The application process consists of three principal phases: (i) the preparatory phase; (ii) the pre-licensing phase; and (iii) the post-licensing/pre-commencement of business phase.

Phase One – Preparatory

It is generally advised that, well in advance of submitting an application for an Investment Services Licence, a comprehensive description of the proposed activity is submitted to the MFSA. Such a description will serve as basis for an exploratory meeting held between the promoters of the investment service and the MFSA to discuss the proposed application.
Following such exploratory meeting, the promoters submit a draft (rather than a final) application form, together with a number of documents as specified in the application form. Such application form and supporting documentation can be submitted in Maltese or in English.

The MFSA will review the draft application and the supporting documentation and revert to the applicant with its comments. The MFSA may ask for more information and may make such further enquiries as it considers necessary. It is at this stage that that the eligibility criteria of the applicant are verified.

On the basis of the draft application form, the MFSA will consider the nature of the proposed activity and the type of investors and markets to whom the investment service is to be provided. This analysis will determine which licence conditions – representing the ongoing requirements which the licence holder will be required to observe – are to apply to the particular licence and which are to be disapplied or amended and whether any supplementary conditions should be imposed.

However, the Act provides that once a licence is granted, the MFSA retains the right, from time to time, to vary or revoke any licence condition or to impose new conditions.

It goes without saying that serious penalties are foreseen for persons providing the MFSA with false, inaccurate or misleading information, in any material respect, in the application process – such a person may be subject to a fine not exceeding €465,874.68 or to imprisonment for a term not exceeding 4 years, or to both such fine and imprisonment.

Phase Two – Pre-Licensing

Agreement on the draft licence conditions will generally lead to MFSA issuing an “in principle” approval for the issue of a licence. A definite approval is granted after the applicant finalises or resolves any outstanding matters, such as the registration of the company or the partnership and the submission of signed copies of the revised application form and supporting documentation.

At this stage, it is important to highlight that one of the standard conditions of a licence is that the MFSA will not be liable in damages for anything done or omitted to be done unless the act or omission is shown to have been done or omitted to be done in bad faith.

Phase Three – Post-Licensing / Pre-Commencement of Business

In certain instances, depending on the review of the application form and the supplementary documentation provided, the MFSA may require that, prior to formal commencement of business, the applicant (now the licence holder) satisfies a number of post-licensing matters.