On 1 November 2024, the MFSA published its Consultation Document on the Proposed Enhancements to the Company Service Providers Framework to propose enhancements to the regulatory framework applicable to individuals who provide directorship/company secretary services to companies or hold equivalent positions in other legal entities.
The Authority’s overarching proposal consists of:
- The introduction of two new concepts: Registration and Notification applicable to individuals providing the service of director/company secretary to companies or holding a similar position in other legal entities;
- 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 MFSA’s proposed enhancements stem from the Authority’s awareness that the jurisdiction has little visibility on the nature and extent of the activities of individuals carrying out directorship/company secretary services when not acting ‘by way of business.’ To address this, the MFSA will undertake a risk assessment to inform Malta’s risk understanding of this sector as a whole.
Proposal 1: Notification Requirement
The proposed Notification requirement is aimed at those individuals who are currently providing directorship and/or company secretarial services but, are not doing so ‘by way of business,’ and fall within certain criteria to be prescribed by the Authority. The MFSA is proposing a change to the interpretation of the number of involvements that are not considered to be regular and habitual, and therefore not ‘by way of business’ and thus increase the involvements from 2 to 5 involvements. However, in the spirit of proportionality, this increase is being qualified by restricting the number of group involvements to a maximum of 2 groups.
Under this proposed change, individuals who fall within this criterion would not be required to seek authorisation or registration but would be required to notify the MFSA of their involvements by submitting a Notification Form through the Authority’s License Holder Portal.
Involvements which are deemed to be outright exempt from the CSP framework in terms of the Company Service Providers (Exemption) Regulations, will not trigger the notification requirement. Furthermore, the MFSA is proposing that individuals who act as director/company secretary in a company in the following scenarios will not be required to notify the Authority of these particular involvements:
- individuals who are required to act as director and/or company secretary through their contract of employment, or
- persons acting exclusively as director/company secretary of a company in which they hold a beneficial interest; or
- individuals who act exclusively as director/company secretary of a company due to a family relationship.
Proposal 2: Registration Requirement and the Category of ‘Registered Persons’
The MFSA is proposing the set-up of a new category of ‘Registered Persons,’ consisting of individuals acting, or holding themselves out as acting, ‘by way of business’ to third parties, who provide directorship and/or company secretarial services to companies up to a maximum of 10 involvements.
Individuals, who fall within this criterion would be required to register with the MFSA through an application form specifically for Registered Persons. The requirement of the compliance function would be waived and Registered Persons would follow a specific Rulebook establishing the requirements and obligations of such persons. Furthermore, Registered Persons would benefit from streamline regulatory submissions to the MFSA and the FIAU through a revised amalgamated annual submission and would no longer be required to register on CASPAR and submit REQs with FIAU.
Stakeholders are invited to submit their views by email on cspreform25@mfsa.mt by not later than 15 November 2024.
