Raising the bar on governance is a strategic priority for the Authority, complementing its objectives of protecting investors while ensuring the stability and integrity of the financial markets.
A public consultation has been launched on the recently drafted Corporate Governance Code – aimed at enhancing the governance, culture and conduct of MFSA-authorised entities – through which the MFSA would receive feedback from stakeholders on the Code’s provisions.
The recently launched consultation marks the second phase of this project. The Authority had previously undertaken another consultation exercise whereby it sought stakeholders’ views on revisiting the Corporate Governance Framework and subsequently issued a Feedback Statement in 2021. A public webinar was also held last November, prior to the latest consultation on the draft Corporate Governance Code this March.
The proposed Code, which will be applicable to all authorised entities, is composed of a number of core principles that define the objectives of good governance while complementing supporting provisions that encourage the adoption of measures, standards and behaviours that the Authority deems appropriate to help achieve these core principles. The Code is split into four sections as follows:
- The Effective Board
- Internal Controls
- Stakeholders’ Engagement
- Corporate Culture, Corporate Social Responsibility and Environmental, Social and Governance
In order to ensure that a proportionate approach for all entities subject to this framework is adopted, the Code will be applicable on ‘a best effort basis’.
Specifically, the Corporate Governance Code is intended to set out best practices in corporate governance for Malta’s financial services sector and encourage their adoption by all authorised entities, while enhancing relationships between authorised entities and their stakeholders. The Code also aims to ensure the effective functioning of authorised entities’ boards so that the soundest decisions are taken in the long-term and sustainable interest of the entity. It also addresses governance deficiencies as identified through supervisory experience. Moreover, the Code is intended to support authorised entities in implementing robust governance measures to achieve enhanced resilience and sustainable operations, and enable the integration of sustainable, environmental, and social aspects in authorised entities’ business strategy.
Going forward, the Code is expected to be supplemented by additional policy work focused on this area and further industry engagement. Such initiatives shall include the delivery of webinars, thematic reviews focused on corporate governance, as well as additional regulatory development in this area, amongst others. With these initiatives, the Authority expects to achieve broader awareness and commitment by market participants to implement the soundest standards of corporate governance.