Nudges in the right direction

top left clockwise: Fran Moisa, Louis Farrugia, Simon Azzopardi, Renee Laiviera, Mark Watkinson, Tonio Depasquale. Centred: Geraldine Spiteri Lucas

Malta's companies are multiplying, and the pressure on their boards is mounting. Age, gender balance, digital fluency, and governance skills are under scrutiny as regulators raise the bar and markets accelerate. Vanessa Macdonald examines how Maltese boards are adapting — and whether change is occurring at a sufficient pace.

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In recent years, governance has moved centre stage, putting boards firmly in the spotlight. Yet with more companies and rising compliance demands, the question remains: are there enough directors to cope? And is it time to broaden the talent pool and rethink the skills boards need? 

Money asked leading professionals for their views, sparking a debate on what it will take to make Maltese boards more effective.

Age

Simon Azzopardi

Some years ago, a survey revealed that the average age of directors was 58. Things are going in the right direction, though: the Malta Business Registry's Annual Report for 2024 showed that the median age has dropped over time. It mapped the figures according to the company registration number. Although this does not indicate the actual time period, it is positive to see that the median age has dropped from 65 when company registration numbers were in the 10,000 range to 47 now that they are in the 110,000 range.

Simon Azzopardi, a start-up guru, is also a non-executive director at Izola Bank, despite being relatively young compared to the median age of directors. However, he stressed that the issue is not age per se but rather capabilities.

As businesses digitise and technology becomes a competitive advantage, he said that younger tech entrepreneurs who have built something of relevance are exciting candidates for boards.

"Expectations of boards must evolve as fast as business itself. Industry experience alone is no longer enough. Boards need new capabilities at the table. Research from MIT shows companies with at least three 'digitally savvy' directors consistently outperform. Yet, in Europe, only 14% of large-company boards have at least one digital expert, compared to 26% in the US.

"Why does this matter? First, AI and technology are now board-level issues. Few boards have AI as a standing agenda item, despite evidence that 95% of generative AI deployments to date have yielded no measurable return on investment. Without directors who have built and operated in the digital era, boards risk approving investments they don't fully understand.

"Second, customer expectations are racing ahead. Consumers now expect digital by default, personalisation as standard, and speed as baseline. Directors closer to these realities help boards adapt strategy before markets move past them.

"The bottom line is simple: if boards can't ask the right questions about AI and digital transformation, they can't govern. CEOs should be recruiting tech entrepreneurs and digital leaders now, before irrelevance becomes the real liability," he said. 

Gender

So much for age and tech-savvy members; however, there is another issue when it comes to the makeup of boards: gender equality. Money sought two opinions: from someone who works with appointments to boards, and from the National Council for the Promotion of Equality.

Headhunter Fran Moisa welcomed the fact that gender equality in Maltese boardrooms has seen progress, but fretted that the pace remains slow.

"As a headhunter, I've seen more women at the C-Suite level, yet this hasn't fully translated to directorships. Data from the Malta Business Registry confirms this: women hold just 18.6% of all directorships, a figure that remains largely insufficient," she said.

Fran Moisa

Unlike C-Suite roles, which have higher turnover and broad visibility, director appointments are often long-term and tend to lack public visibility.  

"Positions, particularly for non-executive directors, are typically filled through established, informal networks and personal referrals. This insular system means that the same names circulate, and talented women outside these informal circles are often overlooked," she explained.

Are quotas the solution? She warned that this must not be viewed simplistically: "While quotas can play a role in accelerating change, they risk becoming 'token' gestures if not supported by a more fundamental shift, which includes a systematic overhaul of the appointment process to broaden the talent pool and ensure that meritocracy truly prevails, allowing businesses to benefit from the full spectrum of available talent, regardless of gender."

So much for the view from the private sector; how about the agency under whose remit this falls? Renee Laiviera is the Commissioner at the National Council for the Promotion of Equality. She said that the issue of women in senior positions is multifaceted. It does not help that 75% of the Maltese deem that 'women are more likely than men to make decisions based on their emotions'.

Renee Laiviera

"The invisible barriers that prevent women from progressing to leadership roles often include persistent gender stereotypes, and organisational cultures that undervalue women's abilities, limiting access to decision-making networks," she said.

The bottleneck had been the number of women in the senior management pipeline, which, she said, was increasing. Indeed, the National Statistics Office reported at the end of 2024 that 40% of managers were women, compared to just 30% in 2019. And this is not limited to the private sector: in the public administration, 45% of public employees in Scales 1-5 were women in 2024, compared to 40% in 2019.

How can this trend be encouraged? Ms Laiviera said that increasing women's representation in senior positions required a combination of strategies, including equality policies, family-friendly measures, mentorship programmes, and leadership training for women.

Her view on whether quotas are the solution came with the same caveat as Ms Moisa's: "EU Member States adopted the Directive on Women on Boards, making a clear statement that positive action is necessary and effective in increasing the number of women on boards in listed companies. However, quotas should complement broader measures that require structural interventions and cultural shifts," she said.

Indeed, Malta is working to implement the Women on Boards Directive, which aims to strengthen gender balance in corporate boards of listed companies. By June 2026, listed companies will have complied with the objectives of the Directive. The NCPE is the entity responsible for promoting, analysing, monitoring, and supporting gender balance in these listed companies.

The NCPE has also taken specific actions. For example, it developed the Directory of Professional Women, which provides further visibility to professional women – currently 278 of them – and increases their opportunities for appointment to boards, committees, and other decision-making positions.

Her message about why this matters is also unequivocal: "Ultimately, advancing gender balance in leadership benefits society as a whole through making full use of the human capital, be it male or female." 

Skills

Mark Watkinson

Of course, skills and diversity are essential factors, but they are not the only ones that matter. Directors represent the companies on whose boards they sit, and they need to be as well-trained and prepared as the executives. Mark Watkinson, a Chartered Director and Fellow of the Institute of Directors UK, stressed the importance of continued investment in the independent non-executive director (INEDs) space, if Malta is to continue growing as a jurisdiction.

"Companies looking to expand into Europe or grow outside the European Union need a pool of strong INEDs to support growth ambitions, provide technical input and offer governance expertise. If Malta can meet this demand, it can be turned into a real competitive advantage for the jurisdiction", he said.

How to achieve this? In line with Simon, Fran and Renee, he also spoke about encouraging greater board diversity to deepen the overall talent pool, with a particular emphasis on younger INEDs and women directors. But there is more that can be done.

For example, he strongly believes in the importance of training and ongoing governance education.

"This is already underway with Shireburn Academy and the Association of Directors teaming up to offer a Certificate in the Role of a Director in October this year and the Institute of Financial Services Practitioners looking to build out its director training offering," he said.

Another suggestion to promote training would be to examine the earlier stages and foster enhanced collaboration between the University of Malta and Industry to develop a diverse range of programmes at both undergraduate and postgraduate levels in corporate governance.

Regarding ongoing education, he noted that this could be encouraged by establishing a standard number of CPE hours per year for directors of regulated entities, aligned with the accounting profession.

It would also be helpful to have a register of qualified directors, as mentioned by Renee regarding women directors. In Mark's case, he suggested that the MFSA create a public register of qualified directors that companies can access when seeking to fill INED roles.

And what about foreign directors, given the size of the Maltese talent pool? Why not leverage incentives (such as the Highly Qualified Persons Rule) to attract seasoned directors from abroad to relocate to Malta, he said? 

Legislation

The role of directors is, among other things, outlined in the Companies Act, which has been amended numerous times over the past three decades. However, it had not been given a thorough review until now.

This painstaking exercise was identified by the Malta Financial Services Advisory Council as one of the projects that would help to guide Malta's future – not only in financial services but also across economic sectors.

Geraldine Spiteri Lucas

The project leader was the Malta Business Registry, and its head, Geraldine Spiteri Lucas, explained why it was so important: "Malta is committed to attracting top-tier investors, and this is reflected in past and also recent amendments to its Companies Act. A core focus is maintaining an up-to-date company register. This benefits potential investors, business partners, and other third parties by ensuring transparency."

The importance of governance was also a key issue. She explained that to enforce this, the Maltese framework restricts directors who consistently fail to keep their company's profile up to date from taking on new directorships in both new and existing companies.

"The same rule applies to the timely updating of beneficial ownership information. A company that is not in line with its statutory or beneficial ownership obligations can be struck off the register as it will be considered as non-operational," she noted.

Recent changes also provide a competitive edge, she added.

"While company incorporation in Malta has always been straightforward, the process for company dissolution has now been significantly simplified. This makes it easier for directors to incorporate a company for a potential investment, knowing that winding it up won't be a complex, difficult process."

There is one area that the MBR is also concerned about: as mentioned above, its annual report analyses company boards and reveals an apparent lack of female participation on company boards.

"One area that still needs attention, however, is gender diversity," she concluded. 

Compliance

Over the past few years, companies have complained about the amount of time spent on compliance and its associated costs. However, perhaps we are not as aware of the impact that this has on boards. In 2019, Deloitte experts noted that boards were spending up to 40% of their time on regulatory matters, and it is reasonable to assume that this figure has increased over the past five years.

Tonio Depasquale

Tonio Depasquale, the former CEO of Bank of Valletta and a director on various boards, has personally experienced this pressure: "Today, especially in financial services, it's fair to say that the number should be closer to 60%. Regulatory alignment isn't just a compliance issue; it's a prerequisite for operating. Without it, licences are at risk and so is the business itself.

"Compliance has evolved into a strategic imperative. Boards must now navigate intricate regulatory landscapes while meeting rising expectations for transparency and accountability. This shift demands time and attention, which, if not managed wisely, can crowd out innovation and strategic foresight."

He admitted that the pressure on boards was unprecedented – and that the best way forward would be to evolve.

"The velocity of change is unyielding, and the complexity of issues from digital transformation to ESG imperatives is intensifying. Layer in persistent disparities in age, gender, and skill sets, and it becomes evident: boardroom evolution is no longer optional but a necessity.

"But in the push to modernise, we shouldn't lose sight of what seasoned leadership brings to the table. The experience, historical insight, and steady hand of veteran board members are invaluable. When you combine that with the fresh thinking, tech fluency, and energy of younger directors, you get something powerful: a board that's not just diverse, but dynamic," he said.

As Simon did, he stressed that today, a broad spectrum of expertise is essential.

"Boards must go beyond traditional finance and legal competencies to include knowledge in cybersecurity, sustainability, and regulatory affairs. Sourcing such multifaceted talent is increasingly complex, especially as the demands continue to shift.

"Forward-thinking boards embrace data-driven oversight. Tools like real-time analytics, AI-based risk modelling, and predictive insights are no longer aspirational; they're essential. Technology alone isn't enough; it takes a board culture that values diverse inclusivity, curiosity, continuous learning, and constructive challenge to harness these capabilities truly. That's what empowers boards not just to navigate change, but to architect the future." 

Independence

Apart from the people on the board, another aspect is their status—the rise of independent directors, who are not affiliated with the company's owners or management. One of the companies that leads by example is the Farsons Group.

Louis Farrugia

Group Chairman Louis Farrugia explained that the Farsons' story of boardroom experiences dates back to 1929, when L. Farrugia & Sons and Simonds of Reading, UK, formed a public company called Simonds Farsons Ltd.

"It was natural at the time that the local company would inherit corporate governance systems practised by Simonds of the UK. Farsons has long maintained working practices which enhance good governance.

"Having independent directors on the Board, namely, those elected by the public shareholders, has been a major contributor to shaping the Farsons' culture of being a 'serious' player in the world of good governance," he said.

He also explained how important their role was in shaping the company's strategy: "Naturally, many momentous decisions have been taken by the Board of Directors in its almost 100 years of history.  All of them would have been moulded by a combination of major shareholder representatives and independent directors who would always ensure that the long-term interest of the company – including all stakeholders – were looked after."

Read the Malta Business Registry Annual Report here: bit.ly/MBRAnnualReport2024

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