The Malta Gaming Authority (MGA) has issued a Capital Requirements Policy requiring all licensees to maintain a Positive Equity Position throughout the term of their licence. This policy forms part of the Authority’s ongoing efforts to strengthen the financial standing of entities operating under its supervision.
Obligation to Maintain Positive Equity
Licensees must hold a Positive Equity Position at all times. This means that the total value of assets must equal or exceed the value of liabilities, as reported in the licensee’s financial statements. Equity can be used for working capital needs. However, if a licensee records a Negative Equity Position, this must be corrected within the timeframe set out in the policy.
Timeframes for Rectifying Negative Equity
Licensees closing their financial year with a Negative Equity Position are required to restore their capital within six months of the financial year-end. The equity position must be fully restored, even if additional losses are recorded during the restoration period.
For entities licensed during 2025 or later, the equity position must be restored by 30 June of the year following the year in which the licence was granted. This requirement applies independently of the licensee’s financial year-end.
Transitional Measures for Existing Licensees
Licensees with a Negative Equity Position as at 31 December 2024 will be subject to a separate arrangement. The MGA will establish an extended restoration period based on the licensee’s financial situation and operational model. This period may be up to five years from the date the policy is published. Where a licensee reports negative equity in excess of €1 million, a recapitalisation plan must be submitted by 30 November 2025. The plan should include up-to-date financial statements and forecasts that outline how the licensee intends to restore its equity position. The Authority may request updates to the plan if there are changes in the licensee’s financial performance.
Additional Points of Note
Licensees are not required to ring-fence capital and may use equity for operational activities. Moreover, a licensee's negative equity position may be rectified through the injection of issued and fully paid-up share capital, share premium reserves, and other reserves or components that are classified as equity in the statement of financial position.
Critical Gaming Supply Licensees
For B2B licensees, restoration of equity becomes mandatory if the Negative Equity Position exceeds €3 million. The MGA may require earlier action where appropriate to safeguard the licensee’s financial stability.
How BDO Malta Can Support
BDO Malta works closely with gaming service and critical supply licensees on matters of financial compliance. Our team can assist with assessing equity positions, preparing recapitalisation plans, and meeting reporting obligations. To discuss support tailored to your licence, reach out to our gaming advisory specialists. Get in Touch
