Related provisions for PRIN 3.1.5

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EG 13.3.2RP
1Under sections 359 (Petitions) and 367 (Winding up Petitions) of the Act, a company or partnership is deemed to be unable to pay its debts if it is in default on an obligation to pay a sum due and payable under an agreement where the making or performance of the agreement constitutes or is part of a regulated activity which the company or partnership is carrying on.
EG 13.3.3RP
1The FCA would not ordinarily petition for an administration order unless it believes that the company or partnership is, or is likely to become, insolvent. Similarly, the FCA would not ordinarily petition for a compulsory winding up order solely on the ground of inability to pay debts (as provided in the Act), unless it believes that the company or partnership is or is likely to be insolvent.
EG 13.3.4RP
1While a default on a single agreement of the type mentioned in paragraph 13.3.2 is, under the Act, a presumption of an inability to pay debts, the FCA will consider the circumstances surrounding the default. In particular, the FCA will consider whether: (1) the default is the subject of continuing discussion between the company or partnership and the creditor, under the relevant agreement, which is likely to lead to a resolution; (2) the default is an isolated incident; (3) in
DEPP 7.1.1GRP
1DEPP 7 applies when the FCA3:3(1) has appointed an investigator at the request of an overseas regulator, under section 169(1)(b) (Assistance to overseas regulators)4under section 131FA2 of the Act; and(2) has directed, or is considering directing, the investigator, under section 169(7) or section 131FA2 of the Act, to permit a representative of the overseas regulator4 to attend, and take part in, any interview conducted for the purposes of the investigation.2
DEPP 7.1.2GRP
In DEPP 7, a "requested2 interview" means any interview conducted for the purposes of an investigation under section 169(1)(b) or section 131FA2 of the Act in relation to which the FCA3 has given a direction under section 169(7) or section 131FA2 of the Act.23
DEPP 7.1.3GRP
The purpose of DEPP 7 is to set out the FCA's3 statement of policy on the conduct of interviews to which a direction under section 169(7) or section 131FA2 has been given or the FCA3 is considering giving. The FCA3 is required to prepare and publish this statement of policy by section 169(9) and (11) and section 131FA2 of the Act. As required by section 169(10) and section 131FA2 of the Act, the Treasury has approved the statement of policy.333
EG 3.3.1RP
1Under section 166 of the Act, the FCA has a power to require a firm and certain other persons to provide a report by a skilled person, or itself to appoint a skilled person to produce such a report. The FCA may use its section 166 power to require reports by skilled persons to support both its supervision and enforcement functions.
EG 3.3.2RP
1The factors the FCA will consider when deciding whether to use the section 166 power include: (1) If the FCA's objectives for making further enquiries are predominantly for the purposes of fact finding i.e. gathering historic information or evidence for determining whether enforcement action may be appropriate, the FCA's information gathering and investigation powers under sections 167 and 168 of the Act are likely to be more effective and more appropriate than the power under
EG 3.3.4RP
1Under section 166A of the Act, the FCA also has a power to require a firm to appoint a skilled person to collect or update information, or itself to appoint a skilled person to do so, where it considers that the firm has failed to provide information required by the FCA or update information previously provided to the FCA.
EG 7.9.1RP
1Where 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.
EG 7.9.2RP
1Decisions about whether to apply to the Court for a voting rights suspension order under the Act will be made by the executive director of Enforcement, or in his or her absence, the acting executive director of Enforcement2.
EG 7.9.3RP
1In deciding whether to apply for a voting rights suspension order, the FCA will consider all the relevant circumstances of the case, and in particular will have regard to the factors listed in 89NA(4) of the Act.
REC 4.6.1GRP
Under section 296 of the Act (FCA's4 power to give directions)5 and (for RAPs) under regulation 3 of the RAP regulations,6 the FCA4 has the power to give directions to a recognised body to take specified steps 1in order to secure its compliance with the recognised body requirements. In the case of a UK RIE (including one which operates a RAP)65those steps may include granting the FCA4 access to the UK RIE's premises for the purposes of inspecting those premises or any documents
REC 4.6.3GRP
The FCA4 is likely to exercise its power under section 296 of the Act or regulation 3 of the RAP regulations65if it considers that:43(1) there has been, or was likely to be, a failure to satisfy one or more of the recognised body requirements31which has serious consequences; (2) compliance with the direction would ensure that 1one or more of the recognised body requirements is3 satisfied; and(3) the recognised body is capable of complying with the direction.
REC 4.6.4GRP
Under section 298(7) of the Act (Directions and revocation: procedure), 5 the FCA4 need not follow the consultation procedure set out in the rest of section 298 (see REC 4.8) or may cut short that procedure, if it considers it reasonably necessary to do so. For RAPs, the FCA need not follow the procedure set out in regulation 5 of the RAP regulations or may cut short the procedure, if it considers it essential to do so.6534444
REC 3.1.1RRP
(1) The notification rules in this chapter, which are made under section 293 of the Act (Notification requirements), apply to all UK recognised bodies.(2) The rules relating to the form and method of notification in REC 3.2 also apply to overseas recognised bodies.
REC 3.1.3GRP
The notification rules in this chapter are in addition to the requirements on UK RIEs2 to give notice or information to the FCA and if applicable, the Bank of England2 under sub-sections 293(5) and (6)2 of the Act.222
REC 3.1.4GRP
The notification rules in this chapter are made by the FCA2 in order to ensure that it is provided with notice of events and information which it reasonably requires for the exercise of its functions under the Act. 2
REC 4.2A.1GRP
1Under subsections 292A(1) and (2) of the Act, a UK RIE must as soon as practicable after a recognition order is made in respect of it publish such particulars of the ownership of the UK RIE, including the identity and scale of interests of the persons who are in a position to exercise significant influence over the management of the UK RIE5 or (where the UK RIE is also a RAP) the RAP6, whether directly or indirectly, as the FCA3 may reasonably require.23
REC 4.2A.2GRP
Under subsections 292A(3) and (4) of the Act, a UK RIE must as soon as practicable after becoming aware of a transfer of ownership of the UK RIE which gives rise to a change of persons who are in a position to exercise significant influence over the management of the UK RIE or (where the UK RIE is also a RAP) the RAP6, whether directly or indirectly, publish such particulars of any such transfer as the FCA3 may reasonably require.523
REC 4.2A.3GRP
Under subsection 292A(5) of the Act, a UK RIE must publish such particulars of any decision it makes to suspend or remove a financial instrument from trading on a regulated market operated by it, or lift a suspension or readmit the instrument,4 as the FCA3 may reasonably require.3
EG 19.21.1RP
1The Payment Services Regulations apply much of Part 11 of the Act. The effect of this is to apply the same procedures under the Act for appointing investigators and requiring information when investigating breaches of the Payment Services Regulations.
EG 19.21.2RP
1The FCA will notify the subject of the investigation that it has appointed investigators to carry out an investigation under the Payment Services Regulations and the reasons for the appointment, unless notification is likely to prejudice the investigation or otherwise result in it being frustrated. The FCA expects to carry out a scoping visit early on in the enforcement process in most cases. The FCA's policy in civil investigations under the Payment Services
EG 19.21.3RP
[deleted]32
COLL 9.3.1DRP
(1) If the operator of a scheme makes an application under section 272 of the Act (Individually recognised overseas schemes), the application must include the information in paragraph (4). 11(2) The documents must be in English or accompanied by a translation in English. (3) The documents must be certified by the operator to be true copies of the originals. (4) The operator of the scheme must provide the following information and documents with the application: 1(a) the name of
COLL 9.3.2RRP
An operator of a scheme applying for recognition under section 272 of the Act6 must ensure the prospectus:3(1) contains a statement that "Complaints about the operation of the scheme may be made to the FCA."; and(2) states whether or not investors in the scheme would be covered by the compensation scheme, and if so, it must state how they are covered and who they would need to contact for further information.
COLL 9.3.3RRP
(1) An operator of 3a scheme recognised under section 272 of the Act63 must comply with the requirements set out in COLL 4.2 (Pre-sale notifications). 11(2) Where a scheme recognised under section 272 of the Act6 is managed and authorised in Guernsey, Jersey, or the Isle of Man, the prospectus need not comply with the requirements of COLL 4.2.5 R (Table: contents of prospectus), providing it contains corresponding matter required under the law in its home territory. 113
COLL 9.3.4GRP
(1) 2The PRIIPs Regulation requires the manufacturer of a PRIIP to draw up a key information document in accordance with the PRIIPs Regulation before that PRIIP is made available to retail investors (as defined in the PRIIPs Regulation).(2) The requirements of the PRIIPs Regulation are directly applicable.(3) As a result, when a 3scheme recognised under section 272 of the Act6 is made available to retail clients in the United Kingdom the operator must draw up a key information
SUP 2.2.1GRP
Breaching Principle 11, or the rules in this chapter, makes a firm liable to regulatory sanctions, including discipline under Part XIV of the Act (Disciplinary Measures), and may be relevant to the use of the appropriate regulator's other powers, including the statutory information gathering and investigation powers (see further PRIN 1.1.7 G to PRIN 1.1.9 G). But, unlike a breach of a requirement imposed under the statutory powers listed in SUP 2.1.5 G, a breach of Principle 11
SUP 2.2.3GRP
The FCA1 would not normally seek to gather information using the methods described in SUP 2.3 or SUP 2.4 in a situation where the FCA1 could not have obtained it under the powers in Part XI of the Act (Information Gathering and Investigations). In particular, the limitations in the following sections of the Act are relevant to this chapter:11(1) section 175(5) (Information and documents: supplementary powers) under which no person may be required under Part XI of the Act (Information
SUP 2.2.4GRP
When the FCA1 obtains confidential information using the methods of information gathering described in SUP 2.3 or SUP 2.4, it is obliged under Part XXIII of the Act (Public Record, Disclosure of Information and Co-operation) to treat that information as confidential. The FCA1 will not disclose confidential information without lawful authority, for example if an exception applies under the Financial Services and Markets Act 2000 (Disclosure of Confidential Information) Regulations
EG 20.1.1RP
1The CCA Order gives the FCA the power to enforce the CCA through the application of its investigation and sanctioning powers in the Act by reference to the contravention of CCA Requirements and criminal offences under the CCA. The FCA's investigation and sanctioning powers include the following: power to censure or fine an approved person, or impose a suspension or a restriction on their approval under section 66 of the Act, for being knowingly concerned in a contravention by
EG 20.1.2RP
1The FCA's approach to taking enforcement action under the CCA Order will mirror its general approach to enforcing the Act, as set out in EG 2. It will seek to exercise its enforcement powers in a manner that is transparent, proportionate, responsive to the issue and consistent with its publicly stated policies. It will also seek to ensure fair treatment when exercising its enforcement powers. Finally, it will aim to change the behaviour of the person who is the subject of its
EG 20.1.3RP
1The FCA has decided to adopt procedures and policies that it currently has in place for the enforcement of the Act in exercising its powers to enforce the CCA. Key features of the FCA's approach are described below.
EG 11.5.1RP
2The FCA may apply to the court for an injunction if it appears that a person, whether authorised or not, is reasonably likely to breach a relevant requirement12, or engage in market abuse. It can also apply for an injunction if a person has breached one of those requirements or has engaged in market abuse and is likely to continue doing so. 12 Under section 380(6)(a) and (7)(a), a 'relevant requirement' in relation to an application by the appropriate regulator means a requirement:
EG 11.5.2RP
2The FCA may consider taking disciplinary1 action using a range of powers1 as well as seeking restitution, if a person has breached a relevant requirement13 of the Act, the UK auctioning regulations or any4onshored regulation3, or has engaged in1market abuse. 13 Under section 204A(2), a 'relevant requirement' in relation to an application by the appropriate regulator means a requirement: which is imposed by or under the Act or by a qualifying 3provision specified, or of a description
EG 11.5.3RP
2The FCA may consider exercising its power to prosecute offences under the Act, as well as applying to seek restitution if a person has breached certain requirements of the Act.
PR 5.6.1RRP
Where, in relation to an offer in the United Kingdom, no prospectus is required under the Act, the issuer and offeror must ensure that material information they provide to qualified investors or special categories of investors, including information disclosed in the context of meetings relating to offers, is disclosed to all qualified investors or special categories of investors to whom the offer is exclusively addressed. [Note: article 15.5 PD]
PR 5.6.2GRP
Where a prospectus is required to be made available to the public under the Act, information referred to in PR 5.6.1 R should be included in the prospectus or in a supplementary prospectus.
PR 5.6.3GRP
Under sections 87K and 87L of the Act, the FCA has various powers including powers to prohibit or suspend an offer and to prohibit or suspend an advertisement. The FCA will use these powers if it is necessary to protect investors or the smooth operation of the market is, or may be, jeopardised.
PERG 8.3.1GRP
The basic restriction on the communication of financial promotions is in section 21(1) of the Act. Sections 21(2) and (5) disapply the restriction in certain circumstances. Their combined effect is that a person must not, in the course of business, communicate an invitation or inducement to engage in investment activity unless:(1) he is an authorised person; or(2) the content of the communication is approved for the purposes of section 21 by an authorised person; or(3) the communication
PERG 8.3.2GRP
Section 21 of the Act does not itself (other than in its heading and side-note) refer to a ‘financial promotion’ but rather to the communication of ‘an invitation or inducement (a)1 to engage in investment activity or (b) to engage in claims management activity1’. References in this guidance to a financial promotion mean an invitation or inducement to engage in investment activity or to engage in claims management activity1.
PERG 8.3.3GRP
Section 21 of the Act contains a number of key expressions or phrases which will determine whether or not it will apply. These are:(1) 'invitation or inducement' (see PERG 8.4);(2) 'in the course of business' (see PERG 8.5);(3) 'communicate' (see PERG 8.6);(4) 'engage in investment activity' (see PERG 8.7); 1(4A) ‘engage in claims management activity’ (see PERG 8.7A); and1(5) 'having an effect in the United Kingdom' (see PERG 8.8).
COND 1.3.1GRP
The guidance in COND 2 explains each FCA1threshold condition in Schedule 6 (threshold conditions) to the Act and indicates1 how the FCA1 will interpret it in practice. This guidance is not, however, exhaustive and is written in very general terms. A firm will need to have regard to the obligation placed upon the FCA1 under section 55B (The threshold conditions) of the Act; that is, the FCA1 must ensure that the firm will satisfy, and continue to satisfy, the FCA1threshold conditions
COND 1.3.3CGRP
1When assessing the FCAthreshold conditions, the FCA may have regard to any person appearing to be, or likely to be, in a relevant relationship with the firm, in accordance with section 55R of the Act (Persons connected with an applicant). For example, a firm'scontrollers, its directors or partners, other persons with close links to the firm (see COND 2.3), and other persons that exert influence on the firm which might pose a risk to the firm's satisfaction of the FCAthreshold
COND 1.3.4GRP
(1) For ease of reference, the FCA1threshold conditions in or under Schedule 6 to the Act have been quoted in full in COND 2. (1A) 1Paragraphs 2A and 3A of Schedule 6 of the Act have not been quoted. These set out the application of the FCAthreshold conditions to firms which do not carry on, or are not seeking to carry on, a PRAregulated activity and firms which carry on, or are seeking to carry on, a PRAregulated activity respectively. This application is summarised in COND
COND 1.3.5UKRP
1Paragraph 1A of Schedule 6 to the Act(1) "assets" includes contingent assets;"consolidated supervision" has the same meaning as in section 3M(a);"consumer" has the meaning given by section 425A(b);"financial crime" is to be read with section 1H(3)(c);"functions", in relation to either the FCA or the PRA, means the functions conferred on that regulator by or under this Act;"liabilities" includes contingent liabilities; "relevant directives" has the same meaning as in section 3M;
REC 6.3.1GRP
Before making a recognition order, the FCA3 will need to be satisfied that the recognition requirements in section 292(3) of the Act (Overseas investment exchanges) have been met. These requirements are the only recognition requirements applicable to ROIEs3. 333
REC 6.3.2UKRP

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

2Section 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 with -4

3

4(i) recognition requirements, other than any such requirements which are expressed in regulations under section 286 not to apply for the purposes of this paragraph; and

4(ii) requirements contained in any directly applicable Community regulation made under the markets in financial instruments directive or markets in financial instruments regulation;

(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]

3

(c)

the applicant is able and willing to co-operate with the[FCA]3by the sharing of information and in other ways; and

3

(d)

adequate arrangements exist for co-operation between the[FCA]3and those responsible for the supervision of the applicant in the country or territory in which the applicant's head office is situated.

3

Section 292(4)

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

3

(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.

REC 6.3.3GRP
The reference to recognition requirements in section 292(3)(a) of the Act is a reference to the requirements applicable to UK RIEs in the Recognition Requirements Regulations. These requirements are set out, together with guidance, in REC 2.3
PERG 8.37.2GRP
Regulations 49 and 50 place restrictions on an AIFMmarketing an AIF. These regulations provide that the following types of AIFM may not market the following types of an AIF in the UK unless the conditions summarised below are met.(1) The conditions that need to be met vary depending on whether the AIF falls within regulation 57(1) or not. An AIF falls within this regulation if it is: (a) a feeder AIF that is a UK AIF, a Gibraltar AIF or an EEA AIF, the master AIF of which is
PERG 8.37.5GRP
(1) The terms 'offering' or 'placement' are not defined in the AIFMD UK regulation but, in our view, an offering or placement takes place for the purposes of the AIFMD UK regulation when a person seeks to raise capital by making a unit of share of anAIF available for purchase by a potential investor. This includes situations which constitute a contractual offer that can be accepted by a potential investor in order to make the investment and form a binding contract, and situations
PERG 8.37.13GRP
An AIFM or an investment firm that acts in contravention of the marketing restrictions in regulations 49 to 51, or an AIFM that acts in contravention of a provision of the SEF regulation or the RVECA regulation3, is deemed to have been carrying out "unlawful marketing" under regulations 52 and 53. The consequences of carrying out unlawful marketing vary, depending on whether the AIFM or investment firm concerned is an authorised person or an unauthorised person.(1) If the AIFM
PERG 8.37.14GRP
(1) Regulation 46 (Application of the financial promotion and scheme promotion restrictions) provides that where a person may market an AIF under regulation 49, 50 or 51:(a) to the extent that such marketing falls within section 21(1) (restrictions on financial promotion) or 238(1) (restrictions on promotion) of the Act, the person may market the AIF to a retail client only if the person does so without breaching the restriction in that section; and(b) to the extent that any activity
PERG 8.37.15GRP
(1) The UK provisions which implemented the prospectus directive were not amended by the UK provisions which implemented the2AIFMD and closed-ended AIFs that are making an offer of securities to the public as defined in the prospectus directive need to comply with the requirements under the UK provisions which implemented2 both Directives.(2) However, where the AIF is required to publish a prospectus under section 85 of the Act2, only information referred to in FUND 3.2.2 R and
SUP 6.5.1GRP
Under section 33(2) of the Act (Withdrawal of authorisation), if the appropriate regulator cancels a firm'sPart 4A permission,1 and as a result there is no regulated activity for which the firm has permission, the regulator authorising that firm1 is required to give a direction withdrawing the firm's status as an authorised person.111
SUP 6.5.2AGRP
1If the FCA concludes that it should grant an FCA-authorised person's application for cancellation of permission and end its authorisation, the FCA will:(1) cancel the firm'sPart 4A permission under section 55H(3) of the Act;(2) withdraw the firm'sauthorised status under section 33(2) of the Act by giving the firm a direction in writing; and(3) update the firm's entry in the Financial Services Register to show it has ceased to be authorised.
SUP 6.2.1GRP
A firm authorised under Part 4A8 of the Act (Permission to carry on regulated activity) has a single Part 4A permission8 granted by the FCA or the PRA. A firm'sPart 4A permission8 specifies all or some of the following elements (see PERG 2 Annex 2 (Regulated activities and the permission regime) and the information online at the FCA and PRA websites):8888338(1) a description of the activities the firm may carry on, including any limitations;(2) the specified investments involved;
SUP 6.2.2GRP
Under section 20(1) and 20(1A)8 of the Act (Authorised persons acting without permission), a firm is prohibited from carrying on a regulated activity in the United Kingdom (or purporting to do so) otherwise than in accordance with its permission.
SUP 6.2.3AGRP
8If an FCA-authorised person wishes to change its Part 4A permission to:(1) add a regulated activity, other than a PRA-regulated activity; or(2) remove a regulated activity from those to which the permission relates; or(3) vary the description of a regulated activity to which the permission relates; or(4) cancel the permission;it can apply to the FCA under section 55H of the Act (Variation by FCA at request of authorised person).
SUP 6.2.3BGRP
8If an FCA-authorised person wishes to change its Part 4A permission, by adding to the regulated activities to which the permission relates one or more regulated activities, which include a PRA-regulated activity, it can apply to the PRA under section 55I of the Act (Variation by PRA at request of authorised person). The PRA can determine such an application only with the consent of the FCA.
SUP 6.2.3CGRP
8If a firm with a Part 4A permission wishes the FCA to: (1) impose a new requirement; or(2) vary a requirement imposed by the FCA; or(3) cancel such a requirement;it can apply to the FCA under section 55L(5) of the Act (Imposition of Requirements by FCA).