MFSA Releases Corporate Governance Code for Authorised Entities

The MFSA has recently launched its Corporate Governance Code for MFSA authorised entities. The Code provides a list of guiding principles, complemented with supporting provisions and its application is based on the principle of proportionality.

These principles are designed to enhance the legal, institutional and regulatory framework for good governance in the Maltese financial services sector. They thus complement the current provisions already in force in the legal and regulatory framework.

The Code's application on a 'best-effort basis' was adopted primarily to ensure a proportionate approach, given that a wide range of entities fall within its scope. Entities are expected to endeavour to adhere to the Code in a manner that is commensurate with the nature, size and complexity of the entity concerned. The provisions of the Code are without prejudice to any requirements set out in the applicable regulatory frameworks.

Clare Farrugia, Head of Strategy, Policy and Innovation, stated that the Authority considers good corporate governance as being fundamental for investor protection, market integrity and financial soundness. Furthermore, the Authority believes that the increased supervisory focus and the policy initiatives that the MFSA is implementing in this area, such as this Code, are conducive to steering board members and practitioners alike, to adopt good judgement and in guiding entities in the right direction to achieve a strong corporate governance ethic.

The Code will serve as a benchmark for future policy alignment in evaluating any changes that may be required in the MFSA Rules and existing codes and guidelines, with an overall aim of retaining a balance between prescriptive regulation and 'soft law', applicable to the various entities.