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[REGULATED ENTITIES] MFSA launches Corporate Governance Code

The MFSA has launched its Corporate Governance Code for Authorised entities in August 2022. The Code provides a list of guiding principles applicable to all unlisted entities Authorised by the MFSA, thus excluding natural persons.

The objective of this code includes amongst others setting out best practice in corporate governance for entities falling within the MFSA’s regulatory remit and to ensure effective operation of Authorised Entities’ Boards and management.

Such principles are designed to enhance the legal, institutional, and regulatory framework for good governance in the Maltese financial services sector. They thus complement the current provisions already in force in the legal and regulatory framework. Entities should endeavour to adopt these principles, thereby fostering an environment of trust, transparency, and accountability necessary for long-term investment, financial stability and business integrity. 

The Code provides a set of principles, complemented by supporting provisions, which are to be applied on a ‘best-effort basis. These are organised into four main sections, as follows:

  • An Effective Board
  • Internal Control
  • Stakeholder Engagement
  • Corporate Culture, CSR and ESG.

The section on ‘Effective Board’, the Code sets out principles on the effective role and functioning of the Board, the structure and composition of the Board of Directors, Appointment and succession of the Board directors, the role of the Chairperson and Chief Executive Officer, the remuneration and Senior Management, Evaluation of Board Performance, Board meetings, conflicts of interest and confidentiality.

‘Internal Controls’ deals with principles relating to risk management, compliance, internal audit, ICT, security risk and business continuity. Authorised Entities are expected to embed the principles of the Three Lines Model in their controls, operation and culture. Entities should adapt the Three Lines Model to their needs and business priorities, facilitating the identification of structures and processes that best assist the achievement of the entity’s objectives, stronger governance, risk management and financial crime compliance. The MFSA also expect entities to have an effective, independent and objective internal audit function whenever possible.

The Board of an Authorised entity is expected to serve the legitimate interests of the entity as well as account to shareholders in full. The code encourages Authorised entities to actively cooperation with its stakeholders, including suppliers, customers, employees and public authorities. Timely and accurate disclosure on material matters including the financial situation, performance, ownership and governance are considered to be relevant and important for the stakeholders of an Authorised entity.

Lastly, the Corporate Governance Code sets out principles on Corporate Culture, Corporate Social Responsibility (CSR) and Environmental, Social and Governance. The MFSA expects Authorised entities to have a ESG strategy in place and should adequately report on ESG initiatives.

The full version of the MFSA Corporate Governance Code can be found on this link:


For further information, please contact:

Franco Falzon C.P.A. LL.M (Managing Director) or Olga Ivanova LL.M (Corporate & Legal)

E: info@ffinternational.com.mt

T: +356 2010 7771 (office)

M: +356 9989 5679 (mobile)

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