Companies put a great price on compliance management that is primarily regulated by the Companies Law in Malta and supported by the Code of Principles of Good Corporate Governance by the Malta Financial Services Authority (MFSA).
The Maltese Code of Good Corporate Governance was enabled by the MFSA in 2001 and it is based on the guidelines of the Organization for Economic Cooperation and Development on corporate governance. The main goal of the Code is to provide a framework for the management members of Maltese companies in terms of how a company should be managed keeping in mind the shareholders’, the employees’ and public’s interests.
The Maltese Code of Good Corporate Governance advises companies to establish management boards of directors conducted by chairmen who would evaluate on an yearly basis the directors’ performances. Corporate governance in Malta basically represents the whole relationship that is established between the company’s component members and translates itself through transparency and responsibility.
The Code clearly states that a company should have a board of directors that will conduct and control it. The board of directors must protect the company’s goods and they should drive the company towards the improvement of the company’s results.
The directors of a company should show moral integrity and responsibility towards the shareholders of the company and act in their best interests when making decisions about the company’s future. According to the Code, directors must have a broad knowledge of company management backed up by a proper experience, should be competent, honest and integer. The directors will be nominated and removed from their functions by the shareholders of the company.
According to the Maltese Code of Corporate Governance, the chief of the company’s management board, usually known as the chairman, should be distinguished by the chief of the company’s business, mainly known as the chief executive. The chairman is the leader of the board of directors and his or her duties are to help the directors for making the best use of their abilities.
The Code advises that the chairman and the chief executive of a company should be separate persons as to avoid the absorption of power by one person and responsibilities between the two entities must be clearly stated in writing with the agreement of the board.
Corporate social responsibility, according to the Maltese Code of Good Corporate Governance, states that the management of the company should act ethically by contributing to the economic enhancement, employees’ and society’s welfare. Corporate social responsibility in Malta refers to the company’s management that should go beyond the legal responsibilities and simple compliance management, by investing in sectors like the development of human resources.