The amendments (the “Amendments”) triggered on the 16th of March 2021 to the Company Services Providers Act, Chapter 529 of the Laws of Malta (as amended, the “CSP Act”), have resulted in an authorisation requirement that is much wider than before. Many CSPs who have lost the benefit of exemptions previously applicable are looking at the new scope of the Act and related instruments to determine whether they need to apply by 15 May 2021 for authorisation from the Malta Financial Services Authority (“MFSA”), to continue acting as CSPs.

Unless otherwise exempt in terms of the Act or the exemption regulations published thereunder (see here for a run-through of the exemptions), any person operating in or from Malta who acts or holds himself out as acting as a company service provider by way of its business shall apply for authorisation with the Authority in terms of this Act. This statement of scope can be broken down into distinct parts to be better able to determine what the law seeks to regulate.

A key factor to consider when making this determination is the meaning of the expressions “operating in or from Malta”, “holding oneself out” and “by way of business”.

The following is a two-part look into these concepts.

Part 1: When is one considered to be “operating in or from Malta” and what is meant by the expression “holding oneself out” as acting as a CSP?

Operating in or from Malta

The CSP Act has defined the act of “operating in or from Malta” to “include the existence of an office, branch, or other centres of professional or commercial activities of a regular nature in Malta and does not include one or more unconnected and sporadic acts”.

The striking factor of the definition is that it is inclusive much like the rest of the guidance on the scope of the Act. Accordingly when breaking down its components, one must always remember that other behaviours may still be captured.

The central factors of this inclusive definition are that of (i) physical presence in Malta and (ii) regularity. In the case of a natural person who is a CSP, this usually translates to individuals who are ordinarily resident in Malta. Similarly, a legal person which is a CSP having some sort of physical establishment that would represent its habitual presence within Malta. Such persons would be deemed to be operating ‘from’ Malta if providing CSP services by way of business. This however does not exclude foreign residents from being caught by the regime. Indeed, a natural person who is Maltese and has significant ties to Malta who reside abroad but still renders CSP services to companies or similar entities registered in Malta may still be considered as operating ‘in’ Malta. Legal persons based abroad but rendering CSP services by way of business to third parties registered in Malta may also be captured by this definition as operating ‘in’ Malta. Indeed, there are provisions in the Act and parts of the Rulebook tailored to such a latter scenario. The aspect of regularity then requires that such person, be they natural or legal, undertake or anticipate undertaking engagements to provide company services on a regular or continuous basis in or from Malta, as opposed to carrying out one or a small number of one-off engagements within a specific context that would place those engagements out of scope.

With yet another inclusive definition, in cases of doubt, one should also look at the totality of a particular person’s circumstances to determine whether they are captured as operating in or from Malta and the rest of the scope triggers in the Act.

Holding oneself out

The revised CSP rulebook, published by the MFSA in tandem with the Amendments (the “Rulebook”) indicates certain ’behaviours’ which would be indicative of a person “holding themselves out” as acting as CSPs, that is, when:

  1. they advertise or solicit their services as a CSP either verbally, through print or online; or
  2. they make it known that they will act to meet certain requests put forward by the potential client; or
  3. they are equipped to provide services as a CSP; or
  4. in the case of CSPs which are legal persons, their Memorandum and Articles of Association include the carrying out of CSP activities.

Nonetheless, as the Rulebook in fact states, this is not an exhaustive list nor are the items listed cumulative in nature. It should rather serve as a qualitative tool for assessment whereby the more items one fulfils, the stronger the probability of being considered as “holding oneself out”. Although the MFSA’s ‘Guidance Note on the Application of the CSP Act’ indicates that this behaviour should not be confined to advertising or solicitation takes place, it does concede that it involves ‘actual representations to third parties.