AUTH App 1.29 Advice must relate to the merits (of buying or selling a particular investment)

Advice must relate to the buying or selling of an investment ? in other words, the pros or cons of doing so.

An explanation of the implications of, for example, exercising certain rights or the happening of certain events (such as death) need not involve advice on the merits of exercising those rights or on what to do following the event.

Neither does advice on the merits of using a particular stockbroker or investment manager in his capacity as such amount to advice for the purpose of article 53. This is because it is not advice on the merits of buying or selling an investment. 1

Advice in the form of rating issuers of debt securities as to the likelihood that they will be able to meet their repayment obligations need not, of itself, involve any advice on the merits of buying, selling or holding on to that issuer's stock.

Without an explicit or implicit recommendation on the merits of buying or selling an investment, advice will not be covered by article 53 if it is advice on:

1. (1)

   the likely meaning of uncertain provisions in an investment agreement;

2. (2)

   how to complete an application form;

3. (3)

   the value of investments for which there is no ready market;

4. (4)

   the effect of contractual terms and their commercial consequences;

5. (5)

   how to structure a transaction to comply with regulatory, competition and taxation requirements; or

6. (6)

   terms which are commonly accepted in the market.

Advice as to what might happen to the price or value of an investment if certain events were to take place, however, may be covered by article 53 in some circumstances.