Regulator undertakes consultation on Corporate Governance framework as it works to raise the bar for authorised entities and listed companies

The MFSA is currently undertaking a consultation process on a proposed new Corporate Governance framework, aimed at raising the bar amongst authorised entities and listed companies and driving a culture change in this regard.

The regulator has drawn up a comprehensive, principles-based Corporate Governance Code, which will raise standards and set the tone in terms of the Authority’s expectations.

MFSA CEO Joseph Cuschieri said that the new framework was part of the Authority’s 2019-2021 Strategic Plan, and dovetailed with its plans to promulgate a comprehensive and enforceable cross-sectoral Corporate Governance system for all entities authorised by the regulator, as well as listed companies. Cuschieri underlined the fact that Corporate Governance was crucial, since it ensures that companies operated transparently, efficiently and effectively, while fostering mutual trust among stakeholders and the general public.

The document itself details how Corporate Governance is addressed at a supranational framework, before giving an overview of its framework locally. It then sets out the MFSA’s proposal to revisit the existing Corporate Governance framework, with the intention of generating a culture where Corporate Governance is considered as a top priority.

In this respect, the Authority is bringing forward numerous proposals in the area, with the main ones being:

• having a comprehensive principles-based Corporate Governance Code which all authorised entities and listed companies have to adhere to, and which will be supplemented by sector-specific rules and guidance notes;
• requiring that entities “apply and explain” the Code and “comply or explain” how they are following its rules;
• suggesting more principles to be included in the Code, including those related to the responsibilities of entities’ functionaries, officials and Board of Directors; engagement with stakeholders; corporate culture; ethics frameworks; risk management; and other topics, including AML/CFT.

The focus on Corporate Governance is expected to have a positive effect on the financial services industry and will raise compliance standards across the board.

The consultation process on the Corporate Governance document, which can be accessed here, remains open until the 25 March.