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Malta FSC Introduces New Corporate Governance Rules

by Robert Lee, for LawAndTax-News.com, London

31 July 2006

The Maltese financial regulator has issued new corporate governance rules for listed companies and for public interest companies, which have come into immediate effect.

According to the MFSC, the aim of these guidelines, issued last week, is to:

  • Advance best practice in corporate governance in Malta;
  • Make it easier for directors and managers to fulfill their duties and assist them in advancing the growth and development of the companies they are entrusted with directing;
  • Ensure public confidence in enterprises and business activities in general; and
  • Strengthen trust between investors, directors and managers.

"The Principles are designed to enhance the legal, institutional and regulatory framework for good governance in the Maltese corporate sector by providing a set of standards that promotes more transparent governance structures and practices thereby enhancing market integrity and confidence and ensuring a higher degree of accountability to shareholders," the MFSA said.

The guidelines are applicable to companies having an impact on the public in general. According to the MFSC, these companies not only have a duty to act in the interests of their shareholders, but also in the communal interest.

"During the past decades freedom in all aspects of business activities has increased significantly thus creating more opportunities for entrepreneurs. Increased freedom means increased responsibility," the Commission said.

"Enterprises must show respect for their shareholders as well as for other stakeholders and indeed society as a whole. The manner in which company directors promote and control their company’s operations, that is, the way they exercise their stewardship, is not just a matter of interest to their shareholders, but is a matter of public interest too. Mutual trust between the public and the business community is the key to improved competitiveness," the Commission added.

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