Effective from 20 March 2026, amendments to the Companies Act (Chapter 386 of the Laws of Malta) have increased the financial thresholds used to classify groups as small, medium-sized or large. These changes may provide greater flexibility for certain groups of companies, particularly regarding their obligation to prepare consolidated financial statements.
Under Article 173 of the Companies Act, a parent company may qualify for an exemption from preparing consolidated financial statements where the group meets the small group criteria set out in Article 185(5).
Under Article 173 of the Companies Act, a parent company may qualify for an exemption from preparing consolidated financial statements where the group meets the small group criteria set out in Article 185(5).
Revised Small Group Thresholds
The revised thresholds for small group classification are as follows:
How Are the Thresholds Calculated?
When assessing the aggregate balance sheet total and net turnover, the distinction between net and gross figures is important:
- Net figures account for the set-offs and other adjustments required when preparing consolidated financial statements.
- Gross figures are calculated without applying these set-offs and adjustments.
A group may satisfy the relevant financial criteria using either the net or gross thresholds.
The Companies Act also sets out specific rules for calculating net turnover and the average number of employees.
The Companies Act also sets out specific rules for calculating net turnover and the average number of employees.
When Does the Exemption Apply?
The exemption from preparing consolidated financial statements is available where, for two consecutive financial years, at least two of the three prescribed criteria are not exceeded at group level.
However, the exemption is subject to additional conditions:
However, the exemption is subject to additional conditions:
- None of the undertakings included in the consolidation may have securities admitted to trading on a regulated market or an equivalent market in a non-EU or non-EEA country.
- None of the companies within the group may qualify as a public-interest entity.
How BDO Malta Can Help
The revised thresholds may allow more groups of companies to benefit from the small group exemption, potentially reducing their financial reporting obligations.
BDO Malta can assist businesses in assessing their eligibility under the revised provisions of the Companies Act, including preparing the necessary assessments, supporting justifications and consolidation workings, where applicable.
If your group has previously been required to prepare consolidated financial statements, these legislative changes present an opportunity to reassess its reporting obligations.
Contact our team to discuss how the revised thresholds may affect your business
BDO Malta can assist businesses in assessing their eligibility under the revised provisions of the Companies Act, including preparing the necessary assessments, supporting justifications and consolidation workings, where applicable.
If your group has previously been required to prepare consolidated financial statements, these legislative changes present an opportunity to reassess its reporting obligations.
Contact our team to discuss how the revised thresholds may affect your business