Part 1: Exemptions

Subject to any Rules, an activity will not constitute Regulated Activities for the purposes of these Regulations if it falls within one or more of the categories set out in the following paragraphs.

1. Group Exemption

The Group Exemption applies to an activity other than Effecting a Contract of Insurance or Carrying Out a Contract of Insurance carried on with or for Persons within the same Group as the Person undertaking that activity.

2. Joint Venture Exemption

2.1 The Joint Venture Exemption applies to an activity other than Effecting a Contract of Insurance or Carrying Out a Contract of Insurance carried on by a Person if that Person and all the Persons with or for whom it is carrying on such activity are, or propose to become, participants in a joint venture where the activity is carried on for the purposes of, or in connection with that joint venture.
2.2 For the purposes of paragraph 2.1:
(1) a joint venture means an enterprise into which two or more Persons enter for commercial purposes relating to a business carried on by them (provided that that business is not the business of engaging in a Regulated Activity); and
(2) the term "a participant in a joint venture" is to be regarded as including (1) a person who is within the same Group as a participant in that joint venture; and (2) the joint venture vehicle.

3. Trustee Exemption

The Trustee Exemption applies to an activity which:

3.1 is carried on by a bare trustee on the instructions of a beneficiary; and
3.2 would not constitute a Regulated Activity if that activity were carried on by that beneficiary provided that the trustee is not separately remunerated for carrying on that activity.

4. Professional Business Exemption

4.1 The Professional Business Exemption applies to the activities of Arranging Deals in Investments, Arranging Credit Facilities, Arranging the Provision of Custody Services and Advising on Investments where the activity in question:
(1) is carried on in the course of a professional business that does not otherwise consist of the carrying on of a Regulated Activity; and
(2) is a necessary part of that profession or business provided the Person carrying on the activity is not separately remunerated for carrying on that activity.
4.2 For the purposes of paragraph 4.1 a professional business is the business of providing legal, actuarial or accounting services.

5. Sale of Body Corporate Exemption

5.1 The Sale of Body Corporate Exemption applies to the activity of Dealing in Investments where the activity in question constitutes the sale of shares in a body corporate by a qualifying transferor to a qualifying transferee such that on completion of the sale, the qualifying transferee holds 50% or more of the voting shares in that body corporate or may reasonably be regarded as having acquired day to day control of the affairs of that body corporate.
5.2 The Sale of Body Corporate Exemption applies to the activities of Advising on Investments, Arranging Deals in Investments and Arranging Credit Facilities where the advice or arrangements are made in connection with a sale of the kind described in paragraph 5.1.
5.3 To qualify for the purposes of paragraph 5.1 the transferor and the transferee must be:
(1) a body corporate, a partnership or an individual; or
(2) a group comprised of individuals each of whom is a director or manager of the body corporate (or in the case of a transferee will, immediately following the sale be a director or manager of the body corporate) or a Close Relative of any such individuals and the trustees of any such individuals.

6. Employee Share Scheme Exemption

The Employee Share Scheme Exemption applies to the activities of Dealing in Investments, Providing Custody Services, Arranging the Provision of Custody Services, Arranging Deals in Investments and Advising on Investments where

6.1 the purpose of the activity in question is to facilitate the participation by employees, directors, former employees or former directors of a body corporate in Shares of that body corporate or Shares of a member of the same Group as that body corporate or other Investments whose price is linked to such Shares; and
6.2 the activity in question is carried out by the body corporate or a member of the same Group as that body corporate.

7. Special Purpose Vehicle Exemption

7.1 Subject to paragraph 7.2, the Special Purpose Vehicle Exemption applies to activities carried on by an Entity having the characteristics of a project finance special purpose vehicle in relation to any financing or related activities (including the procurement of insurance) undertaken by that Entity;
7.2 The Regulatory Authority may make Rules specifying:
(1) the types of Entity which will be deemed to have the characteristics of a project finance special purpose vehicle for the purposes of paragraph 7.1;
(2) the types of financing or related activities (including the procurement of insurance) to which the Special Purpose Vehicle Exemption applies; and
(3) in respect of any activity specified in sub-paragraph (2), the circumstances in which the Special Purpose Vehicle Exemption will apply.

8. Collective Investment Funds Exemption

The Collective Investment Funds Exemption applies to the activity of Dealing in Investments where that activity is carried on by a Collective Investment Fund in the circumstances and to the extent so provided in Rules made by the Regulatory Authority.

Amended by QFC Reg 2010-2 (as from 9th December 2010)