COB 3 Annex 1 An overview of some of the main exemptions contained in the Financial Promotion Order

This annex belongs to COB 3.2.7 G (2) and summarises some of the main exemptions in the Financial Promotion Order. It is not an exhaustive list, and does not seek to replace the Order itself. The first column contains the article number, and the name of the exemption as set out in the Financial Promotion Order, the second column indicates to which type of financial promotions the exemption applies (unsolicited real time, solicited real time or non-real time), the third column indicates to which controlled activities and controlled investments the exemption applies and the final column gives a brief summary of the principal conditions required by the exemption. In all cases, firms wishing to use an exemption should consult the Order and in particular take note of the conditions which apply.

References to articles are to articles of the Financial Promotion Order and to paragraphs are to paragraphs of Schedule 1 to the Financial Promotion Order. For non-investment insurance contracts, firms should refer to ICOB.3

16(2) Exempt persons

Unsolicited real time

All

Made by a person who is an appointed representative carrying on the business for which his principal has accepted responsibility for the purposes of section 39 of the periodic statement; and in relation to which the appointed representative is exempt from the general prohibition; and where the communication is one which, if made by the principal, would comply with the financial promotion rules relevant to a communication of that kind

17 Generic promotions

All

All

Does not identify (directly or indirectly) a person who provides the controlled investment to which the financial promotion relates; and does not identify directly or indirectly any person as a person who carries on a controlled activity in relation to that controlled investment

18 Mere conduits

All

All

Made by a person who acts as a mere conduit for it (other than electronic commerce communications)

18A Electronic commerce communications: mere conduits, caching and hosting

All

All

Where the making of the communication constitutes the provision of an information society service of a kind described as 'mere conduit', 'caching' or 'hosting' under the E-Commerce Directive and the conditions mentioned in the directive are met

19 Investment professionals

All

All

Made only to recipients whom the person making the communication believes on reasonable grounds to be investment professionals; or may reasonably be regarded as directed only at such recipients

20B Incoming electronic commerce communications

Non-real time

All

Incoming electronic commerce communications other than:

(1) a communication which constitutes an advertisement by the operator of a UCITS scheme of units in that scheme; or

(2) a communication consisting of an invitation or inducement to enter into a contract of insurance, where made by an undertaking with authorisation in accordance with article 6 of the First Life Directive or the First Non-Life Directive, and the insurance falls within the scope of any of the Insurance Directives; or

(3) an unsolicited communication made by electronic mail.

22 Deposits: non-real time communications

Non-real time

Accepting deposits within paragraph 1

Accompanied by information specified in article 22(2)

23 Deposits: real time communications

Real time

Accepting deposits within paragraph 1

None

24 Relevant insurance activity: non-real time communications

Non-real time

Effecting and carrying out contracts of insurance within paragraph 2 in relation to contracts of insurance other than life policies

Accompanied by information specified in article 24(2)

26 Relevant insurance activity: real time communications

Real time

Effecting and carrying out contracts of insurance within paragraph 2 in relation to contracts of insurance other than life policies

None

28 One-off non-real time communications and solicited real time communications

Solicited real time Non real time

Note 1

One-off communication

28A One-off unsolicited real time communications

Unsolicited real time

Note 1

One-off communication where the communicator believes on reasonable grounds that the recipient understands the risks associated with engaging in the investment activity to which the communication relates; and at the time that the communication is made the communicator believes on reasonable grounds that the recipient would expect to be contacted by him in relation to the investment activity to which the communication relates

38 Persons in business of placing promotional material

All

Note 1

Made to a person whose business it is to place, or arrange for the placing of, promotional material provided that it is communicated so that he can place or arrange for placing it

40 Participants in certain recognised collective investment schemes

Solicited real time Non-real time

Note 1

Made by a person who is the operator of a scheme recognised under section 270 or 272 of the Act; and to persons in the United Kingdom who are participants in any such recognised scheme operated by the person making the communication; and which relates only to such recognised schemes as are operated by that person or to units in such schemes

48 Certified high net worth individuals

Solicited real time Non-real time

Note 2

(1) Made to a person who the communicator reasonably believes to be a 4

certified high net worth individual (as defined by article 48(2)); and 4

(2) accompanied by the giving of a warning as4 specified by article 48(7)5.

49 High net worth companies, unincorporated associations etc

All

Note 1

Either:

(1) made only to recipients whom the person making the financial promotion believes on reasonable grounds to be persons to whom the conditions set out in the article apply; or

(2) may reasonably be regarded as directed only at such persons.

50 Sophisticated investors

All

Note 1

(1) Made to a certified sophisticated investor (as defined by article 50(1));

(2) does not invite or induce the recipient to engage in investment activity with the person who has signed the certificate;

(3) relates only to a description of investment in respect of which that investor is certified; and

(4) accompanied by an indication of the matters specified by article 50 (3)

450A Self-certified sophisticated investors

All

Note 2

(1) Made to a person who the communicator reasonably believes to be a self-certified sophisticated investor (as defined by article 50A (1)); and

(2) accompanied by the giving of a warning as specified by article 50A (4)

51 Associations of high net worth or sophisticated investors

Solicited real time Non-real time

Note 1

(1) Made to an association, or to a member of an association, 6the membership of which the person making the financial promotion believes on reasonable grounds comprises wholly or predominantly persons who are certified high net worth individuals within article 48, high net worth persons within article 49(2)(a) to (d),6 certified sophisticated investors within article 50 and self-certified sophisticated investors within article 50A6; and

(2) relates only to an investment under the terms of which a person cannot incur a liability or obligation to pay or contribute more than he commits by way of investment

59 Annual accounts and directors' report

All

Note 3

Made by a body corporate (other than an open-ended investment company) which consists of, or is accompanied by, the whole or any part of the annual accounts, or is accompanied by the report, and complies with the requirements specified by article 59

62 Sale of body corporate

All

Note 1

(1) Made by a company, a partnership, a single individual or a group of connected individuals;

(2) relates to a transaction to acquire or dispose of shares in a company (other than an open-ended investment company) or is entered into for the purposes of such an acquisition or disposal, and

(3) either certain conditions are satisfied or the object of the transaction may reasonably be regarded as being the acquisition of day to day control of the affairs of the company

67 Promotions required or permitted by market rules

Solicited real time Non-real time

Note 4

Financial promotion is required or permitted to be communicated by the rules of the relevant market, a body which regulates the market, or a body which regulates offers or issues of investments to be traded on such a market

70 and 71 Promotions included in listing particulars and prospectuses5

Non-real time

Note 1

These articles contain details of exemptions relating to financial promotions included in listing particulars and prospectuses for public offers of listed securities and financial promotions relating to prospectuses for public offers of unlisted securities

672 Pension products offered by employers

All

Note 5

Made by an employer to an employee about a group personal pension scheme or a stakeholder pension scheme where:

(1) the employer will make a contribution to the scheme in the event of the employee joining the scheme and the financial promotion informs the employee of this fact:

(2) the employer has not and will not receive any direct financial benefit from the scheme;

(3) the employer informs the employee in writing prior to his becoming a member of the scheme of the amount of his contributions to the scheme in respect of that employee; and

(4) where the communication is a non-real time financial promotion, the employee is informed of his right to seek advice from a regulated person.

673 Advice centres

All

Note 6

Made by an adviser for or employee of an advice centre (as defined in article 73(3)) in the course of carrying out his duties as such.

References in these notes to paragraphs are to paragraphs of Schedule 1 to the Financial Promotion Order. The controlled investments italicised in these notes are defined in the same way in both the Financial Promotion Order and the Regulated Activities Order.

Note 1:

The following controlled activities:

(1)

effecting and carrying out contracts of insurance within paragraph 2 in relation to life policies;

(2)

dealing in securities and contractually based investments within paragraph 3;

(3)

arranging deals in investments within paragraph 4;

(4)

managing investments within paragraph 5;

(5)

safeguarding and administering investments within paragraph 6;

(6)

advising on investments within paragraph 7;

(7)

advising on syndicate participation at Lloyd's within paragraph 8;

(8)

providing funeral plan contracts within paragraph 9;

(9)

agreeing to carry on any of (2) to (8) within paragraph 11.

Note 2:

The controlled activities specified in Note 1 carried on in relation to one or more of:

(1)

shares (paragraph 14) being stock or shares in an unlisted company;

(2)

debentures (paragraph 15) acknowledging the indebtedness of an unlisted company;

(3)

warrants (paragraph 17) and certificates representing certain securities paragraph 18) conferring entitlements or rights with respect to (1) or (2);

(4)

units (paragraph 19) in a collective investment scheme which invests wholly or predominantly in (1) or (2);

(5)

options (paragraph 21) to acquire or dispose of (1), (2) or (3);

(6)

futures (paragraph 22) which are rights under a contract for the sale of (1), (2) or (3);

(7)

contracts for differences (paragraph 23) which relate to or to fluctuations in the value or price of (1), (2) or (3)

provided that in each case the investor cannot under the terms of the investment incur a liability or obligation to pay or contribute more than he commits by way of investment.

Note 3:

The controlled activities specified in Note 1 carried on in relation to one or more of:

(1)

shares (paragraph 14)

(2)

debentures (paragraph 15)

(3)

warrants (paragraph 17) and certificates representing certain securities (paragraph 18) so far as relating to (1) or (2).

Note 4:

The controlled activities specified in Note 1 carried on in relation to one or more of:

(1)

shares (paragraph 14);

(2)

debentures (paragraph 15);

(3)

government and public securities (paragraph 16);

(4)

warrants (paragraph 17);

(5)

certificates representing certain securities (paragraph 18);

in each case which is permitted to be traded or dealt in on a relevant market (as defined in article 67(2)).

6Note 5:

The controlled activities specified in Note 1 carried on in relation to either:

(1)

life policies (paragraph 13); or

(2)

stakeholder pension schemes (paragraph 20).

In both cases, only where relating to a group personal pension scheme or stakeholder pension scheme that the employer is promoting to his employees.

6Note 6:

The controlled activities specified in Note 1 carried on in relation to:

(1)

life policies (paragraph 13); or

(2)

qualifying credit (paragraph 26); or

(3)

shares (paragraph 14); or

(4)

debentures (paragraph 15); or

(5)

government and public securities (paragraph 16); or

(6)

units (paragraph 19) in a collective investment scheme; or

(7)

any combination of (1) to (6).

In the case of (3), (4), (5) and (6), only where held under a Child Trust Fund (CTF).