Part 6: Part 6: Controllers
Article 34 - Scope of application(1) This Part applies to:(A)
Personswho acquire, or change their level or type of control over an Authorised Firm; and(B) Authorised Firmswho are the subject of such acquisition or change of controlin both cases being an Authorised Firm(s) to which Article 34(2) relates.(2) The Authorised Firmsto which Article 34(1) shall apply are:(A) QFC Entitieswhich are Authorised Firms;(B) other Authorised Firmsto which this Part applies pursuant to a condition, restriction or requirement to that effect imposed by the Regulatory Authorityunder Part 5.
Article 35 - Approval of Regulatory Authority
Personmay assume control, or assume an increased level of control, over an Authorised Firmunless the Regulatory Authorityshall have first given its approval in accordance with the following provisions of this Part.
Article 36 - Obligation to notify the Regulatory Authority(1) Where a
Personproposes to:(A) acquire control over an Authorised Firm; or(B) to increase, decrease or change his existing level or type of control or to cease to have control over an Authorised Firm,a Controller Noticemust be submitted to the Regulatory Authorityin accordance with the following provisions.(2) Subject to Article 36(3), the Controller Noticemust be submitted by the Authorised Firmin 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 the Authorised Firmis:(A) not aware of the acquisition of or change in control; or(B) is not able to obtain sufficient information to submit the Controller Notice,the Controller Noticemust instead be submitted by the Personwho is proposing to acquire or change, or has acquired or changed, control. In the case of (B) above, the Authorised Firmshall promptly upon becoming aware of the acquisition or change or proposed acquisition or change, notify the Regulatory Authorityof all relevant information in its possession about the acquisition or change or proposed acquisition or change and notify the Personin question of his obligations under this Part.(4) The Authorised Firmmust 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) A Controller Noticeshall be given to the Regulatory Authorityand shall include such information and be accompanied by such documents, and be signed or executed by such Personsand in such manner as the Regulatory Authoritymay reasonably require.(6) The Regulatory Authoritymay require the Authorised Firmor Personsubmitting a Controller Noticeto 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 the Controller Notice.(7) The Regulatory Authorityshall not be obliged to confirm receipt of the Controller Notice.(8) Article 108 of these Regulations(Notices and other Information) shall apply in respect of each Controller 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, a
Personacquires control over an Authorised Firmwhere he first:(A) holds 10% or more of the shares in the Authorised Firm, or is entitled to exercise or control the exercise of 10% or more of the voting power in the Authorised Firm;(B) holds 10% or more of the shares in a Parent Entityof the Authorised Firmor is entitled to exercise or control the exercise of 10% or more of the voting power in a Parent Entityof the Authorised Firm; or(C) is able to exercise significant influence over the management of the Authorised Firmor a Parent Entityof the Authorised Firmby virtue of his shareholding or voting power, or by contractual or other arrangements.(2) The Regulatory Authoritymay issue Rulesspecifying 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 an Authorised Firmor relevant Parent Entitywith a share capital, means allotted shares;(ii) in relation to an Authorised Firmor relevant Parent Entitywith capital but no share capital, means rights to share in the capital of the Authorised Firmor relevant Parent Entity; and(iii) in relation to an Authorised Firmor relevant Parent Entitywithout capital, means interests conferring any right to share in the profits, or liability to contribute to the losses, of the Authorised Firmor relevant Parent Entity; or giving rise to any obligation to contribute to the debts or expenses of the Authorised Firmor relevant Parent Entityin the event of a winding-up; and(B) voting power, in relation to an Authorised Firmor relevant Parent Entitywhich does not have general meetings at which matters are decided by the exercise of voting rights, means the right under the constitution of the Authorised Firmor relevant Parent Entityto direct the overall policy of the Authorised Firmor relevant Parent Entityor 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 a Personacquiring or changing control shall be to a Personacquiring or changing control either alone or together with one or more Associate(s).
Article 38 - Decision of the Regulatory Authority(1) The
Regulatory Authoritymay:(A) unconditionally approve the Personhaving or increasing or proposing to have or increase the control for which a Controller Noticewould be required under Article 36;(B) approve such Personsubject to such conditions as the Regulatory Authoritythinks fit; or(C) refuse to give its approval.(2) The Regulatory Authorityshall seek to make its determination within 30 days of receipt of all the required information and shall notify the Authorised Firmin question (or where the Controller Noticehas been submitted by another Person, both the Authorised Firmand that other Person) of its determination promptly once the determination has been made.(3) In reaching its determination, the Regulatory Authoritymay consult with such parties, including competent authorities outside the QFC, as it considers appropriate.(4) The Regulatory Authoritymay only grant unconditional approval if it is satisfied that:(A) the Personacquiring or increasing the control is a fit and proper Personto 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 the Regulatory Objectives.(5) The Regulatory Authoritymay, 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 the Regulatory Authorityset out in Article 38(1) shall apply notwithstanding the fact that a Controller Noticehas 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 the Regulatory Authoritypursuant to Article 38(1) or (5) or Article 39(1)(A) may be referred to the Appeals Bodyby the Authorised Firmto which the proposed or actual acquisition of or change in control relates.
Article 39 - Improperly acquired shares(1) If a
Personhas acquired, or has continued to hold, any shares in contravention of a determination or decision of the Regulatory Authoritypursuant to Article 38(1) or (5) the Regulatory Authoritymay:(A) withdraw the Authorisationof the Authorised Firmpursuant to Article 31(2)(C) (unless that Personhas ceased to hold any shares or have control); or(B) apply to the Tribunalfor 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 the Regulatory Authorityin respect of obtaining such order shall be paid into the Tribunalfor the benefit of the Personsbeneficially interested in them),and such other order ancillary to or necessary for the implementation of the above as the Tribunalshall think fit.
Article 40 - Annual reporting of Persons having control over an Authorised Firm(1) An
Authorised Firmmust submit to the Regulatory Authorityan annual report on the Personshaving control over it within four months of its financial year end.(2) The Authorised Firm'sannual report on the Personshaving control over it must include:(A) the name of each Personhaving control; and(B) the level and type of control.