Controllers and close links

Part

SUP Supervision manual

Chapter

Controllers and close links

Printed on: 06/11/2024

Rulebook at: 14/01/2005

SUP 11

Controllers and close links

SUP 11.1

Application

01/12/2004

Application to firms

SUP 11.1.1

This chapter applies to every firm except:

(1) an ICVC;

(2) an incoming EEA firm;

(3) an incoming Treaty firm;

(4) [deleted]

(5) a sole trader;

(6) a UCITS qualifier;

as set out in the table in SUP 11.1.2 R.

01/01/2003

SUP 11.1.2

Applicable sections (see SUP 11.1.1 R)

Category of firm

Applicable sections

(1)

A UK domestic firm other than a building society, a non-directive friendly society or a UK insurance intermediary

All except SUP 11.3, SUP 11.4.2A R and SUP 11.4.4 R

(1A)

A building society

(a) In the case of an exempt change in control (see Note), SUP 11.1, SUP 11.2 and SUP 11.9
(b) In any other case, all except SUP 11.3, R and SUP 11.4.4 R

(2)

A non-directive friendly society

SUP 11.1, SUP 11.2, and SUP 11.9

(2A)

A UK insurance intermediary

all except SUP 11.3, SUP 11.4.2 R, SUP 11.4.3 G and SUP 11.4.4 R

(3)

An overseas firm

All except SUP 11.3, SUP 11.4.2 R, SUP 11.4.2A R, SUP 11.4.3 G, SUP 11.4.9 G, SUP 11.5.8 G to SUP 11.5.10 G, SUP 11.6.2 R, SUP 11.6.3 R, SUP 11.6.6 G, SUP 11.7

Note

In row (1A), a change in control is exempt if the controller or proposed controller is exempt from any obligation to notify the FSA under Part XII of the Act (Control overAuthorised Persons) because of The Financial Services and Markets Act 2000 (Controllers) (Exemption) (No 2) Order 2001 (SI 2001/3338). (See SUP 11.3.2A G).

01/10/2003

SUP 11.1.3

This chapter may apply to directive friendly societies in the circumstances described in SUP 16.4.2 G (1) to (3).

21/06/2001

Application to controllers

SUP 11.1.4

SUP 11.1, SUP 11.2.1 G, SUP 11.33and SUP 11.7 apply to a controller or a proposed controller of a UK domestic firm not listed in SUP 11.1.1 R (1) to SUP 11.1.1 R (6).

21/06/2001

SUP 11.1.5

This chapter may apply to controllers and proposed controllers of directive friendly societies in the circumstances described in SUP 16.4.2G (1) to (3).

21/06/2001

SUP 11.2

Purpose

01/12/2004

SUP 11.2.1

Part XII of the Act (Control over authorised persons) places an obligation on the controllers and proposed controllers of those UK domestic firms not listed in SUP 11.1.1 R (1) to SUP 11.1.1 R (6) to notify the FSA of changes in control. Furthermore, those persons are required to obtain the FSA's approval before becoming a controller or increasing the level of control held (in certain circumstances). SUP 11.3 is intended to assist those persons in complying with their obligations under Part XII of the Act and also sets out the information which a controller or proposed controller must provide to the FSA before becoming a controller or increasing the level of control held.

21/06/2001

SUP 11.2.2

The rules in SUP 11.4 to SUP 11.6 are aimed at ensuring that the FSA receives information it needs from firms to assist the FSA with its responsibility to monitor and, in some cases, give prior approval to firms' controllers.

01/12/2004

SUP 11.2.2A

Part XII of the Act does not place an obligation on a controller of a UK insurance intermediary to notify the FSA where it becomes or ceases to be a parent undertaking. Nevertheless, the rule in SUP 11.4.2AR (2) requires the UK insurance intermediary to notify the FSA of parent undertakings so that the FSA can monitor the firm's continuing satisfaction of the threshold conditions, which includes consideration of its controllers and parent undertakings (see COND).

21/06/2001

SUP 11.2.3

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 to be notified of controllers and parent undertakings of overseas firms.

21/06/2001

SUP 11.2.4

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 matters relating to a controller.

21/06/2001

SUP 11.2.5

Similarly, the FSA needs to monitor a firm's continuing satisfaction of threshold condition 3 (Close links) (see COND 2.3), 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.

01/12/2004

SUP 11.2.6

Every firm, other than a firm listed in SUP 11.1.1 R (1) to SUP 11.1.1 R (6)or a firm excluded from the operation of SUP 16.4 or SUP 16.5 by SUP 16.1.3 R, is required to submit an annual report on its controllers and close links as set out in SUP 16.4 and SUP 16.5.

01/12/2004

SUP 11.2.7

The requirements in SUP 11 implement certain provisions relating to changes in control and close links required under the Single Market Directives.

01/12/2004

SUP 11.2.8

An event described in SUP 11.4.2 R (1) to SUP 11.4.2 R (4)[and R (1) and R (2)] is referred to in this chapter as a "change in control".

14/01/2005

SUP 11.3

Requirements on controllers or proposed controllers under the Act

01/12/2004

SUP 11.3.1

A summary of the notification requirements described in this section is given in SUP 11 Annex 1.

21/06/2001

Requirement to notify a proposed change in control

SUP 11.3.2

Sections 178(1) and 190(1)of the Act require a person (whether or not he is an authorised person) to notify the FSA in writing if he proposestotake a step which would result in his acquiring control or increasing or reducing his control over a UK domestic firmin a way described in SUP 11.4.2 R (1) to SUP 11.4.2 R (4), or acquiring or reducing his control in a way described in SUP 11.4.2 R (1) and (2). Failure to notify is an offence under section 191(1) of the Act (Offences under this Part).

01/12/2004

SUP 11.3.2A

The Treasury have made the following exemptions:

(1) controllers and potential controllers of non-directive friendly societies are exempt from the obligation to notify a change in control (The Financial Services and Markets Act 2000 (Controllers) (Exemption) Order 2001 (SI 2001/2638));
(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 society's capital or the increase or reduction by a specified percentage of a holding of a society's capital (The Financial Services and Markets Act 2000 (Controllers) (Exemption) (No.2) Order 2001 (SI 2001/3338.)). The "capital" of a society for these purposes consists of:

(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
(b) the general reserves of the society.

01/10/2003

Approval required before acquiring or increasing control

SUP 11.3.4

If a personproposesto acquire control or increase his control over a UK domestic firm in a way described in SUP 11.4.2 R(1) to (4)or acquire control in a way described in SUP 11.4.2AR (1), he must obtain the FSA's approval before doing so. Failure to obtain approvalis an offence under section 191(3) of the Act (Offences under this Part). The FSA has up to three months to consider whether to approve such a change in control: see SUP 11.7 for guidance on the approval procedures.

14/01/2005

SUP 11.3.5

The FSA's approval is not required before a controller reduces his control over a UK domestic firm.

01/12/2004

Pre-notification and approval for fund managers

SUP 11.3.5A

The FSA recognises that firms acting as investment managers may have difficulties in complying with the prior notification requirements in sections 178(1) and 190(1)of 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 year.

01/12/2004

SUP 11.3.5B

The FSA may treat as notice given in accordance with sections 178(1) and 190(1)of the Act a written notification from a firm which contains the following statements:

(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;:

(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; and

(3) that the level of control the firm so acquires in the pre-approval period will at all times remain less than 20%.

01/12/2004

SUP 11.3.5C

Where 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 further information, including that which would have been supplied under SUP 11.3.7 D (2).

01/12/2004

Change in control without taking any step

SUP 11.3.6

If a change in control occurs without the person himself having taken any step, he must notify the FSA within 14 days of becoming aware of the change (sections 178(2) and 190(2) of the Act). Failure to notify is an offence under section 191(2) of the Act.

01/12/2004

Custodians obtaining control

SUP 11.3.6A

The FSA considers that a custodian or its wholly-owned subsidiary nominee company, acting only in that capacity, does not itself take any step for the purposes of sections 178(2) and 190(2) of the Act when it becomes the controller of a UK domestic firm, its control of a UK domestic firm changes or it ceases to be the controller of a UK domestic firm as a result of acquiring or disposing of custody assets in the form of shares in accordance with its client's instructions.

01/12/2004

SUP 11.3.6B

For the purposes of sections 178(2) and 190(2) of the Act and where there has been more than one change in control for each UK domestic firm in a fortnightly period, a custodian or its wholly-owned subsidiary nominee company to which SUP 11.3.6A G applies need only notify the FSA of its final control position for each UK domestic firm for that fortnight, so long as it also supplies the highest control position for each UK domestic firm it obtained during that period.

01/12/2004

SUP 11.3.6C

Reporting by a custodian or its wholly-owned subsidiary nominee company does not relieve any other person with an interest in any custody assets from its control notification responsibilities under Part XII of the Act.

01/12/2004

Form of notification when acquiring or increasing control

SUP 11.3.7

Anotification ("notice of control") 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:

(1) where the controller or a proposed controller is not an authorised person, contain the information required in:

(a) Controllers Form A (SUP 11 Annex 4); and

(b) one or more of Controllers Form B (SUP 11 Annex 5) in accordance with SUP 11.3.8 D; or

(1A) where the controller is a custodian or a nominee company notifying under SUP 11.3.6A G, comply with that direction;

(2) where the controller or proposed controller is any other authorised person, contain the information required in those sections of Controllers Form A (SUP 11 Annex 4) which deal with details of the proposed change in control and the persons involved in the notification; and

(3) if a notification is not submitted on the relevant form specified in (1) or (2), provide reasons why that form was not used.

01/12/2004

SUP 11.3.8

The information in Controllers Form B is required in relation to the following persons:

(1) if the controller is an individual, that individual;

(2) if the controller is a body corporate:

(a) the individual who is its chief executive; and

(b) one other individual who is a director of the body corporate;

(3) if the controller is a partnership or is a controller because he is a partner in a partnership:

(a) the individual who is a managing partner or equivalent in the partnership; and

(b) one other individual who is a partner in the partnership.

21/06/2001

SUP 11.3.9

If a Controllers Form B, or an Application to perform controlled functions under the approved persons regime (Form A in SUP 10 Annex 4) in respect of a governing function, has already been submitted to the FSA in relation to a relevant individual, then the information in that form need not be submitted to the FSA as long as details of any changes in the information previously submitted, or confirmation that there are none, is submitted.

15/11/2001

SUP 11.3.10

(1) A person who has submitted a notificationunder 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:

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

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

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

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

21/06/2001

SUP 11.3.11

The FSA, for administrative reasons, expects notifications within SUP 11.3.7 D to be given on Controllers Form A or Controllers Form B, as appropriate. If notifications are not made on these forms the applicant must inform the FSA of the reasons for not using them.

01/12/2004

SUP 11.3.12

If a controller or proposed controller considers that the requirements in SUP 11.3.7 D to SUP 11.3.9 D are not appropriate to his circumstances, :

(1) if the control is temporary; or

(2) if Form B is required (under SUP 11.3.8 D) in relation to:

(a) an individual who is an approved person; or

(b) a partnership of which one or more of the partners are bodies corporate.

he should consult the FSA. The FSA has power, under section 182(3) of the Act (Notification), to amend those requirements if it considers it appropriate to do so.

01/12/2004

SUP 11.3.13

The Act provides that the FSA may request any additional information or documentation from the controller or proposed controller that it reasonably requires in order to determine what action it is to take in response to the notification. A controller or proposed controller which is an authorised person is required to submit less information under SUP 11.3.7 D than other persons and consequently the FSA may ask for confirmation of details already held or any additional information which it consi3ders appropriate.

21/06/2001

SUP 11.3.14

The FSA is obliged to consult regulatory authorities in other EEA Statesbefore approving the change in control or giving a warning notice where :

(1)

(a) the "target"UK domestic firm is an investment firm;

(b) the controller or proposed controller is an ISD investment firm or the parent undertaking of an ISD investment firm; and

(c) as a result of the acquisition or proposed acquisition, the controller or proposed controller would become the parent undertaking of the UK domestic firm; or

(2)

(a) the "target"UK domestic firm has permission to accept deposits;

(b) the controller or proposed controller is a BCD credit institution or the parent undertaking of a BCD credit institution; and

(c) as a result of the acquisition or proposed acquisition, the controller or proposed controller would become the parent undertaking of the UK domestic firm.

01/12/2004

Form of notification when reducing control

SUP 11.3.15

A notification given to the FSA by a person who is reducing his control over a UK domestic firm, in a way described in SUP 11.4.2 R(1) to (4), or must, in accordance with section 190(4) of the Act (Notification):

(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.

01/12/2004

Notification when change in control occurs

SUP 11.3.16

A person who is under a duty to notify the FSA of a proposed change in control is also required to notify the FSA when the relevant change in control has occurred (sections 178(3) and 190(3) of the Act).

01/12/2004

Joint and shared notifications

SUP 11.3.17

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

01/12/2004

SUP 11.4

Requirements on firms

01/12/2004

SUP 11.4.1

A summary of the notification requirements in this section is given in SUP 11 Annex 1.

21/06/2001

Requirement to notify a change in control

SUP 11.4.2

A UK domestic firm other than a UK insurance intermediary must notify the FSA of any of the following events concerning the firm:

(1) a person acquiring control or ceasing to have control

(2) an existing controlleracquiring an additional kind of control or ceasing to have a kind of control;

(3) an existing controllerincreasing or decreasing a kind of control which he already has so that the percentage of shares or voting power concerned becomes or ceases to be equal to or greater than 20, 33 or 50;

(4) an existing controllerbecoming or ceasing to be a parent undertaking.

21/06/2001

SUP 11.4.2A

A UK insurance intermediary must notify the FSA of any of the following events concerning the firm:

(1) a person acquiring control;
(2) in relation to an existing controller:

(a) the percentage of shares held in the firm decreasing from 20% or more to less than 20%; or
(b) the percentage of shares held in a parent undertaking of the firm decreasing from 20% or more to less than 20%; or
(c) the percentage of voting power which it is entitled to exercise, or control the exercise of, in the firm decreasing from 20% or more to less than 20%; or
(d) the percentage of voting power which it is entitled to exercise, or control the exercise of, in a parent undertaking of the firm decreasing from 20% or more to less than 20%;

(3) an existing controller becoming or ceasing to be a parent undertaking.

21/06/2001

SUP 11.4.3

SUP 11 Annex 2 gives examples of the circumstances in which a notification in accordance with SUP 11.4.2 R is required.

21/06/2001

SUP 11.4.4

An overseas firm must notify the FSA of any of the following events concerning the firm:

(1) a person acquiring control or ceasing to have control;

(2) an existing controller becoming or ceasing to be a parent undertaking.

21/06/2001

SUP 11.4.5

If there is uncertainty whether a particular relationship constitutes control, it may be appropriate for the firm or controller or proposed controller to ask the FSA for individual guidance (see SUP 9) and to obtain its own legal advice. For example, if the control is to be held through a trust, then certain trustees, beneficiaries and other parties may qualify as controllers for the purposes of the Act and this chapter. Furthermore, a person may qualify as a controller if he is able to exercise 10%. (20% if the firm is a UK insurance intermediary) or more of the voting power at a firm's general meeting as a result of the ability to exercise proxy votes.

21/06/2001

SUP 11.4.6

If a firm is required to obtain approval from the Society of Lloyd's for any changes in its controllers, it should apply for this approval as well as notifying the FSA.

21/06/2001

Content and timing of the notification

SUP 11.4.7

The notification by a firm under SUP 11.4.2 R, R or SUP 11.4.4 R must:

(1) be in writing;

(2) contain the information set out in:

(a) in the case of acquiring or increasing control, SUP 11.5.1 R (subject to SUP 11.5); or

(b) in the case of reducing control, SUP 11.5.7 R; and

(3) be made:

(a) as soon as the firm becomes aware that a personis proposing to take a step that would result in the event concerned; or

(b) if the eventtakes place without the knowledge of the firm, within 14 days of the firm becoming aware of the change in control concerned.

21/06/2001

SUP 11.4.8

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 controllers' or proposed controllers' shareholdings 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 should take place before a person:

(1) enters into any formal agreement in respect of the purchase of shares or a proposed acquisition or merger which would result in a change in control (whether or not the agreement is conditional upon any matter, including the FSA's approval); or

(2) purchases any share options, warrants or other financial instruments, the exercise of which would result in the person acquiring control or any other change in control.

21/06/2001

SUP 11.4.9

The obligationin SUP 11.4.2 R and SUP 11.4.2AR (1) and R (2) applies whether or not the controller himself has given or intends to give a notification, in accordance with his obligations under the Act.

21/06/2001

Identity of controllers

SUP 11.4.10

A firm must take reasonable steps to keep itself informed about the identity of its controllers.

21/06/2001

SUP 11.4.11

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 VI of the Companies Act 1985;

(3) monitoring public announcements made under the relevant disclosure provisions of the Takeover Code or other rules made by the Takeover Panel (for example the SARs);

(4) monitoring the entitlement of delegates, or persons with voting rights in respect of group insurance contracts, to exercise or control voting power at general meetings.

21/06/2001

SUP 11.5

Form of notification by firms

01/12/2004

SUP 11.5.1

Information to be submitted by the firm (see SUP 11.4.7 R (2)(a))

(1)

The name of the firm;

(2)

the name of the controller or proposed controller and, if it is a body corporate and is not an authorised person, the names of its directors and its controllers;

(3)

a description of the proposed event including the shareholding and voting power of the person concerned, both before and after the proposed event; and

(4)

any other information of which the FSA would reasonably expect notice, including information which could have a material impact on any of the approval requirements in section 186(2) of the Act (seeSUP 11.7.5 G) and any relevant supporting documentation.

21/06/2001

SUP 11.5.2

The notification from a firm under SUP 11.4.7 R (2)(a) need only contain as much of the information set out in SUP 11.5.1 R as the firm is able to provide, having made reasonable enquiries from persons and other sources as appropriate.

21/06/2001

SUP 11.5.3

In determining what the FSA would reasonably expect notice of in accordance with row (4) in SUP 11.5.1 R, a firm should have regard, in particular, to the following matters to the extent that the firm is aware of them:

(1) whether the controller intends to make any significant changes to the firm's or firms' regulated activities, business plan or strategy as a result of the change in control;

(2) whether the controller intends any restructuring either in terms of the legal form of the firm(s) or in its or their borrowings, capital restructuring or financing arrangements;

(3) whether the FSA is obliged to consult with regulatory authorities in other EEA States (see SUP 11.3.14 G);

(4) in the case of a share acquisition or similar, how it is to be financed;

(5) whether the controller has any interests which may conflict with its role as controller of the UK domestic firm.

Firms are also reminded of the circumstances set out in SUP 15.3.8 G (Communication with the FSA in accordance with Principle 11) which may arise on a change in control and which should also be notified.

01/12/2004

SUP 11.5.4

Firms are reminded that a change in control may give rise to a change in the group companies to which the FSA's consolidated financial supervision requirements apply. Also, the firm may for the first time become subject to the FSA's requirements on consolidated financial supervision (or equivalent requirements imposed by another EEA State). This may apply, for example, if the controller is itself an authorised undertaking. The FSA may therefore request such a firm, controller or proposed controller to provide evidence that, following the change in control, the firm will meet the requirements of these rules, if appropriate.

21/06/2001

SUP 11.5.4A

Firms are also reminded that a change in control may give rise to a notification as a financial conglomerate or a change in the supplementary supervision of a financial conglomerate (see PRU 8.4(Cross sector groups) and PRU 8.5(Third country groups)).

01/01/2005

SUP 11.5.5

If a controller proposes any significant changes to the firm, for instance to its regulated activities, business plan or strategy, the firm may be requested to provide a business plan (see SUP 2: Information gathering by the FSA on its own initiative). If an insurer comes under the control of a new parent undertaking, such a business plan would be a scheme of operations in accordance with SUP App 2.

21/06/2001

SUP 11.5.6

The FSA may request the firm to provide additional information (see SUP 2 (Information gathering by the FSA on its own initiative)). In determining any additional information requirements, the FSA will have regard to the supervision being exercised over the firm by any overseas regulators.

21/06/2001

Form of notification when a person reduces control

SUP 11.5.7

A notification of a proposed reduction in control must:

(1) give the name of the controller; and

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

21/06/2001

Joint and shared notifications

SUP 11.5.8

A firm and its controller or proposed controller may discharge an obligation to notify the FSA by submitting a single joint notificationcontaining the information required from the firm and the controller or proposed controller. In this case, the Controllers Form A may be used to submit a notification on behalf of both the firm and the controller or proposed controller.

21/06/2001

SUP 11.5.9

If a person is proposing a change in control over more than one firm within a group, then the controller or proposed controller may submit a singlenotification in respect of all those firms. The notificationshould contain all the required information as if separate notifications had been made, but information and documentation need not be duplicated.

21/06/2001

SUP 11.5.10

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 notification containing one set of information.

21/06/2001

SUP 11.6

Subsequent notification requirements by firms

01/12/2004

Changes in the information provided to the FSA

SUP 11.6.1

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.

21/06/2001

SUP 11.6.2

After submitting a notificationunder SUP 11.4.2 R or SUP 11.4.2AR (1) and R (2) and until the change in control occurs (or is no longer to take place), SUP 15.6.4 R and SUP 15.6.5 R apply to a UK domestic firm in relation to any information its controller or proposed controller provided to the FSA under SUP 11.5.1 R or SUP 11.3.7 D.

21/06/2001

SUP 11.6.3

During the period in SUP 11.6.2 R, a UK domestic firm must take reasonable steps to keep itself informed about the circumstances of the controller or the proposed controller to which the notification related.

21/06/2001

Notification that the change in control has taken place

SUP 11.6.4

A firm must notify the FSA :

(1) when a change in control which was previously notified under SUP 11.4.2 R, SUP 11.4.2A Ror SUP 11.4.4 R has taken place; or

(2) if the firm has grounds for reasonably believing that the event will not now take place.

21/06/2001

SUP 11.6.5

The notification under SUP 11.6.4 R must be given within 14 days of the change in control or of having the grounds (as applicable).

21/06/2001

SUP 11.6.6

A notification under SUP 11.6.4 R may be given jointly with the notification of the controller under SUP 11.3.16 G.

21/06/2001

SUP 11.7

Acquisition or increase of control: approval procedures

01/12/2004

SUP 11.7.1

The approval procedures are summarised in SUP 11 Annex 3.

21/06/2001

Approval with or without conditions

SUP 11.7.2

If the FSA decides to approve a proposed acquisition or increase of control unconditionally, it must give an 'approval notice' without delay (section 184(1) of the Act).

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SUP 11.7.3

Alternatively, the FSA may decide to approve the proposed acquisition or increase of control subject to such conditions as it considers appropriate, having regard to the FSA's duty to ensure that the firm concerned will satisfy, and continue to satisfy, the threshold conditions (section 185 of the Act).

(1) If the FSA proposes to approve subject to conditions, it must give a warning notice.

(2) If the FSA decides to proceed to approve subject to conditions, it must give a decision notice.

01/12/2004

SUP 11.7.4

A notice which approves a change of control (with or without conditions) is effective only for a limited period as set out in the notice (or, if no such period is specified, for one year) (section 184(3) of the Act). An approved change in control may not therefore take place after the end of this period.

21/06/2001

Approval requirements and objection

SUP 11.7.5

The FSA may object to a proposed acquisition or increase of control unless it is satisfied that the approval requirements are met (section 186 of the Act). These are that:

(1) the acquirer is a fit and proper person to have the control over the firm that he has or would have if he acquired the control in question; and

(2) the interests of consumers would not be threatened by the acquirer's control or by his acquiring that control.

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SUP 11.7.6

In deciding whether the approval requirements are met, the FSA must have regard, in relation to the control that the acquirer:

(1) has over the firm; or

(2) will have over the firm if the proposal to which the notification relates is carried out;

to the FSA's duty to ensure that the firm will satisfy, and continue to satisfy, the threshold conditions (section 186(3) of the Act).

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SUP 11.7.7

(1) If the FSA proposes to object, it must issue a warning notice.

(2) If the FSA decides to proceed with its proposed objection, it must issue a decision notice.

(3) If the FSA considers that the approval requirements would be met if a particular step were taken or not taken, the decision notice must identify that step (section 186(4) of the Act).

01/12/2004

SUP 11.7.8

The FSA may also object if it has not received sufficient information from either the controller or the firm to satisfy itself that the approval requirements are met.

01/12/2004

Warning notices and decision notices

SUP 11.7.9

The procedure followed by the FSA in relation to the giving of warning notices and decision notices and the process for referrals to the Financial Services and Markets Tribunal are set out in DEC 2.

21/06/2001

The FSA's timeframe for responding to a notification

SUP 11.7.10

If the FSA receives a valid notification from a controller or proposed controller, the FSA must respond within three months (section 183(1) of the Act). The response from the FSA will be either an approval notice or a warning notice.

01/12/2004

SUP 11.7.11

(1) Where the FSA becomes aware of a possible breach by the controller or proposed controller of his obligations under section 178(1) or (2) of the Act (Obligation to notify the Authority), it may require the person concerned to provide additional information or documents (section 188(4) of the Act).

(2) If the FSA is satisfied that a breach has occurred, but is not satisfied that the approval requirements are met, the FSA may give a warning notice to the controller or proposed controller (section 187(1) and 188(1) of the Act).

(3) Alternatively, the FSA may retrospectively approve the change in control as if a notification had been received from the controller or proposed controller (section 187(2) of the Act).

01/12/2004

SUP 11.7.12

If the FSA does not receive a notification from the controller or proposed controller and proposes to give a warning notice, it must do so within three months of the date on which it became aware that the controller or proposed controller had failed to comply with his duty to notify (section 188(3) of the Act).

21/06/2001

SUP 11.7.13

Before giving an approval notice or warning notice , the FSA must comply with certainrequirements as to consultation with competent authorities outside the United Kingdom (sections 183(2) and 188(2) of the Act and the Financial Services and Markets Act 2000 (Consultation with Competent Authorities) Regulations 2001). The Financial Groups Directive Regulations make special provision in relation to (the change in control over a UK authorised person (within the meaning of section 178(4) of the Act) which is a member of a third-country group

01/01/2005

The FSA's right to object to existing controllers

SUP 11.7.14

If a controller fails to give a notification under section 178 of the Act on acquiring or increasing control, and the FSA is not satisfied that the approval requirements are met, the FSA may propose to object to the controller by giving him a warning notice (sections 187(1) and 188(1) of the Act).

01/12/2004

SUP 11.7.15

The FSA may propose to object to a controller by giving him a warning notice at any time if it becomes aware of matters as a result of which it is satisfied that:

(1) the approval requirements are not met with respect to the controller; or

(2) a condition attached to an approval required the controller to do (or refrain from doing) a particular thing and that condition has been breached by the controller (sections 187(3) and 188(1) of the Act).

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SUP 11.7.16

If the FSA gives a warning notice as described in SUP 11.7.14 G or SUP 11.7.15 G, section 188 of the Act sets out various requirements as to timetable, consultation and provision of information.

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SUP 11.7.17

Following a warning notice as described in SUP 11.7.14 G or SUP 11.7.15 G, the FSA may decide to object to the controller and give him a decision notice. If the FSA does so, or if a conditional approval has been contravened, it may impose restrictions on some or all of the controller's shares by notice in writing or apply to the court for an order that the controller dispose of them (section 189 of the Act).

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SUP 11.7.18

If it appears to the FSA that the likely effect of an acquisition of control on a firm, or on any of its activities, is uncertain, the FSA may, in accordance with section 46 of the Act (Variation of permission on acquisition of control), vary the firm's Part IV permission by:

(1) imposing a requirement (see SUP 7: Individual requirements); or

(2) varying an existing requirement.

The warning notice and decision notice procedure does not apply to action taken under section 46 of the Act, but the FSA will operate a procedure that is fair in the circumstances.

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SUP 11.8

Changes in the circumstances of existing controllers

01/12/2004

SUP 11.8.1

A firm must notify the FSA immediately it becomes aware of any of the following matters in respect of one or more of its controllers:

(1) if a controller, or any entity subject to his control, is or has been the subject of any legal action or investigation which might put into question the integrity of the controller;

(2) if there is a significant deterioration in the financial position of a controller;

(3) if a corporate controller undergoes a substantial change or series of changes in its governing body;

(4) if a controller, who is authorised in another EEA State as an ISD investment firm or BCD credit institution or under the Insurance Directives or the Insurance Mediation Directive, ceases to be so authorised (registered in the case on an IMD insurance intermediary).

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SUP 11.8.2

In assessing whether a matter should be notified to the FSA under SUP 11.8.1 R (1), SUP 11.8.1 R (2) or SUP 11.8.1 R (3), a firm should have regard to the guidance on satisfying threshold condition 5 (Suitability) contained in COND 2.5.

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SUP 11.8.3

In respect of SUP 11.8.1 R (3), the FSA considers that, in particular, the removal or replacement of a majority of the members of a governing body (in a single event or a series of connected events) is a substantial change and should be notified.

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SUP 11.8.4

If a matter has already been notified to the FSA (for example, as part of the firm's application for a Part IV permission ), the firm need only inform the FSA of any significant developments.

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SUP 11.8.5

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 or has occurred.

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SUP 11.8.6

The FSA may ask the firm for additional information following a notification under SUP 11.8.1 R in order to satisfy itself that the controller continues to be suitable (see SUP 2: Information gathering by the FSA on its own initiative).

21/06/2001

SUP 11.9

Changes in close links

01/12/2004

Requirement to notify changes in close links

SUP 11.9.1

A firm must notify the FSA that it has become or ceased to be closely linked with any person. The notification must include the information set out in SUP 16.5.4 R(4).

01/12/2004

SUP 11.9.2

Guidance on what constitutes a close link is provided in COND 2.3.

21/06/2001

SUP 11.9.3

The FSA may ask the firm for additional information following a notification under SUP 11.9.1 R in order to satisfy itself that the firm continues to satisfy the threshold conditions (see SUP 2: Information gathering by the FSA on its own initiative).

21/06/2001

Timing of notification requirement

SUP 11.9.4

The firm must make a notification to the FSA under SUP 11.9.1 R:

(1) as soon as reasonably practicable and no later than one month after it becomes aware that it has become or ceased to be closely linked with any person; or

(2) where a firm has elected to report on a monthly basis, within fifteen business days of the end of each monthand:

(a) including the information set out in SUP 16.5.4R(4) for that month; and

(b) if there is no person required to be included in the notification for a particular month, confirming this fact in the notification.

01/12/2004

Electing to notify changes in close links monthly

SUP 11.9.5

(1) A firm elects to report changes in close links on a monthly basis by sending a written notice of election to the firm's usual supervisory contact at the FSA.

(2) An election to report changes in close links on a monthly basis will stand until such time as the firm gives its usual supervisory contact at the FSA at least one month's written notice of its intention to cease reporting changes in close links on a monthly basis.

01/12/2004

SUP 11.9.6

The FSA considers that monthly reporting of changes in close links will ordinarily only be appropriate for firms forming part of large groups.

01/12/2004

SUP 11 Annex 1

Summary of notification requirements

01/12/2004

SUP 11 Annex 1G

21/06/2001

SUP 11 Annex 2

Guidance on events requiring approval

01/12/2004

21/06/2001

SUP 11 Annex 3

Summary of procedures on a notification of a change in control

01/12/2004

21/06/2001

SUP 11 Annex 4

Controllers Form A

01/12/2004

This annex consists only of one or more forms. Forms are to be found through the 'Forms' link at www.fsahandbook.info or through the Handbook section of the CD-ROM under Forms.

01/01/2003

SUP 11 Annex 5

Controllers Form B

01/12/2004

This annex consists only of one or more forms. Forms are to be found through the 'Forms' link at www.fsahandbook.info or through the Handbook section of the CD-ROM under Forms.

21/06/2001