C1C2C3C4C6C5 Part XII Control Over Authorised Persons
Pt. 12 applied (with modifications) (30.4.2011) by The Electronic Money Regulations 2011 (S.I. 2011/99), reg. 62, Sch. 3 para. 4 (with reg. 3) (as amended (1.4.2013) by The Financial Services Act 2012 (Consequential Amendments and Transitional Provisions) Order 2013 (S.I. 2013/472), Sch. 2 para. 196(5)(d)(e))
Pt. 12 excluded (26.7.2013 for specified purposes, 2.9.2013 in so far as not already in force) by The Financial Services and Markets Act 2000 (Regulated Activities) (Amendment) (No.2) Order 2013 (S.I. 2013/1881), arts. 1(2)(5), 59(7)
Pt. 12 applied (with modifications) (13.8.2017 for specified purposes, 13.10.2017 in so far as nt already in force) by The Payment Services Regulations 2017 (S.I. 2017/752), reg. 1(2)(b)(iii)(3)(c), Sch. 6 para. 5 (with reg. 3)
Pt. 12 excluded (8.12.2017) by The Risk Transformation Regulations 2017 (S.I. 2017/1212), regs. 1(2), 8
Pt. 12 modified (E.W.S.) (29.11.2018 for specified purposes, 1.4.2019 in so far as not already in force) by The Financial Services and Markets Act 2000 (Claims Management Activity) Order 2018 (S.I. 2018/1253), arts. 1(2)(3), 83(10)
F1Acquiring control and other changes of holding
Ss. 178-191G and cross-headings substituted (21.3.2009) for ss. 178-191 and cross-headings by The Financial Services and Markets Act 2000 (Controllers) Regulations 2009 (S.I. 2009/534), reg. 3, Sch. 1 (with reg. 8)
X1181Acquiring control
1
For the purposes of this Part, a person (“A”) acquires control over a UK authorised person (“B”) if any of the cases in subsection (2) begin to apply.
2
The cases are where A holds—
a
10% or more of the shares in B or in a parent undertaking of B (“P”);
b
10% or more of the voting power in B or P; or
c
shares or voting power in B or P as a result of which A is able to exercise significant influence over the management of B.
X2182Increasing control
1
For the purposes of this Part, a person (“A”) increases control over a UK authorised person (“B”) whenever—
a
the percentage of shares which A holds in B or in a parent undertaking of B (“P”) increases by any of the steps mentioned in subsection (2);
b
the percentage of voting power A holds in B or P increases by any of the steps mentioned in subsection (2); or
c
A becomes a parent undertaking of B.
2
The steps are—
a
from less than 20% to 20% or more;
b
from less than 30% to 30% or more;
c
from less than 50% to 50% or more.
X3183Reducing or ceasing to have control
1
For the purposes of this Part, a person (“A”) reduces control over a UK authorised person (“B”) whenever—
a
the percentage of shares which A holds in B or in a parent undertaking of B (“P”) decreases by any of the steps mentioned in subsection (2);
b
the percentage of voting power which A holds in B or P decreases by any of the steps mentioned in subsection (2); or
c
A ceases to be a parent undertaking of B.
2
The steps are—
a
from 50% or more to less than 50%;
b
from 30% or more to less than 30%;
c
from 20% or more to less than 20%.
3
For the purposes of this Part, a person (“A”) ceases to have control over a UK authorised person (“B”) if A ceases to be in the position of holding—
a
10% or more of the shares in B or in a parent undertaking of B (“P”);
b
10% or more of the voting power in B or P; or
c
shares or voting power in B or P as a result of which A is able to exercise significant influence over the management of B.
X4184Disregarded holdings
1
For the purposes of sections 181 to 183, shares and voting power that a person holds in a UK authorised person (“B”) or in a parent undertaking of B (“P”) are disregarded in the following circumstances.
2
Shares held only for the purposes of clearing and settling within a short settlement cycle are disregarded.
3
Shares held by a custodian or its nominee in a custodian capacity are disregarded, provided that the custodian or nominee is only able to exercise voting power represented by the shares in accordance with instructions given in writing.
4
Shares representing no more than 5% of the total voting power in B or P held by an investment firm are disregarded, provided that it—
a
holds the shares in the capacity of a market maker (as defined in F13article 2.1.6 of the markets in financial instruments regulation);
F10b
has a Part 4A permission to carry on one or more investment services and activities;
c
neither intervenes in the management of B or P nor exerts any influence on B or P to buy the shares or back the share price.
5
Shares held by a F9qualifying credit institution or investment firm in its trading book are disregarded, provided that—
a
the shares represent no more than 5% of the total voting power in B or P; and
b
F7... the voting power is not used to intervene in the management of B or P.
6
Shares held by a F5qualifying credit institution or an investment firm are disregarded, provided that—
a
the shares are held as a result of performing the investment services and activities of—
i
underwriting a share issue; or
ii
placing shares on a firm commitment basis F12...; and
b
the F5qualifying credit institution or investment firm—
i
does not exercise voting power represented by the shares or otherwise intervene in the management of the issuer; and
ii
retains the holding for a period of less than one year.
7
Where a management company (as defined in F4section 237(2)) and its parent undertaking both hold shares or voting power, each may disregard holdings of the other, provided that each exercises its voting power independently of the other.
8
But subsection (7) does not apply if the management company—
F2a
manages holdings for its parent undertaking or a controlled undertaking of the parent undertaking;
b
has no discretion as to the exercise of the voting power attached to such holdings; and
c
may only exercise the voting power in relation to such holdings under direct or indirect instruction from—
i
the parent undertaking; or
F8ii
a controlled undertaking of the parent undertaking.
9
Where an investment firm and its parent undertaking both hold shares or voting power, the parent undertaking may disregard holdings managed by the investment firm on a client by client basis and the investment firm may disregard holdings of the parent undertaking, provided that the investment firm—
a
has permission to provide portfolio management;
b
exercises its voting power independently from the parent undertaking; and
c
may only exercise the voting power under instructions given in writing, or has appropriate mechanisms in place for ensuring that individual portfolio management services are conducted independently of any other services.
F119A
Shares acquired for stabilisation purposes in accordance with F3the market abuse regulation and the Commission Delegated Regulation (EU) No. 1052/2016 of 8 March 2016 supplementing Regulation (EU) No. 596/2014 of the European Parliament and the Council with regard to the regulatory technical standards for conditions applicable to buy-back programmes and stabilisation measures are disregarded, provided that the voting power attached to those shares is not exercised or otherwise used to intervene in the management of B or P.
F610
For the purposes of this section, an undertaking is a controlled undertaking of the parent undertaking if it is controlled by the parent undertaking; and for this purpose the question of whether one undertaking controls another is to be determined in accordance with section 89J(4) and (5).
Pt. 12 modified (1.12.2001) by S.I. 2001/3592, arts. 1(2), 114(3)(a) (with art. 23(2))