The Bill to Amend CSP Laws

On the 31^st of January 2025, Bill number 124 (the “Bill”) entitled Company Service Providers (Amendment) Act, 2025 (Cap. 529) (the “Proposed Act”) was published among the Government Notices in the Supplement to the Government Gazette. The Bill has reached First Reading stage in Parliament and aims to amend and strengthen the regulatory framework applicable to company service providers (“CSPs”) by introducing two new categories of CSPs.

Key Amendments

The proposed amendment to the Company Service Providers Act, Chapter 529 of the Laws of Malta (the “Act”) contains numerous changes. These include various definitional changes as well as modifications to the structure of the regulatory framework.

Below are the main amendments outlined in the Bill:

1. Revised Definitions and Scope Expansion

One of the main amendments to the Act relates to its terminology. Notably, the term “company service providers” will be replaced with “persons providing company services”, in specific articles of the Act, as appropriate. Additionally, new classifications such as limited company service providers and restricted company service providers have been introduced as outlined as follows.

Under the Bill, a Limited Company Service Provider (a “LCSP”) refers to a natural person who:

(a)  Provides or holds oneself out as providing, by way of business, any of the following services to third parties:

1. 1. Acting as a director and/ or company secretary in a company and/ or a partner in a partnership; and/ or
   2. Acting in a similar position in relation to other legal entities; and

(b) does not meet the requirements established in the rules issued by the Malta Financial Services Authority (the “MFSA” or the “Authority”) in order to be considered as an over-threshold or an under-threshold Class A CSP or Class B CSP.

A Restricted Company Service Provider (a “RCSP”) means any natural person who:

(a) acts as a director and/ or company secretary in a company and/ or a partner in a partnership and/ or holds a similar position in relation to other legal entities; and

(b) does not act or hold such positions mentioned in paragraph (a) by way of business; and

(c) meets the requirements established in the rules issued by the MFSA provides for any other matters as the MFSA may consider appropriate in relation to company service providers and the conduct of their activities.

These two new categories ensure proportional oversight and compliance obligations tailored to the nature of each CSP’s operations. In the event of doubt as to whether a person would be classified as a CSP, a LCSP or a RCSP by carrying out a particular activity, the matter will be up to the MFSA to determine.

2. Introduction of New Licensing and Notification Requirements

The proposed amendments establish distinct authorisation, registration and notification requirements for different classes of CSPs:

Authorisation: Any person wishing to act as a CSP, or hold oneself out to act as such, in or from Malta, must obtain prior approval from the Authority.

Registration: Any person intending to act as a LCSP, or hold oneself out to act as such, in or from Malta, shall apply to the Authority for registration to do so.

Notification: Any person acting as a RCSP in or from Malta must formally notify the Authority of their intent to provide such services. This notification shall be made within fourteen (14) days from the date when the RCSP first holds the position of a director or company secretary in a company, or a partner in a partnership, or a similar position in relation to other legal entities and must be accompanied by a notification fee.

3. Enhanced Supervisory Powers for the Authority

With the introduction of the new classes of CSPs, the MFSA would be granted expanded powers to ensure compliance and enforcement of the Proposed Act. Provisions to this effect include:

(a) The MFSA has the authority to refuse or cancel an authorisation or registration based on sub-article (1) of Article 6 of the Company Service Providers (Amendment) Act, 2025.

(b) The establishment of a register of notified persons which shall be updated on a regular basis.

4. Transitory Provisions for RCSPs

To facilitate a smooth transition into the new regulatory framework, persons who were acting as RCSPs in or from Malta prior to the date of the Bill is passed may continue to do so, provided that they duly notify the MFSA of their intention to do so not later than two (2) months from that date.

It should be noted that where any such person fails to notify the MFSA within such period, that person shall immediately cease from acting as a RCSP.

Moreover, CSPs will need to update their internal governance frameworks to align with the new definitions and classification structures.

Way Forward

The proposed Company Service Providers (Amendment) Act, 2025 represents an intended regulatory shift aimed at enhancing regulatory compliance oversight with respect to CSPs and persons providing company services.

As the Bill progresses through Malta’s legislative process, CSPs and stakeholders in the corporate services sector should closely monitor developments to ensure they are prepared for the forthcoming changes. The introduction of LCSPs and RCSPs signifies a move towards a more proportionate and risk-based regulatory framework, reflecting the MFSA’s broader strategy of enhancing supervision while recognising the diverse nature of company service providers.

In anticipation of the Bill’s probable enactment, natural persons should assess their classification under the proposed framework and take proactive steps to comply with new authorisation, registration, or notification requirements. Internal governance structures may need revision to align with the refined definitions and supervisory expectations introduced by the Proposed Act.

Furthermore, the proposed transition period for RCSPs underscores the importance of timely regulatory engagement. Those providing company services should take advantage of this window to ensure compliance with notification obligations and avoid potential regulatory breaches.

Going forward, clarity on the MFSA’s implementation approach, including the issuance of subsidiary rules or guidelines, will be essential. CSPs should remain engaged with regulatory consultations and industry discussions to manage these changes effectively.