- (2) 2
(in relation to a subsidiary undertaking) 100% of the voting rights attaching to the shares in its capital is held by the firm, financial holding company or mixed financial holding company2 (or a subsidiary undertaking of the financial holding company or mixed financial holding company2), whether individually or jointly, and that firm, financial holding company or mixed financial holding company2 (or its subsidiary undertaking) must have the right to appoint or remove a majority of the members of the board of directors, committee of management or other governing body of the undertaking;22
it is subject to the same risk evaluation, measurement and control procedures as the firm;
it is incorporated in the United Kingdom; and
In relation to BIPRU 10.8A.2R (3), a subsidiary undertaking should generally be 100% owned and controlled by a single shareholder. However, if a subsidiary undertaking has more than one shareholder, that undertaking may be a member of the core UK group if all its shareholders are also members of that same core UK group.
If a core concentration risk group counterparty is of a type that falls within the scope of the Council Regulation of 29 May 2000 on insolvency proceedings (Regulation 1346/2000/EC) and it is established in the United Kingdom other than by incorporation, a firm wishing to include that counterparty in its core UK group may apply to the appropriate regulator for a waiver of BIPRU 10.8A.2R (5) if it can demonstrate fully to the appropriate regulator that the counterparty's centre of main interests is situated in the United Kingdom within the meaning of that Regulation.
For the purpose of BIPRU 10.8A.2R (6), a firm must be able to demonstrate fully to the appropriate regulator the circumstances and arrangements, including legal arrangements, by virtue of which there are no material practical or legal impediments, and none are foreseen, to the prompt transfer of capital resources or repayment of liabilities from the counterparty to the firm.
In relation to a counterparty that is not a firm, the arrangements referred to in (1) must include a legally binding agreement with each firm that is a member of the core UK group that it will promptly on demand by the firm increase that firm's capital resources by an amount required to ensure that the firm complies with GENPRU 2.1 (Calculation of capital resources requirements), BIPRU 10 (Large exposures requirements) and any other requirements relating to capital resources or concentration risk imposed on a firm by or under the regulatory system.
the speed with which funds can be transferred or liabilities repaid to the firm and the simplicity of the method for the transfer or repayment;
whether there are any interests other than those of the firm in the core concentration risk group counterparty and what impact those other interests may have on the firm's control over the core group concentration risk group counterparty and the ability of the firm to require a transfer of funds or repayment of liabilities;
whether the purpose of the core concentration risk group counterparty prejudices the prompt transfer of funds or repayment of liabilities;
whether the legal structure of the core concentration risk group counterparty prejudices the prompt transfer of funds or repayment of liabilities;
For the purpose of BIPRU 10.8A.5R (2), the obligation to increase the firm's capital resources may be limited to capital resources available to the counterparty and may reasonably exclude such amount of capital resources that, if transferred to the firm, would cause the counterparty to become balance sheet insolvent in the manner contemplated in section 123(2) of the Insolvency Act 1986.
For the purposes of this section, a firm must calculate the capital resources of the core UK group in accordance with GENPRU 3 Annex 1 R Part 2 (Method 2 of Annex 1 of the Financial Groups Directive (Deduction and aggregation Method)) and apply the limits set out in this section to those capital resources rather than the capital resources of the firm. For these purposes the definition of solo capital resources is adjusted so that the rules on which the calculation for each member of the core UK group is based are the ones that would apply under the procedure in BIPRU 8.6.6 R to BIPRU 8.6.9 R (Consolidated capital resources).
The calculation of capital resources under GENPRU 3 Annex 1 R Part 2 (Method 2 of Annex 1 of the Financial Groups Directive (Deduction and aggregation Method) is based on the solo capital resources of members of a financial conglomerate. The definition of solo capital resources depends on what type of undertakings the financial conglomerate contains. For example, if a financial conglomerate contains a bank the solo capital resources calculation for every group member in the banking sector and the investment services sector is based on the capital resources calculation for banks. The purpose of BIPRU 10.8A.10R is to apply the corresponding procedure that applies under BIPRU 8.6 (Calculation of capital resources on a consolidated basis for BIPRU firms).
A firm must immediately notify the appropriate regulator in writing it if becomes aware that any exposure that it has treated as exempt under this section or any counterparty that it has been treating as a member of its core UK group has ceased to meet the conditions for application of the treatment in this section.