CSP reform: A quick reference guide – Part 1

This is a quick look at the central amendments introduced on 16 March 2021 by the Company Service Providers (Amendment) Act, 2020 to the scope of applicability of the Company Services Providers Act, Chapter 529 of the Laws of Malta (as amended by the Amendment Act, the “CSP Act”) and the applicable transitory provisions. The Malta Financial Services Authority (“MFSA”) has also launched the updated Rulebook for Company Services Providers (the “Rulebook”) in this respect.

Are you a Company Service Provider (CSP) and what is your classification?

If you are a person operating in or from Malta and provide any of the below-mentioned services by way of business to third parties, then you are a company service provider (“CSP”). You must therefore be attributed one of the below classifications by the MFSA and obtain MFSA authorization to operate unless you are exempt:

Class A: company formation and/or the provision of a registered office, a business correspondence or administrative address and other related services for a company, a partnership or any other legal entity.

Class B: acting as, or arranging for another person to act as, director or secretary of a company, a partner in a partnership or in a similar position in relation to other legal entities.

Class C: all the services mentioned under Classes A and B above.

What threshold Class A or B CSP are you?

When classifying Class A and Class B CSPs, the MFSA will also determine whether the applicant is over-threshold or under-threshold. The following are the criteria to be satisfied for an under-threshold classification, otherwise a CSP will classify as over-threshold:

  1. Class A under threshold CSPs are those individuals/civil partnerships holding a warrant/equivalent as advocates, notaries public, legal procurators or certified public accountants whose revenue (total revenue less commissions) generated through CSP services does not exceed 35% of the total revenue generated from professional services or €100,000, whichever is higher – these CSPs may not provide services of registered office, business correspondence/administrative address and other related services
  2. Class B under threshold CSPs are those individuals whose total number of involvements as director and/or company secretary in a company or equivalent role in another legal person does not exceed 10 – involvements within the same group of companies are considered as one involvement and involvements with entities which are licensed/recognized/otherwise authorised by the MFSA are exempt;

Are you exempt from MFSA authorization?

It is only the following persons who are exempt from obtaining CSP authorisation from the MFSA and the first 3 categories listed below must notify the MFSA prior to so acting:

  1. Trustees and persons who provide fiduciary duties in terms of the Trusts and Trustees Act;
  2. Virtual Financial Assets (VFA) Agents when acting as company service providers as part of their VFA activity so long as this is not or does not include the service of acting as director or secretary of a company, as a partner in a partnership or of acting in a similar position in relation to any other legal person;
  3. Any person having a license, registration or any other authorization to provide company services issued by the relevant regulatory authority in an approved jurisdiction (notification to the MFSA is required 90 days prior to commencement and its no objection is required first although MFS will still classify such persons as per classes above);
  4. A natural person who only offers the services of acting as director or secretary of a company, as a partner in a partnership or of acting in a similar position in relation to any other legal entity, where:
  1. Such company, partnership or other legal entity is licensed, registered or otherwise authorised by the MFSA or by an overseas regulatory authority in a recognized jurisdiction; OR
  2. In the case of companies, such company’s financial instruments have been admitted to listing on a regulated market in Malta in terms of the Financial Markets Act or by an overseas regulatory authority in a recognised jurisdiction.

If you wish to hear what the top-priority considerations for CSPs are at present, please tune in to our online panel discussion on this subject on 19th April @ 16.30hrs CET. Click here to register.

Should you need any advice on these matters please contact Annalise Papa.