The Company Service Providers Act was enacted on December 24, 2013, and requires the registration of any person operating in or from Malta who acts as a company service provider by way of business. Due to the different interpretations that followed this requirement, it created a form of uncertainty among the financial services community, particularly on the issue of who needs to register and who is eligible for exemption.
Company Service Providers (CSPs) had until March 24 to apply with the Malta Financial Services Authority (MFSA) for registration while those exempt needed to notify the Financial Intelligence Analysis Unit (FIAU) by the same date.
After a consultation document issued by the MFSA and a series of industry comments to aid understanding, the final rules were issued on March 21 and gave limited time to interested parties to make sure that they comply with requirements. So, who is considered to be a ‘company service provider’ and who actually needed to apply for registration?
First of all, a company service provider (CSP) is mainly a person that provides, among other services, company formation services, the provision of directors or secretaries, and the provision of a registered address for limited liability companies or other legal entities. These services are provided extensively around the island and, therefore, this definition encompassed a substantial amount of people. However, it was easier to deduce who needs to register than who is eligible for an exemption.
In my opinion, these regulations were issued to limit the people providing these services, which are traditionally offered by accounting and legal professionals. In turn, these regulations manage to create a more secure professional environment. Professionals are already bound to comply with extensive anti-money laundering laws and regulations, while unwarranted individuals used to provide similar services without the necessary obligations, such as the appointment of a money laundering reporting officer (MLRO).
These regulations were issued to limit the people providing these services
In fact, it was made abundantly clear that CSPs who do not possess a warrant or equivalent to carry out the profession of advocate, notary public, legal procurator, certified public accountant or are authorised to act as a trustee are required to register with the MFSA.
It was made equally clear that the term “activity undertaken by way of business” will include the majority of the relevant services provided given that they produce a significant benefit to the CSP.
Furthermore, the authority confirmed the De Minimis Rule that limits the number of directorships a person registered under the act can or may offer by way of business.
Nonetheless, industry comments were extensive and professionals expected confirmation as to whether they are, or are not, exempt from registration.
Common concerns included: the registration of multiple CSPs forming part of the same group which are expected to register separately; confirmation that the appointment of an employee as a director for a company by a CSP does not need a separate registration; and a confirmation that firms with a separate legal entity, such as an audit firm registered in terms of the Accountancy Profession Act, are exempt from registration as opposed to other firms which must rely on the individual warrant holders.
Therefore, if a person or entity is required to register in terms of this Act, it will be required to comply with general, financial and organisational requirements such as: periodic reviews; notifications of changes in companies; prior written consent from the MFSA when carrying out major changes affecting the said companies; a minimum share capital requirement for registered companies; and an annual registration fee.
If you’re in doubt as to whether or not you’re entitled to an exemption or need to register in terms of these rules, I suggest that you contact both the MFSA and the FIAU as soon as possible.
bgauci@ksimalta.com
Bernard Gauci is a senior adviser at KSi Malta.