Corporate Legal Update for the Month of July 2023

The MFSA published a Circular on the 13^th  of July 2023 regarding a Public Statement issued by the European Securities and Markets Authority (hereinafter referred to as “ESMA”) outlining sustainability disclosure expectations in prospectuses. This was addressed to issuers and their advisory teams in the process of drawing up prospectuses. The statement aims to coordinate national authorities’ review of sustainability disclosures in prospectuses, inform issuers and advisors about expected disclosures and enhance investor decisions by emphasizing sustainability-related disclosures.

On the 14^th of July 2023, the Crowdfunding Service Provider Act (Act No. XXV of 2023) was enacted. The purpose of this act is to implement uniform regulations outlined in the Regulation on European Crowdfunding Service Providers for businesses within the European Union. This Regulation establishes standardised guidelines governing the facilitation of investment-based and lending-based crowdfunding services aimed at business financing.

Another Circular was published by the MFSA on the 17^th of July 2023 relating to ESMA’s position on pre-hedging (being the practice of a principal undertaking a trade in anticipation of a client order to manage the risk associated with a possible trade stemming from that order). The circular aims to inform all market participants, with particular reference to investment firms, credit institutions, proprietary traders, market makers and asset management companies, about the final report published on the feedback received to the call for evidence on pre-hedging. ESMA stated that it does not find any reason to ban this practice, however it also draws attention to risks which should be considered.

The Act to amend the Arbiter for Financial Services Act (Act XXVI of 2023) was published on the 18^th of July 2023. The purpose and motivations behind this Act are twofold: firstly, to allow for consumer associations to lodge complaints before the Arbiter for Financial Services, and secondly, to align the provisions of the Arbiter for Financial Services Act (Cap. 555) with the provisions outlined in Directive (EU) 2016/97.

For a full list of MFSA Circulars, click here.