UKLR 24.4 Criteria for approval as a sponsor

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

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.]

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).

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.]

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.

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.

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.

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.

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.

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.

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.

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.

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).

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.

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.

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.

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.

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.

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.