In terms of Article 3 of the Company Services Providers Act (“the Act”) any person resident or operating in or from Malta who acts as a company service provider by way of business is required to apply for registration with the MFSA. The term ‘company services provider’ (“CSP”) is defined in Article 2 of the Act as any natural or legal person which, by way of business, provides any of the following services to third parties:
- Formation of companies or other legal entities;
- Act as or arranging 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;
- Provision of a registered office, a business correspondence or administrative address and other related legal services for a company, a partnership or any other legal entity
Further to the above, on the 7th January 2014, The Malta Financial Services Authority issued for consultation a set of proposed rules governing Company Services Providers in Malta. The rules are issued in terms of the Company Services Providers Act (“the Act”) and are intended to establish the detailed regulatory requirements which persons registered in terms of the Act are required to adhere to.
The key elements of the proposed rules are the following:
A definition of the expression ‘by way of business’. Given the pivotal importance of this term to the applicability of the Act to any given operation, the MFSA is proposing a useful explanation of the expression. The proposed definition requires the subject to either:
- Hold himself out as providing company services by, inter alia, soliciting the services on offer to members of the public (this entails actual representation to third parties); OR
- Provides company services on a regular and habitual basis
- AND
- Is being directly or indirectly in receipt of remuneration or other benefits for the provision of such services
Provision of directorship services. The proposed rules provide further clarity on the circumstances in which a person acting a personal capacity would be considered as not acting ‘by way of business’ and thus not triggering the applicability of the Act, namely:
- Directorships of private companies where the director is a 50% or more beneficial owner; and
- Directorships of company beneficially owned by family members
Minimum capital requirements. The rules propose that body corporates subject to the Act should have a minimum paid up share capital of EUR 5,000 which must be maintained on an ongoing basis. Where the person is an individual, a working capital of at least EUR 2,500 must be maintained.
MLRO and CO. In terms of the Prevention of Money Laundering and Funding of Terrorism Regulations, a person who provides company services is considered a subject person and must therefore appoint a money laundering reporting officer. The rules further propose that Registered Persons should appoint a compliance officer.
Applicants are required to submit their applications for registration by the 24th March 2014.
The rules have been broadly welcomed by the Maltese industry and will serve to maintain high levels of professionalism throughout the sector. The high standards set by the rules will ensure that prudent, compliant service providers enjoy a level playing field, which will ultimate benefit both clients as well as the jurisdiction.
Our firm's financial services regulatory team has assisted a wide variety of businesses with respect to their MFSA application processes, and is currently advising a number of corporate service providers with respect to their prospective applications. Contact us for more information.
