MGA (Mutual Guaranty Association) Announces its Policy on Capital Requirements

MGA (Mutual Guaranty Association) Announces its Policy on Capital Requirements

The Malta Gaming Authority (MGA) has announced a new Capital Requirements Policy, effective immediately, aimed at ensuring the financial soundness and sustainability of licensed gaming entities. This policy, which can be accessed online, has been shaped by an extensive consultation process and has been formally notified to the EU’s Technical Regulation Information System (TRIS) in accordance with Directive (EU) 2015/1535.

### Positive Equity Position Requirement

Under the new policy, all licensees must maintain a positive equity position at all times. This means that their total assets must be equal to or greater than their total liabilities, as reflected in their financial statements. The equity position calculation includes the minimum share capital plus reserves classified as equity. Maintaining positive equity is designed as an early warning mechanism to detect and address financial instability promptly.

If a licensee ends a financial year with a negative equity position, they must restore it within six months by measures such as capital injection, reserve reclassification, or converting shareholder loans to equity, in accordance with accepted accounting standards. If the negative equity exceeds €1 million, the licensee must submit a clear recapitalisation plan by 30 November 2025 to the MGA.

### Minimum Share Capital Thresholds

The policy sets minimum nominal share capital requirements depending on the type of gaming service. For Gaming Service Types 1 and 2, the minimum requirement is €100,000, while for Gaming Service Types 3 and 4, and B2B license holders, the requirement is €40,000. For operators holding multiple licenses, capital requirements are cumulative up to a maximum of €240,000. For companies operating within a corporate group, the capital requirement can be met by a single entity or collectively by multiple entities within the group.

### Transitional Period for New and Existing Licensees

The policy applies immediately but includes a transitional period allowing both new and existing licensees time to comply with the new capital and equity requirements. This transitional phase balances the need for financial stability with practical business considerations, giving licensees time to adjust without immediate penalty.

### Objectives and Implementation

The MGA’s policy ensures sufficient capital resources are available to support licensees’ ongoing operations and growth. It enhances MGA’s ability to proactively monitor, address potential financial issues, and ensure compliance. The policy is designed to reinforce the financial soundness of entities offering remote gaming services and critical gaming supply, thereby reflecting the MGA's commitment to promoting a resilient and sustainable gaming industry.

In summary, the MGA’s Capital Requirements Policy reinforces the financial integrity of licensed operators by mandating a permanent positive equity position, setting defined minimum capital thresholds, and providing a structured transitional period for compliance. This policy is in line with the MGA's regulatory objectives and is aimed at safeguarding the integrity and financial sustainability of the gaming industry.

[1] Malta Gaming Authority. (2024). Capital Requirements Policy. Retrieved from [2] European Commission. (2015). Directive (EU) 2015/1535 of the European Parliament and of the Council of 9 September 2015 laying down a procedure for the provision of the Union's own resources. Retrieved from

1. In accordance with the MGA's Capital Requirements Policy, all licensed gaming entities must maintain a positive equity position and meet minimum share capital thresholds to ensure the financial soundness and sustainability of the gaming industry, especially in sectors like finance and business.
2. To stay in compliance with the Malta Gaming Authority's policy, licensees are expected to adhere to the set equity position and share capital requirements in their gaming services, which range from €40,000 to €100,000 depending on the service type or corporate group structure.

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