On 1 November, the Malta Financial Services Authority (MFSA) issued a Consultation Document on the Proposed Enhancements to the Company Service Providers (CSPs) Framework.
The enhancements are aimed at individuals who provide directorship or company secretary services to companies or hold equivalent positions in other legal entities.
The proposed framework enhancements, which nonetheless maintain adherence to Malta’s international commitments, seek to adopt a more proportionate regulatory approach, perhaps most significantly through the introduction of a less burdensome requirement for persons acting as director/company secretary on more than 2 companies.
The latest proposal consists of:
- amalgamating the concepts of notification and registration in the sphere of the above-mentioned subject persons; with the former, entailing the submission of a notification form through the MFSA’s license holder portal, being less onerous than the latter, a degree more akin to current authorisation, however involving a specific application form, a specific rulebook as well as streamlined regulatory submissions (eliminating registration on CASPAR and the submission of REQs with the FIAU);
- the introduction of a new rulebook applicable solely to individuals who qualify for registration; and
- the increase of the number of involvements both for Class B Under Threshold CSPs as well as Class B CSPs.
The below table provides a summary of the current framework vis-a-vis the provision of directorship and/or company secretarial services as opposed to the proposed enhancements:
|
Situation
|
Current Framework | Proposed Framework |
|
3 to 10 directorship and/or company secretarial involvements (when carried out ‘by way of business’, i.e. regularly and habitually). |
Class B Under Threshold CSP |
Up to 10 involvements = Registration Requirement (new category of CSPs known as ‘Registered Persons’). 11 to 20 involvements = Class B Under Threshold CSP.
|
|
More than 10 directorship and/or company secretarial involvements (when carried out ‘by way of business’, i.e. regularly and habitually).
|
Class B CSP |
More than 20 involvements = Class B CSP |
|
Provision of 1 to 2 directorships (when not carried out ‘by way of business’, i.e. not regularly and habitually).
|
CSP Authorisation not required |
Threshold increased to 5 involvements.
MFSA notification through License Holder Portal required.
|
|
Provision of 3 company secretarial roles
(when not carried out ‘by way of business’, i.e. regularly and habitually).
|
CSP Authorisation not required |
Threshold increased to 5 involvements.
MFSA notification through License Holder Portal required.
|
|
Persons required to act as director and/or company secretary through contract of employment.
|
CSP Authorisation not required |
MFSA Notification not required |
|
Persons acting exclusively as director/company secretary of a company in which they hold beneficial interest.
|
CSP Authorisation not required |
MFSA Notification not required |
|
Persons acting exclusively as director/company secretary of a company due to a family relationship.
|
CSP Authorisation not required |
MFSA Notification not required |
|
Persons authorised to act as trustees/provide other fiduciary services in terms of Trusts and Trustees Act.
|
Exempt from CSP Authorisation |
Exempt from MFSA Notification |
|
Persons registered to act as VFA Agent in terms of Virtual Financial Assets Act. |
Exempt from CSP Authorisation |
Exempt from MFSA Notification |
|
Persons only offering service of director/company secretary where company is licensed, registered or authorised.
|
Exempt from CSP Authorisation |
Exempt from MFSA Notification |
|
Persons only offering service of director/company secretary where company’s financial instruments have been admitted to listing on a regulated market in Malta.
|
Exempt from CSP Authorisation |
Exempt from MFSA Notification |
For more information, the Consultation Document may be accessed here. Stakeholders are invited to submit feedback by no later than 15 November 2024 by email on cspreform25@mfsa.mt.
Please contact Giulio Sammut on giulio@davidzahra.com or Andrew Grech on andrew@davidzahra.com should you wish to look into how the proposed regulatory framework will affect you.
