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SUP 11.3 Requirements on controllers or proposed controllers under the Act

SUP 11.3.1G

The notification requirements are set out in sections 178, 179, 191D and 191E of the Act and holdings which may be disregarded are set out in section 184 of the Act.10A summary of the notification requirements described in this section is given in SUP 11 Annex 1.4

SUP 11.3.1AG

12For the purposes of Part XII (Control over authorised persons) of the Act, and in particular, calculations relating to the holding of shares and/or voting power, the definitions of “shares” and “voting power” are set out in section 191G of the Act.

SUP 11.3.1BG

12SUP 11 Annex 6G provides guidance on when one person's holding of shares or voting power must be aggregated with that of another person for the purpose of determining whether an acquisition or increase of control will take place as contemplated by section 181 or 182 of the Act such that notice must be given to the appropriate regulator15 in accordance with section 178 of the Act before making the acquisition or increase. This will be:

15
  1. (1)

    where those persons are acting in concert, as contemplated by section 178(2) (Obligation to notify appropriate regulator15: acquisitions of control) of the Act; or

    15
  2. (2)

    in the case of voting power only, if any of the circumstances described in section 422(5) (Controller) of the Act apply.

Requirement to notify a proposed 6change in control

SUP 11.3.2G

Sections 178(1) and 191D(1)10of the Act require a person (whether or not he is an authorised person) to notify the appropriate regulator15 in writing if he decides 10to acquire, increase or reduce10 control or to cease to have control10over a UK domestic firm . Failure to notify is an offence under section 191F10 of the Act (Offences under this Part).46

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SUP 11.3.2AG

The Treasury have made the following exemptions from the obligations under section 178 of the Act10:

  1. (1)

    controllers and potential controllers of non-directive friendly societiesare exempt from the obligation to notify a change in control (The Financial Services and Markets Act 2000 (Controllers) (Exemption) Order 2009 (SI 2009/77410));

    10
  2. (2)

    controllers and potential controllers of building societies are exempt from the obligation to notify a change in control unless the change involves the acquisition of a holding of a specified percentage of a building society's 10 capital or the increase or reduction by a specified percentage of a holding of a building society's 10capital (The Financial Services and Markets Act 2000 (Controllers) (Exemption) Order 2009 (SI 2009/77410.)). The "capital" of a building society 10 for these purposes consists of:

    1010
    1. (a)

      any shares of a class defined as deferred shares for the purposes of section 119 of the Building Societies Act 1986 which have been issued by the society (in practice, likely to be permanent interest bearing shares (PIBS)); and

    2. (b)

      the general reserves of that building society: 10

      103
  3. (3)

    10potential controllers of non-directive firms (other than, in the case of an FCA-authorised person, firms with only a limited permission) 14("A") are exempt from the obligation to notify a change in control unless the change results in the potential controller holding:

    1. (a)

      20% or more of the shares in A or in a parent undertaking of A ("P");

    2. (b)

      20% or more of the voting power in A or P; or

    3. (c)

      shares or voting power in A or P as a result of which the controller is able to exercise significant influence over the management of A;

    or where the change in control over A would lead to the controller ceasing to fall into any of the cases (a), (b) or (c) above (The Financial Services and Markets Act 2000 (Controllers) (Exemption) Order 2009 (SI 2009/774)).

  4. (4)

    (in the case of a change in control over an FCA-authorised person) potential controllers of firms with only a limited permission) ("A") are exempt from the obligation to notify a change in control, unless the change would result in the potential controller holding:14

    1. (a)

      33% or more of the shares in A or in a parent undertaking of A ("P"); or14

    2. (b)

      33% or more of the voting power in A or P; or14

    3. (c)

      shares or voting power in A or P as a result of which the controller is able to exercise significant influence over the management of A;14

    or where the change in control over A would lead to the controller ceasing to fall into any of the cases (a), (b) or (c) above (The Financial Services and Markets Act 2000 (Controllers) (Exemption) Order 2009 (SI 2009/774)).14

SUP 11.3.3G

6[deleted]

Approval required before acquiring or increasing control6

SUP 11.3.4G

If a person decides10to acquire control or increase control over a UK domestic firm in a way described in SUP 11.4.2 Ror acquire control in a way described in SUP 11.4.2AR (1)4, he must obtain the appropriate regulator's15 approval before doing so. Making an acquisition before the appropriate regulator15 has approved of it10is an offence under section 191F of the Act (Offences under this Part).

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SUP 11.3.5G

The appropriate regulator's15 approval is not required before a controller reduces control or ceases to have control10over a UK domestic firm.

1510

Pre-notification and approval for fund managers6

SUP 11.3.5AG

6The appropriate regulator15 recognises that firms acting as investment managers may have difficulties in complying with the prior notification requirements in sections 178 and 191D 10of the Act as a result of acquiring or disposing of listed shares in the course of that fund management activity. To ameliorate these difficulties, the appropriate regulator15 may accept pre-notification of proposed changes in control, made in accordance with SUP D, and may grant approval of such changes for a period lasting up to a year.

15101015
SUP 11.3.5BD

6The appropriate regulator15 may treat as notice given in accordance with sections 178 and 191D15of the Act a written notification from a firm which contains the following statements:

151015
  1. (1)

    that the firm proposes to acquire and/or dispose of control, on one or more occasions, of any UK domestic firm whose shares or those of its ultimate parent undertaking are, at the time of the acquisition or disposal of control, listed, or which are traded or admitted to trading on a MTF or a market operated by a ROIE;13

    13
  2. (2)

    that any such acquisitions and/or disposals of control will occur only in the course of the firm's business as an investment manager;

    10
  3. (3)

    that the level of control the firm so acquires in the pre-approval period will at all times remain less than 20%; and10

    10
  4. (4)

    10that the firm will not exercise any influence over the UK domestic firm in which the shares are held, other than by exercising its voting rights as a shareholder or by exercising influence intended to promote generally accepted principles of good corporate governance.

SUP 11.3.5CG

6Where the appropriate regulator15 approves changes in control proposed in a notice given under SUP 11.3.5B D:

15
  1. (1)

    the controller remains subject to the requirement to notify the appropriate regulator15 when a change in control actually occurs; and

    15
  2. (2)

    the notification of change in control should be made no later than five business days after the end of each month and set out all changes in the controller's control position for each UK domestic firm for the month in question.

At that stage, the appropriate regulator15 may seek from the controller further information.

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SUP 11.3.6G

[deleted]10

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SUP 11.3.6AG

[deleted]10

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SUP 11.3.6BG

[deleted]10

10
SUP 11.3.6CG

[deleted]10

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Forms of notifications when acquiring or increasing control10

SUP 11.3.7D

Asection 178 notice 10 given to the appropriate regulator15 by a person who is acquiring control or increasing his control over a UK domestic firm, in a way described in SUP 11.4.2 R (1) to (4), or acquiring control in a way described in SUP 11.4.2A R, must contain the information and be accompanied by such documents as are required by the controllers form approved by the appropriate regulator15 for the relevant application. 46

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SUP 11.3.7AG
SUP 11.3.8D

[deleted]8

SUP 11.3.9D

[deleted]10

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SUP 11.3.10D
  1. (1)

    A person who has submitted a section 178 notice 10under SUP 11.3.7 D must notify the appropriate regulator15 immediately if he becomes aware, or has information that reasonably suggests, that he has or may have provided the appropriate regulator15 with information which was or may have been false, misleading, incomplete or inaccurate, or has or may have changed, in a material particular. The notification must include:

    101515
    1. (a)

      details of the information which is or may be false, misleading, incomplete or inaccurate, or has or may have changed;

    2. (b)

      an explanation why such information was or may have been provided; and

    3. (c)

      the correct information.

  2. (2)

    If the information in (1) (c) cannot be submitted with the section 178 notice 10(because it is not immediately available), it must instead be submitted as soon as possible afterwards.

    10
  3. (3)

    The requirement in (1) ceases if the change in control occurs or will not take place.

SUP 11.3.11G

The appropriate regulator15 will inform a section 178 notice giver as soon as reasonably practicable if it considers the section 178 notice to be incomplete.10651

81015
SUP 11.3.12G

86 The appropriate regulator15 has power, under section 179(3) 10of the Act (Requirements for section 178 notices1510), to vary or waive these 10requirements in relation to a section 178 notice in particular cases 10if it considers it appropriate to do so.8

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SUP 11.3.13G

Where a15 controller or proposed controller which is an authorised person is required to submit less information under SUP 11.3.7 D than other persons,15 the appropriate regulator15 may ask for confirmation of details already held by it15 or any additional information required under SUP 11.5.1R10.

1015151510
SUP 11.3.14G

Pursuant to section 188 of the Act (Assessment: consultation with EC15 competent authorities), the 10 appropriate regulator15 is obliged to consult any appropriate Home State regulator 10before making a determination under section 185 of the Act (Assessment: general)10.7

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Notification when reducing control10

SUP 11.3.15G

[deleted]10

SUP 11.3.15AD

10A notice given to the appropriate regulator15 by a person who is reducing or ceasing to have control over a UK domestic firm, as set out in SUP 11.4.2Ror SUP 11.4.2A R must:

15
  1. (1)

    be in writing; and

  2. (2)

    provide details of the extent of control (if any) which the controller will have following the change in control.

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SUP 11.3.16G

[deleted]10

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Joint notifications106

SUP 11.3.17G

6Notifications to the appropriate regulator15 by proposed controllers and controllers under Part XII of the Act may be made on a joint basis outlined in SUP 11.5.8 G to SUP 11.5.10 G.

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