LR 8.6 Criteria for approval as a sponsor

The FCA will maintain a list of sponsors on its website.

When considering an application for approval as a sponsor the FCA may:

1. (1)

   carry out any enquiries and request any further information which it considers appropriate, including consulting other regulators;

2. (2)

   request that the applicant or its specified representative answer questions and explain any matter the FCA considers relevant to the application; and6

3. (3)

   take into account any information which it considers appropriate in relation to the application.2

   2
4. (4)

   [deleted]2

   2

[Note: The decision-making procedures that the FCA will follow when it4considers whether to refuse an application for approval as a sponsor are set out in DEPP3.]

11In assessing whether a person wanting to provide sponsor services satisfies LR 8.6.5R(2), the FCA will consider a variety of factors, including any matters notified to it pursuant to LR 8.6.2R(4).

7Situations when the FCA may impose restrictions or limitations on the services a sponsor can provide include (but are not limited to) where it appears to the FCA that:

1. (1)

   the employees 11of the person applying to be a sponsor whom it is proposed will perform sponsor services have no or limited relevant experience and expertise of the kind described in LR 8.6.7R(1) in relation to 11certain types of sponsor services or in relation 11 to certain types of company; or

2. (2)

   the person applying to be a sponsor does not have systems and controls in place which are appropriate for the nature of the sponsor services which the person applying to be a sponsor proposes to undertake.

8Where a person wishes to apply for approval as a sponsor to provide a limited range of sponsor services, it may do so on the basis that the FCA will impose a limitation or restriction on its approval (in accordance with section 88 of the Act). In such circumstances, the FCA will assess whether the person satisfies LR 8.6.5R (2) and LR 8.6.5R (3) taking into consideration the sponsor services to which the approval, as formally limited or restricted by the FCA, will relate.

11In assessing whether a sponsor satisfies LR 8.6.6R, the FCA will consider a variety of factors, including any matters notified to it pursuant to LR 8.7.8R.

8To determine whether a sponsor, or a person applying for approval as a sponsor, satisfies 11LR 8.6.7R (1)(a), the FCA may consider whether any of the sponsor’s or 11 person's employees have had material involvement in the provision of sponsor services that have required the submission of a sponsor declaration within the previous 5 11 years.

11For the purposes of LR 8.6.7R(1)(a), any declaration or confirmation given by a sponsor to the FCA that is not a sponsor declaration will not be accepted to demonstrate relevant experience and expertise.

11To determine whether a sponsor, or a person applying for approval as a sponsor, satisfies LR 8.6.7R(1)(b), the FCA may consider a variety of factors, including:

1. (1)

   the cumulative body of its experience and expertise providing relevant corporate finance advisory services, including any sponsor services provided where no sponsor declaration has been required;

2. (2)

   the range of skills and knowledge evidenced through its provision of relevant corporate finance advisory services, including:

   1. (a)

      advising on the rules and guidance issued by a regulator or exchange;

   2. (b)

      adhering to the procedural requirements and processes of a regulator or exchange; and

   3. (c)

      undertaking due diligence to:

      1. (i)

         support assurances or information delivered to a regulator or exchange; and

      2. (ii)

         verify public statements made by an issuer; and

3. (3)

   the extent of the sponsor services intended to be provided.

8In exceptional circumstances, the FCA may consider dispensing with, or modifying, the requirement in LR 8.6.7R (1) in accordance with LR 1.2.1 R.

8In assessing whether a sponsor, or a person applying for approval as a sponsor, 11 satisfies LR 8.6.7R, 11 the FCA will consider a variety of factors, 11 including:

1. (1)

   the nature, scale and complexity of its business;

2. (2)

   the diversity of its operations;

3. (3)

   the volume and size of transactions it undertakes;

4. (4)

   the volume and size of transactions it anticipates undertaking in the following year; and

5. (5)

   the degree of risk associated with the transactions it undertakes or anticipates undertaking in the following year.

11To determine whether a sponsor, or a person applying for approval as a sponsor, satisfies LR 8.6.7R(1)(b), the FCA may consider whether any of the sponsor’s or person’s employees have, within the previous 5 years, had material involvement in the provision of corporate finance advisory services to persons with or applying for admission of securities to a UK RIE and each having an aggregate market value or expected aggregate market value of at least the amount specified in LR 2.2.7R(1)(a) or, where the sponsor or person applying for approval as a sponsor is doing so on the basis of providing sponsor services to closed-ended investment funds only, LR 2.2.7R(1A), at the time such services were provided.

8Notwithstanding LR 8.6.7C G, when considering whether a sponsor satisfies LR 8.6.7R (2)(c) the FCA expects a sponsor to have no less than two employees who are able to satisfy the key contact requirements in LR 8.6.19R (2).

4In assessing whether a sponsor or a8 person applying for approval as a sponsor can demonstrate it is competent in the areas required under LR 8.6.7R (2), the FCA may also take into account, where relevant, the guidance or advice on the listing rules or disclosure requirements9 and transparency rules 5the sponsor or8 person has given in circumstances other than in providing sponsor services.

When considering a sponsor's ability to comply with LR 8.6.12 R, the FCA will consider8 a variety of factors, including:

1. (1)

   the nature, scale and complexity of its business;

2. (2)

   the diversity of its operations;

3. (3)

   the volume and size of the transactions it undertakes;

   4
4. (4)

   the volume and size of the transactions it anticipates undertaking in the following year; and4

   4
5. (5)

   the degree of risk associated with the transactions it undertakes or anticipates undertaking in the following year8.4

4A sponsor will generally be regarded as having appropriate systems and controls for identifying and managing conflicts6 if it has in place effective policies and procedures:

1. (1)

   to ensure that decisions taken on managing conflicts of interest are taken by appropriately senior staff and on a timely basis;

2. (2)

   to monitor whether arrangements put in place to manage conflicts are effective; and6

3. (3)

   to ensure that individuals within the sponsor are appropriately trained to enable them to identify, escalate and manage conflicts of interest.6

   6
4. (4)

   [deleted]6

   6

4The policies and procedures referred to in LR 8.6.13A G are distinct from the actual organisational and administrative arrangements that a sponsor is required to put in place and maintain under LR 8.3.9 R to manage specific conflicts.

6Records should:

1. (1)

   be capable of timely retrieval; and

2. (2)

   include material communications which relate to the provision of sponsor services, including any advice or guidance given to a company with or applying for a premium listing in relation to their responsibilities under the listing rules, the disclosure requirements9 and the transparency rules.

6In considering whether a sponsor has satisfied the requirements regarding sufficiency of records in LR 8.6.16A R, the FCA will consider whether the records would enable a person with general knowledge of the sponsor regime but no specific knowledge of the actual sponsor service undertaken to understand and verify the basis upon which material judgments have been made throughout the provision of the sponsor service.