GENE 8.4.2 Significant changes in controllers

(1) An authorised firm must give notice to the Regulatory Authority if any of the following matters happen in relation to a controller:
(a) the controller is the subject of a legal proceeding or an investigation that calls, or might call, the controller's integrity into question;
(b) there is a significant deterioration in the controller's financial position;
(c) there is any significant change in the conduct or circumstances of the controller that might reasonably be considered to diminish the fitness and propriety of the firm or its ability to conduct its business soundly and prudently;
(d) if the controller is not an individual — the controller undergoes a substantial change or series of changes in its governing body;
Note Governing body is defined in the glossary.

Examples for para (d)
1 for a firm incorporated under the Companies Regulations 2005 — removal or replacement of a majority of the members of the board of directors in a single event or a series of connected events
2 for a firm that is a partnership constituted under the Partnership Regulations 2007 — removal of all, or a majority of, the members of the body (whatever it is called) that, under the firm's constitutional document, has the responsibility of overseeing the firm's business in or from the QFC
3. for a firm that is a branch that has for its governing body a committee of management given the responsibility of overseeing the firm's business in or from the QFC — abolition or change of the committee.
(2) The notice must be given in the approved form immediately after the firm becomes aware of the matter.
(3) If the firm has reasonable grounds to suspect that any of the matters in subrule (1) may happen or has happened, the firm must make appropriate inquiries to satisfy itself about the matter and decide whether it should give notice.

Guidance

The test of reasonable grounds for suspicion applies to the firm's obligation to make inquiries for itself (and thereafter decide whether or not to give notice). The grounds for making inquiries based on the suspicion must be that a reasonable person would, in the circumstances, be expected to make those inquiries.
(4) If there is a legal or regulatory restriction on a firm's complying with subrule (1), (2) or (3), the firm must immediately notify the Regulatory Authority of the specific nature of the restriction. On being notified, the authority will direct the firm as to what action the firm must take to comply with this rule.
Editorial changes (as from 1st January 2016).