Part VII Control of Business Transfers
103AF60Meaning of “the appropriate regulator”
1
In this Part “the appropriate regulator” means—
a
b
in any other case, the FCA.
2
In this Part, “F37the transferor concerned”—
a
in the case of an insurance business transfer scheme, is to be read in accordance with section 105(2);
b
in the case of a banking business transfer scheme, is to be read in accordance with section 106(2);
c
in the case of a reclaim fund business transfer scheme, means the reclaim fund to whose business the scheme relates.
F42d
in the case of a ring-fencing transfer scheme, means the body to whose business the scheme relates.
C1I1104 Control of business transfers.
No insurance business transfer scheme F40... is to have effect unless an order has been made in relation to it under section 111(1).
C11105 Insurance business transfer schemes.
1
A scheme is an insurance business transfer scheme if it—
a
satisfies F44the condition set out in subsection (2);
b
results in the business transferred being carried on from an establishment of the transferee in F47the United Kingdom or Gibraltar; and
c
is not an excluded scheme.
F592
The condition is that the whole or part of the business carried on in the United Kingdom by an authorised person who has permission to effect or carry out contracts of insurance (“the transferor concerned”) is to be transferred to another body (“the transferee”).
3
A scheme is an excluded scheme for the purposes of this section if it falls within any of the following cases:
Case 1
Where F37the transferor concerned is a friendly society.
F49Case 2
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Case 3
Where—
a
F37the transferor concerned is a UK authorised person;
b
c
the scheme has been approved by a court in a country or territory F33outside the United Kingdom or by the authority responsible for the supervision of that business in a country or territory in which it is carried on.
Case 4
Where F3—
a
the business to be transferred under the scheme is the whole of the business of F37the transferor concerned;
b
all the policyholders are controllers of the firm or of firms within the same group as the firm which is the transferee, and,
F4c
all of the policyholders who will be affected by the transfer have consented to it.
F5CASE 5
Where—
a
the business of F37the transferor concerned consists solely of the effecting or carrying out of contracts of reinsurance;
b
the business to be transferred is the whole or part of that business;
c
the scheme does not fall within Case 4;
d
all of the policyholders who will be affected by the transfer have consented to it; and
e
a certificate has been obtained under paragraph 2 of Schedule 12 in relation to the proposed transfer.
4
F75
If the scheme involves a compromise or arrangement falling within Part 27 of the Companies Act 2006 (mergers and divisions of public companies), the provisions of that Part (and F19Part 26 or 26A of that Act, as the case may be) apply accordingly but this does not affect the operation of this Part in relation to the scheme.
8
“UK authorised person” means a body which is an authorised person and which—
a
is incorporated in the United Kingdom; or
b
is an unincorporated association formed under the law of any part of the United Kingdom.
9
“Establishment” means, in relation to a person, his head office or a branch of his.
106 Banking business transfer schemes.
1
A scheme is a banking business transfer scheme if it—
a
satisfies one of the conditions set out in subsection (2);
b
is one under which the whole or part of the business to be transferred includes the accepting of deposits; and
c
is not an excluded scheme F30or a ring-fencing transfer scheme.
2
The conditions are that—
a
the whole or part of the business carried on by a UK authorised person who has permission to accept deposits (“F37the transferor concerned”) is to be transferred to another body (“the transferee”);
b
the whole or part of the business carried on in the United Kingdom by an authorised person who is not a UK authorised person but who has permission to accept deposits (“F37the transferor concerned”) is to be transferred to another body which will carry it on in the United Kingdom (“the transferee”).
3
A scheme is an excluded scheme for the purposes of this section if—
a
F37the transferor concerned is a building society or a credit union; or
F8b
the scheme is a compromise or arrangement to which Part 27 of the Companies Act 2006 (mergers and divisions of public companies) applies.
4
For the purposes of subsection (2)(a) it is immaterial whether or not the business to be transferred is carried on in the United Kingdom.
5
“UK authorised person” has the same meaning as in section 105.
6
“Building society” has the meaning given in the M1Building Societies Act 1986.
7
“Credit union” means a credit union within the meaning of—
a
the M2Credit Unions Act 1979;
b
the M3Credit Unions (Northern Ireland) Order 1985.
106AF14Reclaim fund business transfer scheme
1
A scheme is a reclaim fund business transfer scheme if, under the scheme, the whole or part of the business carried on by a reclaim fund is to be transferred to one or more other reclaim funds.
2
“Reclaim fund” has the meaning given by section 5(1) of the Dormant Bank and Building Society Accounts Act 2008.
106BF26Ring-fencing transfer scheme
1
A scheme is a ring-fencing transfer scheme if it—
a
is one under which the whole or part of the business carried on—
i
by a UK authorised person, or
ii
by a qualifying body,
is to be transferred to another body (“the transferee”),
b
is to be made for one or more of the purposes mentioned in subsection (3), and
c
is not an excluded scheme or an insurance business transfer scheme.
2
“Qualifying body” means a body which—
a
is incorporated in the United Kingdom,
b
is a member of the group of a UK authorised person, and
c
is not itself an authorised person.
3
The purposes are—
a
enabling a UK authorised person to carry on core activities as a ring-fenced body in compliance with the ring-fencing provisions;
b
enabling the transferee to carry on core activities as a ring-fenced body in compliance with the ring-fencing provisions;
c
making provision in connection with the implementation of proposals that would involve a body corporate whose group includes the body corporate to whose business the scheme relates becoming a ring-fenced body while one or more other members of its group are not ring-fenced bodies;
d
making provision in connection with the implementation of proposals that would involve a body corporate whose group includes the transferee becoming a ring-fenced body while one or more other members of the transferee's group are not ring-fenced bodies.
4
A scheme is an excluded scheme for the purposes of this section if—
a
the body to whose business the scheme relates is a building society or credit union, or
b
the scheme is a compromise or arrangement to which Part 27 of the Companies Act 2006 (mergers and divisions of public companies) applies.
5
For the purposes of subsection (1)(a) it is immaterial whether or not the business to be transferred is carried on in the United Kingdom.
6
“UK authorised person” has the same meaning as in section 105.
7
“Building society” and “credit union” have the same meanings as in section 106.
8
“The ring-fencing provisions” means ring-fencing rules and the duty imposed as a result of section 142G.
C2107 Application for order sanctioning transfer scheme.
1
2
An application may be made by—
a
F37the transferor concerned;
b
the transferee; or
c
both.
F292A
An application relating to a ring-fencing transfer scheme may be made only with the consent of the PRA.
2B
In deciding whether to give consent, the PRA must have regard to the scheme report prepared under section 109A in relation to the ring-fencing transfer scheme.
3
The application must be made—
a
if F37the transferor concerned and the transferee are registered or have their head offices in the same jurisdiction, to the court in that jurisdiction;
b
if F37the transferor concerned and the transferee are registered or have their head offices in different jurisdictions, to the court in either jurisdiction;
c
if the transferee is not registered in the United Kingdom and does not have his head office there, to the court which has jurisdiction in relation to F37the transferor concerned.
4
“Court” means—
a
the High Court; or
b
in Scotland, the Court of Session.
C3I2108 Requirements on applicants.
1
The Treasury may by regulations impose requirements on applicants under section 107.
2
The court may not determine an application under that section if the applicant has failed to comply with a prescribed requirement.
3
The regulations may, in particular, include provision—
a
as to the persons to whom, and periods within which, notice of an application must be given;
b
enabling the court to waive a requirement of the regulations in prescribed circumstances.
C4109F31Scheme reports: insurance business transfer schemes
1
An application under section 107 in respect of an insurance business transfer scheme must be accompanied by a report on the terms of the scheme (“a scheme report”).
2
A scheme report may be made only by a person—
a
appearing to the F56appropriate regulator to have the skills necessary to enable him to make a proper report; and
b
nominated or approved for the purpose by the F56appropriate regulator.
3
A scheme report must be made in a form approved by the F56appropriate regulator.
F554
Where the appropriate regulator is the PRA, it must consult the FCA before—
a
nominating or approving a person under subsection (2)(b), or
b
approving a form under subsection (3).
5
Subsection (6) applies where the appropriate regulator is the FCA and either—
a
the transferee is a PRA-authorised person, or
b
F37the transferor concerned or the transferee has as a member of its immediate group a PRA-authorised person.
6
The FCA must consult the PRA before—
a
nominating or approving a person under subsection (2)(b), or
b
approving a form under subsection (3).
109AF45Scheme reports: ring-fencing transfer schemes
1
An application under section 106B in respect of a ring-fencing transfer scheme must be accompanied by a report on the terms of the scheme (a “scheme report”).
2
A scheme report may be made only by a person—
a
appearing to the PRA to have the skills necessary to enable the person to make a proper report, and
b
nominated or approved for the purpose by the PRA.
3
A scheme report must be made in a form approved by the PRA.
4
A scheme report must state—
a
whether persons other than the transferor concerned are likely to be adversely affected by the scheme, and
b
if so, whether the adverse effect is likely to be greater than is reasonably necessary in order to achieve whichever of the purposes mentioned in section 106B(3) is relevant.
5
The PRA must consult the FCA before—
a
nominating or approving a person under subsection (2)(b), or
b
approving a form under subsection (3).
C5110 Right to participate in proceedings.
F231
On an application under section 107 F22relating to an insurance business transfer scheme, a banking business transfer scheme or a reclaim fund business transfer scheme, the following are also entitled to be heard—
F50a
the FCA,
aa
in the case of a scheme falling within subsection (2), the PRA, and
b
any person (including an employee of F37the transferor concerned or of the transferee) who alleges that he would be adversely affected by the carrying out of the scheme.
F542
A scheme falls within this subsection if—
a
F37the transferor concerned or the transferee is a PRA-authorised person, or
b
F37the transferor concerned or the transferee has as a member of its immediate group a PRA-authorised person.
F383
Subsections (4) and (5) apply where an application under section 107 relates to a ring-fencing transfer scheme.
4
The following are also entitled to be heard—
a
the PRA,
b
where the transferee is an authorised person, the FCA, and
c
any person (“P”) (including an employee of the transferor concerned or of the transferee) who alleges that P would be adversely affected by the carrying out of the scheme.
5
P is not entitled to be heard by virtue of subsection (4)(c) unless before the hearing P has—
a
filed (in Scotland, lodged) with the court a written statement of the representations that P wishes the court to consider, and
b
served copies of the statement on the PRA and the transferor concerned.
C6I3111 Sanction of the court for business transfer schemes.
1
2
The court must be satisfied that—
a
F18aa
in the case of a reclaim fund business transfer scheme, the appropriate certificate has been obtained (as to which see Part 2A of that Schedule);
F53ab
in the case of a ring-fencing transfer scheme, the appropriate certificates have been obtained (as to which see Part 2B of that Schedule);
b
the transferee has the authorisation required (if any) to enable the business, or part, which is to be transferred to be carried on in the place to which it is to be transferred (or will have it before the scheme takes effect).
3
The court must consider that, in all the circumstances of the case, it is appropriate to sanction the scheme.
C7C10112 Effect of order sanctioning business transfer scheme.
C81
If the court makes an order under section 111(1), it may by that or any subsequent order make such provision (if any) as it thinks fit—
a
for the transfer to the transferee of the whole or any part of the undertaking concerned and of any property or liabilities of F37the transferor concerned;
b
for the allotment or appropriation by the transferee of any shares, debentures, policies or other similar interests in the transferee which under the scheme are to be allotted or appropriated to or for any other person;
c
for the continuation by (or against) the transferee of any pending legal proceedings by (or against) F37the transferor concerned;
d
with respect to such incidental, consequential and supplementary matters as are, in its opinion, necessary to secure that the scheme is fully and effectively carried out.
2
An order under subsection (1)(a) may—
a
transfer property or liabilities whether or not F37the transferor concerned otherwise has the capacity to effect the transfer in question;
b
make provision in relation to property which was held by F37the transferor concerned as trustee;
c
make provision as to future or contingent rights or liabilities of F37the transferor concerned, including provision as to the construction of instruments (including wills) under which such rights or liabilities may arise;
F122A
Subsection (2)(a) is to be taken to include power to make provision in an order—
a
for the transfer of property or liabilities which would not otherwise be capable of being transferred or assigned;
b
for a transfer of property or liabilities to take effect as if there were—
i
no such requirement to obtain a person's consent or concurrence, and
ii
no such contravention, liability or interference with any interest or right,
as there would otherwise be (in the case of a transfer apart from this section) by reason of any provision falling within subsection (2B).
2B
A provision falls within this subsection to the extent that it has effect (whether under an enactment or agreement or otherwise) in relation to the terms on which F37the transferor concerned is entitled to the property or subject to the liabilities in question.
2C
Nothing in subsection (2A) or (2B) is to be read as limiting the scope of subsection (1).
3
If an order under subsection (1) makes provision for the transfer of property or liabilities—
a
the property is transferred to and vests in, and
b
the liabilities are transferred to and become liabilities of,
the transferee as a result of the order.
4
But if any property or liability included in the order is governed by the law of any country or territory outside the United Kingdom, the order may require F37the transferor concerned, if the transferee so requires, to take all necessary steps for securing that the transfer to the transferee of the property or liability is fully effective under the law of that country or territory.
5
Property transferred as the result of an order under subsection (1) may, if the court so directs, vest in the transferee free from any charge which is (as a result of the scheme) to cease to have effect.
6
An order under subsection (1) which makes provision for the transfer of property is to be treated as an instrument of transfer for the purposes of F9section 770(1) of the Companies Act 2006 and any other enactment requiring the delivery of an instrument of transfer for the registration of property.
7
F10. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8
If the court makes an order under section 111(1) in relation to an insurance business transfer scheme, it may by that or any subsequent order make such provision (if any) as it thinks fit—
a
for dealing with the interests of any person who, within such time and in such manner as the court may direct, objects to the scheme;
b
for the dissolution, without winding up, of F37the transferor concerned;
c
for the reduction, on such terms and subject to such conditions (if any) as it thinks fit, of the benefits payable under—
i
any description of policy, or
ii
policies generally,
entered into by F37the transferor concerned and transferred as a result of the scheme.
F529
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10
11
But the F27appropriate regulator may extend that period.
12
“Property” includes property, rights and powers of any description.
13
“Liabilities” includes duties.
14
“Shares” and “debentures” have the same meaning as in F11 the Companies Acts (see sections 540 and 738 of the Companies Act 2006).
15
“Charge” includes a mortgage (or, in Scotland, a security over property).
112ZAF58Duty of regulator to provide copy of order
1
Where the PRA receives under section 112(10) a copy of an order it must, without delay, give a copy of it to the FCA.
2
Where the FCA receives under section 112(10) a copy of an order it must, without delay, give a copy of it to the PRA if the order relates to a scheme in respect of which—
a
the transferee is a PRA-authorised person, or
b
F37the transferor concerned or the transferee has as a member of its immediate group a PRA-authorised person.
112AF13Rights to terminate etc.
1
Subsection (2) applies where (apart from that subsection) a person would be entitled, in consequence of anything done or likely to be done by or under this Part in connection with an insurance business transfer scheme F32, a banking business transfer scheme or a ring-fencing transfer scheme—
a
to terminate, modify, acquire or claim an interest or right; or
b
to treat an interest or right as terminated or modified.
2
The entitlement—
a
is not enforceable in relation to that interest or right until after an order has been made under section 112(1) in relation to the scheme; and
b
is then enforceable in relation to that interest or right only insofar as the order contains provision to that effect.
3
Nothing in subsection (1) or (2) is to be read as limiting the scope of section 112(1).
C9113 Appointment of actuary in relation to reduction of benefits.
1
This section applies if an order has been made under section 111(1).
2
The court making the order may, on the application of F34either regulator, appoint an independent actuary—
a
to investigate the business transferred under the scheme; and
F203
An application under subsection (2) may be made by the PRA only if—
a
F37the transferor concerned or the transferee is a PRA-authorised person, or
b
F37the transferor concerned or the transferee has as a member of its immediate group a PRA-authorised person.
F36114 Rights of certain policyholders.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F43114ANotice of transfer of reinsurance contracts
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Business transfers outside the United Kingdom
115 Certificates for purposes of insurance business transfers overseas.
Part III of Schedule 12 makes provision about certificates which the F24appropriate regulator may issue in relation to insurance business transfers taking place outside the United Kingdom.
F25116 Effect of insurance business transfers authorised in other EEA States.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Modifications
117 Power to modify this Part.
The Treasury may by regulations—
a
provide for prescribed provisions of this Part to have effect in relation to prescribed cases with such modifications as may be prescribed;
b
make such amendments to any provision of this Part as they consider appropriate for the more effective operation of that or any other provision of this Part.