Introducing the notion of a trader

Trading Malta

In commercial circles one finds use of the term trader. This notion is defined in Article 4 of the Maltese Commercial Code as being “any person who, by profession, exercises acts of trade in his own name, and includes any commercial partnership”.

If one, whether a physical person or a commercial partnership, falls under this definition of a trader, then as a trader they are subject to specific duties and obligations, as well as entitled to several rights. Interestingly, a commercial partnership may only be considered as a trader at the moment that it registers to be so with the Malta Business Registry. On the other hand, the physical person is considered a trader when he acts as such.

It is essential that the person carries out any of the objective acts of trade, listed in Articles 5 and 6 of the Commercial Code, with the intention of making a profit. These acts of trade must be carried out in a habitual manner as the element of repetition is key in distinguishing between a trader and a non-trader carrying out a random act of trade. The frequency of such repetition depends on the type of act of trade being carried out, more specifically whether the object concerned is a movable or an immovable.

In carrying out the acts of trade in his own name, the trader is clearly accepting the responsibility pertaining to such acts. However, the law allows for other persons, whom are auxiliary to the trader, to assist the trader. These persons, the agents, carry out acts of trade on behalf of the trader, the principal, without being considered as traders themselves.

Above all, these acts of trade must be carried out ‘by profession’ – meaning that the trader relies on them to make an income. Since the law does not specify otherwise, such acts of trade may be exercised both publicly and privately. In instances where there is doubt as to whether one is a trader, it is up to the Commercial Court to decide so after evaluating the proof brought by the person accusing the trader not to be such.

At Sciberras Advocates we can guide you to the setting up of a sole trader / self-employed business from the legal and commercial perspective by providing you the necessary registration with the VAT and tax authorities and guiding you accordingly.

Article written by Ms Chantal Borg, currently reading a Bachelor of Laws (Honours) at University of Malta.

Sciberras Advocates founded by Dr Adrian Sciberras, is a law firm based in Malta. The firm prides itself to be multi-disciplinary, innovative and flexible in order to meet the changing times and any challenges in the local and international legal scenario. No matter what private or corporate complex demands are called for, Sciberras Advocates offers practical and cost-effective legal solutions to achieve your desired results. You may reach Sciberras Advocates by phone on +35627040903 or via email on [email protected].

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