MFSA Reminder: Existing CSPs to Comply with new Rules by September

This article was written by Dr Simon Pullicino, Dr Petra Attard, and Dr Laura Spiteri

The Malta Financial Services Authority (‘MFSA‘) has issued a circular directed at authorised company service providers (‘CSPs‘) that were registered to provide CSP services prior to the entry into force of the new CSP rules.

CSPs that offered CSP services on the date of entry of the new rules – 16 March 2021 – could only continue to offer such services if they applied for authorisation with the MFSA by the 16 May 2021. This application for authorisation resulted in the MFSA classifying company service providers into the relevant class (see below), as is required in terms of the new rules.

Following this classification, CSPs are required to comply with the requirements their respective class imposes by the 16 September 2021. This means that CSPs classified as:

• A. Class A require a minimum share capital of €10,000, fully paid up, and which is maintained throughout the CSP’s authorisation;
• B. Class B require a minimum share capital of €15,000, fully paid up, which is maintained throughout the CSP’s authorisation, and to have adequate professional indemnity insurance cover in place; and
• C. Class C require a minimum share capital of €25,000, fully paid up, which is maintained throughout the CSP’s authorisation, and to have adequate professional indemnity insurance cover in place. CSPs falling within this class must also abide by the new risk management function requirement.

If a CSP is required to increase its share capital to comply with the above-mentioned minimum share capital requirements, a shareholders’ resolution would first need to be passed. The CSP’s memorandum and articles of association would also need to be amended to reflect the updated share capital. The resolution and updated memorandum and articles of association, together with confirmation that the relevant CSP’s share capital has increased and a bank statement confirming the capital investment must be forwarded to the MFSA by 15 September 2021. Confirmation that the CSP has acquired adequate professional indemnity insurance, where applicable, must also reach the MFSA by the 15 September.

CSPs classified as Class C must also comply with the new requirement relating to the risk management compliance function by the 16 September 2021. This requires the CSP to submit a proposal relating to the individual who will be performing the risk management function.

It should be noted that the failure of any CSP to abide by the requirements imposed by each Class of CSPs following the end of the above-mentioned time periods will constitute a breach of the CSP rules.