Financial Services and Markets Bill - continued        House of Commons
Case D - continued

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Variation of permission on acquisition of control.     41. - (1) This section applies if it appears to the Authority that-
    (a) a person has acquired control as mentioned in section 150 over a UK authorised person who has a Part IV permission; but
    (b) there are no grounds for acting under section 40.
      (2) If it appears to the Authority that the likely effect of the acquisition of control on the authorised person, or on any of its activities, is uncertain the Authority may vary the authorised person's permission by-
    (a) imposing a requirement of a kind that could be imposed under section 38 on giving permission; or
    (b) varying a requirement included in the authorised person's permission under that section.
Exercise of powers in support of overseas regulator.     42. - (1) The Authority's power to vary or cancel a Part IV permission otherwise than at the request of an authorised person (its "own-initiative power") may be exercised in respect of an authorised person at the request of, or for the purpose of assisting, a regulator who is-
    (a) outside the United Kingdom; and
    (b) of a prescribed kind.
      (2) Subsection (1) applies whether or not the Authority has powers which are exercisable in relation to the authorised person by virtue of any provision of Part XII.
      (3) If a request to the Authority for the exercise of its own-initiative power has been made by a regulator who is-
    (a) outside the United Kingdom,
    (b) of a prescribed kind, and
    (c) acting in pursuance of provisions of a prescribed kind,
  the Authority must, in deciding whether or not to exercise that power in response to the request, consider whether it is necessary to do so in order to comply with a Community obligation.
      (4) In deciding in any other case whether or not to exercise its own-initiative power in response to a request, the Authority may take into account in particular-
    (a) whether in the country or territory of the regulator concerned, corresponding assistance would be given to a United Kingdom regulatory authority;
    (b) whether the case concerns the breach of a law, or other requirement, which has no close parallel in the United Kingdom or involves the assertion of a jurisdiction not recognised by the United Kingdom;
    (c) the seriousness of the case and its importance to persons in the United Kingdom;
    (d) whether it is otherwise appropriate in the public interest to give the assistance sought.
      (5) The Authority may decide not to exercise its own-initiative power, in response to a request, unless the regulator concerned undertakes to make such contribution towards the cost of its exercise as the Authority considers appropriate.
      (6) Subsection (5) does not apply if the Authority decides that it is necessary for it to exercise its own-initiative power in order to comply with a Community obligation.
      (7) In subsections (4) and (5) "request" means a request of a kind mentioned in subsection (1).
Prohibitions and restrictions.     43. - (1) This section applies if the Authority, acting under section 40, 41 or 42, varies a Part IV permission so as to impose on the authorised person concerned ("A") a requirement-
    (a) prohibiting the disposal of, or other dealing with, any of A's assets (whether in the United Kingdom or elsewhere) or restricting such disposals or dealings;
    (b) that all or any of A's assets, or all or any assets belonging to investors but held by or to A's order, must be transferred to and held by a trustee approved by the Authority; or
    (c) prohibiting A from making (on his own behalf) investments of a particular kind or that A must dispose of investments of a particular kind belonging to him.
      (2) Section 38(2) does not apply in relation to-
    (a) the imposition of such a requirement ("the main requirement"); or
    (b) the imposition of a requirement imposed by the Authority in connection with the imposition of the main requirement.
      (3) If the Authority-
    (a) imposes a requirement of the kind mentioned in subsection (1)(a), and
    (b) gives notice of the requirement to any institution with whom A keeps an account,
  the notice has the effects mentioned in subsection (4).
      (4) Those effects are that-
    (a) the institution does not act in breach of any contract with A if, having been instructed by A (or on his behalf) to transfer any sum or otherwise make any payment out of A's account, it refuses to do so in the reasonably held belief that complying with the instruction would be incompatible with the requirement; and
    (b) if the institution complies with such an instruction, it is liable to pay to the Authority an amount equal to the amount transferred from, or otherwise paid out of, A's account in contravention of the requirement.
      (5) If the Authority imposes a requirement of the kind mentioned in subsection (1)(b), no assets held by a person as trustee in accordance with the requirement may, while the requirement is in force, be released except with the consent of the Authority.
      (6) If, while a requirement of the kind mentioned in subsection (1)(b) is in force, A creates a charge over any assets of his held in accordance with the requirement, the charge is (to the extent that it confers security over the assets) void against the liquidator and any of A's creditors.
      (7) Assets held by a person as trustee ("T") are to be taken to be held by T in accordance with a requirement mentioned in subsection (1)(b) only if-
    (a) A has given T written notice that those assets are to be held by T in accordance with the requirement; or
    (b) they are assets into which assets to which paragraph (a) applies have been transposed by T on the instructions of A.
      (8) A person who contravenes subsection (5) is guilty of an offence and liable on summary conviction to a fine not exceeding level 5 on the standard scale.
      (9) "Charge" includes a mortgage (or in Scotland a security over property).
      (10) Subsections (5) and (7) do not affect any equitable interest or remedy in favour of a person who is a beneficiary of a trust as a result of a requirement of the kind mentioned in subsection (1)(b).
Connected persons
Persons connected with an applicant.     44. - (1) In considering-
    (a) an application for a Part IV permission, or
    (b) whether to vary or cancel a Part IV permission,
  the Authority may have regard to any person appearing to it to be, or likely to be, in a relationship with the applicant or person given permission which is relevant.
      (2) Before-
    (a) giving permission in response to an application made by a person who is connected with an EEA firm, or
    (b) cancelling or varying any permission given by the Authority to such a person,
  the Authority must consult the firm's home state regulator.
      (3) A person ("A") is connected with an EEA firm if-
    (a) A is a subsidiary undertaking of the firm; or
    (b) A is a subsidiary undertaking of a parent undertaking of the firm.
Additional permissions
Authority's duty to consider other permissions etc.     45. - (1) "Additional Part IV permission" means a Part IV permission which is in force in relation to an EEA firm, a Treaty firm or a person qualifying for authorisation under paragraph 1(1) of Schedule 5.
      (2) If the Authority is considering whether, and if so how, to exercise its own-initiative power under this Part in relation to an additional Part IV permission, it must take into account-
    (a) the home State authorisation of the authorised person concerned;
    (b) any relevant directive;
    (c) relevant provisions of the Treaty; and
    (d) such other matters, if any, as may be prescribed.
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Prepared 14 December 1999