
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:
https://www.mfsa.mt/wp-content/uploads/2022/08/MFSA-Corporate-Governance-Code.pdf
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)
Disclaimer
While FF International Limited (hereinafter referred to as “FFI”) endeavours to ensure that any information published in articles / publications / memos / updates (including any information published on our website) is accurate as at the time of publication, FFI nor any of their respective directors, partners, officers, employees, or agents make any representation or warranty (express or implied) or accept or will accept any responsibility or liability in relation to the accuracy or completeness of the information contained published in our articles / publications / memos / updates (including any information published on our website) or any other written or oral information made available or published on our articles / publications / memos and updates. Any responsibility or liability in respect of any such information or any inaccuracy or omission arising from any article / publication / memo is expressly disclaimed. In particular, but without prejudice to the generality of the foregoing, no representation or warranty is given as to the achievement or reasonableness of any future projections, estimates, prospects or returns published on our articles / publications / memos / updates (including any information published on our website) . The content of the above article / publication / memo / update and any information published on our website is intended to serve solely as general information only and its purpose is not to provide any specific professional advice whether of a financial, legal, tax or other nature. Since it is recommended that business decisions be based only on qualified professional advice, neither FFI nor any related company belonging to FFI nor any of the respective directors, partners, officers, employees, or agents of FFI will be held liable for any damages which might result as a consequence of relying on the information contained within. FFI including any directors, partners, officers, employees, or agents of FFI and / or any entity related to FFI accept no liability whatsoever for the content of this article / publication / memo / update for the consequences of any actions taken on the basis of the information provided. If you have any questions relating to the accuracy and correctness of the above article / publication / memo / updates or any information published on our website you are kindly requested inform us by sending us an email on info@ffinternational.com.mt