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UKLR 24.4 Criteria for approval as a sponsor

List of sponsors

UKLR 24.4.1G

1The FCA will maintain a list of sponsors on its website.

Application for approval as a sponsor

UKLR 24.4.2R

1A person wanting to provide sponsor services, and to be included on the list of sponsors, must apply to the FCA for approval as a sponsor by submitting the following to the Primary Market Specialist Supervision Team at the FCA’s address:

  1. (1)

    a completed Sponsor Firm Application form;

  2. (2)

    details of any matter in the past 5 years that would have been notifiable to the FCA pursuant to UKLR 24.5.12R(2), (3), (4) or (5), had the person been approved as a sponsor; and

  3. (3)

    the application fee set out in FEES 3.

[Note: The Sponsor’s Firm Application form can be found on the Primary Markets section of the FCA’s website.]

UKLR 24.4.3R

1A person wanting to provide sponsor services and be included on the list of sponsors must also submit:

  1. (1)

    all additional documents, explanations and information as required by the FCA; and

  2. (2)

    verification of any information in such a manner as the FCA may specify.

UKLR 24.4.4G

1When 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; and

  3. (3)

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

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

Criteria for approval as a sponsor

UKLR 24.4.5R

1The FCA will approve a person as a sponsor only if it is satisfied that the person:

  1. (1)

    is an authorised person or a member of a designated professional body;

  2. (2)

    is competent to provide sponsor services in accordance with UKLR 24; and

  3. (3)

    has appropriate systems and controls in place to carry out its role as a sponsor in accordance with UKLR 24.

UKLR 24.4.6G

1In assessing whether a person wanting to provide sponsor services satisfies UKLR 24.4.5R(2), the FCA will consider a variety of factors, including any matters notified to it pursuant to UKLR 24.4.2R(2).

UKLR 24.4.7R

1The FCA may impose restrictions or limitations on the sponsor services a sponsor can provide at the time of granting a sponsor’s approval.

UKLR 24.4.8G

1Situations when the FCA may impose restrictions or limitations on the sponsor services a sponsor can provide, include (but are not limited to) where it appears to the FCA that:

  1. (1)

    the employees of 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 UKLR 24.4.12R(1) in relation to certain types of sponsor services or in relation 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.

[Note: A statutory notice may be required under section 88 of the Act. Where this is the case, the procedure for giving a statutory notice is set out in DEPP.]

UKLR 24.4.9G

1Where 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 UKLR 24.4.5R(2) and UKLR 24.4.5R(3) taking into consideration the sponsor services to which the approval, as formally limited or restricted by the FCA, will relate.

Continuing obligations

UKLR 24.4.10R

1A sponsor must comply, at all times, with the criteria set out in UKLR 24.4.5R.

UKLR 24.4.11G

1In assessing whether a sponsor satisfies UKLR 24.4.10R, the FCA will consider a variety of factors, including any matters notified to it pursuant to UKLR 24.5.12R.

Competence of a sponsor

UKLR 24.4.12R

1A sponsor, or a person applying for approval as a sponsor, will not satisfy UKLR 24.4.5R(2) unless it has:

  1. (1)

    a sufficient amount of relevant experience and expertise, demonstrated by having:

    1. (a)

      submitted a sponsor declaration to the FCA:

      1. (i)

        for a person applying for approval as a sponsor, within 5 years of the date of its application; and

      2. (ii)

        for a sponsor, within the previous 5 years; or

    2. (b)

      provided sufficient relevant corporate finance advisory services within the previous 5 years to persons:

      1. (i)

        with securities admitted to trading on, or applying for admission of securities to trading on, a UK RIE or a market established under the rules of a UK RIE; and

      2. (ii)

        each having an aggregate market value or expected aggregate market value of at least the amount specified in UKLR 3.2.7R(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, UKLR 3.2.7R(2),

      at the time such services were provided; and

  2. (2)

    a sufficient number of employees with the skills and knowledge necessary for it to:

    1. (a)

      provide sponsor services in accordance with UKLR 24.2;

    2. (b)

      understand:

      1. (i)

        the rules and guidance directly relevant to sponsor services;

      2. (ii)

        the procedural requirements and processes of the FCA;

      3. (iii)

        the due diligence process required in order to provide sponsor services in accordance with UKLR 24.2 and UKLR 24.3;

      4. (iv)

        the responsibilities and obligations of a sponsor in UKLR 24; and

      5. (v)

        specialist industry sectors and/or certain types of company, if relevant to the sponsor services it provides or intends to provide; and

    3. (c)

      be able to comply with the key contact requirements in UKLR 24.4.28R.

UKLR 24.4.13G

1In assessing whether a sponsor, or a person applying for approval as a sponsor, satisfies UKLR 24.4.12R, the FCA will consider 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 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.

UKLR 24.4.14G

1To determine whether a sponsor, or a person applying for approval as a sponsor, satisfies UKLR 24.4.12R(1)(a), the FCA may consider whether any of the sponsor’s or 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 years.

UKLR 24.4.15G

1For the purposes of UKLR 24.4.12R(1)(a), any declaration or confirmation given by a sponsor to the FCA that is not a sponsor declaration will not be accepted as demonstrating relevant experience and expertise.

UKLR 24.4.16G

1To determine whether a sponsor, or a person applying for approval as a sponsor, satisfies UKLR 24.4.12R(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.

UKLR 24.4.17G

1To determine whether a sponsor, or a person applying for approval as a sponsor, satisfies UKLR 24.4.12R(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 relevant corporate finance advisory services to persons:

  1. (1)

    with securities admitted to trading on, or applying for admission of securities to trading on, a UK RIE or a market established under the rules of a UK RIE; and

  2. (2)

    each having an aggregate market value or expected aggregate market value of at least the amount specified in:

    1. (a)

      UKLR 3.2.7R(1)(a); or

    2. (b)

      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, UKLR 3.2.7R(2),

    at the time such services were provided.

UKLR 24.4.18G

1In exceptional circumstances, the FCA may consider dispensing with, or modifying, the requirement in UKLR 24.4.12R(1) in accordance with UKLR 1.2.1R.

UKLR 24.4.19G

1Notwithstanding UKLR 24.4.13G, when considering whether a sponsor satisfies UKLR 24.4.12R(2)(c) the FCA expects a sponsor to have no fewer than 2 employees who are able to satisfy the key contact requirements in UKLR 24.4.28R(2).

UKLR 24.4.20G

1In assessing whether a sponsor, or a person applying for approval as a sponsor, can demonstrate it is competent in the areas required under UKLR 24.4.12R(2), the FCA may also take into account, where relevant, the guidance or advice on the listing rules, the disclosure requirements and the transparency rules the sponsor or person has given in circumstances other than in providing sponsor services.

Systems and controls: general

UKLR 24.4.21R

1A sponsor, or a person applying for approval as a sponsor, will not satisfy UKLR 24.4.5R(3) unless it has in place:

  1. (1)

    clear and effective reporting lines for the provision of sponsor services (including clear and effective management responsibilities);

  2. (2)

    effective systems and controls which require employees with management responsibilities for the provision of sponsor services to understand and apply the requirements of UKLR 24;

  3. (3)

    effective systems and controls for the appropriate supervision of employees engaged in the provision of sponsor services by the sponsor;

  4. (4)

    effective systems and controls for compliance with all applicable listing rules at all times, including when performing sponsor services;

  5. (5)

    effective systems and controls which require appropriate staffing arrangements for providing each sponsor service in line with the principles for sponsors in UKLR 24.2;

  6. (6)

    effective systems and controls for employees engaged in the provision of sponsor services to receive appropriate guidance and training to provide each sponsor service in line with the principles for sponsors in UKLR 24.2;

  7. (7)

    effective systems and controls to identify and manage conflicts of interest;

  8. (8)

    effective systems and controls for compliance with each of the requirements in UKLR 24.4.12R(2)(b); and

  9. (9)

    systems and controls which comply with the requirements of UKLR 24.4.25R.

UKLR 24.4.22G

1When considering a sponsor’s ability to comply with UKLR 24.4.21R, the FCA will consider 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)

    the volume and size of the 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.

Systems and controls: conflicts of interest

UKLR 24.4.23G

1A sponsor will generally be regarded as having appropriate systems and controls for identifying and managing conflicts 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; and

  3. (3)

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

UKLR 24.4.24G

1The policies and procedures referred to in UKLR 24.4.23G are distinct from the actual organisational and administrative arrangements that a sponsor is required to put in place and maintain under UKLR 24.2.14R to manage specific conflicts.

Systems and controls: record management

UKLR 24.4.25R

1A sponsor must have effective arrangements to create and retain for 6 years accessible records which are sufficient to be capable of demonstrating that it has provided sponsor services and otherwise complied with its obligations under UKLR 24, including:

  1. (1)

    where a declaration is to be submitted to the FCA:

    1. (a)

      under UKLR 24.3.3R(1), UKLR 24.3.7R(1), UKLR 24.3.11R(1) or UKLR 24.3.12R(2); or

    2. (b)

      pursuant to an appointment under UKLR 4.2.1R(5),

    the basis of each declaration given;

  2. (2)

    where any opinion, assurance or confirmation is provided by a sponsor to the FCA or an issuer with a listing of equity shares or applying for admission of its equity shares in relation to a sponsor service, the basis of that opinion, assurance or confirmation;

  3. (3)

    where a sponsor submits a request to the FCA:

    1. (a)

      to modify, waive or substitute the operation of UKLR 7, UKLR 8 or UKLR 11 pursuant to UKLR 4.2.3R; or

    2. (b)

      for individual guidance pursuant to UKLR 4.2.4R,

    the basis upon which any guidance, judgements or opinions made or given by the sponsor to an issuer which underlie the request have been made or given;

  4. (4)

    where a sponsor provides guidance to an issuer with a listing of equity shares or applying for admission of its equity shares pursuant to UKLR 4.2.6R or UKLR 24.2.1R(3), the basis upon which the guidance is given and upon which any judgements or opinions underlying the guidance have been made or given; and

  5. (5)

    the steps taken to comply with its obligations under UKLR 24.2.12R, UKLR 24.2.14R, UKLR 24.2.16R and UKLR 24.4.10R.

UKLR 24.4.26G

1Records 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 an issuer with a listing of equity shares or applying for admission of its equity shares in relation to its responsibilities under the listing rules, the disclosure requirements and the transparency rules.

UKLR 24.4.27G

1In considering whether a sponsor has satisfied the requirements regarding sufficiency of records in UKLR 24.4.25R, the FCA will consider whether the records would enable a person with general knowledge of the sponsor regime and a basic understanding of a transaction to which a sponsor service relates to understand and verify the basis upon which material judgements have been made throughout the provision of the sponsor service.

Key contact

UKLR 24.4.28R

1For each sponsor service requiring the submission of a document to the FCA or contact with the FCA, a sponsor must:

  1. (1)

    at the time of submission or on first making contact with the FCA in connection with the sponsor service, notify the FCA of the name and contact details of a key contact within the sponsor for that matter; and

  2. (2)

    ensure that its key contact:

    1. (a)

      has sufficient knowledge about the listed issuer or applicant and the proposed matter to be able to answer queries from the FCA about it;

    2. (b)

      is available to answer queries from the FCA on any business day between 7am and 6pm;

    3. (c)

      is authorised to make representations to the FCA for and on behalf of the sponsor;

    4. (d)

      possesses technical knowledge of rules and guidance directly relevant to the sponsor service; and

    5. (e)

      understands the responsibilities and obligations of the sponsor under UKLR 24 in relation to the sponsor service.