Related provisions for SUP 11.6.4
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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 FSA in accordance with section 178 of the Act before making the acquisition or increase. This will be:(1) where those persons are acting in concert, as contemplated
Sections 178(1) and 191D(1)10 of the Act require a person (whether or not he is an authorised person) to notify the FSA in writing if he decides 10to acquire, increase or reduce10control or to cease to have control10 over a UK domestic firm . Failure to notify is an offence under section 191F10 of the Act (Offences under this Part).461010101010
6The FSA 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 FSA 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
6The FSA may treat as notice given in accordance with sections 178 and 190(1)of the Act a written notification from a firm which contains the following statements:10(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 admitted to listing on a designated investment exchange;;10(2) that
6Where the FSA approves changes in control proposed in a notice given under SUP 11.3.5B D:(1) the controller remains subject to the requirement to notify the FSA when a change in control actually occurs; and(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 FSA may seek from the controller
A section 178 notice10 given to the FSA 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 FSA for the relevant application. 461010
(1) A person who has submitted a section 178 notice10under SUP 11.3.7 D must notify the FSA immediately if he becomes aware, or has information that reasonably suggests, that he has or may have provided the FSA 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:10(a) details of the information which is or may be false, misleading, incomplete or inaccurate,
10A notice given to the FSA 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:(1) be in writing; and(2) provide details of the extent of control (if any) which the controller will have following the change in control.
Friendly societies are encouraged to discuss a proposed transfer or amalgamation with the FSA, at an early stage to help ensure that a workable timetable is developed. This is particularly important where there are notification requirements for supervisory authorities in EEA States other than the United Kingdom, or for an amalgamation where additional procedures are required.
Under the Friendly Societies Act 1992:(1) when the members of a transferor society have approved the transfer of its engagements by passing a special resolution and the transferee has approved the transfer (by passing a resolution where the transferee is a friendly society); or(2) when two or more societies have approved a proposed amalgamation by passing a special resolution;it, or they jointly, must then obtain confirmation by the FSA of the transfer. Notice of the application
For a directive friendly society, if the transfer or amalgamation includes policies where the state of the risk or the state of the commitment is an EEA State other than the United Kingdom, consultation with the Host State regulator is required and SUP 18.2.25 G to SUP 18.2.29 G apply (for an amalgamation they apply as if the business of the amalgamating societies is to be transferred to the successor society). Paragraph 6(1) of Schedule 15 to the Friendly Societies Act 1992 requires
The criteria that the FSA must use in determining whether to confirm a proposed amalgamation or transfer are set out in schedule 15 to the Friendly Societies Act 1992. These criteria include that:(1) confirmation must not be given if the FSA considers that:(a) there is a substantial risk that the successor society or transferee will be unable lawfully to carry out the engagements to be transferred to it;(b) information material to the members' decision about the amalgamation or
Written representations, or written notice of a person's intention to make oral representations, or both, are required to reach the FSA by the date published in the relevant Gazettes and other newspapers. Those giving notice of intent to make oral representations are advised to state the nature and general grounds of the oral representations they intend to make. Persons who make written representations but subsequently decide also to make oral representations are required, nevertheless,
The hearing referred to in SUP 18.4.30 G will be at a time and place that will be notified to the participants and will be conducted by FSA representatives. The hearing may last longer than one day and may be adjourned. The FSA will try to tell participants when they may expect to make their representations and when the society may be expected to respond.
In aggregating VaR measures across risk or product categories, a firm must not use the square root of the sum of the squares approach unless the assumption of zero correlation between these categories is empirically justified. If correlations between risk categories are not empirically justified, the VaR measures for each category must simply be added in order to determine its aggregate VaR measure. But to the extent that a firm'sVaR model permission provides for a different way
3If the results of the stress tests carried out in accordance with BIPRU 7.10.55Z R indicate a material shortfall in the amount of capital required under the all price risk measure, a firm must notify the FSA of this circumstance by no later than two business days after the business day on which the material shortfall occurred.
If a backtesting exception occurs, the firm must notify its usual supervisory contact at the FSA orally by close of business two business days after the business day for which the backtesting exception occurred. Within five business days following the end of each Month, the firm must submit to the FSA a written account of the previous Month'sbacktesting exceptions (if any). This explanation must include the causes of the backtesting exceptions, an analysis of whether the backtesting
A VaR model permission will contain requirements for what the firm should report to the FSA and the procedures for reporting. The precise requirements will vary from VaR model permission to VaR model permission. BIPRU 7.10.129R-BIPRU 7.10.130R set out what the FSA regards as the standard requirements.
Where the change arises from circumstances within the control of the UK firm, the requirements in regulation 11(2) are that:(1) the UK firm has given notice to the FSA and to the Host State regulator stating the details of the proposed change;(2) the FSA has given the Host State regulator a notice informing it of the details of the change; and(3) either the Host State regulator has informed the UK firm that it may make the change, or the period of one month7 beginning with the
(1) If the change arises from circumstances beyond the UK firm's control, the UK firm:(a) is required by regulation 11(3) or regulation 13(3) to give a notice to the FSA and to the Host State regulator stating the details of the change as soon as reasonably practicable;(b) may, if it is passporting under the Insurance Directives, make a change to its relevant UK details7 under regulation 15(1) if it has, as soon as practicable (whether before or after the change), given notice
When the FSA receives a notice from a UK firm other than a MiFID investment firm7(see SUP 13.6.5 G (1) and SUP 13.6.7 G (1)) or a pure reinsurer (see SUP 13.6.9B R) 8it is required by regulations 11(4) and 13(4) to either refuse, or consent to the change within a period of one month7 from the day on which it received the notice.7
If the FSA refuses to consent to a change, then under regulations 11(6) and 13(6):(1) the FSA will give notice of the refusal to the UK firm, stating its reasons and giving an indication of the UK firm's right to refer the matter to the Tribunal and the procedures on such a reference; and(2) the UK firm may refer the matter to the Tribunal.62
Where the change arises from circumstances within the control of the incoming EEA firm, the requirements in regulation 4(4) are that:(1) the incoming EEA firm has given notice to the FSA (see SUP 14.4.1 G) and to its Home State regulator stating the details of the proposed change;(2) the FSA has received a notice stating those details; and(3) either:(a) the FSA has informed the firm that it may make the change; or(b) the period of one month beginning with the date on which the
Changes to the requisite details may lead to changes to the applicable provisions to which the incoming EEA firm is subject. The FSA will, as soon as practicable after receiving a notice in SUP 14.2.3 G or SUP 14.2.8 G, inform the incoming EEA firm of any consequential changes in the applicable provisions (regulation 4(6)).1
If the change arises from circumstances beyond the incoming EEA firm's control, the firm is required by regulation 4(5) (see SUP 14.2.2 G) or regulation 6(5) (see SUP 14.2.5 G (2)) to give a notice to the FSA (see SUP 14.4.1 G) and to its Home State regulator stating the details of the change as soon as reasonably practicable.
6The relevant requirements in regulation 4A(3) are that:(1) the EEA MiFID investment firm has given notice to its Home State regulator stating the details of the proposed change; and(2) the period of one month beginning with the date on which the EEA MiFID investment firm gave the notice mentioned in (1) has elapsed.
6Changes to the requisite details may lead to changes to the applicable provisions to which the EEA MiFID investment firm is subject. The FSA will, as soon as practicable after receiving a notice in SUP 14.2.11 G inform the EEA MiFID investment firm of any consequential changes in the applicable provisions.
A UK domestic firm,4 other than a non-directive firm, 4must notify the FSA of any of the following events concerning the firm:14(1) a person acquiring control;4(2) an existing controller increasing control4; 4(3) an existing controller reducing control4; 4(4) an existing controller ceasing to have control4.44
Principle 11 requires firms to be open and cooperative with the FSA. A firm should discuss with the FSA, at the earliest opportunity, any prospective changes of which it is aware, in a controller's4or proposed controller's4shareholdings or voting power (if the change is material). These discussions may take place before the formal notification requirement in SUP 11.4.2 R, R or SUP 11.4.4 R arises. (See also SUP 11.3.2 G). As a minimum, the FSA considers that such discussions
The steps that the FSA expects a firm to take to comply with SUP 11.4.10 R include, if applicable:(1) monitoring its register of shareholders (or equivalent);(2) monitoring notifications to the firm in accordance with Part 223 of the Companies Act 20063;33(3) monitoring public announcements made under the relevant disclosure provisions of the Takeover Code or other rules made by the Takeover Panel;2(4) monitoring the entitlement of delegates, or persons with voting rights in respect
Where the transferee is a friendly society, the notice should include information about the meeting at which a special resolution in accordance with paragraph 7 of Schedule 12 to the Friendly Societies Act 1992 is to be voted on, including the date of the meeting, how notice of the meeting is to be given to members and the terms of the special resolution. After the meeting the friendly society should inform the FSA whether the special resolution has been passed. The court will
The level of a firm's awareness of its controller's circumstances will depend on its relationship with that controller. The FSA does not expect firms to implement systems or procedures so as to be certain of any changes in its controllers' circumstances. However, the FSA does expect firms to notify it of such matters if the firm becomes aware of them, and it expects firms to make enquiries of its controllers if it becomes aware that one of the events in SUP 11.8.1 R may occur
The relevant requirements in regulation 5(3) are that:(1) the incoming EEA firm has given a notice to the FSA (see SUP 14.4.1 G) and to its Home State regulator stating the details of the proposed change;(2) if the change arises from circumstances beyond the incoming EEA firm's control, that firm has, as soon as practicable, given to the FSA and to its Home State regulator the notice in (1).1
1Under section 312C of the Act, if a UK RIE wishes to make arrangements in an EEA State other than the UK to facilitate access to or use of a regulated market,2multilateral trading facility or auction platform2 operated by it, it must give the FSAwritten notice of its intention to do so. The notice must:(1) describe the arrangements; and(2) identify the EEA State in which the UK RIE intends to make them.
(1) Where a firm is submitting an application for variation of Part IV permission which would lead to a change in the controlled functions of its approved persons, it should, at the same time and as appropriate:(a) make an application to the FSA for an internal transfer of an approved person, Form E (Internal transfer), or make an application to the FSA for an individual to perform additional controlled functions, the relevant11 Form A (Application); seeSUP 10.13.3 D to SUP 10.13.5
(1) A firm other than a credit union wishing to vary its Part IV permissionmust apply online at www.fsa.gov.uk using the form specified on the FSA's ONA system.1414(2) A credit union wishing to vary its Part IV permission must apply using the form in SUP 6 Ann 5D and submit its application in the way set out in SUP 15.7.4 R to SUP 15.7.9 G (Form and method of notification).1414(3) Until the application has been determined, a firm which submits an application for variation of
The name of the firm;
A firm and its controller or proposed controller may discharge an obligation to notify the FSA by submitting a single joint section 178 notice5containing the information required from the firm and the controller or proposed controller. In this case, the section 178 notice53 may be used on behalf of both the firm and the controller or proposed controller.5355
When an event occurs (for example, a group restructuring or a merger) as a result of which: (1) more than one firm in a group would undergo a change in control; or(2) a single firm would experience more than one change in control;then, to avoid duplication of documentation, all the firms and their controllers or proposed controllers may discharge their respective obligations to notify the FSA by submitting a single section 178 notice5 containing one set of information.5
(1) Auditors are subject to regulations made by the Treasury under sections 342(5) and 343(5) of the Act (Information given by auditor or actuary to the FSA). Section 343 and the regulations also apply to an auditor of an authorised person in his capacity as an auditor of a person who has close links with the authorised person.3(2) These regulations oblige auditors to report certain matters to the FSA. Sections 342(3) and 343(3) of the Act provide that an auditor does not contravene
(1) 2A firm other than a credit union must submit any notice underSUP 15.5.1R, SUP 15.5.4R, SUP 15.5.5 R3 and SUP 15.5.7R by submitting the form in SUP 15 Ann 3R online at www.fsa.gov.uk.(2) A credit union must submit any notice under SUP 15.5.1R, SUP 15.5.4R, SUP 15.5.5 R3 and SUP 15.5.7R by submitting the form in SUP 15 Ann 3R in the way set out in SUP 15.7.4R to SUP 15.7.9G (Form and method of notification).(3) Where a firm is obliged to submit a notice online under (1), if
As the approval of the FSA is not required under the Act for a new controller of an overseas firm, the notification rules on such firms are less prescriptive than they are for UK domestic firms. Nevertheless, the FSA still needs to monitor such an overseas firm's continuing satisfaction of the threshold conditions, which normally includes consideration of a firm's connection with any person, including its controllers and parent undertakings (see COND). The FSA therefore needs
As part of the FSA's function of monitoring a firm's continuing satisfaction of the threshold conditions, the FSA needs to consider the impact of any significant change in the circumstances of one or more of its controllers, for example, in their financial standing and, in respect of corporate controllers, in their governing bodies. Consequently, the FSA needs to know if there are any such changes. SUP 11.8 therefore requires a firm to tell the FSA if it becomes aware of particular
Similarly, the FSA needs to monitor a firm's continuing satisfaction of threshold condition 3 (Close links) (see COND 2.32), which requires that a firm's close links are not likely to prevent the FSA's effective supervision of that firm. Accordingly the FSA needs to be notified of any changes in a firm's close links. This requirement is contained in SUP 11.9.2
A UK firm, other than a UK pure reinsurer,9 cannot start providing cross border services into another EEA State under an EEA right unless it satisfies the conditions in paragraphs 20(1) of Part III of Schedule 3 to the Act and, if it derives its EEA right from the Insurance Directives, paragraph 20(4B) of Part III of Schedule 3 to the Act. It is an offence for a UK firm which is not an authorised person to breach this prohibition (paragraph 21 of Part III of Schedule 3 to the
8(1) If8 the UK firm'sEEA right derives from MiFID8, the Banking Consolidation Directive or the UCITS Directive, paragraph 20(3) of Part III of Schedule 3 to the Act requires the FSA to send a copy of the notice of intention8 to the Host State Regulator within one month8 of receipt.8A UK firm passporting under the Banking Consolidation Directive10 may start providing cross border services as soon as it satisfies the relevant conditions (see SUP 13.4.2 G).88888810(2) (a) If8 the
Firms are reminded that SUP 15.6.4 R requires them to notify the FSA if information notified under SUP 11.4.2 R, R or SUP 11.4.4 R was false, misleading, inaccurate, incomplete, or changes, in a material particular. This would include a firm becoming aware of information that it would have been required to provide under SUP 11.5.1 R if it had been aware of it.1