Financial Services Act 1986 (Repealed)

[3 (1) The following are the conditions specified in this sub-paragraph—

(a) the securities are offered to persons—

(i) whose ordinary activities involve them in acquiring, holding managing or disposing of investments (as principal or agent) for the purposes of their businesses; or

(ii) who it is reasonable to expect will acquire, hold, manage or dispose of investments (as principal or agent) for the purposes of their businesses;

or are otherwise offered to persons in the context of their trades, professions or occupations;

(b) the securities are offered to no more than fifty persons;

(c) the securities are offered to the members of a club or association (whether or not incorporated) and the members can reasonably be regarded as having a common interest with each other and with the club or association in the affairs of the club or association and in what is to be done with the proceeds of the offer;

(d) the securities are offered to a restricted circle of persons whom the offeror reasonably believes to be sufficiently knowledgeable to understand the risks involved in accepting the offer;

(e) the securities are offered in connection with a bona fide invitation to enter into an underwriting agreement with respect to them;

(f) the securities are offered to a government, local authority or public authority, as defined in paragraph 3 of Schedule 1 to this Act;

(g) the total consideration payable for the securities cannot exceed ecu 40,000 (or an equivalent amount);

(h) the minimum consideration which may be [F1 paid by any person for securities acquired by him]pursuant to the offer is at least ecu 40,000 (or an equivalent amount);

(i) the securities are denominated in amounts of at least ecu 40,000 (or an equivalent amount);

(j) the securities are offered in connection with a takeover offer;

(k) the securities are offered in connection with a merger within the meaning of Council Directive No. 78/855/EEC;

(l) the securities are shares and are offered free of charge to any or all of the holders of shares in the issuer;

(m) the securities are shares, or investments falling within paragraph 4 or 5 of Schedule 1 to this Act relating to shares, in a body corporate and are offered in exchange for shares in the same body corporate, and the offer cannot result in any increase in the issued share capital of the body corporate;

(n) the securities are issued by a body corporate and offered—

(i) by the issuer; [F2 , by a body corporate connected with the issuer or by a relevant trustee]

(ii) only to qualifying persons; and

(iii) on terms that a contract to acquire any such securities may be entered into only by the qualifying person to whom they were offered or, if the terms of the offer so permit, any qualifying person;

(o) the securities result from the conversion of convertible securities and listing particulars or a prospectus relating to the convertible securities were or was published in the United Kingdom under or by virtue of Part IV of this Act, Part III of the Companies Act 1985 or the Public Offers of Securities Regulations 1995;

(p) the securities are issued by—

(i) a charity within the meaning of section 96(1) of the Charities Act 1993 F3 ;

(ii) a housing association within the meaning of section 5(1) of the Housing Act 1985 F4 ;

(iii) an industrial or provident society registered in accordance with section 1(2)(b) of the Industrial and Provident Societies Act 1965 F5 ; or

(iv) a non-profit making association or body, recognised by the country or territory in which it is established, with objectives similar to those of a body falling within any of sub-paragraphs (i) to (iii) above;

and the proceeds of the offer will be used for the purposes of the issuer’s objectives;

(q) the securities offered are shares which are issued by, or ownership of which entitles the holder to membership of or to obtain the benefit of services provided by,—

(i) a building society incorporated under the law of, or of any part of, the United Kingdom;

(ii) any body incorporated under the law of, or of any part of, the United Kingdom relating to industrial and provident societies or credit unions; or

(iii) a body of a similar nature established in a member State;

[F6 (r) the securities offered are Euro-securities, and no advertisement relating to the offer is issued in the United Kingdom, or is caused to be so issued, by the issuer of the Euro-securities or by any credit institution or other financial institution through which the Euro-securities may be acquired pursuant to the offer, or by any body corporate which is a member of the same group as that issuer or any of those institutions, other than–

(i) an advertisement falling within article 8 of the Financial Services Act 1986 (Investment Advertisements) (Exemptions) (No. 2) Order 1995; or

(ii) an advertisement which would fall within article 11 of the Financial Services Act 1986 (Investment Advertisements) (Exemptions) Order 1996 if the person issuing the advertisement were a relevant person within the meaning of that article and there were added to the list of persons in paragraph (3) of that article a person with or for whom any credit institution or other financial institution through which the Euro-securities may be acquired pursuant to the offer has effected or arranged for the effecting of a transaction within the period of twelve months ending with the date on which the offer is first made;]

(s) the securities are of the same class, and were issued at the same time, as securities in respect of which a prospectus has been published under or by virtue of Part IV of this Act, Part III of the Companies Act 1985 or the Public Offers of Securities Regulations 1995;

(t) the securities are investments falling within paragraph 2 of schedule 1 to this Act with a maturity of less than one year from their date of issue;

(u) the securities are investments falling within paragraph 3 of Schedule 1 to this Act;

(v) he securities are not transferable.

(2) For the purposes of this paragraph

“convertible securities" means

(a) securities falling within paragraph 2 of Schedule 1 to this Act which can be converted into, or exchanged for, or which confer rights to acquire, securities; or

(b) ecurities falling within paragraph 4 or 5 of that Schedule (as applied for the purposes of section 142(2) of this Act);

and “conversion" in relation to convertible securities means their conversion into or exchange for, or the exercise of rights conferred by them to acquire, other securities;

“credit institution" means a credit institution as defined in Article 1 of [F7 Directive 2000/12/EC of the European Parliament and of the Council];

“ecu" means the European currency unit as defined in Article 1 of Council Regulation No. 3320/94/EC F8 or any Council regulation replacing the same, in either case as amended from time to time;

“Euro-securities" means investments which

(a) are to be underwritten [F9 (by whatever means, including acquisition or subscription, with a view to resale)] and distributed by a syndicate at least two of the members of which have their registered offices in different countries or territories;

(b) are to be offered on a significant scale in one or more countries or territories other than the country or territory on which the issuer has its registered office; and

(c) may be acquired pursuant to the offer only through a credit institution or other financial institution;

“financial institution" means a financial institution as defined in Article 1 of [F10 Directive 2000/12/EC of the European Parliament and of the Council]; and

“shares", except in relation to a takeover offer, means investments which are securities by virtue of falling within paragraph 1 of Schedule 1 to this Act (as applied for the purposes of section 142(3) of this Act).

(3) For the purposes of determining whether the condition specified in paragraph (b) of (g) of sub-paragraph (1) above is satisfied in relation to an offer, the offer shall be taken together with any other offer of the same securities which was

(a) made by the same person;

(b) open at any time within the period of 12 months ending with the date on which the offer is first made; and

(c) not an offer to the public in the United Kingdom by virtue of that condition being satisfied.

[F11 (3A) For the purposes of paragraph (b) of sub-paragraph (1) above, the making of an offer of securities to trustees of a trust or members of a partnership in their capacity as such, or the making of such an offer to any other two or more persons jointly, shall be treated as the making of an offer to a single person.]

(4) In determining for the purposes of paragraph (d) of sub-paragraph (1) above whether a person is sufficiently knowledgeable to understand the risks involved in accepting an offer of securities, any information supplied by the person making the offer shall be disregarded, apart from information about

(a) the issuer of the securities; or

(b) if the securities confer the right to acquire other securities, the issuer of those other securities.

(5) For the purposes of determining whether the condition specified in paragraph (g), (h) or (i) of sub-paragraph (1) above is satisfied in relation to an offer, an amount, in relation to an amount denominated in ecu, is an “equivalent amount" if it is an amount of equal value, calculated at the latest practicable date before (but in any event not more than 3 days before) the date on which the offer is first made, denominated wholly or partly in another currency or unit of account.

[F12 (6) For the purposes of paragraph (j) of sub-paragraph (1) above, “takeover offer" means–

(a) an offer to acquire shares in a body corporate incorporated in the United Kingdom which is a takeover offer within the meaning of Part XIIIA of the Companies Act 1985 F13 (or would be such an offer if that Part of that Act applied in relation to any body corporate);

(b) an offer to acquire all or substantially all the shares, or the shares of a particular class, in a body corporate incorporated outside the United Kingdom; or

(c) an offer made to all the holders of shares, or of shares of a particular class, in a body corporate to acquire a specified proportion of those shares; but in determining whether an offer falls within paragraph (b) above there shall be disregarded any shares which the offeror or any associate of his holds or has contracted to acquire; and in determining whether an offer falls within paragraph (c) above the offeror, any associate of his and any person whose shares the offeror or any such associate has contracted to acquire shall not be regarded as holders of the shares.

(6A) In sub-paragraph (6) above–

“associate" has the same meaning as in section 430E of the Companies Act 1985; and

“share" has the same meaning as in section 428(1) of that Act.]

(7) For the purposes of paragraph (1) of sub-paragraph (1) above, “holders of shares" means the persons who, at the close of business on a date specified in the offer and falling within the period of [F14 60 days] ending with the date on which the offer is first made, were the holders of such shares.

(8) For the purposes of paragraph (n) of sub-paragraph (1) above

(a) a person is a “qualifying person", in relation to an issuer, if he is a bona fide employee or former employee of the issuer or of another body corporate in the same group [F15 (within the meaning of Schedule 1 to this Act)]or the wife, husband, widow, widower or child or stepchild under the age of eighteen of such an employee or former employee; F16 . . .

(b) the definition of “issuer" in section 142(7) applies with the omission of the words from “except that" to the end of the definition.]

[F17 and

(c) the references to “a body corporate connected with the issuer" and to “a relevant trustee" shall be construed in accordance with paragraph 20 of Schedule 1 to this Act.]

Textual Amendments

F1 Words in Sch. 11A para. 3(1)(h) substituted (10.5.1999) by S.I. 1999/734, reg. 4(a)

F2 Words in Sch. 11A para. 3(1)(n)(i) substituted (10.5.1999) by S.I. 1999/734, reg. 4(b)

F3 1993 c.10.

F4 1985 c.68.

F5 1965 c.12.

F6 Sch. 11A para. 3(1)(r) substituted (10.5.1999) by S.I. 1999/1146, reg. 3

F7 Words in the definition of “credit institution” in Sch. 11A para. 3(2) substituted (22.11.2000) by S.I. 2000/2952, reg. 4(a)

F8 OJ No. L350. 31.12.94, p. 27.

F9 Sch. 11A para. 3(2): Words in para. (a) of the definition of “Euro-securities” inserted (10.5.1999) by S.I. 1999/734, reg. 4(d)

F10 Words in the definition of “financial institution” in Sch. 11A para. 3(2) substituted (22.11.2000) by S.I. 2000/2952, reg. 4(b)

F11 Sch. 11A para. 3(3A) inserted (10.5.1999) by S.I. 1999/734, reg. 4(e)

F12 Sch. 11A para. 3(6)(6A) substituted (10.5.1999) for Sch. 11A para. 3(6) by S.I. 1999/734, reg. 4(f)

F13 1985 c. 6. Part XIIIA was substituted by Schedule 12 to the Financial Services Act 1986 (c. 60).

F14 Words in Sch. 11A para. 3(7) substituted (10.5.1999) by S.I. 1999/734, reg. 4(g)

F15 Words in Sch. 11A para. 3(8) inserted (10.5.1999) by S.I. 1999/734, reg. 4(h)(i)

F16 Word in Sch. 11A para. 3(8)(a) omitted (10.5.1999) by virtue of S.I. 1999/734, reg. 4(h)(ii)

F17 Sch. 11A para. 3(8)(c) and word “and” immediately preceding inserted (10.5.1999) by S.I. 1999/734, reg. 4(h)(iii)