Related provisions for COBS 19.7.6
- (1)
3The restriction in COBS 4.12.3 R does not apply if the promotion falls within an exemption in the table in (5) below.
- (2)
A firm may communicate an invitation or inducement to participate in an unregulated collective investment scheme without breaching the restriction on promotion in section 238 of the Act if the promotion falls within an exemption in the table in (5) below.
- (3)
Where the middle column in the table in (5) refers to promotion to a category of person, this means that the invitation or inducement:
- (a)
is made only to recipients who the firm has taken reasonable steps to establish are persons in that category; or
- (b)
is directed at recipients in a way that may reasonably be regarded as designed to reduce, so far as possible, the risk of participation in, acquisition or underwriting of the non-mainstream pooled investment by persons who are not in that category.
- (a)
- (4)
A firm may rely on more than one exemption in relation to the same invitation or inducement.
- (5)
Title of Exemption
Promotion to:
Promotion of a non-mainstream pooled investment which is:
1. Replacement products and rights issues
A person who already participates in, owns, holds rights to or interests in, a non-mainstream pooled investment that is being liquidated or wound down or which is undergoing a rights issue. [See Note 1.]
1. A non-mainstream pooled investment which is intended by the operator or manager to absorb or take over the assets of that non-mainstream pooled investment, or which is being offered by the operator or manager of that non-mainstream pooled investment as an alternative to cash on its liquidation;
or
2. Securities offered by the existing non-mainstream pooled investment as part of a rights issue.
2. Certified high net worth investors
An individual6 who meets the requirements set out in COBS 4.12.6 R, or a person (or persons) legally empowered to make investment decisions on behalf of such individual6.
Any non-mainstream pooled investment the firm considers is likely to be suitable for that individual6, based on a preliminary assessment of the client's profile and objectives.
[See COBS 4.12.5G (2).]
3. Enterprise and charitable funds
A person who is eligible to participate or invest in an arrangement constituted under:
(1) the Church Funds Investment Measure 1958;
(2) section 96 5or 100 of the Charities Act 2011;
(3) section 25 of the Charities Act (Northern Ireland) 1964;
(4) the Regulation on European Venture Capital Funds (‘EuVECAs’); or
(5) the Regulation on European Social Entrepreneurship Funds (‘EuSEFs’).
Any non-mainstream pooled investment which is such an arrangement.
4. Eligible employees
An eligible employee, that is, a person who is:
(1) an officer;
(2) an employee;
(3) a former officer or employee; or
(4) a member of the immediate family of any of (1) - (3), of an employer which is (or is in the same group as) the firm, or which has accepted responsibility for the activities of the firm in carrying out the designated investment business in question.
1. A non-mainstream pooled investment, the instrument constituting which:
A. restricts the property of the non-mainstream pooled investment, apart from cash and near cash, to:
(1) (where the employer is a company) shares in and debentures of the company or any other connected company; [See Note 2.]
(2) (in any case), any property, provided that the non-mainstream pooled investment takes the form of:
(i) a limited partnership, under the terms of which the employer (or connected company) will be the unlimited partner and the eligible employees will be some or all of the limited partners; or
(ii) a trust which the firm reasonably believes not to contain any risk that any eligible employee may be liable to make any further payments (other than charges) for investment transactions earlier entered into, which the eligible employee was not aware of at the time he entered into them; and
B. (in a case falling within A(1) above) restricts participation in the non-mainstream pooled investment to eligible employees, the employer and any connected company.
2. Any non-mainstream pooled investment, provided that the participation of eligible employees is to facilitate their co-investment:
(i) with one or more companies in the same group as their employer (which may include the employer); or
5. Members of the Society of Lloyd’s
A person admitted to membership of the Society of Lloyd's or any person by law entitled or bound to administer his affairs.
A scheme in the form of a limited partnership which is established for the sole purpose of underwriting insurance business at Lloyd's.
6. Exempt persons
An exempt person (other than a person exempted only by section 39 of the Act (Exemption of appointed representatives)) if the financial promotion relates to a regulated activity in respect of which the person is exempt from the general prohibition.
7. Non-retail clients
An eligible counterparty or a professional client.
Any non-mainstream pooled investment in relation to which the client is categorised as a professional client or eligible counterparty.
[See Note 4.]
8. Certified sophisticated investors
An individual6 who meets the requirements set out in COBS 4.12.7 R, including an individual who is legally empowered (solely or jointly with others) to make investment decisions on behalf of another person who is the firm'sclient6.
9. Self-certified sophisticated investors
An individual6 who meets the requirements set out in COBS 4.12.8 R, including an individual who is legally empowered (solely or jointly with others) to make investment decisions on behalf of another person who is the firm'sclient6.
Any non-mainstream pooled investment the firm considers is likely to be suitable for that client, based on a preliminary assessment of the client's profile and objectives.
[See COBS 4.12.5G (2)]
10. Solicited advice
Any person.
Any non-mainstream pooled investment, provided the communication meets all of the following requirements:
(a) the communication only amounts to a financial promotion because it is a personal recommendation on a non-mainstream pooled investment;
(b) the personal recommendation is made following a specific request by that client for advice on the merits of investing in the non-mainstream pooled investment; and
(c) the client has not previously received a financial promotion or any other communication from the firm (or from a person connected to the firm) which is intended to influence the client in relation to that non-mainstream pooled investment. [See Note 3.]
11. Excluded communications
Any person.
Any non-mainstream pooled investment, provided the financial promotion is an excluded communication.
[See COBS 4.12.12 G and COBS 4.12.13 G.]
12. Non-recognised UCITS
Any person.
Any EEA UCITS scheme which is not a recognised scheme, provided the following requirements are met:
(1) the firm considers it is likely to be suitable for that client based on a preliminary assessment of the client's profile and objectives; and
(2) the firm provides that client with the same product information as it would be required to provide by COBS 14.2 if the scheme was a recognised scheme.
[See COBS 4.12.5G (2).]
13. US persons
A person who is classified as a United States person for tax purposes under United States legislation or who owns a US qualified retirement plan.
Any investment company registered and operated in the United States under the Investment Company Act 1940.
The following Notes explain certain words and phrases used in the table above.
Note 1
Promotion of non-mainstream pooled investments to a category of person includes any nominee company acting for such a person.
Note 2
A company is 'connected' with another company if:
- they are both in the same group; or
- one company is entitled, either alone or with another company in the same group, to exercise or control the exercise of a majority of the voting rights attributable to the share capital, which are exercisable in all circumstances at any general meeting of the other company or of its holding company.
Note 3
A person is connected with a firm if it acts as an introducer or appointed representative for that firm or if it is any other person, regardless of authorisation status, who has a relevant business relationship with the firm.
Note 4
In deciding whether a promotion is permitted under the rules of this section or under section 238 of the Act, firms may use the client categorisation regime that applies to business other than MiFID or equivalent third country business. (This is the case even if the firm will be carrying on a MiFID activity at the same time as or following the promotion.)
3This sourcebook does not apply to a firm with respect to the activity of accepting deposits carried on from an establishment maintained by it, or its appointed representative, in the United Kingdom, except for COBS 4.6 (Past, simulated past and future performance), COBS 4.7.1 R (Direct offer financial promotions), COBS 4.10 (Systems and controls and approving and communicating financial promotions), COBS 13 (Preparing product information) and COBS 14 (Providing product information to clients) which apply as set out in those provisions, COBS 4.1 and the Banking: Conduct of Business sourcebook (BCOBS).
The provisions of COBS in the table do not apply in relation to any energy market activity or oil market activity carried on by a firm which is MiFID or equivalent third country business:
COBS |
Description |
Adviser charging and remuneration |
|
Retail investment product provider requirements relating to adviser charging and remuneration |
|
Describing advice services |
|
Disclosure of charges, remuneration and commission |
|
Suitability reports |
|
Special rules for providing basic advice on a stakeholder product |
|
Use of dealing commission |
|
Guidance on contingent liability transaction |
|
Quotations for surrender values |
|
Life insurance contracts - communications to clients |
|
Information to be provided in accordance with COBS 16.2.1 R and 16.3 |
The provisions of COBS in the table are unlikely to be relevant to any energy market activity or oil market activity carried on by a firm which is MiFID or equivalent third country business:
COBS |
Description |
Distance communications |
|
Insurance mediation |
|
Preparing product information |
|
Providing product information to clients |
|
Cancellation |
|
Claims handling for long-term care insurance |
|
Trustee firms' regime |
|
Corporate finance business |
|
Stock lending activity |
|
Pensions - supplementary provisions |
|
With-profits |
Table
A key features document for a packaged product must: |
||
(1) |
Include the title: ‘key features of the [name of product]’; |
|
(2) |
describe the product in the order of the following headings, and by giving the following information under those headings: |
|
Heading |
Information to be given |
|
‘Its aims’ |
A brief description of the product’s aims |
|
‘Your commitment’ or ‘Your investment’ |
What a retail client is committing to or investing in and any consequences of failing to maintain the commitment or investment |
|
‘Risks’ |
The material risks associated with the product, including a description of the factors that may have an adverse effect on performance or are material to the decision to invest |
|
‘Questions and Answers’ |
(in the form of questions and answers) the principle terms of the product, what it will do for a retail client and any other information necessary to enable a retail client to make an informed decision. |
|
5[Note: in respect of ‘Risks’, article 185(4) of the Solvency II Directive] |
1Each of the exemptions listed below applies only if the retail client is of the type described for the exemption and provided any additional conditions for the exemption are met.
Title |
Type of retail client |
Additional conditions |
(a) An individual who meets the requirements set out in COBS 4.12.6R; or (b) an individual in an EEA State other than the UK who meets requirements which are broadly equivalent to those set out in COBS 4.12.6R; or (c) a person (or persons) legally empowered to make investment decisions on behalf of an individual who meets the earnings or net asset requirements in (a) or (b) above. |
The firm must consider that the mutual society share is likely to be suitable for that individual, based on a preliminary assessment of that individual’s profile and objectives (see COBS 4.12.5G(2)). |
|
(a) An individual who meets the requirements set out in COBS 4.12.7R; or (b) an individual in an EEA State other than the UK who meets requirements which are broadly equivalent to those set out in COBS 4.12.7R; or (c) an individual who meets the requirements for either (a) or (b) above and who is legally empowered (solely or jointly with others) to make investment decisions on behalf of another person who is the firm's client. |
Not applicable. |
|
(a) An individual who meets the requirements set out in COBS 4.12.8R; or (b) an individual in an EEA State other than the UK who meets requirements which are broadly equivalent to those set out in COBS 4.12.8R; or (c) an individual who meets the requirements for either (a) or (b) above and who is legally empowered (solely or jointly with others) to make investment decisions on behalf of another person who is the firm's client. |
Not applicable. |
5A certified restricted investor is an individual who has signed, within the period of twelve months ending with the day on which the communication is made, a statement in the following terms:
“RESTRICTED INVESTOR STATEMENT I make this statement so that I can receive promotional communications relating to non-readily realisable securities as a restricted investor. I declare that I qualify as a restricted investor because: |
|
(a) |
in the twelve months preceding the date below, I have not invested more than 10% of my net assets in non-readily realisable securities; and |
(b) |
I undertake that in the twelve months following the date below, I will not invest more than 10% of my net assets in non-readily realisable securities. |
Net assets for these purposes do not include: |
|
(a) |
the property which is my primary residence or any money raised through a loan secured on that property; |
(b) |
any rights of mine under a qualifying contract of insurance; or |
(c) |
any benefits (in the form of pensions or otherwise) which are payable on the termination of my service or on my death or retirement and to which I am (or my dependants are), or may be entitled; or7 |
7 (d) |
any withdrawals from my pension savings (except where the withdrawals are used directly for income in retirement). |
I accept that the investments to which the promotions will relate may expose me to a significant risk of losing all of the money or other property invested. I am aware that it is open to me to seek advice from an authorised person who specialises in advising on non-readily realisable securities. Signature: Date:” |