Related provisions for PERG 9.7.1

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PR 2.5.1RRP
Without prejudice to the adequate information of investors, if, in exceptional cases, certain information referred to in the PD Regulation that is required to be included in a prospectus is inappropriate to the issuer's activity or to the legal form of the issuer or to the transferable securities to which the prospectus relates, the prospectus must contain information equivalent to the required information (unless there is no such information). [Note: article 8.3 PD]
PERG 5.8.2GRP
For advice to fall within article 53, it must:(1) relate to a particular contract of insurance (that is, one that a person may enter into);(2) be given to a person in his capacity as an investor or potential investor;(3) be advice (that is, not just information); and(4) relate to the merits of a personbuying, selling, subscribing for or underwriting (or exercising any right to do so) a contract of insurance or rights to or interests in life policies.
PERG 5.8.6GRP
For the purposes of article 53, advice must be given to a person in his capacity as an investor or potential investor (which, in the context of contracts of insurance, will mean as policyholder or potential policyholder). So, article 53 will not apply where advice is given to persons who receive it as:(1) an adviser who will use it only to inform advice given by him to others; or(2) a journalist or broadcaster who will use it only for journalistic purposes.
SUP App 3.9.5GRP

Services set out in Annex to the ISD1

Table 2: ISD activities

Part II RAO Activities

Part III RAO Investments

1. Core services

1.

(a) Reception and transmission, on behalf of investors, of orders in relation to one or more of the relevant instruments

(b) Execution of such orders other than for own account

Article 25 (see Note 1), 64

Article 21, 64

Article 76-81, 83-85, 89

Article 76-81, 83-85, 89

2.

Dealing in any of the relevant instruments for own account

Article 14, 64

Article 76-81, 83-85, 89

3.

Managing portfolios of investments in accordance with mandates given by investors on a discretionary, client-by-client basis where such portfolios include one or more of the relevant instruments

Article 14, 21, 25, 37, 53, 64

Article 76-81, 83-85, 89

4.

Underwriting in respect of issues of any of the relevant instruments and/or the placing of such issues

Article 14, 21, 25, 64

Article 76-81, 83-85, 89

2. Non-core services

1.

Safekeeping and administration services

Article 40, 45, 64

Article 76-81, 89

2.

Safe custody services

3.

Granting credits or loans to an investor to allow him to carry out a transaction in one or more of the relevant instruments where the firm granting the credit or loan is involved

4.

Advice to undertakings on capital structure, industrial matters and advice and services relating to mergers and the purchase of undertakings

Article 14, 21, 25, 53, 64

Article 76-80, 83-85, 89

5.

Services related to underwriting

Article 25, 53, 64

Article 76-81, 83-85, 89

6.

Investment advice concerning one or more of the relevant instruments

Article 53, 64

Article 76-81, 83-85, 89

7.

Foreign exchange services where these are connected with the provision of investment services

Article 14, 21, 25, 53, 64

Article 83-85, 89

Note 1. The ISD activity of receiving and transmitting orders does not extend to the regulated activity of making arrangements with a view to transactions in investments under article 25(2) of the Regulated Activities Order unless the arrangements bring about or would bring about particular transactions. This is the case, whether or not the bringing about arises or would arise as a result of the person who makes the arrangements receiving and transmitting orders in relation to particular transactions or in any other way.
LR 13.5.9RRP
A listed company must provide investors with all necessary information to understand the context and relevance of non-statutory figures, including a reconciliation to statutory equivalents.
LR 13.5.11RRP
A listed company that provides a summary of financial information in a class 1 circular must include in the circular a statement that investors should read the whole document and not rely solely on the summarised financial information.
COLL 6.7.3GRP
(1) This section assists in securing the regulatory objective of protecting consumers through requirements which govern the payments out of scheme property and charges imposed on investors when buying or selling units.(2) The requirements clarify the nature of permitted charges and payments and ensure the disclosure for unitholders of any increases in charges and payments to the authorised fund manager.(3) The prospectus should make adequate provision for payments from an authorised
COLL 6.7.8GRP
(1) To introduce a new charge for the sale or redemption of units, or any new category of remuneration for its services or increase the rate stated in the prospectus, the authorised fund manager will need to comply with COLL 4.2.5 R (Table: contents of prospectus) and COLL 4.3 (Approvals and notifications).(2) A redemption charge may be expressed in terms of amount or percentage. It may also be expressed as diminishing over the time during which the unitholder has held the units
PERG 7.3.1GRP
Under article 53 of the Regulated Activities Order (Advising on investments), advising a person is a specified kind of activity if:(1) the advice is given to the person in his capacity as an investor or potential investor, or in his capacity as agent for an investor or a potential investor; and(2) it is advice on the merits of his doing any of the following (whether as principal or agent):(a) buying, selling, subscribing for or underwriting a particular investment which is a security
PERG 7.3.4GRP
In the FSA's view, for a person to be carrying on the business of advising on investments or advising on regulated mortgage contracts he will usually need to be doing so with a degree of regularity and for commercial purposes – that is to say, he will normally be expecting to gain some kind of a direct or indirect financial benefit. But, in the FSA's view it is not necessarily the case that advice provided free of charge will not amount to a business. Advice is often given 'free'
PERG 9.11.1GRP

Table There are some frequently asked questions about the application of the definition of an open-ended investment company in the following table. This table belongs to PERG 9.2.4 G (Introduction).

Question

Answer

1

Can a body corporate be both open-ended and closed-ended at the same time?

In the FSA's view, the answer to this question is 'no'. The fact that the investment condition is applied to BC (rather than to particular shares in, or securities of, BC) means that a body corporate is either an open-ended investment company as defined in section 236 of the Act or it is not. Where BC is an open-ended investment company, all of its securities would be treated as units of a collective investment scheme for the purpose of the Act. A body corporate formed in another jurisdiction may, however, be regarded as open-ended under the laws of that jurisdiction but not come within the definition of an open-ended investment company in section 236 (and vice versa).

2

Can an open-ended investment company become closed-ended (or a closed-ended body become open-ended)?

In the FSA's view, the answer to this question is 'yes'. A body corporate may change from open-ended to closed-ended (and vice versa) if, taking an overall view, circumstances change so that a hypothetical reasonable investor would consider that the investment condition is no longer met (or vice versa). This might happen where, for example, an open-ended investment company stops its policy of redeeming shares or securities at regular intervals (so removing the expectation that a reasonable investor would be able to realise his investment within a period appearing to him to be reasonable). See also PERG 9.7.5 G.

3

Does the liquidation of a body corporate affect the assessment of whether or not the body is an open-ended investment company?

The FSA considers that the possibility that a body corporate that would otherwise be regarded as closed-ended may be wound up has no effect at all on the nature of the body corporate before the winding up. The fact that, on a winding up, the shares or securities of any investor in the body corporate may be converted into cash or money on the winding up (and so 'realised') would not, in the FSA's view, affect the outcome of applying the expectation test to the body corporate when looked at as a whole. The answer to Question 4 explains that investment in a closed-ended fixed term company shortly before its winding up does not, in the FSA's view, change the closed-ended nature of the company. For companies with no fixed term, the theoretical possibility of a winding up at some uncertain future point is not, in the FSA's view, a matter that would generally carry weight with a reasonable investor in assessing whether he could expect to be able to realise his investment within a reasonable period.

4

Does a fixed term closed-ended investment company become an open-ended investment company simply because the fixed term will expire?

In the FSA's view, the answer to this is 'no'. The termination of the body corporate is an event that has always been contemplated (and it will appear in the company's constitution). Even as the date of the expiry of the fixed term approaches, there is nothing about the body corporate itself that changes so as to cause a fundamental reassessment of its nature as something other than closed-ended. Addressing this very point in parliamentary debate, the Economic Secretary to the Treasury stated that the "aim and effect [of the definition] is to cover companies that look, to a reasonable investor, like open-ended investment companies". The Minister added that "A reasonable investor's overall expectations of potential investment in a company when its status with respect to the definition is being judged will determine whether it meets the definition. The matter is therefore, definitional rather than one of proximity to liquidation". (Hansard HC, 5 June 2000 col 124).

5

In what circumstances will a body corporate that issues a mixture of redeemable and non-redeemable shares or securities be an open-ended investment company?

In the FSA's view, the existence of non-redeemable shares or securities will not, of itself, rule out the possibility of a body corporate falling within the definition of an open-ended investment company. All the relevant circumstances will need to be considered (see PERG 9.6.4 G, PERG 9.2.8.8G and PERG 9.8.9 G). So the following points need to be taken into account.

  • The precise terms of the issue of all the shares or securities will be relevant to the question whether the investment condition is met, as will any arrangements that may exist to allow the investor to realise his investment by other means.
  • The proportions of the different share classes will be relevant to the impression the reasonable investor forms of the body corporate. A body corporate that issues only a minimal amount of redeemable shares or securities will not, in theFSA's view, be an open-ended investment company. A body corporate that issues a minimal amount of non-redeemable shares or securities will be likely to be an open-ended investment company. A body corporate that falls within the definition of an open-ended investment company is likely to have (and to be marketed as having) mainly redeemable shares or securities. However, whether or not the body corporate does fall within the definition in any particular case will be subject to any contrary indications there may be in its constitutional documents or otherwise.
  • Where shares or securities are only redeemable after the end of a stated period, this factor will make it more likely that the body corporate is open-ended than if the shares or securities are never redeemable.

6

Does "realised on a basis calculated wholly or mainly by reference to..." in section 236(3)(b) apply to an investor buying investment trust company shares traded on a recognised investment exchange because of usual market practice that the shares trade at a discount to asset value?

In the FSA's view, the answer is 'no' (for the reasons set out in PERG 9.9.4 G to PERG 9.9.6 G).

7

Does the practice of UK investment trust companies buying back shares result in them becoming open-ended investment companies?

In the FSA's view, it does not, because its actions will comply with company law: see section 236(4) of the Act and PERG 9.6.5 G.

8

Would a body corporate holding out redemption or repurchase of its shares or securities every six months be an open-ended investment company?

In the FSA's view a period of six months would generally be too long to be a reasonable period for a liquid securities fund. A shorter period affording more scope for an investor to take advantage of any profits caused by fluctuations in the market would be more likely to be a reasonable period for the purpose of the realisation of the investment (in the context of the 'expectation' test, see PERG 9.8 and, in particular, PERG 9.8.9 G which sets out the kind of factors that may need to be considered in applying the test).

9

Would an initial period during which it is not possible to realise investment in a body corporate mean that the body corporate could not satisfy the investment condition?

In the FSA's view, the answer to that question is 'no'. In applying the investment condition, the body corporate must be considered as a whole (see PERG 9.6.3 G). At the time that the shares or securities in a body corporate are issued, a reasonable investor may expect that he will be able to realise his investment within a reasonable period notwithstanding that there will first be a short-term delay before he can do so. Whether or not the 'expectation test' is satisfied will depend on all the circumstances (see PERG 9.8.9 G).
GEN 4.2.2GRP
There are other pre-contract information requirements outside this chapter, including:(1) for financial promotions, inCOB 3 (Financial promotion)(2) for designated investment business, inCOB 4.2 (Terms of business and client agreements with customers), COB 4.3 (Disclosing information about services, fees and commission - packaged products), COB 5.5 (Information about the firm), COB 6.1 to COB 6.5 (Product disclosure) and CASS (Client assets);(3) for non-investment insurance contracts3,
PR App 1.1.1RP

1Note: The following definitions relevant to the prospectus rules are extracted from the Glossary.

Act

the Financial Services and Markets Act 2000.

admission to trading

admission to trading on a regulated market.

advertisement

(as defined in the PD Regulation) announcements:

(1)

relating to a specific offer to the public of securities or to an admission to trading on a regulated market; and

(2)

aiming to specifically promote the potential subscription or acquisition of securities.

annual information update

the document referred to in PR 5.2.1 R.

applicant

an applicant for approval of a prospectus or supplementary prospectus relating to transferable securities.

asset backed security

(as defined in the PD Regulation) securities which:

(1)

represent an interest in assets, including any rights intended to assure servicing, or the receipt or timeliness of receipts by holders of assets of amounts payable thereunder; or

(2)

are secured by assets and the terms of which provide for payments which relate to payments or reasonable projections of payments calculated by reference to identified or identifiable assets.

base prospectus

a base prospectus referred to in PR 2.2.7 R.

body corporate

(in accordance with section 417(1) of the Act (Definitions) any body corporate, including a body corporate constituted under the law of a country or territory outside the United Kingdom;

building block

(as defined in the PD Regulation) a list of additional information requirements, not included in one of the schedules, to be added to one or more schedules, as the case may be, depending on the type of instrument and/or transaction for which a prospectus or base prospectus is drawn up.

CARD

Consolidated Admissions and Reporting Directive.

CESR recommendations

the recommendations for the consistent implementation of the European Commission's Regulation on Prospectuses no 809/2004 published by the Committee of European Securities Regulators.

collective investment undertaking other than the closed-end type

(in PR) (as defined in Article 2.1(o) of the prospectus directive) unit trusts and investment companies:

(1)

the object of which is the collective investment of capital provided by the public, and which operate on the principle of risk-spreading;

(2)

the units of which are, at the holder's request, repurchased or redeemed, directly or indirectly, out of the assets of these undertakings.

Consolidated Admissions and Reporting Directive

Directive 2001/34/EC of the European Parliament and of the Council on the admission of securities to official stock exchange listing and on information to be published on those securities.

credit institution

as defined in article 1(1) of the Banking Consolidation Directive.

director

(in accordance with section 417(1)(a) of the Act) a person occupying in relation to it the position of a director (by whatever name called) and, in relation to an issuer which is not a body corporate, a person with corresponding powers and duties.

EEA State

(in accordance with paragraph 8 of Schedule 3 to the Act (EEA Passport Rights)) a State which is a contracting party to the agreement on the European Economic Area signed at Oporto on 2 May 1992, as it has effect for the time being; as at 1 May 2004, the following are the EEA States: Austria, Belgium, Cyprus, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, the Netherlands, Norway, Poland, Portugal, the Slovak Republic, Slovenia, Spain, Sweden and the United Kingdom.

equity security

(as defined in Article 2.1(b) of the prospectus directive) shares and other transferable securities equivalent to shares in companies, as well as any other type of transferable securities giving the right to acquire any of the aforementioned securities as a consequence of their being converted or the rights conferred by them being exercised, provided that securities of the latter type are issued by the issuer of the underlying shares or by an entity belonging to the group of the said issuer.

equity share

shares comprised in a company'sequity share capital.

equity share capital

(for a company), its issued share capital excluding any part of that capital which, neither as respects dividends nor as respects capital, carries any right to participate beyond a specified amount in a distribution.

executive procedures

the procedures relating to the giving of warning notices, decision notices and supervisory notices that the FSA proposes to follow in the circumstances specified in DEC 4.1.6 G (Decisions to be taken by executive procedures), and that are described in DEC 4.3 (Executive procedures for statutory notice decisions and statutory notice associated decisions).

FSA

the Financial Services Authority.

guarantee

(as defined in the PD Regulation) any arrangement intended to ensure that any obligation material to the issue will be duly serviced, whether in the form of guarantee, surety, keep well agreement, mono-line insurance policy or other equivalent commitment.

guarantor

a person that provides a guarantee.

Home State or Home Member State

(as defined in section 102C of the Act) in relation to an issuer of transferable securities, the EEA State which is the "home Member State" for the purposes of the prospectus directive (which is to be determined in accordance with Article 2.1(m) of that directive).

Host State or Host Member State

(as defined in Article 2.1(n) of the prospectus directive) the EEA State where an offer to the public is made or admission to trading is sought, when different from the home State.

Investment Services Directive

the Council Directive of 10 May 1993 on investment services in the securities field (No 93/22/EEC).

ISD

Investment Services Directive.

issuer

(as defined in section 102A of the Act) a legal person who issues or proposes to issue the transferable securities in question.

non-equity transferable securities

(as defined in section 102A of the Act) all transferable securities that are not equity securities.

Note: In the prospectus directive and the PD Regulation, the Commission uses the term "non-equity securities" rather than "non-equity transferable securities".

offer

an offer of transferable securities to the public.

offer of transferable securities to the public

(as defined in section 102B of the Act), in summary:

(a)

a communication to any person which presents sufficient information on:

  • (i) the transferable securities to be offered, and
  • (ii) the terms on which they are offered,

to enable an investor to decide to buy or subscribe for the securities in question;

(b)

which is made in any form or by any means;

(c)

including the placing of securities through a financial intermediary;

(d)

but not including a communication in connection with trading on:

  • (i) a regulated market;
  • (ii) a multilateral trading facility; or
  • (iii) any market prescribed by an order under section 130A of the Act.

Note: This is only a summary, to see the full text of the definition, readers should consult section 102B of the Act.

offering programme

(as defined in Article 2.1(k) of the prospectus directive) a plan which would permit the issuance of non-equity securities, including warrants in any form, having a similar type and/or class, in a continuous or repeated manner during a specified issuing period.

offeror

a person who makes an offer of transferable securities to the public.

overseas company

a company incorporated outside the United Kingdom.

Part 6 rules

(in accordance with section 73A(1) of the Act), rules made for the purposes of Part 6 of the Act.

PD

prospectus directive.

PD Regulation

Regulation number 809/2004 of the European Commission.

person

(in accordance with the Interpretation Act 1978) any person, including a body of persons corporate or unincorporated that is, a natural person, a legal person and, for example, a partnership).

PR

the Prospectus Rules sourcebook.

profit estimate

(as defined in the PD Regulation) a profit forecast for a financial period which has expired and for which results have not yet been published.

profit forecast

(as defined in the PD Regulation) a form of words which expressly states or by implication indicates a figure or a minimum or maximum figure for the likely level of profits or losses for the current financial period and/or financial periods subsequent to that period, or contains data from which a calculation of such a figure for future profits or losses may be made, even if no particular figure is mentioned and the word "profit" is not used.

property collective investment undertaking

(as defined in the PD Regulation) a collective investment undertaking whose investment objective is the participation in the holding of property in the long term.

prospectus

a prospectus required under the prospectus directive.

prospectus directive

the Directive of the European Parliament and of the Council of 4 November 2003 on the prospectus to be published when securities are offered to the public or admitted to trading (No 2003/71/EC).

Prospectus Rules

(as defined in section 73A(4) of the Act) rules expressed to relate to transferable securities.

Public international body

(as defined in the PD Regulation) a legal entity of public nature established by an international treaty between sovereign States and of which one or more Member States are members.

qualified investor

(as defined in section 86(7) of the Act) :

(a)

any entity falling within the meaning of Article 2(1)(e)(i), (ii) or (iii) of the prospectus directive;

(b)

An investor registered on the register maintained by the competent authority under section 87R;

(c)

An investor authorised by an EEA State other than the United Kingdom to be considered as a qualified investor for the purposes of the prospectus directive.

register

register of qualified investors maintained by the FSA under section 87R of the Act.

registration document

a registration document referred to in PR 2.2.2 R.

regulated information

(as defined in the PD Regulation) all information which the issuer, or any person who has applied for the admission of securities to trading on a regulated market without the issuer’s consent, is required to disclose under Directive 2001/34/EC or under Article 6 of Directive 2003/6/EC.

regulated market

(a)

(as defined in article 1 of the ISD) a market for the instruments listed in Section B of the Annex to the ISD which:

  • (i) appears on the list of such markets drawn up by the market's Home State as required by article 16 of the ISD;
  • (ii) functions regularly;
  • (iii) is characterised by the fact that regulations issued or approved by the competent authorities define the conditions for the operation of the market, the conditions for access to the market and, where Directive 79/279/EEC is applicable, the conditions governing admission to listing imposed in that Directive and, where that Directive is not applicable, the conditions that must be satisfied by a financial instrument before it can effectively be dealt in on the market; and
  • (iv)requires compliance with all the reporting and transparency requirements laid down by articles 20 and 21 of the ISD; and

(b)

a market notified under article 16 of the ISD, as included in point 30b of Annex IX to the Agreement of the European Economic Area, to the Standing Committee of the EFTA States as defined in that agreement.

RIS

Regulatory Information Service.

risk factors

(as defined in the PD Regulation) a list of risks which are specific to the situation of the issuer and/or the securities and which are material for taking investment decisions.

rule

(in accordance with section 417(1) of the Act (Definitions)) a rule made by the FSA under the Act.

schedule

(as defined in the PD Regulation) a list of minimum information requirements adapted to the particular nature of the different types of issuers and/or the different securities involved.

securities issued in a continuous and repeated manner

(as defined in Article 2.1(l) of the prospectus directive) issues on tap or at least two separate issues of securities of a similar type and/or class over a period of 12 months.

securities note

a securities note referred to in PR 2.2.2 R.

small and medium-sized enterprise

(as defined in Article 2.1(f) of the prospectus directive) companies, which, according to their last annual or consolidated accounts, meet at least two of the following three criteria: an average number of employees during the financial year of less than 250, a total balance sheet not exceeding €43,000,000 and an annual net turnover not exceeding €50,000,000.

special purpose vehicle

(as defined in the PD Regulation) an issuer whose objects and purposes are primarily the issue of securities.

statutory notice associated decision

a decision which is made by the FSA and which is associated with a decision to give a statutory notice, including a decision:

statutory notice decision

a decision by the FSA on whether or not to give a statutory notice.

(a)

to determine or extend the period for making representations;

(b)

to determine whether a copy of the statutory notice needs to be given to any third party and the period for him to make representations;

(c)

to refuse access to FSA material;

(d)

as to the information which it is appropriate to publish about the matter to which a final notice or an effective supervisory notice relates.

summary

(in relation to a prospectus) the summary included in the prospectus.

supplementary prospectus

a supplementary prospectus containing details of a new factor, mistake or inaccuracy.

transferable security

(as defined in section 102A of the Act) anything which is a transferable security for the purposes of the investment services directive, other than money-market instruments for the purposes of that directive which have a maturity of less than 12 months.

Note: In the prospectus directive and PD regulation, the Commission uses the term "security" rather than "transferable security".

umbrella collective investment scheme

(as defined in the PD Regulation) a collective investment undertaking invested in one or more collective investment undertakings, the asset of which is composed of separate class(es) or designation(s) of securities.

United Kingdom

England and Wales, Scotland and Northern Ireland (but not the Channel Islands or the Isle of Man).

units of a collective investment scheme

(as defined in Article 2.1(p) of the prospectus directive) securities issued by a collective investment undertaking as representing the rights of the participants in such an undertaking over its assets.

working day

(as defined in section 103 of the Act) any day other than a Saturday, a Sunday, Christmas Day, Good Friday or a day which is a bank holiday under the Banking and Financial Dealings Act 1971 in any part of the United Kingdom.
LR 2.2.5GRP
The FSA may modify LR 2.2.4 R to allow partly paid securities to be listed if it is satisfied that their transferability is not restricted and investors have been provided with appropriate information to enable dealings in the securities to take place on an open and proper basis. [Note: articles 46 and 54 CARD]
PERG 9.2.1GRP
The nature of many bodies corporate means that they will, in most if not all circumstances, come within the definition of collective investment scheme in section 235(1) to (3) of the Act (Collective investment schemes). The property concerned will generally be managed as a whole under the control of the directors of the body corporate or some other person for the purpose of running its business. The idea underlying the investment is that the investors will participate in or receive
REC 6.3.2UKRP

Sections 292(3) and 292(4) state:

Section 292(3)

The requirements are that-

(a)

investors are afforded protection equivalent to that which they would be afforded if the body concerned were required to comply withrecognition requirements;

(b)

there are adequate procedures for dealing with a person who is unable, or likely to become unable, to meet his obligations in respect of one or more market contracts connected with the [ROIE] or [ROCH];

(c)

the applicant is able and willing to co-operate with the [FSA] by the sharing of information and in other ways; and

(d)

adequate arrangements exist for co-operation between the [FSA] and those responsible for the supervision of the applicant in the country or territory in which the applicant's head office is situated.

Section 292(4)

In considering whether it is satisfied as to the requirements mentioned in subsections (3)(a) and (b), the [FSA] is to have regard to-

(a)

the relevant law and practice of the country or territory in which the applicant's head office is situated;

(b)

the rules and practices of the applicant.1
PERG 8.33.2GRP
Article 29 of the Regulated Activities Order states that certain arrangements are not covered by article 25. These are arrangements made by an unauthorised person ('A'). The arrangements must be made for or with a view to a transaction which is or is to be entered into by another person (the client) with or through an authorised person. It must also be the case that:(1) the transaction is or will be entered into on advice given to the client by an authorised person; or(2) it is
PR 1.2.1UKRP

Sections 85 and 86 of the Act provide for when a prospectus approved by the FSA will be required:

85

(1)

It is unlawful for transferable securities to which this subsection applies to be offered to the public in the United Kingdom unless an approved prospectus has been made available to the public before the offer is made.

(2)

It is unlawful to request the admission of transferable securities to which this subsection applies to trading on a regulated market situated or operating in the United Kingdom unless an approved prospectus has been made available to the public before the request is made.

(3)

A person who contravenes subsection (1) or (2) is guilty of an offence and liable –

(a)

on summary conviction, to imprisonment for a term not exceeding 3 months or a fine not exceeding the statutory maximum or both;

(b)

on conviction on indictment, to imprisonment for a term not exceeding 2 years or a fine or both.

(4)

A contravention of subsection (1) or (2) is actionable, at the suit of a person who suffers loss as a result of the contravention, subject to the defences and other incidents applying to actions for breach of statutory duty.

(5)

Subsection (1) applies to all transferable securities other than –

(a)

those listed in Schedule 11A;

(b)

such other transferable securities as may be specified in prospectus rules [see PR 1.2.2 R].

(6)

Subsection (2) applies to all transferable securities other than –

(a)

those listed in Part 1 of Schedule 11A;

(b)

such other transferable securities as may be specified in prospectus rules [see PR 1.2.3 R].

(7)

"Approved prospectus" means, in relation to transferable securities to which this section applies, a prospectus approved by the competent authority of the home State in relation to the issuer of the securities.

86

Exempt offers to the public

(1)

A person does not contravene section 85(1) if –

(a)

the offer is made to or directed at qualified investors only;

(b)

the offer is made to or directed at fewer than 100 persons, other than qualified investors, per EEA State;

(c)

the minimum consideration which may be paid by any person for transferable securities acquired by him pursuant to the offer is at least 50,000 euros (or an equivalent amount);

(d)

the transferable securities being offered are denominated in amounts of at least 50,000 euros (or equivalent amounts); or

(e)

the total consideration for the transferable securities being offered cannot exceed 100,000 euros (or an equivalent amount).

(2)

Where -

(a)

a person who is not a qualified investor ("the client") has engaged a qualified investor falling within Article 2.1(e)(i) of the prospectus directive to act as his agent; and

(b)

the terms on which the qualified investor is engaged enable him to make decisions concerning the acceptance of offers of transferable securities on the client's behalf without reference to the client,

an offer made to or directed at the qualified investor is not to be regarded for the purposes of subsection (1) as also having been made to or directed at the client.

(3)

For the purposes of subsection (1)(b), the making of an offer of transferable securities to –

(a)

trustees of a trust,

(b)

members of a partnership in their capacity as such, or

(c)

two or more persons jointly,

is to be treated as the making of an offer to a single person.

(4)

In determining whether subsection (1)(e) is satisfied in relation to an offer ("offer A"), offer A is to be taken together with any other offer of transferable securities of the same class made by the same person which –

(a)

was open at any time within the period of 12 months ending with the date on which offer A is first made; and

(b)

had previously satisfied subsection (1)(e).

(5)

For the purposes of this section, an amount (in relation to an amount denominated in euros) is an "equivalent amount" if it is an amount of equal value denominated wholly or partly in another currency or unit of account.

(6)

The equivalent is to be calculated at the latest practicable date before (but in any event not more than 3 working days before) the date on which the offer is first made.

(7)

"Qualified investor" means –

(a)

an entity falling within Article 2.1(e)(i), (ii) or (iii) of the prospectus directive;

(b)

an investor registered on the register maintained by the [FSA] under section 87R;

(c)

an investor authorised by an EEA State other than the United Kingdom to be considered as a qualified investor for the purposes of the prospectus directive.