Author: Adrian Mercieca, Manager, Corporate Administration Department
Date: 29th March 2021
On the 15th March 2021, the MFSA published the new Company Service Providers (‘CSP’) Rulebook which shall apply to all Company Service Providers that are currently authorised under the Company Service Providers Act, 2013 (the ‘Act’) together with many other operators such as accountants and law firms who previously has an exemption and did not require authorisation from the MFSA and where therefore ‘unregulated’. .
The amendments, also introduce categorisation of CSPs into three licensing classes as follows:
- Class A CSP – captures the provision of (i) company incorporation and re-domiciliation and (ii) provision of registered office, business address or administrative address.
- Class B CSP – includes a CSP that acts or arranges for another to act as a director, company secretary or partner in a partnership or any other similar position in an entity; and
- Class C CSP – a CSP that provides all the services captured by Class A and Class B or as defined in the Rulebook all of the services of a company service provider specified in the definition of “company service provider” contained in article 2(1) of the Act
Application under one of these CSP licence classes is obligatory subject to two exceptions:
- Under threshold Class A CSPs – Individual warrant holders or civil partnerships in possession of a warrant or equivalent, to carry out the profession of advocate, notary public, legal procurator or certified public accountant whose revenue from corporate services work forms, or is forecast to form, in the upcoming year, not more than: [a] 35% of the combined total revenue in a calendar year from the provision of all professional services; or [b] EUR100,000, whichever is the higher.
- Under threshold Class B CSPs– Individuals who hold not more than ten involvements as a director, company secretary or partner in a partnership or any other similar position in an entity.
Depending on the Class of CSP licence that an applicant submits different capital and insurance requirements apply as indicated in the table below (fig.1).
|CSP Class||Initial Capital Requirement|
|Class A CSPs||€ 10,000|
|Under threshold Class A CSPs – € 2,500|
|Class B CSPs||€ 15,000 + Mandatory Pll|
|Under threshold Class B CSPs – € 5,000|
|Class C CSPs||€ 25,000 + Mandatory Pll|
Whilst risk has always been an important matter on the agenda of CSPs, the Rulebook introduces a requirement on the Class C CSPs to establish and maintain a risk management function which shall independently, implement policies and procedures referred to in the Rulebook and provide reports and advice to the CSPs senior management. The MFSA may allow the CSP to establish and maintain an in house risk management function, provided that the said CSP provides evidence to the Authority that the establishment and maintenance of a dedicated independent risk management function ,with the sole responsibility for risk management is not appropriate and proportionate in view of the nature, scale and complexity of its business and the nature and range of the CSP services. This notwithstanding, where a Risk Officer is not specifically employed by the CSP, the role should be performed by a senior official of the CSP or a non-executive director.
The MFSA will also be assessing the fitness and properness of any applicants. In this regard the following aspects will be assessed (i) Competence (ii) Reputation (iii) Conflicts of Interest and Independence of Mind and (iv) Time Commitment. The fitness and properness assessment shall be applicable to: (i) the Applicant, where the CSP is a natural person; (ii) Qualifying Shareholders; and (iii) any individual that intends to hold an approved position within the CSP.
On the 16th March 2021, the MFSA opened applications for authorisations under the Act. CSPs have to submit applications via the online portal between the 16th March and the 16th May of 2021. It is interesting to note though, that existing CSPs who were in possession of a CSP Licence prior to the date of coming into force of the amendments introduced by Act L of 2020 are obliged to take all necessary steps in order to adhere with the obligations within six (6) months from the date of the publication of the Rulebook. Provided of course that during such interim period, said CSPs shall remain compliant with the previous version of the Rules and do their utmost to comply with the new Rulebook to the best of their abilities.
Fenlex has over 30 years of experience in the sector and through its Compliance team is in a position to provide support and assist individuals and or organisations now required to apply for a license and who are now deemed to be subject persons and required to fully comply with the Prevention of Money Laundering and Funding of Terrorism Regulations as well as the implementing procedures as published by the FIAU. Contact us at email@example.com for more info.