Part 6: Part 6: Controllers
Article 34 - Scope of application
(1) This Part applies to:(A)Persons who acquire, or change their level or type of control over anAuthorised Firm ; and(B)Authorised Firms who are the subject of such acquisition or change of controlin both cases being anAuthorised Firm (s) to which Article 34(2) relates.(2) TheAuthorised Firms to which Article 34(1) shall apply are:(A)QFC Entities which areAuthorised Firms ;(B) otherAuthorised Firms to which this Part applies pursuant to a condition, restriction or requirement to that effect imposed by theRegulatory Authority under Part 5.Article 35 - Approval of Regulatory Authority
No
Person may assume control, or assume an increased level of control, over anAuthorised Firm unless theRegulatory Authority shall have first given its approval in accordance with the following provisions of this Part.Article 36 - Obligation to notify the Regulatory Authority
(1) Where aPerson proposes to:(A) acquire control over anAuthorised Firm ; or(B) to increase, decrease or change his existing level or type of control or to cease to have control over anAuthorised Firm ,aController Notice must be submitted to theRegulatory Authority in accordance with the following provisions.(2) Subject to Article 36(3), theController Notice must be submitted by theAuthorised Firm in question not less than 30 days in advance of the proposed acquisition of or change in control or, where this is not reasonably practicable, immediately upon becoming aware of the proposed or actual acquisition of or change in control.(3) Where theAuthorised Firm is:(A) not aware of the acquisition of or change in control; or(B) is not able to obtain sufficient information to submit theController Notice ,theController Notice must instead be submitted by thePerson who is proposing to acquire or change, or has acquired or changed, control. In the case of (B) above, theAuthorised Firm shall promptly upon becoming aware of the acquisition or change or proposed acquisition or change, notify theRegulatory Authority of all relevant information in its possession about the acquisition or change or proposed acquisition or change and notify thePerson in question of his obligations under this Part.(4) TheAuthorised Firm must have in place systems and controls aimed at ensuring that it is advised of and monitors any acquisition of or change in control to which this Part applies.(5) AController Notice shall be given to theRegulatory Authority and shall include such information and be accompanied by such documents, and be signed or executed by suchPersons and in such manner as theRegulatory Authority may reasonably require.(6) TheRegulatory Authority may require theAuthorised Firm orPerson submitting aController Notice to provide such additional information or documents as it reasonably considers necessary in order to enable it to determine what action it should take in response to theController Notice .(7) TheRegulatory Authority shall not be obliged to confirm receipt of theController Notice .(8) Article 108 of theseRegulations (Notices and other Information) shall apply in respect of eachController Notice .Amended by QFC Reg 2010-2 (as from 9th December 2010) Article 37 - Acquiring and changing control
(1) For the purposes of this Part, aPerson acquires control over anAuthorised Firm where he first:(A) holds 10% or more of the shares in theAuthorised Firm , or is entitled to exercise or control the exercise of 10% or more of the voting power in theAuthorised Firm ;(B) holds 10% or more of the shares in aParent Entity of theAuthorised Firm or is entitled to exercise or control the exercise of 10% or more of the voting power in aParent Entity of theAuthorised Firm ; or(C) is able to exercise significant influence over the management of theAuthorised Firm or aParent Entity of theAuthorised Firm by virtue of his shareholding or voting power, or by contractual or other arrangements.(2) TheRegulatory Authority may issueRules specifying the levels and type of control, and of change in control which will give rise to a notification requirement under Article 36 or require approval under Article 35.(3) For the purposes of this Article:(A) shares -(i) in relation to anAuthorised Firm or relevantParent Entity with a share capital, means allotted shares;(ii) in relation to anAuthorised Firm or relevantParent Entity with capital but no share capital, means rights to share in the capital of theAuthorised Firm or relevantParent Entity ; and(iii) in relation to anAuthorised Firm or relevantParent Entity without capital, means interests conferring any right to share in the profits, or liability to contribute to the losses, of theAuthorised Firm or relevantParent Entity ; or giving rise to any obligation to contribute to the debts or expenses of theAuthorised Firm or relevantParent Entity in the event of a winding-up; and(B) voting power, in relation to anAuthorised Firm or relevantParent Entity which does not have general meetings at which matters are decided by the exercise of voting rights, means the right under the constitution of theAuthorised Firm or relevantParent Entity to direct the overall policy of theAuthorised Firm or relevantParent Entity or alter the terms of its constitution.(4) References in this Part to a change of control include any of the matters referred to in Article 36(1)(B) and reference to aPerson acquiring or changing control shall be to aPerson acquiring or changing control either alone or together with one or moreAssociate (s).Article 38 - Decision of the Regulatory Authority
(1) TheRegulatory Authority may:(A) unconditionally approve thePerson having or increasing or proposing to have or increase the control for which aController Notice would be required under Article 36;(B) approve suchPerson subject to such conditions as theRegulatory Authority thinks fit; or(C) refuse to give its approval.(2) TheRegulatory Authority shall seek to make its determination within 30 days of receipt of all the required information and shall notify theAuthorised Firm in question (or where theController Notice has been submitted by anotherPerson , both theAuthorised Firm and that otherPerson ) of its determination promptly once the determination has been made.(3) In reaching its determination, theRegulatory Authority may consult with such parties, including competent authorities outside theQFC , as it considers appropriate.(4) TheRegulatory Authority may only grant unconditional approval if it is satisfied that:(A) thePerson acquiring or increasing the control is a fit and properPerson to have the control in question; and(B) the conditions in Article 29(5)(A) and (B) (Close Links ) have been met; and(C) granting such approval would be consistent with theRegulatory Objectives .(5) TheRegulatory Authority may, on its own initiative:(A) cancel or vary a condition imposed under this Article;(B) withdraw an approval, or impose conditions on it, where it has reason to believe that the criteria set out in Article 38(4) are no longer satisfied.(6) The rights of theRegulatory Authority set out in Article 38(1) shall apply notwithstanding the fact that aController Notice has not been submitted (in contravention of the requirements set out in Article 36), or has not been submitted in accordance with the requirements of Article 36.(7) Any determination or decision made by theRegulatory Authority pursuant to Article 38(1) or (5) or Article 39(1)(A) may be referred to theAppeals Body by theAuthorised Firm to which the proposed or actual acquisition of or change in control relates.Article 39 - Improperly acquired shares
(1) If aPerson has acquired, or has continued to hold, any shares in contravention of a determination or decision of theRegulatory Authority pursuant to Article 38(1) or (5) theRegulatory Authority may:(A) withdraw theAuthorisation of theAuthorised Firm pursuant to Article 31(2)(C) (unless thatPerson has ceased to hold any shares or have control); or(B) apply to theTribunal for an order:(i) restricting the transfer of any shares to which the obligations in Article 36 relate;(ii) restricting the voting rights exercisable in respect of such shares;(iii) restricting the issuing and transfer of further shares which may have been agreed to be issued or transferred;(iv) requiring that, except in a liquidation, no payment be made of any sums of whatever nature due in respect of such shares; or(v) requiring the sale of any such shares (in which event the sale proceeds less the costs of sale and any costs incurred by theRegulatory Authority in respect of obtaining such order shall be paid into theTribunal for the benefit of thePersons beneficially interested in them),and such other order ancillary to or necessary for the implementation of the above as theTribunal shall think fit.Article 40 - Annual reporting of Persons having control over an Authorised Firm
(1) AnAuthorised Firm must submit to theRegulatory Authority an annual report on thePersons having control over it within four months of its financial year end.(2) TheAuthorised Firm's annual report on thePersons having control over it must include:(A) the name of eachPerson having control; and(B) the level and type of control.