Malta: MFSA publishes new corporate governance code

Earlier this year - in March, to be precise - I noted that the Malta Financial Services Authority was consulting on a new corporate governance code that would cover all unlisted MFSA authorised entities. The consultation has since ended and the new code published: see here (pdf). 

Malta: MFSA consults on new corporate governance code

The Malta Financial Services Authority is currently consulting on a new corporate governance code, to cover all unlisted MFSA authorised entities. A copy of the consultation document and new code can be found, respectively, here (pdf) and here (pdf). The code contains principles and supporting provisions, the latter to be applied on what is described as a 'best effort basis'.

Malta: MFSA feedback statement - the corporate governance framework for authorised firms and listed companies

In February 2020 the Malta Financial Services Authority published proposals for a new corporate governance framework for MFSA authorised firms and listed companies: see here (pdf). The proposed framework, on which views were sought, contained principles operating on the basis of 'apply and explain', to be supported by sector specific guidance and rules. A consolidated corporate governance code for authorised firms and listed companies was also proposed.

An update on these proposals, in the form of a feedback statement, was published today: see here (pdf). A short press release was also published: see here (pdf).  The statement explains that the proposed principles within the corporate governance framework for authorised firms will no longer be mandatory - as suggested by "apply and explain" - but will operate on what is described as a "best effort basis". The principles will be supported by binding rules and guidance notes. The feedback statement also sets out the structure of the proposed new MFSA corporate governance code. A consolidated code is no longer proposed.

Malta: corporate governance statements + the Maltese Code

The Malta Financial Services Authority has issued a consultation paper concerning changes to its Listing Rules with regard to the requirement, under the Fourth Company Law Directive (as amended by Directive 2006/46/EC), for certain companies to include a corporate governance statement in their annual report. The deadline for implementation of the Directive by Member States was 5 September 2008. 

Companies with securities traded on regulated markets are required to provide the corporate governance statement (in the UK, this requirement is found in DTR 7.2 of the FSA Handbook). This must state, inter alia, the Code to which the company is subject and/or the code which the company has adopted. The relevant Code in Malta is the Code of Principles of Good Corporate Governance, which is included in the Listing Rules as an appendix (number 8.1). This Code has many similarities with the UK's Combined Code but it is interesting to note that it contains much greater guidance with regard to boards. There is, for example, a separate section titled "Board Meetings" and this explains:

Notice of the dates of the forthcoming meetings together with the  supporting material should be circulated well in advance to the Directors so that they have ample opportunity to appropriately consider the information prior to the next scheduled board meeting. Advance notice should be given of ad hoc meetings of the board to allow all Directors sufficient time to re-arrange their commitments in order to be able to participate".

There is also a section in the Code dealing with corporate social responsibility and Principle 12 of the Code states: "Directors should seek to adhere to accepted principles of corporate social responsibility in their day-to-day management practices of their company". In this regard the Code explains:

Corporate Social Responsibility is the continuing commitment by business entities to behave ethically and contribute to economic development while improving the quality of life of the work force and their families as well as of the local community and society at large. Being socially responsible means not only fulfilling legal expectations but also going beyond compliance and investing “more” into human capital, the environment and the relations with stakeholders".