The Central Securities Depositories Regulations 2014

[F1 PART 5 U.K. Control over a recognised CSD

Textual Amendments

F1 Pts. 4-8 and Pt. 9 heading inserted (28.11.2017) by The Central Securities Depositories Regulations 2017 (S.I. 2017/1064), regs. 1, 5(9) (with regs. 7(4), 9(1))

Interpretation of Part 5 U.K.

5F.   In Part 5—

“acquisition” means a transfer of ownership rights which gives rise to a change in the identity of the persons exercising control over the operation of a recognised CSD;

“Article 27 notice” means a notification by a person under Article 27(7) of the CSD regulation of a proposed acquisition;

“assessment period” means the period of 60 working days referred to in Article 27(8) of the CSD regulation;

“control” means the relationship between two undertakings as described in section 1162 of, and Schedule 7 to, the Companies Act 2006

“proposed acquisition” means a decision to transfer ownership rights which gives rise to a change in the identity of the persons exercising control over the operation of a recognised CSD;

“restriction notice” has the meaning given by regulation 5I;

“shares” has the meaning given by section 422 of the Act (controller), but section 422A of the Act (disregarded holdings) does not apply;

“voting power” has the meaning given by section 422 of the Act;

“working day” means a day other than—

(a)

Saturday or Sunday,

(b)

Christmas Day or Good Friday, or

(c)

a day which is a bank holiday under the Banking and Financial Dealings Act 1971 in any part of the United Kingdom.

Powers of Bank in relation to proposed acquisition U.K.

5G.— (1) The Bank may before the end of a period of 14 working days starting with the day on which it receives an Article 27 notice, by notice in writing, require the person who gave the Article 27 notice—

(a) to provide specified information or information of a specified description; or

(b) to provide specified documents or documents of a specified description.

(2) Subsection (1) only applies to information or documents which the Bank reasonably requires in order to decide whether there are objective and demonstrable grounds for believing that a proposed acquisition would pose a threat to the sound and prudent management of the recognised CSD or to the ability of the recognised CSD to comply with the CSD regulation.

(3) The information or documents must be provided or produced—

(a) before the end of such period as may be specified; and

(b) at such place as may be specified.

(4) The Bank may require any information provided under this regulation to be provided in such a form as it may reasonably require.

(5) The Bank may require—

(a) any information provided, whether in a document or otherwise, to be verified in such a manner, or

(b) any document produced to be authenticated in such a manner,

as it may reasonably require.

(6) In this regulation, “specified” means specified in the notice.

(7) For the purposes of Article 27(8) of the CSD regulation, the information referred to in Article 27(7) of that regulation is not received until the Bank receives all the information and documents required under this regulation, and where the Bank has imposed a requirement under paragraph (4) or (5), that requirement has been complied with.

Procedure in relation to proposed acquisition U.K.

5H.— (1) If the Bank gives a person (“P”) notice of its decision under Article 27(8) of the CSD regulation that it opposes a proposed acquisition, P may refer the Bank’s decision to the Tribunal.

(2) The notice under Article 27(8) of the CSD regulation must—

(a) give reasons for the decision;

(b) inform P that P may make representations to the Bank within such period as may be specified in the notice (whether or not P has referred the matter to the Tribunal); and

(c) inform P of P’s right to refer the matter to the Tribunal, and give an indication of the procedure on such a reference.

(3) The Bank may extend the period allowed under the notice under Article 27(8) of the CSD regulation for making representations.

(4) If, having considered any representations made by P, the Bank decides to rescind the notice under Article 27(8) of the CSD regulation, it must give P written notice.

(5) If, having considered any representations made by P, the Bank decides not to rescind the notice under Article 27(8) of the CSD regulation, it must give P written notice which must comply with paragraph (2)(c).

(6) Part 9 of the Act (hearings and appeals) applies to references to the Tribunal under this regulation as it applies to references to the Tribunal under the Act.

Restriction notices U.K.

5I.— (1) The Bank may give notice in writing (a “restriction notice”) to a person (“P”) in the following circumstances.

(2) The circumstances are that—

(a) P has taken a decision in relation to which P is required to give the Bank an Article 27 notice; and

(b) P has made the acquisition—

(i) without giving the Article 27 notice,

(ii) before the expiry date of the assessment period (unless the Bank has approved the acquisition), or

(iii) in contravention of the Bank’s decision under Article 27(8) of the CSD regulation.

(3) In a restriction notice, the Bank may direct that shares or voting power to which the notice relates are, until further notice, subject to one or more of the following restrictions—

(a) except by court order, an agreement to transfer or a transfer of any such shares or voting power or, in the case of unissued shares, any agreement to transfer or transfer of the right to be issued with them, is void;

(b) no voting power is to be exercisable;

(c) no further shares are to be issued in pursuance of any right of the holder of any such shares or voting power or in pursuance of any offer made to their holder;

(d) except in a liquidation, no payment is to be made of any sums due from the body corporate on any such shares, whether in respect of capital or otherwise.

(4) A restriction notice takes effect—

(a) immediately; or

(b) on such date as may be specified in the notice.

(5) A restriction notice does not extinguish rights which would be enjoyable but for the notice.

(6) A copy of the restriction notice must be given to—

(a) the recognised CSD in question; and

(b) in the case of shares or voting power held in a parent undertaking of a recognised CSD, the parent undertaking.

(7) A person to whom the Bank gives a restriction notice may refer the matter to the Tribunal.

(8) Part 9 of the Act (hearings and appeals) applies to references to the Tribunal under this regulation as it applies to references to the Tribunal under the Act.

Orders for sale of shares U.K.

5J.— (1) The court may, on the application of the Bank, order the sale of shares or the disposition of voting power in the following circumstances.

(2) The circumstances are that—

(a) a person (“P”) has taken a decision in relation to which P is required to give the Bank an Article 27 notice; and

(b) P has made the acquisition—

(i) without giving the Article 27 notice,

(ii) before the expiry date of the assessment period (unless the Bank has approved the acquisition), or

(iii) in contravention of the Bank’s decision under Article 27(8) of the CSD regulation.

(3) Where the court orders the sale of shares or disposition of voting power it may—

(a) if a restriction notice has been given in relation to the shares or voting power, order that the restrictions cease to apply; and

(b) make any further order.

(4) Where the court makes an order under this regulation, it must take into account the level of holding that P would have been entitled to acquire, or to continue to hold, without contravening the Bank’s decision under Article 27(8) of the CSD regulation.

(5) If shares are sold or voting power disposed of in pursuance of an order under this regulation, any proceeds, less the costs of the sale or disposition, must be paid into court for the benefit of the persons beneficially interested in them; and any such person may apply to the court for payment of the whole or a part of the proceeds.

(6) The jurisdiction conferred by this regulation may be exercised by the High Court or in Scotland, the Court of Session.

Offences U.K.

5K.— (1) A person who fails to comply with an obligation to notify the Bank under the Article 27(7) of the CSD regulation is guilty of an offence.

(2) A person who gives an Article 27 notice to the Bank and makes the acquisition to which the notice relates before the expiry date of the assessment period is guilty of an offence unless the Bank has approved the acquisition.

(3) A person who makes an acquisition in contravention of the Bank’s decision under Article 27(8) of the CSD regulation is guilty of an offence.

(4) A person who provides information to the Bank which is false in a material particular is guilty of an offence.

(5) A person guilty of an offence under paragraph (1), (2) or (4) is liable—

(a) in England and Wales, on summary conviction or on conviction on indictment to a fine; and

(b) in Scotland and Northern Ireland, on summary conviction to a fine not exceeding the statutory maximum or on conviction on indictment to a fine.

(6) A person guilty of an offence under paragraph (3) is liable—

(a) in England and Wales—

(i) on summary conviction to a fine, or

(ii) on conviction on indictment, to imprisonment for a term not exceeding two years or a fine, or both; and

(b) in Scotland and Northern Ireland—

(i) on summary conviction to a fine not exceeding the statutory maximum, or

(ii) on conviction on indictment, to imprisonment for a term not exceeding two years or a fine, or both.

(7) It is a defence for a person charged with an offence under paragraph (1) to show the person had, at the time of the alleged offence, no knowledge of the act or circumstances by virtue of which the duty to notify the Bank arose.]