Dominic Fisher

Head of Risk & Compliance, ARQ

MFSA’s Corporate Governance Consultation

Friday 21st February 2020

On 5th February the MFSA published a discussion paper containing proposals to update Malta’s corporate governance framework. Once implemented, the new measures will apply to locally licensed and listed entities. This paper is a serious attempt to address some of the issues which are most prevalent in Malta businesses. In this short article, Dominic Fisher, a governance expert at ARQ Group, highlights some of the key proposals.

Chairman & CEO

At many Maltese organisations, you can meet the major shareholder, Board Chairman and CEO and only have to shake hands with one person. The consultation proposes that ‘entities must ensure … a clear line of demarcation … between the running of the Board and the executive responsibility of running the company’. Amongst other requirements to support this, the separation of Chairman and CEO roles is proposed unless combining can be justified due to company size.

Widening The Scope

Cadbury defined corporate governance as ‘the system by which companies are directed and controlled’. These proposals cover arrangements related to a number of areas not generally understood to be within the scope of corporate governance, such as anti-money laundering, business continuity and employee engagement. Regarding employees there is a proposal that arrangements should be in place that help them to come forward to report illegal or unethical practices by their employer.

Disclosure Changes

‘Comply or explain’ is a disclosure concept which has been used to this day in Malta. The new proposals borrow from recent UK proposals to adopt a more rigorous concept of ‘apply and explain’.

Implementing The Proposals

In developing these proposals the MFSA has collaborated with the Institute of Directors (IoD) in the UK and its Maltese branch. Implementation of the proposals will be key to their effectiveness and the IoD’s interest extends beyond merely having the Code published. Edwin Ward, IoD Malta Chairman said ‘We will be working alongside the MFSA to cultivate a better understanding of the new Code’s recommendations among companies, promote debate and thereby foster awareness of the underlying issues, to address not only the statements on compliance but also how companies will actually implement the Code’s recommendations’.

Concluding Comments

Once adopted, these proposed requirements will need significant effort at affected entities. If you have feedback on what is suggested, email before the consultation period closes on 25 March 2020. To arrange a no-strings consultation on your governance arrangements, get in touch with Dominic Fisher at ARQ on

For the MFSA consultation document, click here.