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MFSA issues Revamped Corporate Governance Manual for Funds

On 30 October 2023, the Malta Financial Services Authority (“MFSA”) issued an updated version of its Corporate Governance Manual for Directors of Collective Investment Schemes (the “Manual”), in pursuit of its ultimate strategic goal of strengthening corporate governance, culture, and conduct in the financial services sector.

The Manual supplements the MFSA’s Corporate Governance Code (the “Code”) issued in August 2022, which established a principle-based and cross-sectoral framework for financial service providers. While the Code provides guidance on almost all entities regulated by the MFSA, the Manual introduces additional best practice principles for collective investment schemes, recognising the unique attributes of funds in order to ensure effective governance and continued stability in the industry.

Through the promotion of efficient corporate governance practices, investors can be assured that their interests and objectives are protected. Whilst the guidance provided in the Manual is non-exhaustive, collective investment schemes, including Professional Investor Funds, UCITS schemes and Alternative Investment Funds, should use it to develop their own corporate best governance practices.

The board of directors of a fund shall hold responsibility for the fund’s corporate governance arrangements and to oversee the coherent operation of a fund. Rather than providing a rigid set of rules, the Manual contains principles that are to be adhered to on a best-effort basis. Management bodies will be expected to comply with the Manual in a manner that is proportionate to the nature, size, and complexity of their business. In this respect, the Manual contains various expectations and requirements for directors during the conduct of business, including inter alia:

  • the role of directors within a fund;
  • the composition of the board of directors;
  • board meetings;
  • the appointment, succession and resignation of directors;
  • the relationship with fund managers;
  • the delegation of activities to service providers;
  • indemnity and insurance;
  • conflicts of interest and confidentiality;
  • investor relations;
  • financial crime;
  • ESG; and
  • business continuity and disaster recovery.

Directors will also be responsible for setting up effective internal controls to (i) identify, understand, and disclose risks; (ii) ensure that legal and regulatory requirements, including those relating to financial crime, are complied with; and (iii) ensure that an effective and robust Information and Communication Technology and security risks management process is implemented. To this effect, the board shall be responsible for establishing policies and procedures safeguarding said controls, determining the amount and type of risk that a scheme is willing to take on and for the monitoring of data and cyber security risks.

Given the wide-ranging nature of corporate governance framework in Malta, the Manual will be beneficial in providing specific guidance to collective investment schemes. Nonetheless, the Manual is complimentary in nature and does not intend to override other applicable rules and laws. Rather, it must be applied in tandem with other sources which include inter alia the Companies Act, the Investment Services Act, and any rules for collective investment schemes as issued by the MFSA.

For further information on the corporate governance of collective investment schemes, kindly get in touch with Kyle Debattista ( or Tristan Said (