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SYSC 4.2 Persons who effectively direct the business

SYSC 4.2.1R

The senior personnel of a common platform firm, a management company3a full-scope UK AIFM,5 or of the UK branch of a non-EEA bank 1must be of sufficiently good repute and sufficiently experienced as to ensure the sound and prudent management of the firm.

[Note: article 9

(1) of MiFID, article 7(1)(b) of the UCITS Directive3 article 8(1)(c) of AIFMD5, article 11(1) second paragraph of the Banking Consolidation Directive and article 13(1) of the CRD4]

SYSC 4.2.1AG

1Other firms should take account of the senior personnel rule (SYSC 4.2.1 R) as if it were guidance (and as if "should" appeared in that rule instead of "must") as explained in SYSC 1 Annex 1.3.3 G2.

Responsibility of senior personnel of an AIFM

SYSC 4.2.1BR

7For a full-scope UK AIFM, the senior personnel must, in complying with SYSC 4.2.1 R, be sufficiently experienced in relation to the investment strategies pursued by the AIFs it manages.

[Note: article 8(1)(c) of AIFMD]

SYSC 4.2.2R

A common platform firm, a management company, a full-scope UK AIFM53 and the UK branch of a non-EEA bank 1must ensure that its management is undertaken by at least two persons meeting the requirements laid down in SYSC 4.2.1 R and

, for a full-scope UK AIFM, SYSC 4.2.7 R5.

[Note: article 9(4) first paragraph of MiFID, article 7(1)(b) of the UCITS Directive3, article 8(1)(c) of AIFMD 5and article 13(1) of CRD]

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SYSC 4.2.3G

In the case of a body corporate, the persons referred to in SYSC 4.2.2 R should either be executive directors or persons granted executive powers by, and reporting immediately to, the governing body. In the case of a partnership, they should be active partners.

SYSC 4.2.4G

At least two independent minds should be applied to the formulation and implementation of the policies of a common platform firm, a management company3, a full-scope UK AIFM5 and the UK branch of a non-EEA bank1. Where a firm1 nominates just two individuals to direct its business, the appropriate regulator will not regard them as both effectively directing the business where one of them makes some, albeit significant, decisions relating to only a few aspects of the business. Each should play a part in the decision-making process on all significant decisions. Both should demonstrate the qualities and application to influence strategy, day-to-day policy and its implementation. This does not require their day-to-day involvement in the execution and implementation of policy. It does, however, require involvement in strategy and general direction, as well as knowledge of, and influence on, the way in which strategy is being implemented through day-to-day policy.

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SYSC 4.2.5G

Where there are more than two individuals directing the business of a common platform firm, a management company3, a full-scope UK AIFM5 or the UK branch of a non-EEA bank,1 the appropriate regulator does not regard it as necessary for all of these individuals to be involved in all decisions relating to the determination of strategy and general direction. However, at least two individuals should be involved in all such decisions. Both individuals' judgement should be engaged so that major errors leading to difficulties for the firm are less likely to occur. Similarly, each individual should have sufficient experience and knowledge of the business and the necessary personal qualities and skills to detect and resist any imprudence, dishonesty or other irregularities by the other individual. Where a single individual, whether a chief executive, managing director or otherwise, is particularly dominant in such 1a firm this will raise doubts about whether SYSC 4.2.2 R is met.

SYSC 4.2.6R

If a common platform firm, (other than a credit institution or AIFM investment firm5) or the UK branch of a non-EEA bank1, is:

1
  1. (1)

    a natural person; or

  2. (2)

    a legal person managed by a single natural person;

it must have alternative arrangements in place which ensure sound and prudent management of the firm.

[Note: article 9(4) second paragraph of MiFID]

SYSC 4.2.7R

A full-scope UK AIFM must notify the FCA of the names of the senior personnel of the firm and of every person succeeding them in office.

[Note: article 8(1)(c) of AIFMD]

SYSC 4.2.8G

Where the senior personnel of a full-scope UK AIFM will carry out a FCA8 governing function and the firm has applied for the FCA's approval under section 59 of the Act, this will be considered sufficient to comply with SYSC 4.2.7 R.8

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