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Making it easier to do business

Karl Diacono, CEO Fenlex Corporate Services

Malta has successfully attracted international investment and businesses. However, striking the right balance between regulation and compliance is proving most difficult, Karl Diacono of Fenlex Corporate Services tells MaltaProfile.

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Fenlex has been active in servicing the international business sector since the 1980’s. With over 20 years’ experience in the field Fenlex offers company incorporation, management accountancy, company secretary, tax compliance and VAT Services amongst others. They offer clients “hands on” assistance in their day to day needs. To do this, the company uses cost-effective systems which are assisted by state of the art technology solutions. Fenlex is very closely associated with Fenech & Fenech Advocates, one of Malta’s largest and longest established law firms. Fenlex Corporate Services Ltd is a fully fledged corporate services company. It offers special expertise in most aspects of company management, accounting and administration. Clients are serviced by a multi-disciplinary team, organised into five support units: Corporate Services, Accounts, Tax and VAT Compliance, Banking and Compliance and Operations. 

Can you give us a brief overview of the company?

Fenlex Corporate Services Limited (FCS) is part of a group of companies, the Fenlex Group. Within the group we have a licensed Trust and Fiduciary company, namely Fenlex Holdings and Services Limited. FCS is also a regulated corporate service provider. We form part of an even wider organisation as Fenlex is very closely associated with Fenech and Fenech Advocates, one of the larger law firms on the island. We provide the Corporate, Trust and Fiduciary side of the solution to our clients that includes the setting up and complete maintenance of companies and structures. The relationship between Fenlex and Fenech and Fenech provides clients with an efficient solution all under one roof. We have been around since the early days of financial services in Malta under different guises, as the business grew we reorganised and rebranded. We formed Fenlex in March of 2000; however we were already operating before that under a different name since 1989. We have a team of around 50 people within Fenlex that include a team of accountants, tax specialists, company administrators, banking administrators and a strong management team.

What major developments in recent years have shaped the way business is in your sector today?

We saw business change soon after Malta joined the EU in 2004. We saw a change in the client profile with larger EU-focused businesses seeking to place their business in Malta. Joining the Eurozone in 2008 further contributed to our growth, with more businesses actually setting up offices and employing people in Malta. The fact that we have a good fiscal and regulatory system in place that the regulator has kept up to date has helped the industry. 

What challenges are you currently facing and how do you plan to tackle these?

Capacity is our main challenge at the moment. Capacity is not only a challenge for us as a firm, I would say it is a challenge for the local industry as a whole. Making sure that we have enough local capacity to meet the demands is important. If one cannot find the human resources required locally, then the industry has resort to importing talent. There are many expats working in Malta within this particular sector, and we are lucky that Malta is a comfortable place to live in. There are also issues with solutions in terms of banking. Opening a bank account can be extremely difficult; this is not just a local issue but an international one. We spend a lot of time on this in particular, working with banks to try and ease this situation. The industry as a whole has been somewhat burdened with compliance and regulatory issues that are of course important but frustrate business. This is probably the biggest challenge we face at present, finding the right balance between regulation and compliance and allowing business to flow.

What is your growth strategy?

Our growth is mostly driven through client referral. We are well diversified in terms of markets and industry sectors we support and service. Diversification is key to our growth, and we do seek new opportunities in new industry sectors. While we are happy with the rate of growth we are experiencing, we know we cannot rest on our laurels. We need to manage our growth to ensure that we maintain efficiency. I prefer the slowly, slowly, softly, softly, approach.

How would you describe your typical client profile?

It is usually international businessmen looking for the right jurisdiction to grow their business, and it’s mostly regional. We see a lot of business coming from the EU as well as the Middle East or the Gulf region, targeting investments in the EU or North African region.

Which sectors do you work closely with and which areas would you like to expand into more?

We’ve taken a conscious decision not to put all our eggs into one basket. We have a very wide portfolio of clients in different industry sectors. I still think there is space for high value added business to grow in Malta mostly in the IT and online sector. We have had some fintech success stories. There is room for growth in this sector, which is interesting as it is relatively new to Malta. We are seeing people setting up growth companies in Malta, one of our largest clients started an online services company with around 15 employees and today employs roughly 220. This is the sort of business we like because it adds value to the economy as a whole.

Have there been any legal or regulatory developments which have impacted your industry recently?

We’re constantly keeping up with regulation, and compliance is becoming a bit of a nightmare. There’s so much of it that it distracts you from concentrating on growing your business. We recently had FATCA as well as the implementation of the Common Reporting Standards. We are now getting ready for BEPS and the new Anti-Money Laundering Directive. BEPS is probably the biggest challenge at present. However, we’ve had similar challenges in the past and overcame them.

What do you think the government can do to help Malta in the international business sphere?

While there was a promise to simplify processes here, this has been slow moving. We need to make doing business here easier for the bona-fide investor. The government also has to stand its ground in international fora to make sure that we don’t lose anything from the competitive advantages that we have. It is the government’s role to preserve what we have. I am sure they are committed to this.  

It’s been a good ten years for Malta, and we are lucky that our economy is extremely diversified as a whole. While the world has been in crises since 2008, luckily we’ve been somewhat cocooned from what has been happening around us, although we can never become complacent.

How do you think Malta could increase its appeal to foreign direct investors?

We need to find new niches in order to attract new foreign direct investment. We are limited by space, so as mentioned earlier it should be in the high-tech areas and in the creative industries, where you don’t need much space, just brain power. This requires aligning education investment with industry requirements. We’ve done this successfully in the past, in the financial services sector and aviation. We need to encourage locally grown talent to expand internationally. There are some young entrepreneurs doing interesting things and working in the international space, we need more of these. A new growth area for our industry would be not helping the international businessman do business through Malta, but instead assisting the young entrepreneur to go international with foreign sourced investment.

What personal message would you like to share about Malta to the international business community?

Malta is well established and it is well-regulated. It has made its mark and has been recognised internationally as a good place to do business and is also recognised as a great place to live. We have passed the phase of having to prove that Malta works. We now need to constantly show that we can meet client expectations.

Karl is the CEO of the Fenlex Group. He read Management Studies at Anglia University and is a Member of the Malta Institute of Management, the Institute of Financial Service Practitioners and the Malta Chamber of Commerce and Enterprise. He sits on various boards both in Malta and abroad and has over 20 years of management experience. He started his career in the family business managing a restaurant. In 1993, he joined BDS Ltd, an IT organisation, as Sales Manager and assisted the company expanding its solutions to the hospitality industry, developing the firm into a leader in IT Solutions to the local hospitality industry. He joined Fenlex in 1998 as Director of Administration and later COO and was appointed Managing Director in 2008.

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