Set to reshape the landscape for Company Service Providers (CSPs), Bill No. 124, the Company Service Providers (Amendment) Act 2025 (the “Bill”), was introduced to Parliament on 27 January 2025. This crucial amendment proposes the strengthening of regulations and establishment of two new categories of CSPs that will be subject to reduced oversight and less burdensome regulatory requirements.
Stemming from a consultation launched by the Malta Financial Services Authority in November 2024, the Bill notably simplifies the compliance process for those offering directorship and company secretarial services, shifting towards streamlined notification and registration procedures. Designed to bolster regulatory integrity, this legislative move promises a more structured and efficient compliance landscape for professionals in the field.
Key Updates
- Refinement of CSP Classifications: The Bill formally introduces two new categories:
- Restricted Company Service Providers (RCSPs): This category applies to individuals who act as directors, company secretaries, or partners in a partnership but do so on a limited basis. These individuals may not provide company services as a core business activity or on a large scale. RCSPs will be subject to lighter regulatory requirements, including a notification process with the MFSA instead of full authorisation.
- Limited Company Service Providers (LCSPs): This category covers individuals and entities providing company services but operating below a specific threshold set by the MFSA. Unlike fully licensed CSPs, LCSPs will need to undergo a registration process but will face fewer compliance obligations. However, they will still be required to meet due diligence standards and adhere to specific reporting requirements.
It is important to note that the Bill specifies that in the event of any doubt regarding whether a person is considered a CSP, an LCSP, or an RCSP for carrying out a particular activity, the matter shall be conclusively determined by the MFSA.
- Notification and Registration: The proposed changes, which initially sought to create a more proportionate approach, are now streamlined further under the Bill. Notification for RCSPs will require submission through the MFSA’s license holder portal, while LCSPs will follow a specific registration process with dedicated rulebooks and streamlined regulatory submissions.
- Regulatory Oversight and Compliance Adjustments: While the consultation proposed an easing of regulatory requirements, the Bill ensures that CSPs remain aligned with Malta’s international commitments, particularly EU Directive (EU) 2015/849 on anti-money laundering (AML) and counter-terrorism financing (CTF). The MFSA is granted enhanced powers to supervise, regulate, and revoke licenses where necessary.
- Expansion of Service Thresholds: The amendments introduced expand the regulatory thresholds applicable to CSPs particularly Class A and Class B CSPs. The MFSA has yet to release the updated CSP rulebook, and as such, there is no confirmation of the precise increase in thresholds at this stage. However, it is anticipated that the revised thresholds will align closely with those outlined in the MFSA’s Consultation Document, as referenced in a previous news item on this topic.
- Enforcement and Cancellation Powers: The MFSA will have expanded powers to cancel or refuse authorizations and registrations where CSPs fail to meet regulatory requirements or engage in misconduct. This includes the establishment of a structured appeals process for CSPs affected by such decisions.
- Introduction of a Dedicated Rulebook for Limited CSPs: To provide clearer guidance, the Bill mandates the creation of a distinct rulebook specifically for LCSPs, outlining their obligations, reporting requirements, and compliance expectations.
- Transitional Provisions for Existing CSPs: Individuals and entities currently operating under the previous framework will be given a transitional period to comply with the new requirements. Those failing to notify the MFSA within the specified time frame will have to cease operations.
CSPs are advised to review these legislative changes and assess their impact on their operations.
The Bill will now proceed to further parliamentary review. For any further information, please do not hesitate to contact David Zahra & Associates Advocates.
