On 2nd July 2025, the Malta Gaming Authority (“MGA”) published its Capital Requirements Policy (the “Policy”), which introduces new financial obligations for licensed entities. In addition to satisfying and maintaining minimum nominal share capital throughout the duration of a licence, the Policy introduces requirements to maintain a positive equity position, and to restore negative equity within set timeframes.
The objective of the Policy is to ensure that licensees have sufficient capital resources to support continued operations and long-term growth, thereby safeguarding the financial sustainability of the gaming industry.
The Policy applies to both applicants and existing MGA licensees offering B2C gaming services by remote means and, or offering B2B critical gaming supplies. Whilst the Policy comes into force with immediate effect, a transitional period is being granted to both new and existing licensees. In the event of non-compliance, the MGA may take enforcement action.
Fulfilment of Minimum Share Capital Requirement
The Policy delineates the minimum share capital requirements, which remain unchanged, whilst clarifying that it must consist exclusively of issued and paid-up share capital and share premium reserves, and furthermore, that in the context of corporate group licences, the minimum share capital requirement may be satisfied either by a single entity within the corporate group or cumulatively by two or more entities within the corporate group, regardless of contribution split.
Maintaining a Positive Equity Position
Licensees must maintain a positive equity position throughout the license term to be able to sustain their operations. The equity position of a licensed entity is assessed by the MGA by considering the total assets and liabilities reported in the licensee’s financial statements. The minimum share capital and any reserves categorised as equity must be included in the position.
Without prejudice to any other laws or regulations, the MGA does not object to the use of capital for operational purposes. However, a negative equity position must be restored within the timeframes set out in the Policy.
Restoring Equity Position
Negative equity may be restored through issued and paid-up share capital, share premium reserves, and other reserves or components classified as equity within the statement of financial position, including converting shareholder loans. Accordingly, restoration of capital may not necessarily be effected by additional funding.
Timelines
Licensees closing their financial year end (“FYE”) in a negative equity position must restore their equity within six months from their FYE, regardless of whether financial statements covering the previous financial year have been audited.
Licensees may not increase loans payable during this restoration period until its equity position has been restored or unless such loans qualify for classification as capital under International Financial Reporting Standards or any other accounting standards accepted by the MGA. However, exceptions may be granted by the MGA in exceptional circumstances and provided certain safeguards are implemented.
Entities which solely provide a critical gaming supply (i.e. B2B licensees) are allowed to have a negative equity position of up to a maximum of €3 million following which, restoration is required. However, if financial stability is at risk, the MGA reserves the right to demand earlier action.
Should a licensee be unable to restore its equity position, it may seek derogation from maintaining a positive equity position in limited circumstances such as, for instance, where the MGA is satisfied with the stability and performance of the group to which the licensee pertains.
Transitory Period
Licensees granted a licence in 2025 or later must restore their equity position by 30 June of the year following granting of the licence, regardless of their FYE. For the avoidance of doubt, any subsequent negative equity position must be rectified within the 6-month period mentioned above.
With respect to licensees who have been licensed pre-2025 with a negative equity position as at December 31 2024, said licensees are not required to restore their equity within the 6-month period. They will benefit from an extended period of time which will be decided by the MGA on a case-by-case basis which however, shall not exceed five years from the publication of this Policy. In determining the duration of this period, the MGA will consider various factors, including the licensee’s business model, operational status, the extent of the negative equity, overall financial performance, the financial standing of the group, as well as the amount and frequency of proposed capital injections.
Licensees with over €1 million negative equity as at 31 December 2024 must submit a detailed recapitalisation plan, subject to the MGA’s approval, by 30 November 2025, outlining the strategy and timeline for restoration.
The full Policy can be accessed here.
Should you have any queries on the Policy please contact Sarah Camilleri.
