CSP Regulatory Framework
On the 31st January 2025, Bill 124 ('the Bill') entitled Company Service Providers (Amendment) Act, 2025 (Cap.529) was published ('the Amended Act'). This Bill, which is at First Reading stage in Parliament, has been published to help bolster the Company Service Providers Act ('the Act'), which regulates the activities of company service providers ('CSPs').
One of the foremost changes to the Act pertains to terminology. The Bill proposes that the term 'company service providers' be replaced by 'persons providing company services', where appropriate. Moreover, the Bill also proposes the introduction of new classifications of CSPs/persons providing company services, mainly:
- Limited Liability Company Service Providers ('LCSPs'); and
- Restricted Company Service Providers ('RSCPs')
The Bill defines a LCSP as being any natural person who:
- Provides or holds himself out as providing the below services to third parties:
- Acting as a director and/or company secretary in a company and/or a partner in a partnership; and/or
- Acting in a similar position in other legal entities
- does not satisfy the requirements established in the rules issued by the Malta Financial Services Authority (the "MFSA"/ the "Authority") so that s/he may be considered as an over-threshold or an under-threshold Class A or Class B CSP.
On the other hand, an RCSP is defined as any natural person who satisfies these three conditions together:
- acts as a director and/ or company secretary in a company and/ or a partner in a partnership and/ or holds a similar position in other legal entities; and
- does not act or hold such positions mentioned in paragraph (a) by way of business; and
- meets the requirements established in the rules issued by the MFSA, which provide for any other matters the MFSA may consider appropriate in relation to company service providers and the conduct of their activities.
The creation of these two new categories of CSPs ensures that proportional oversight and compliance obligations are upheld with cognisance being taken of the nature of each CSP's operations on a case-by-case basis. In the event of doubt as to whether a person should be classified as a CSP, a LCSP or a RCSP, this matter will be left at the discretion of the MFSA.
It has also been put forth that new licensing and notification requirements be introduced. The proposed amendments, in this regard, aim to establish distinct authorisation, registration and notification requirements for different classes of CSPs:
- Firstly, what is needed is authorisation, which means that any person wishing to provide company services, or hold oneself out to act as such, in or from Malta, must obtain prior approval from the Authority;
- The step which follows is registration. In this regard, any person wishing to act as a LCSP, or hold oneself out to act as such, in or from Malta, shall apply to the Authority for registration;
- A further important step is notification. Here, all persons acting as RCSPs in or from Malta must formally notify the Authority of their intent to provide such services. This notification shall be made within fourteen (14) days from the date when the RCSP starts holding the position of a director and/or company secretary in a company, or other equivalent positions such as a partner in a partnership, or a similar position in relation to other legal entities. This must be accompanied by a notification fee.
The Bill also caters for Enhanced Supervisory Powers conferred upon the Authority. As a direct result of the introduction of the new classes of CSPs, the MFSA would eventually be granted expanded powers to uphold compliance with, and enforcement, of the Amended Act. Provisions to this effect include:
- The powers conferred upon it to either refuse or cancel an authorisation or registration in accordance with of Article 6(1) of the Company Service Providers (Amendment) Act, 2025; and
- The creation of a notified persons register which shall be updated on a regular basis.
In light of the above considerations, the proposed Company Service Providers (Amendment) Act, 2025 signifies a paradigm and regulatory shift aimed at bolstering CSP regulatory compliance obligations and oversight thereof with respect to CSPs/persons providing company services.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
