Corporate Legal Update for the Month of August 2023

On the 9^th of August 2023 the MFSA published a circular regarding the Observations from Supervisory Inspections held with Issuers on the Prevention of Financial Market Abuse. Since 2018, the MFSA has been conducting onsite compliance meetings with issuers whose financial instruments are traded on a Maltese trading venue, relating to the Market Abuse Regulation (hereinafter referred to as ‘MAR’). The aim of this was to ensure proper implementation of the MAR.  After conducting numerous onsite compliance meetings, the Authority released a circular on the 16^th of March 2020, to communicate the overall findings derived from these meetings. Three years later, the Authority is now sharing findings, including the best practices and common pitfalls which have emanated from inspections since March 2020. Given that the Regulation has been implemented since 2016, and the MFSA’s ongoing interaction with the Market, the authority expects all issuers to maintain robust arrangements and procedures for MAR compliance. Market participants should note that breaches of MAR requirements may lead to regulatory action under Article 22 of the Prevention of Financial Markets Abuse Act (Chapter 476 of the laws of Malta).

Another circular was published by the MFSA on the 18^th of August 2023. This circular related to the publication of Applications for Authorisation/Registration of Benchmark Administrators and was addressed to all market participants, specifically to administrators of benchmarks, contributors of benchmarks and users of benchmarks. The MFSA has launched new forms for authorisation and registration, namely AA39: Benchmark Administrator Application Form – Authorisation (‘AA39’), and AA45: Benchmark Administrator Application Form – Registration (‘AA45’). Any application for authorization or registration submitted after the circular is published should be using the above-mentioned forms through the LH Portal, and any other forms will not be accepted by the MFSA.

A further circular was published by the MFSA on the 18^th of August 2023, informing the public about the Adoption of the final delegated act on the first set of European Sustainability Reporting Standards (“ESRSs”).  The Corporate Sustainability Reporting Directive (hereinafter referred to as ‘CSRD’) entered into force in January 2023, and pushes for promoting capital inflows towards sustainable activities within the EU. On the 31^st of July 2023, the European Commission adopted the final delegated act on the first set of ESRSs. Annexes I and II of the Act lay out the first set of ESRSs. Companies falling under the CSRD’s jurisdiction should be aware that they will need to commence reporting under ESRSs starting from the 2024 reporting period. The mandatory applicability will be phased in gradually, depending on the category of the respective companies. Companies previously subject to the NFRD (including large Listed Companies with more than 500 employees), and large non-EU Listed Companies with more than 500 employees, will be required to start from the Financial Year of 2024. Other large companies will be required to start from the financial year of 2025 and Listed SMEs will be required to start from the Financial Year of 2026.

For a full list of MFSA Circulars, click here.