The financial services watchdog is reviewing the existing corporate governance framework with the aim of raising the bar and promoting a culture whereby the manner in which a company is directed and controlled is given top priority.

The main proposals being made include a comprehensive principles-based corporate governance code applicable to all entities authorised by the MFSA and listed companies, supplemented by sector-specific rules and complementing guidance notes, to ensure that the proportionality principle is applied.

Entities will be expected to ‘apply and explain’ the high-level principles-based code and to ‘comply or explain’ how they are following the applicable rules and guidelines.

The MFSA is also suggesting principles to be included in the code referring to, among other things, the Board of Directors, the responsibilities of functionaries and officials, engagement with stakeholders, committees, corporate culture, ethics framework and risk management, apart from other matters like anti-money laundering measures and combatting the financing of terrorism, continuous professional development and corporate social responsibility.

MFSA Chief Executive Officer Joe Cuschieri said: “We believe that the proposals set out in this document will significantly raise the bar with respect to corporate governance in Malta and will, ultimately, have a positive effect on the financial services industry, encouraging growth and modernisation.”

The discussion paper released by the MFSA provides an overview of the requirements and expectations in relation to corporate governance and lists the regulator’s proposals for a comprehensive regulatory corporate governance framework

The consultation document is available on the MFSA website and will remain open until 26th February 2020. Feedback can be made via [email protected].