New Regulatory Regime for Company Services Providers (CSPs)

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Act XX of 2013 was enacted by Parliament on the 24 December 2013, with the main purpose to regulate company services providers (CSPs). The Act defines a CSP as any natural or legal person which, by way of business, provides any of the following services to third parties:

I. forms companies or other legal entities;

II. acts as or arranges for another person to act as director or secretary of a company, a partner in a partnership or in a similar position in relation to other legal entities;

III. provides a registered office, a business correspondence or administrative address and other related services for a company, a partnership or any other legal entity.

Any person resident or operating in or from Malta who acts as a CSP must apply for registration with the MFSA in terms of this Act. However, those who carry out the professions of an advocate, notary public, legal procurator or certified public accountant as well as persons who act as a trustee in terms of the Trusts and Trustees Act are not required to be registered with the MFSA. Nonetheless, such parties must notify the Financial Intelligence Analysis Unit established under the Prevention of Money Laundering Act.

Furthermore, the MFSA shall duly consider any due diligence process already carried out in relation to a person, if such person is in possession of another licence, authorization or recognition under the Investment Services Act.

The MFSA is empowered to either accept or decline an application for registration made under this Act. The Authority may refuse an application if the person is not deemed to be fit and proper to provide the services concerned. The legislation makes it mandatory that a natural person applying for registration is resident in or operating from Malta. In the case of a legal entity, the MFSA must be satisfied that the legal entity:

• Acts as a CSP and its objects clause does not run counter to the services offered by a CSP;

• The directors of the company are not less than 2 and are individuals who are fit and proper persons, as should be the shareholders who own or control 25% or more of the shares or voting rights in the company;

• The name of the company is consistent with its activities;

• The company is formed and incorporated in a reputable jurisdiction when such company is not formed and registered in Malta.

MFSA may also cancel a registration granted in terms of this Act due to the arising of certain circumstances. These include: if the registered person has contravened any of the provisions of the Act, if the person has supplied the MFSA with false, inaccurate or misleading information, if the person has ceased to act as a CSP, if the person has requested to do so and if the cancellation of such registration is considered desirable for the well-being and reputation of Malta.

A cancellation of such registration will be made public and a person whose registration has been cancelled must transfer such services to a person who is duly registered under this Act within 60 days.

When approving or refusing such application, the Authority is duty bound to protect investors and the general public, protect Malta’s reputation and promote competition and choice. Although existing CSPs will need to adjust to this new framework within a short period, this Act provides a widespread approach to the registration of company services providers and its objective is to ensure that the services provided in Malta are of a high standard.

Existing CSPs ought to register with the MFSA by the 24th of March 2014.

For further information on the application process, the requirements for the attainment of MFSA approval and any other corporate law advice, do not hesitate to contact us on info@wdm.com.mt