Amendments to the Company Services Providers Regime

Act X of 2025 which came into force on 16 May 2025 introduced amendments to the Company Service Providers Act (Chap. 525 of the law of Malta). The amendments are intended to further refine the provision of directorship and company secretary services and therefore impact mainly the Class B Company Service Provider (CSP) Category. The amendments introduced two new categories of Class B CSPs:

1. restricted CSPs; and
2. limited CSPs.

While the former (restricted) must notify the Malta Financial Services Authority (MFSA) by no later than 16 July 2025, the latter must register with the MFSA. This brief article focuses on restricted CSPs as limited CSPs were already subject to the CSP Act.

This article will briefly set out the raison d’être behind the notification procedure, elements of restricted/notified CSPs and the exceptions thereto. This also will also flesh out, by reference to MFSA guidance, the meaning of the phrase “by way of business”

Rationale behind the notification procedure

Currently, there is little visibility on the extent of the activities of those individuals who despite not acting by way of business are conducting and/or providing limited directorship/company secretary services. The rationale behind the notification procedure is to address this gap. To address this gap, the MFSA requires that such individuals, going forward, submit a notification form which shall include information in relation to the positions that they are currently occupying or intend to occupy.[1]

Restricted/Notified CSPs

 A restricted CSP is defined as any natural person who:

• acts as a director and, or a company secretary in a company and, or a partner in a partnership and, or holds a similar position in relation to other legal entities; and
• does not act or hold any position as referred to in paragraph (a) by way of business; and
• meets the requirements established in the rules issued by the MFSA in accordance with article 8(1)(f) of the CSP Act.

The requirements set out in paragraph (c) may be summarized as follows: (i) the individual must not have more than five (5) involvements as director and, or company secretary in a company and, or a partner in a partnership and, or a similar position in relation to other legal entities; and (ii) the individual must not have involvements in more than two (2) groups of companies as per the definition in the CSP Rulebooks.

Essentially, the category of restricted CSPs applies to natural persons (individuals) who hold directorship/company secretary appointments in no more than 5 companies (with a maximum of 2 groups and do not act or hold any directorships/company secretary appointment by way of business (see section 4 below).

If an individual falls within the above category such person must submit a notification form to the MFSA by 16 July 2025. Moreover, going forward any individuals holding involvements as director and/or company secretary in a company, or other legal entities, which activity is not deemed to be as by way of business, will be required to inform the MFSA through the submission of the Notification Form within fourteen (14) days from the date when the restricted CSP first holds the position of a director or company secretary in a company, or a partner in a partnership, or a similar position in relation to other legal entities.

However, exemptions do apply. These will be set out in section 3 below.

Should none of the exemptions set out in section 3 below apply, the notification form must be submitted by 16 July 2025. The notification form must be submitted through the LH Portal of the Authority. In this regard, the MFSA has issued a new Guidance Note on the Notification Process for Restricted CSPs laying down the step-by-step procedure to be followed with respect to the submission of the notification form.

The following supporting documentation must be submitted along with the notification form:

1. scanned copy of a police conduct certificate (or equivalent) not older than three (3) months;
2. scanned copy of the signed Declaration form (downloadable from the Important Notice section); and
3. any other documents, if applicable, in relation to Section C of the notification form.[2]

In section B of the notification form the following information is required for each involvement:

1. company name and the registration number
2. jurisdictions of registration and operation
3. annual turnover
4. industry in which the company operates
5. nationality and residency of UBO/s

Exemptions

The following persons are not required to notify the MFSA:

1. An individual who acts, or holds himself out as acting as a director, company secretary, partner on a company:
   • license, registered or authorized by the MFSA or overseas regulatory authority and its holding company;[3]
   • authorised trustees or to provide other fiduciaries duties in terms of Trusts and Trustees Act; or
   • company whose financial instruments have been admitted to listing on the Malta Stock Exchange or overseas regulated market (prospects are not exempted).
2. individuals whose involvement in a company is the direct result of:
   • an employment arrangement;
   • direct / indirect beneficial interest in such a company;
   • family relations (related by consanguinity and, or affinity); or
   • any person acting as a director and/or company secretary as part of their employment by an authorised CSP.

By way of Business

The phrase “by way of business” means that these activities must be provided by a person who either:

1. holds himself out as providing company services inter alia by soliciting the services on offer to members of the public; or
2. provides company services on a regular and habitual basis.

If any one of the conditions specified in a) or b) is satisfied, AND the person is directly or indirectly in receipt of remuneration or other benefits for the provision of these services, that person is deemed to be providing the service ‘by way of business’.

The MFSA’s Guidance Note contain further information on the interpretation of the terms “holding oneself out”, “regular and habitual”, and “directly or indirectly remunerated”.

 Holding oneself out

The term “holding oneself out” involves actual representation to third parties. The test on “holding oneself out” is not confined solely to a determination as to whether advertising or solicitation takes place.

The following are also indicators that a person shall be deemed to be “holding himself out”:

1. advertising the services provided or solicitation of business either verbally, through print or online (rather than being requested to provide company services); or
2. making it known that the person will act to meet certain requests; or
3. being equipped so to act: e.g. office stationery, application form, business cards, business telephone book entries, website; etc.; or
4. The memorandum and articles of association of a legal person includes the carrying out of company services.

These indicators are not cumulative, however, the greater the number of indicators a person meets, the greater the probability that such person would be considered as “holding oneself out” by the MFSA.

Regular and Habitual

The MFSA emphasises that the initial focus with respect to the determination as to whether CSP activity is being undertaken “by way of business” should be on whether the provision of this service is being carried out on a regular and habitual basis.

The MFSA clarified that an individual who is providing directorship services to one company and is soliciting further appointments from the public, requires authorisation/registration since that individual will be deemed to be providing directorship services by way of business. On the other hand, if that person is not soliciting business, such individual would not be deemed as providing the activity by way of business and therefore no authorisation or registration. However, the notification process set out above would apply. The same reasoning applies where an individual is providing company secretarial services. A similar example is where an individual is providing a directorship service to one overseas company operating in or from Malta this will not be considered as providing services ’by way of business’ as long as the person concerned is not soliciting further appointments from the public. In each of these scenarios, the individual will, however, be required to notify the MFSA of the fact that they hold the role of director or company secretary in accordance with the CSP Act and the applicable CSP Rulebooks.

 Directly or Indirectly Remunerated

If the company services being provided by a person are being remunerated through another person which is associated or connected with the person providing such services or in the case of a group of companies, which belongs to the same group, then the provider of the services would still be deemed to be receiving indirect remuneration for the services it offers and provided that it meets one of the criteria mentioned in section 4(a) and 4(b) above, it would be subject to authorisation (or registration, if applicable in the specific circumstances of the case) in terms of the CSP Act.

Other factors taken consideration by MFSA

When determining whether the activity is being undertaken “by way of business”, the MFSA also takes into account the following criteria:

1. the amount of time taken to fulfil the responsibility is considered significant;
2. the individual has no other form of employment;
3. the level of income received (both in terms of the quantum and as a proportion of the individuals’ total income) is considered significant;
4. the existence of a business relationship through which habitual or frequent or regular appointments are introduced;
5. the individual is receiving significant non-financial benefits/benefits in kind;
6. the individual claiming business expenses within his own tax return;
7. the individual offering or providing more than one type of company service; and
8. the turnover of engagements is considered significant.

These indicators represent a non-exhaustive list of considerations and the MFSA urges individuals either currently undertaking or contemplating commencing the provision of company services, who remain unsure as to whether they meet the ‘by way of its business’ threshold test, to consider taking legal advice and/or discuss their specific circumstances with the MFSA. The Rulebooks also specify that these indicators are not cumulative, however the greater the number of indicators an individual meets the greater the probability that a ‘by way of business’ determination would be made by the MFSA. The MFSA looks at these factors holistically and thus the assessment as to whether an activity is being undertaken “by way of business” will depend on a case-by-case assessment of the facts and the specific business model of the person carrying out such activity.