C1 Part XVIII Recognised Investment Exchanges and Clearing Houses
F2CHAPTER 1ACONTROL OVER RECOGNISED INVESTMENT EXCHANGE
Pt. 18 Ch. 1A substituted (21.3.2009) by virtue of The Financial Services and Markets Act 2000 (Controllers) Regulations 2009 (S.I. 2009/534), reg. 5, Sch. 2 (with reg. 8)
Acquiring and increasing control
301DAcquiring and increasing control
1
For the purposes of this Chapter, a person (“A”) acquires control over a recognised investment exchange (“B”) if any of the cases in subsection (2) begin to apply.
2
The cases are where A holds—
a
20% or more of the shares in B or in a parent undertaking of B (“P”);
b
20% or more of the voting power in B or P; or
c
shares or voting power in B or P as a result of which A is able to exercise significant influence over the management of B.
3
For the purposes of this Chapter, a person (“A”) increases control over a recognised investment exchange (“B”) whenever—
a
the percentage of shares which A holds in B or in a parent undertaking of B (“P”) increases from less than 50% to 50% or more;
b
the percentage of voting power A holds in B or P increases from less than 50% to 50% or more; or
c
A becomes a parent undertaking of B.
301EDisregarded holdings
1
For the purpose of section 301D, shares and voting power that a person holds in a recognised investment exchange (“B”) or in a parent undertaking of B (“P”) are disregarded in the following circumstances.
2
Shares held only for the purposes of clearing and settling within a short settlement cycle are disregarded.
3
Shares held by a custodian or its nominee in a custodian capacity are disregarded, provided that the custodian or nominee is only able to exercise voting power represented by the shares in accordance with instructions given in writing.
4
Shares representing no more than 5% of the total voting power in B or P held by an investment firm are disregarded, provided that it—
a
holds the shares in the capacity of a market maker (as defined in article 4.1(8) of the markets in financial instruments directive);
b
is authorised by its home state regulator under the markets in financial instruments directive; and
c
neither intervenes in the management of B or P nor exerts any influence on B or P to buy the shares or back the share price.
5
Shares held by a credit institution or investment firm in its trading book are disregarded, provided that—
a
the shares represent no more than 5% of the total voting power in B or P; and
b
the credit institution or investment firm ensures that the voting power is not exercised nor otherwise used to intervene in the management of B or P.
6
Shares held by a credit institution or an investment firm are disregarded, provided that—
a
the shares are held as a result of performing the investment services and activities of—
i
underwriting a share issue; or
ii
placing shares on a firm commitment basis in accordance with Annex I, section A.6 of the markets in financial instruments directive; and
b
the credit institution or investment firm—
i
does not exercise voting power represented by the shares or otherwise intervene in the management of the issuer; and
ii
retains the holding for a period of less than one year.
7
Where a management company (as defined in F1Article 2.1(b) of the UCITS directive) and its parent undertaking both hold shares or voting power, each may disregard holdings of the other, provided that each exercises its voting power independently of the other.
8
But subsection (7) does not apply if the management company—
F4a
manages holdings for its parent undertaking or a controlled undertaking of the parent undertaking;
b
has no discretion as to the exercise of the voting power attached to such holdings; and
c
may only exercise the voting power in relation to such holdings under direct or indirect instruction from—
i
the parent undertaking; or
F5ii
a controlled undertaking of the parent undertaking.
9
Where an investment firm and its parent undertaking both hold shares or voting power, the parent undertaking may disregard holdings managed by the investment firm on a client by client basis and the investment firm may disregard holdings of the parent undertaking, provided that the investment firm—
a
has permission to provide portfolio management;
b
exercises its voting power independently from the parent undertaking; and
c
may only exercise the voting power under instructions given in writing, or has appropriate mechanisms in place for ensuring that individual portfolio management services are conducted independently of any other services.
F310
For the purposes of this section, an undertaking is a controlled undertaking of the parent undertaking if it is controlled by the parent undertaking; and for this purpose the question of whether one undertaking controls another is to be determined in accordance with section 89J(4) and (5).
Pt. 18 applied in part (with modifications) (12.12.2011) by The Recognised Auction Platforms Regulations 2011 (S.I. 2011/2699), reg. 7, Sch. 2 (as amended (28.11.2017) by The Central Securities Depositories Regulations 2017 (S.I. 2017/1064), reg. 1, Sch. para. 37 (with regs. 7(4), 9(1)))