Amendments to CSP Act - new rules for CSPs and introduction of new reporting obligations for auditors of CSPs

ARTICLE

11 Jan 2021

The Company Service Providers (Amendment) Act (“Act”) of the 13th of November 2020, outlines various amendments to the Company Service Providers Act, Chapter 529 of the Laws of Malta (“Principal Act”). This Act is not yet in force, but Company Service Providers (“CSPs”), Auditors of CSPs and Advocates and legal professionals should take note of the amendments and new obligations imposed.

The main amendment that has been introduced through the Act is the creation of 3 classes which the Malta Financial Services Authority (MFSA) will use to assess and classify an authorised person.

An authorised person is a person in relation to whom an authorisation to act as a company service provider has been issued by the MFSA in terms of the Principal Act.

The classes are the following:

Class A CSP - A company service provider authorised to provide, by way of its business, the following services to third parties:

1. formation of companies or other legal entities; and, or
2. provision of a registered office, a business correspondence or administrative address and other related services for a company, a partnership, or any other legal entity.

Class B CSP - A company service provider authorised to provide, by way of its business, the service to third parties of acting as, or arranging for another person to act as director or secretary of a company, a partner in a partnership or in a similar position in relation to other legal entities.

Class C CSP - A company service provider authorised to provide, by way of its business, all of the services of a company service provider.

Note: ‘Company Service Provider’ is defined as a person which, by way of business, provides any of the following services to third parties: (a) formation of companies or other legal entities; (b) acting  as  or  arranging  for  another  person  to  act  as director  or  secretary  of  a  company,  a  partner  in  a partnership or in a similar position in relation to other legal entities; (c) provision  of  a  registered  office,  a  business correspondence  or  administrative  address  and  other related services for a company, a partnership or any other legal entity.

If an authorised person is classified under Class A CSP or a Class B CSP, MFSA shall also determine whether such person is over-threshold or under-threshold. To determine this, MFSA may issue rules laying down the requirements, conditions, and criteria. Even though no such rules have been published by MFSA to-date, a consultation paper on such matter has been issued and anyone wishing to provide feedback is to do so by not later than 15th January 2021.

Other amendments of note introduced by this Act can be found in the table attached.

Transitory Period

• Persons who, on the first date of the coming into force of the amendments, are offering any of the services of a company service provider and who, until such date, were not required to be registered in terms of the Principal Act, may only continue to offer the services of a company service provider following 8 months from such date of coming into force of the Act if:

1. They have applied for authorisation within 2 months from the first date of the coming into force of the Act and have been authorised by the MFSA as an under-threshold company service provider within 8 months of such date of coming into force; OR
2. They have applied for authorisation within 2 months from the first date of the coming into force of the Act and have been provisionally authorised by the MFSA as an over-threshold or Class C company services provider within 8 months of such date of coming into force. In such case, the MFSA shall notify any such person provisionally authorised of its decision whether to grant or refuse authorisation, within 12 months of having granted such provisional authorisation.

• Any person who on the first date of the coming into force of the Act, is already registered as a company service provider shall be considered to be an authorised person for the purposes of the Act. Such person shall be subject to the MFSA’s classification process, with no requirement, on such person to submit any application to the MFSA.
• Any applicant who may have already submitted an application for registration with the MFSA prior to the first date of the coming into force of the Act and whose application had, by such date, not yet been determined by the MFSA, shall notify the MFSA, in writing whether such applicant intends continuing with the application or whether such applicant wishes to withdraw such application. If notification is not provided within 3 months from the first date of the coming into force of the Act, the MFSA shall deem such an application to have been withdrawn.