Related provisions for PERG 8.14.38

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SUP 10A.17.2GRP
If the firm or its advisers have further questions, they should contact the FCA's Contact Centre (see SUP 10A.12.6 G).
INSPRU 3.2.32GRP
Examples of cover by assets for the purposes of INSPRU 3.2.16 R:(1) a bought put option (or a sold call option) on 1000 1 shares (fully paid) of ABC plc is covered by an existing holding in the fund of 1000 1 shares (fully paid) of ABC plc;(2) a bought call option (or sold put option) on 1000 ordinary 1 shares (fully paid) of ABC plc is covered by cash (or its equivalent) which is sufficient in amount to meet the purchase price of the shares on exercise of the option;(3) a bought
SUP 11.4.8GRP
Principle 11 requires firms to be open and cooperative with the appropriate regulator6. A firm should discuss with the appropriate regulator6, at the earliest opportunity, any prospective changes of which it is aware, in a controller's4or proposed controller's4shareholdings or voting power (if the change is material). These discussions may take place before the formal notification requirement in SUP 11.4.2 R or SUP 11.4.4 R arises. (See also SUP 11.3.2 G). As a minimum, the appropriate
PERG 8.26.4GRP
Examples of a particular investment include:(1) securities – shares in ABC plc, Treasury 10% 2001 stock, XYZ plc warrants;(2) units in collective investment schemes - ABC smaller companies fund, XYZ Growth Trust;(3) exchange-traded derivatives - LME Copper Grade A 3 months, LIFFE Japanese Government bond, ABC plc traded options;(4) contractual investments, for example, futures and other contracts having specified terms and conditions such as duration, volume, interest rate or
PR 5.5.3RRP
(1) This rule applies to a prospectus relating to:(a) equity shares;(b) warrants or options to subscribe for equity shares, that are issued by the issuer of the equity shares; and(c) other transferable securities that have similar characteristics to transferable securities referred to in paragraphs (a) or (b).(2) Each of the following persons are responsible for the prospectus:(a) the issuer of the transferable securities;(b) if the issuer is a body corporate:(i) each person who
BIPRU 8.5.6RRP
In BIPRU 8.5.5 R, the relevant proportion is either:(1) (in the case of a participation) the proportion of shares issued by the undertaking held by the UK consolidation group or the non-EEA sub-group; or(2) (in the case of a consolidation Article 12(1) relationship or an Article 134 relationship), such proportion (if any) as stated in the Part 4A permission of the firm.
BIPRU 2.1.21RRP
The firm must hold more than 75% of the voting rights attaching to the shares in the capital of the subsidiary undertaking referred to in BIPRU 2.1.19 R and must have the right to appoint or remove a majority of the members of the governing body of the subsidiary undertaking.
MAR 1.2.14GRP
For example, if a passenger on a train passing a burning factory calls his broker and tells him to sell shares in the factory's owner, the passenger will be using5information which has been made public5, since it is information which has been obtained by legitimate means through observation of a public event.
EG 7.2.2RP
2Where a person who is a shareholder has contravened one or more relevant transparency provisions (as defined in section 89NA(11) of the Act) in respect of shares in a company admitted to trading on a regulated market and the FCA considers the breach to be serious, the FCA may apply to the Court for an order suspending that person’s voting rights as set out in section 89NA of the Act.
PR 1.2.3AEURP
5Points (a), (b) and (c) of the first subparagraph of Article 1(5) of the Prospectus Regulation and the second subparagraph of Article 1(5) of the Prospectus Regulation provide that:Article 1 Subject matter, scope and exemptions … 5. The obligation to publish a prospectus set out in Article 3(3) shall not apply to the admission to trading on a regulated market of any of the following: (a) securities fungible with securities already admitted to trading on the same regulated market,
COLL 4.4.4RRP
(1) Unless a unit in the authorised fund is a participating security, in this section "unitholders" means unitholders as at a cut-off date selected by the authorised fund manager which is a reasonable time before notices of the relevant meeting are sent out.(2) If any unit in the authorised fund is a participating security, a registered unitholder of such a unit is entitled to receive a notice of a meeting or a notice of an adjourned meeting under COLL 4.4.5 R (Notice of general
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 FCA'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 FCA'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 FCA 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 FCA'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 FCA 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 FCA'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 FCA'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 FCA'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 theFCA'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 FCA'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 FCA'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 FCA'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 FCA'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).
DTR 5.11.2RRP
An issuer whose registered office is in a non-EEA State will be treated as meeting equivalent requirements in respect of treasury shares to those set out in DTR 5.5.1 R provided that:(1) if the issuer is only allowed to hold up a maximum of 5% of its own shares to which voting rights are attached, a notification requirement is triggered under the law of the third country whenever this the maximum threshold of 5% of the voting rights is reached or crossed;(2) if the issuer is allowed
DTR 4.1.11RRP
The management report required by DTR 4.1.8 R must also give an indication of:(1) any important events that have occurred since the end of the financial year unless those events are:4(a) 4reflected in the issuer’s profit and loss account or balance sheet; or(b) 4disclosed in the notes to the issuer’s audited financial statements;(2) the issuer's likely future development;(3) activities in the field of research and development;(4) the information concerning acquisitions of own
BIPRU 11.5.18RRP
3A firm must disclose the following information, including regular, at least annual, updates, regarding its remuneration policy and practices for those categories of staff whose professional activities have a material impact on its risk profile:(1) information concerning the decision-making process used for determining the remuneration policy, including if applicable, information about the composition and the mandate of a remuneration committee, the external consultant whose services