On the 5th August 2022, the MFSA launched its Corporate Governance Code (the ‘Code’) for authorised entities.
The Code is primarily intended to provide a list of guiding principles, complemented with supporting provisions and is to be applied on a ‘best-effort basis’ to ensure a proportionate approach, given that a wide range of entities fall within its scope. As such, authorised entities are expected to endeavour to adhere to the Code in a manner that is commensurate with the nature, size and complexity of its business.
The principles established in the Code are designed to enhance the legal, institutional and regulatory framework for good governance in the Maltese financial services sector and are intended to serve as a benchmark for future policy alignment in evaluating any changes that may be required in the MFSA Rules and existing codes and guidelines, with an overall aim of retaining a balance between prescriptive regulation and ‘soft law’, applicable to the various entities.
The principles established in the Code are designed to enhance the legal, institutional and regulatory framework for good governance in the Maltese financial services sector
Summarily, the Code seeks to:
- Set out best practice in corporate governance for entities falling within the MFSA’s regulatory remit, by enhancing the legal, institutional, and regulatory framework;
- Enhance governance structures, improve relations, and strengthen trust with stakeholders;
- Ensure effective operation of authorised entities’ boards and management;
- Assist directors and senior management to fulfil their duties;
- Ensure that authorised entities have adequate and effective internal controls, and procedures to discharge their responsibilities and monitor outcomes;
- Enhance stakeholder and public confidence in the financial services sector in general; and
- Assist entities to put in place improved governance standards to achieve enhanced resilience and sustainable operations going forward, as well as ensuring ethical behaviour.
The Code does not apply to MFSA listed entities falling within the scope of the Capital Market Rules, nor to authorised entities which are also listed entities falling within the scope of the Capital Markets Rules, given that these contain more specific provisions in this regard.