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MGA Policy – Introduction of the Capital Requirements Policy

MEDIA ROOM

July 3, 2025

On the 2nd of July 2025 the Malta Gaming Authority (the “MGA”)  published a Capital Requirements Policy (the “Policy”) which, by way of its very nature, is effective immediately.

Salient features of the policy:

  1. MGA have introduced an obligation, binding on all licence holders, to maintain a “positive equity position”. A “positive equity position” is defined as “a situation where a Licensee’s value of assets exceeds or is equal to the liabilities recorded in its financial statements”. The basis upon which such an equity position is assessed shall be the licence holder’s financial statements.
  1. In the event that a licence holder is in a “negative equity position”, the latter being defined as “a situation where a Licensee’s value of liabilities exceeds the value of its assets recorded in its financial statements.”. Without prejudice to transitory timeframes as denoted hereunder (see point 6 below), a licence holder shall be obliged to restore its position to one which is a “positive equity position” within six (6) months from the respective financial year end (the “Restoration Period”), regardless of whether the financial statements covering the previous financial year have been audited or otherwise (for example, the audit process may be ongoing). The restoration of a licence holder’s equity must also result in a positive position, irrespective of any further losses incurred during the Restoration Period. It is critical to note that in the case of a B2B licence holder, the obligation to restore the equity position to a positive one shall only be triggered once the negative equity position exceeds EUR 3,000,000 (unless MGA deem otherwise on a case by case basis).
  1. By way of a general rule, throughout the Restoration Period, a licence holder is prohibited from increasing its loans payable until its equity position has been restored or unless such loans qualify for classification as capital in accordance with IFRS. The MGA may apply discretion on a case by case basis provided that licence holders present the MGA with sufficient safeguards (as described below) pertaining to its precarious financial position.
  1. Capital may be restored through:
  • Issued and paid up share capital; and/or
  • Share premium reserves; and/or
  • Other components classified as equity within the financial statements of the company; and/or
  • Conversion of existing shareholder loans to capital.
  1. The MGA may allow derogation from the require to restore equity to a positive position in the event that safeguards are provided to the MGA to evidence/manifest:
  • the consolidated performance and stability of the group to which the licence holder pertains; and/or
  • the implementation of a pledge in favour of the MGA over some or all of the assets held by the group which the licence holder pertains to, the provision of bank and/or parent company guarantees, or insurance coverage.
  1. In terms of transitory timeframes applicable:
  • Licence holders which were granted a licence in 2025 are to ensure full compliance with the Policy by 30th of June 2026, irrespective of such licence holder’s financial year end date.
  • Licence holders which were licenced prior to 2025 are obliged to restore their equity to a positive position within a timeframe as imposed by the MGA which shall in no case exceed 5 years from the entry into force of the Policy.
  1. Notwithstanding anything noted above, in the event that, as of 31/12/2024, a licence holder is in a negative equity position which exceed EUR 1,000,000 (B2Cs) or EUR 3,000,000 (B2Bs), such a licence holder is obliged to submit a detailed recapitalisation plan to the MGA by 30/11/2025. The recapitalisation plan, which is subject to MGA approval, must be inclusive of:
  • Detail as to how and when the equity will be restored;
  • The latest financial statements; and
  • Forecasted financial statements, inclusive of, by way of minimum application, statements of Comprehensive Income and Statement of Financial Position as well as a description of all assumptions considered in the preparation thereof, which clearly outline the recapitalisation plan in question.

How can CSB Group be of assistance?

Please contact our iGaming team should you require further information on the effects of the Policy and how you may manage your legal and regulatory obligations as a result of such a publication.

About the Author

This article has been authored by Dr Kyle Scerri, Senior Manager - Legal & Jan Killips Wright, Manager - Legal.