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The Feedback Statement on the final Corporate Governance Code (hereinafter referred to as the “CGC” or the “Code”), accompanying the publication of the final CGC dated 5th August 2022 outlines the feedback received from stakeholders and provides the MFSA’s way forward in response to the feedback it received. The CGC is a code issued by the MFSA intended to enhance the governance, culture and conduct of MFSA Authorised Entities . The CGC is intended to apply to all Authorised Entities , regardless of their size, apart from Listed Entities.

The CGC outlines principles of good corporate governance in the following four areas: the Effective Board; Internal Controls; Stakeholders Engagement; and Corporate Culture, CSR and ESG. The Feedback Statement confirmed that the implementation of the CGC is complementary to the sector-specific MFSA issued rules or guidance notes and the adoption of the CGC is based on the principle of proportionality. To this extent, the MFSA has reiterated that the core principles of the CGC are expected to be complied with on a ‘best-effort basis’. Additionally, where conflicts arise between the Code and other sector specific laws, regulations and MFSA issued rules, the former will prevail.

The MFSA recognised that amongst the responses received as part of the consultation process, stakeholders expressed their concern that the application of certain provisions of the CGC may be too onerous on small and medium sized Regulated Entities. In response to this, the MFSA emphasised that proportionality must be exercised in respect of such Regulated Entities. Additionally, the MFSA has provided that Regulated Entities forming the subject of the Code should use their discretion when applying the principles laid down therein. This was followed by the MFSA’s intention to issue practical guidelines and reach out to stakeholders in order to ensure the effectiveness of the CGC.

The MFSA confirmed that Trustees and Company Service Providers are included within the scope of the Code because the definition of ‘Financial Services’ under the MFSA Act includes “any other areas of activity or services as may be placed under the supervisory and regulatory competence of the Authority by the Minister or by any other law”. Additionally, the definitions of ‘Person’, ‘Management Body’, ‘Beneficial Owner’ and ‘Director’ have been amended in the CGC.

Following feedback received from stakeholders, the MFSA clarified the respective roles of the Chairperson and CEO of a Regulated Entity, as well as stating that the Board of a Regulated Entity is responsible for establishing a succession plan for the Senior Management.

In the Evaluation of Board Performance section, the MFSA amended provision of the CGC in response to feedback it received that potential inconsistencies existed between such provision and provision of the CGC on the evaluation of Board performance by external third parties. The Board Meetings section was amended to the extent that more importance was placed on reporting Directors’ attendance at such board meetings.

A number of amendments were undertaken to the CGC in connection with the Conflicts of Interest and Confidentiality section, wherein reporting on breaches of conflicts of interest also applies to persons such as Money Laundering Reporting Officers. Additionally, the provision relating to the Directors’ disclosure of conflicts of interest to the Board and subsequent abstention from voting on the matter has been amended to the effect that this shall be without prejudice to the Regulated Entity’s instrument of incorporation . Finally, within the Corporate Culture, CSR and ESG section, the MFSA emphasised the Board’s role in cultivating a strong compliance culture.

The MFSA envisions undertaking further corporate governance initiatives in the future, focusing on sector-specific policy work as well as ensuring understanding among entities of their obligations set out under this Code.

This article was co-authored by Tessa Borg Bartolo

Disclaimer: This document does not purport to give legal, financial or tax advice. Should you require further information or legal assistance, please do not hesitate to contact Dr. Petra Attard on