Malta: MGA sets new capital requirements for licensees
The Malta Gaming Authority (MGA) has formalised a comprehensive Capital Requirements Policy, setting new financial standards for current and prospective gaming licensees. The policy, described as a “foundation for the financial soundness of legal entities holding a licence issued by the Malta Gaming Authority,” is designed to “ultimately safeguard the integrity and sustainability of the gaming industry by obliging Licensees to have sufficient resources available for their continued and sustainable operation.”
MGA formalises minimum share capital thresholds
Under the new policy, all licensees and applicants must maintain a minimum level of share capital, which varies depending on the type of gaming service provided. The requirements are as follows:
- “Critical Gaming Supply: €40,000”
- “Gaming Service – Type 1: €100,000”
- “Gaming Service – Type 2: €100,000”
- “Gaming Service – Type 3: €40,000”
- “Gaming Service – Type 4: €40,000”
- “Gaming Service Applicants/Licensees offering multiple type approvals are required to meet the above capital requirements cumulatively up to a capping of €240,000.”
For companies operating as part of a corporate group (Corporate Group Licence), the capital requirement can be satisfied by one or more entities within the group, offering some flexibility in how the threshold is met.
Positive equity position: a binding obligation
One of the key parts of the new MGA policy is that licensed companies have to keep a positive equity position at all times: their assets need to be equal to or greater than their liabilities, a way to make sure they’re financially stable and able to meet their responsibilities.
The Authority will determine this by “considering the total assets and liabilities reported within the Licensee’s financial statement.” The policy further notes, “The equity position shall be comprised of the Minimum Share Capital and reserves classified as equity within the Licensee’s statement of financial position.”
However, the policy does not require companies to keep their capital locked away; equity can be used for working capital needs, provided the overall financial position remains positive.
Addressing negative equity
If a licensee’s financial year ends with negative equity, the company is required to restore its position within six months. Companies can restore their financial position in a few ways — for example, by bringing in new capital or turning shareholder loans into equity. While they’re working on this, they usually aren’t allowed to take on more debt unless it counts as capital under international accounting rules.
For B2B license holders, the Malta Gaming Authority’s new requirements are more flexible: they’re only required to take action if their negative equity exceeds €3 million. However, the MGA still reserves the right to step in sooner if it sees any risk to financial stability.
Flexibility and enforcement for gaming licensees
The policy does allow for some exceptions in certain cases. For example, if a licensee is part of a financially stable group or has implemented sufficient safeguards—such as asset pledges or guarantees—the MGA may permit temporary deviations from the positive equity requirement.
Non-compliance with the policy can result in enforcement action.
Transition period and special cases
Licensees with a negative equity position as at 31 December 2024, might be given extra time to fix it, in some cases, up to five years, depending on their specific situation. However, if their negative equity is more than €1 million, they’ll need to submit a clear recapitalisation plan by 30 November 2025. This plan should explain how they intend to improve their financial position and by when.
Recently, the MGA and the Malta Financial Services Authority (MFSA) signed a new Memorandum of Understanding (MoU) to improve regulatory cooperation between the two key institutions.
