Question 1 – One of the novelties in the new Gaming Act and subsidiary legislation is the Corporate Group Licence. Can you briefly explain the thinking behind this type of licence.
One of the main aims of the regulatory overhaul that took place in 2018 was to reduce unnecessary bureaucratic processes in order to focus efforts on checks that provide added value in line with a risk-based approach. This resulted, amongst other changes, in the introduction of the corporate group licence. Corporate groups that have multiple entities providing licensable activities may apply for such a licence in order to further reduce administrative burdens. One of the principal examples of its use is when an entity only provides a critical gaming supply to other entities within the same group. When the entities are all eligible for, and included within, a corporate group gaming service (B2C) licence, there is no need for the entity providing the critical gaming supply to obtain a B2B licence provided it is only providing such supply to entities within the corporate group licence.
Question 2 – What does the process relating to the addition or removal of an entity from such a licence entail?
The addition or removal of an entity from the corporate group licence can be made via the MGA’s Licensee Relationship Management System. The addition of an entity within the corporate group entails the submission of documentation, including the proposed corporate structure. The MGA would also conduct any relevant checks, including due diligence checks on the newly added entities and natural persons behind such entities. Where an entity is removed from the corporate group licence, the MGA would similarly require the submission of the proposed corporate structure. Further to this, the MGA retains the discretion to ask for additional documentation and conduct any checks which it may deem necessary to ensure that the addition or removal of the corporate group entity is being made in accordance with applicable legislation.
Question 3 – Can a group that operates with companies outside of Malta use the Corporate Group Licence instead of obtaining Recognition Notices?
Any entity that is eligible to apply for a licence may be included under the purview of a corporate group licence. If the aforementioned entity is included in the corporate group licence, it can operate by virtue of such licence without having the need to obtain a recognition notice from the MGA.
Question 4 – Has this type of licence been popular amongst licencees?
Following the introduction of the new regulatory regime in 2018, the corporate group licence has been adopted to by a number of authorised persons. For the purpose of statistical data, the Authority considers the entities that fall under a corporate group licence to be one operating company. As of February 2020, there were 27 corporate group licences in total; 16 out of such corporate group licences were issued for B2C-related operations whilst the remaining 11 were issued to B2B-related operations.
Question 5 – What are the regulatory obligations of entities within the Group? E.g. audited financial statements, industry performance reports, etc.
The corporate group entity which is designated as the ‘reporting entity’ is required to fulfil a number of regulatory obligations in order to ensure that the operation is being carried out in accordance with the law, including, inter alia, the fulfilment of reporting requirements. The reporting requirements pertaining to the such operations include the submission of the annual audited financial statements, interim financial statements, monthly player fund reports, monthly tax reports, industry performance reports and also, the payment of the applicable licence fees and compliance contribution. It is pertinent to note that, notwithstanding the designation of one reporting entity, every entity within the corporate group licence is deemed to be jointly and severally liable vis-à-vis the MGA.
Question 6 – Will a company within a group automatically become a Subject Person under the AML/CFT regulations?
In accordance with the Prevention of Money Laundering and Funding of Terrorism Regulations (S.L. 373.01), a subject person is defined as all legal and natural persons carrying out either relevant financial business or relevant activity. Additionally, in accordance with the Implementing Procedures (Part I) published by the FIAU, gaming licencees are deemed to be subject persons and accordingly, this would include corporate group licence holders. However, it is important to clarify that such licence can either be a B2C or a B2B corporate group licence and in this regard, only entities that offer a gaming service (B2C) are deemed to be subject persons. The MGA provides information to the FIAU for the purpose of determining which entities within the corporate group licence may not be providing a gaming service and which therefore, would not be deemed to be subject persons.
Question 7 – Apart from the 90% shareholding requirement for a group entity are there any other specific requirements that need to be satisfied?
Corporate group licence holders are subject to the same regulatory obligations as any other licence holder and therefore, the same requirements which are applicable to licence holders in general need to be satisfied by all of the entities included within the corporate group licence.
Question 8 – Does a Corporate Group licence cost more than a B2C or B2B licence?
The Gaming Licence Fees Regulations (S.L. 583.03) do not make any specific reservations for corporate group licences, as the only differentiation made in relation to the payable fees is related to whether the licence is a gaming service licence or a critical gaming supply licence. Therefore, the fees applicable to a corporate group licence will depend on whether the said licence is a B2C or a B2B corporate group licence. The B2B licence has a fixed licence fee. On the other hand, in the case of B2C licences, the gaming revenue of each entity included within the corporate group licence is taken into consideration for the purpose of determining the applicable licence fee.