The Corporate Governance Code
The Malta Financial Services Authority (‘MFSA’) has recently published a Corporate Governance Code (the ‘Code’) with the aim to provide insight and guidance on how regulated entities can effectively enhance their compliance culture, conduct and overall governance framework.
The Code sets out the main principles of good corporate governance, to which regulated entities are to adopt on a ‘best effort basis’ in line with the nature, scale and size of their business. Fostering good corporate governance ultimately entails the application of:
- quality leadership executed by the board and senior management;
- sound internal controls on information technology, risk management and compliance (among others);
- ongoing and effective stakeholder engagement; and
- a corporate culture that fosters integrity, ethics and social responsibility.
Rather than rolling out a set of obligations that must be applied across the financial sector in Malta, the MFSA’s goal in launching the Code is to underline the intrinsic aspects of a sound compliance culture, and to enhance regulated entities’ performance readiness, thereby inadvertently enhancing the jurisdiction’s financial sector.
In this respect, we strongly believe that, rather than approaching the Code as an additional compliance requirement added to an ever-increasing list, regulated entities should understand and adopt the principles outlined within the Code, according to the needs of their business, to enrich their day-to-day management and business operations.
How is value added to an organisation which adopts a robust governance framework?
The Code makes reference to the establishment of documents that will serve as a basis of understanding on the roles, reporting lines and responsibilities with an organisation. These include the Board and Committee terms of reference, remuneration policies, standard operating procedures, conflict of interest (internal alert) policies, code of conduct, risk management and business continuity plans. The regular development, review and communication of these internal documents naturally enhance the quality of work and business efficiency within an organisation.
Focus is also placed on the importance of engagement with the stakeholders and employees of an organisation. Evidently, whilst having a well-developed and documented framework in place is integral, the effective and company-wide adoption of a governance framework is how good governance may truly be achieved. This is thoroughly affirmed by the Code, which provides guidance on how the organisation can properly implement effective leadership, communication and engagement with its stakeholders. Having trained, motivated staff with the right values and expertise allows an organisation to enhance internal controls and procedure, deliver quality service and safeguard its stakeholders.
How can BDO assist your organisation?
BDO Malta has qualified professionals who can conduct an independent Corporate Governance Review, through which the organisation’s governance framework and internal controls are thoroughly assessed for risk identification and remediation purposes.
The Corporate Governance Review covers the following areas:
- Governance Framework;
- Board of Directors’ and Senior Management’s roles and responsibilities;
- Policies and Procedures (SOPs, breaches log, complaints log, etc.);
- Training programs;
- Compliance function;
- Internal Audit function;
- Stakeholder engagement.