MFSA Circular on the Newly Published Accountancy Profession Regulations, 2023 (Legal Notice 299 of 2023)

In the 2022 Annual Report of the Malta Financial Services Authority (“MFSA”), the Authority referred to the discussions which were being held with the Malta Insurance Management Association and the Malta Institute of Accountants in preparation for IFRS 17 and in particular the possibility of exempting categories of (re)insurance undertakings.

The said discussions came to fruition and the Minister of Finance, on the recommendation of the Accountancy Board, enacted the Accountancy Profession (General Accounting Principles in respect of certain Eligible Entities) Regulations, 2023 (Legal Notice 299 of 2023) (“GAPEE”).   The MFSA announced this development in its circular issued on the 22^nd of December 2023. 

The GAPEE will enable ‘eligible entities’, as defined in the regulations to opt out of IFRS 17 and in lieu apply the general accounting principles set out in the schedule to the Regulations.

The “eligible entities” are:

• captive (re)insurance undertakings;
• Solvency II Directive exempted insurance undertakings;
• specialised run-off undertakings;
• ancillary (re)insurance undertakings;
• protected cell companies (where core, if it carries on (re)insurance activities, and all the cells qualify as an eligible entity);
• cessation undertakings;
• redomiciled undertakings;
• insurance and/or reinsurance parent undertakings.

Listed entities whose securities are traded on a regulated market and public interest entities (other than “eligible entities”) may not opt-in.

The GAPEE shall apply for financial reporting periods commencing on or after 1^st of January 2023.

As a result of the publication of GAPEE, the MFSA made amendments to Chapter 8 of the Insurance Rules issued under the Insurance Business Act.   In its said circular, MFSA further explained that undertakings falling under the definition of ‘eligible entities’ and which elect to adopt GAPEE shall continue to submit the Quarterly National Specific Templates and Annual National Specific Templates found in Annex II – Annual National Specific Templates (IFRS 4 & GAPEE) and Annex III – Quarterly National Specific Templates (IFRS 4 & GAPEE) to Chapter 8 of the Insurance Rules issued under the Insurance Business Act.

Authors: Romina Bonnici (Senior Regulatory Advisor, Ganado Advocates) & Nadia Cassar (Senior Associate, Ganado Advocates)