On the 30th of September 2023, the Malta Financial Services Authority (the "MFSA") issued a Circular wherein it announced the publication of a revamped version of its Corporate Governance Manual for Directors of Collective Investment Schemes.
The principles-based updated Corporate Governance Manual builds upon the Corporate Governance Code, published by the MFSA in August of 2022 and sets out focused practices, while simultaneously enhancing certain existing best practices, designed to promote effective governance and foster a stronger compliance culture within the industry.
The revamped Corporate Governance Manual, which provides relevant and accurate insight as regards the MFSA's expectations, as the regulator of the funds sector, with particular emphasis on the importance of integrating environmental, social, and governance ("ESG") considerations into a fund's long-term strategy, while ensuring that all ESG/sustainability-related data and information are disclosed accurately, fairly, clearly and concisely to all relevant stakeholders.
Updated guidance is also provided as regards the responsibilities of directors in managing risks, including understanding the key dependencies required to maintain business operations. Directors are advised to ensure that appropriate disaster recovery plans are in place and continuously updated, while stressing the need for sufficient resources being employed to handle any eventuality.
Collective investment schemes are also reminded that, despite being applicable on a proportionality basis, the principles set out in the revamped Corporate Governance Manual are nevertheless to be applied on a best-efforts basis. Therefore, Directors of Collective Investment Schemes are encouraged to make timely assessments of the respective fund's governance practices, to determine the extent of the applicability of the Corporate Governance Code as well as the updated Corporate Governance Manual. The Board of Directors will also be required to take such action as may be necessary to bring the governance of the fund in line with the principles enshrined in the respective Codes.
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