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Establishing a Financial Institution in Malta
Establishing a Financial Institution in Malta
Application and licensing process, application documents, reporting requirements, ongoing obligations fees and criteria for establishing a FI in Malta
The Application and Licensing Process
1. Preparatory
- Initial meeting with the MFSA’s Authorisation Unit.
- Communication of the applicant’s intended activities to the regulator through a presentation of the proposed operations.
- Preliminary indication by the MFSA to proceed to second stage.
2. Licence Application
- Preparation and submission of the application documents.
- Reviews carried out by the MFSA on the application and feedback provided by the regulator.
- Completion of the documentation to the satisfaction of the MFSA.
- Issuance of the MFSA’s “in principal approval” subject to licensing conditions.
3. Post Licensing & Pre Commencement of Business
- Application to satisfy all post licensing matters including the incorporation of the proposed institution.
- Issue of official licence.
- Commencement of business activities.
- Ongoing supervision by the Banking Supervision Unit.
Application Documents
- Form 1 – Application Form.
- Form 2 - Questionnaire for Institutional Shareholders.
- Personal Questionnaire for individuals who are, or are proposing to become Directors, Controllers or Managers.
- A Business plan covering the first 3 years of operations, including three year financial projections.
- Audited financial statements of the parent institution for the last 3 years (if applicable).
- Memorandum and Articles of Association of the parent undertaking (if applicable).
- Draft Memorandum and Articles of Association of the proposed Institution.
- Details of the operations of the parent institution/entity.
- Internet and Electronic Banking Questionnaire (if applicable).
Reporting Requirements
Financial Reporting Requirements
Financial Institutions are required to publish Annual Reports 4 months following year end.
Regulatory Requirements
Financial Institutions in Malta are required to submit Regulatory Returns to the MFSA and the Central Bank of Malta at specific intervals. Financial Institutions may be subject to submit all or some of the following information, depending on their activities, risk exposures, and other factors which the MFSA will deem relevant for the purposes of their assessment.
- Liquidity
- Credit and Country Risk Exposures
- Own Funds
- Solvency Ratio
- Large Exposure
Ongoing Obligations Fees
- Application and Processing Fee - €3,500 - Payable upon submission of draft licensing documentation
- Annual Supervision Fee - 0.0002 of Total Assets (but not less than €2,500)1 - Payable on the granting of a licence2
- Company Registration Fee - €2,250 (maximum)
- Company Annual Return Fee - €1,400 (maximum)
1 As reported at the end of the year immediately before the year in which the fee is payable
2 Shall be proportionate to the period between the date when the license is granted and the end of that calendar year
Criteria for establishing a Financial Institution in Malta
- A local Financial Institution is licensed by the MFSA’s Authorisation Unit and supervised on an ongoing basis by the MFSA’s Banking Supervision Unit.
- A Financial Institution’s capital requirement will depend on its business model and activities as carried out in line with the First Schedule of the Financial Instruments Act.
- A Financial Institution must calculate and maintain its own funds requirements on an on-going basis.
- “Fit and Proper” Test: Persons directing the business and all shareholders holding more than 10% in the Bank’s equity are subject to extensive due diligence checks.
- Minimum of 3-4 individuals effectively directing the business (“four eyes principle”).
- A Financial Institution may be set up as a private or public limited liability company.
- A Financial Institution must not have the intention to take deposits from the public.
- For an entity to be licensed as a Financial Institution in Malta, it must intend to undertake any services as listed within the First Schedule of the Financial Institutions Act.
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