On 16 July 2026, the Malta Financial Services Authority (MFSA) issued a thematic review examining how Company Service Providers (CSPs) oversee the natural persons they arrange to act as directors and/or company secretaries of client entities. The review found that while most CSPs carry out fitness and properness checks and some degree of monitoring, notable gaps remain around service definitions, time commitment assessment, and the depth of ongoing oversight.
Main findings
- Scope: MFSA selected 50 of the 82 licensed Class B and Class C CSPs offering arranging services, a sample representing 61% of the population.
- Unclear definitions: Nearly a third of CSPs (32%) could not adequately define what “Arranging Services” involves, exposing weaknesses in governance and internal controls. Some incorrectly described legal persons, rather than natural persons, as the ones being arranged. Under the CSP Rulebook, only a natural person who is an officer or employee of the CSP may take on the role, not a third party or separate legal entity.
- Fitness and properness: 96% of CSPs confirmed they assess the fitness and properness of arranged persons, and 94% said they carry out some form of oversight or monitoring.
- Oversight lacking substance: Despite this, only 27% of CSPs requesting management reports cover matters that count: governance practices, financial transactions, compliance breaches, conflicts of interest, and solvency.
- Time commitment: One individual held 151 directorships; another held 63 company secretary appointments. MFSA regards this level of concentration as a red flag for “rubber-stamping” and inadequate service, even where the person has support staff in place.
Regulatory expectations
MFSA reminded CSPs that they remain fully responsible for services delivered through the arranging process, including ongoing monitoring and reporting. Specifically, CSPs are expected to:
- Appoint only fit and proper natural persons who are officers or employees of the CSP, never third parties or legal entities
- Maintain clear service agreements, appropriate remuneration arrangements, documented monitoring, and escalation procedures
- Request regular activity updates from arranged persons, at least annually, with more frequent and detailed reporting where risk is higher or roles more complex
- Assess time commitment both quantitatively and qualitatively, not merely by counting the number of appointments held
Key takeaway
Arranged directors and company secretaries must not become passive or “letterbox” appointments. CSPs are expected take corrective action to bring their arrangements in line with MFSA’s expectations. Moreover, CSPs are expected to conduct a gap analysis to ensure the corrective actions are meeting MFSA’s expectations.
