The Financial Services and Markets Act 2000 (Consequential Amendments and Repeals) Order 2001

• Citation: S.I. 2001/3649
• Sections: 610

Section 1 Citation, commencement and transitional provisions

This Order may be cited as the Financial Services and Markets Act 2000 (Consequential Amendments and Repeals) Order 2001 and comes into force on 1st December 2001.

Section 2 Interpretation

In this Order “the Act” means the Financial Services and Markets Act 2000.

Section 3 The principal repeals and revocations

(1) The following enactments are repealed—

(a) the Policyholders Protection Act 1975 ;

(b) the Insurance Companies Act 1982 ;

(c) the Financial Services Act 1986 ;

(d) the Banking Act 1987 ;

(e) the Insurance Companies (Reserves) Act 1995 ; and

(f) the Policyholders Protection Act 1997 .

(2) The following instruments are revoked—

(a) the Banking Co-ordination (Second Council Directive) Regulations 1992 ;

(b) the Insurance Companies (Third Insurance Directives) Regulations 1994 ; and

(c) the Investment Services Regulations 1995 .

Section 4 Membership of holding company

(1) Section 23 (membership of holding company) of the Companies Act 1985 is amended as follows.

(2) In paragraph (b) of subsection (3B), for “section 75 of the Financial Services Act 1986” substitute “section 236 of the Financial Services and Markets Act 2000”.

(3) For paragraphs (d) and (e) of that subsection substitute—

(d) “insurance business” means business which consists of the effecting or carrying out of contracts of insurance;

(e) “securities” includes—

(i) options,

(ii) futures, and

(iii) contracts for differences,

and rights or interests in those investments;

(4) In paragraph (f) of that subsection, for “section 75(8) of the Financial Services Act 1986” substitute “section 237(2) of the Financial Services and Markets Act 2000”.

(5) After that subsection, insert—

(3BA) Subsection (3B) must be read with—

(a) section 22 of the Financial Services and Markets Act 2000;

(b) any relevant order under that section; and

(c) Schedule 2 to that Act.

Section 5 Meaning of “offer to the public”

Sections 59 and 60 of the 1985 Act (so far as those sections continue to have effect) are repealed.

Section 6 Purchase by company of its own shares: definition of “off-market” and “market” purchase

(1) Section 163 of the 1985 Act (meaning of “off-market” and “market” purchase) is amended as follows.

(2) In subsection (2)(a) for “Part IV of the Financial Services Act 1986” substitute “Part 6 of the Financial Services and Markets Act 2000”.

(3) For subsection (4) substitute—

(4) “Recognised investment exchange” means a recognised investment exchange other than an overseas investment exchange.

(5) Expressions used in the definition contained in subsection (4) have the same meaning as in Part 18 of the Financial Services and Markets Act 2000.

Section 7 Duty of company as to issue of certificates

For subsection (4) of section 185 of the 1985 Act (duty of company to issue certificates in relation to shares allotted or transferred) substitute—

(4) Subsection (4A) applies in relation to a company—

(a) of which shares or debentures are allotted to a financial institution,

(b) of which debenture stock is allotted to a financial institution, or

(c) with which a transfer for transferring shares, debentures or debenture stock to a financial institution is lodged.

(4A) The company is not required, in consequence of that allotment or transfer, to comply with subsection (1).

(4B) “Financial institution” means—

(a) a recognised clearing house acting in relation to a recognised investment exchange; or

(b) a nominee of—

(i) a recognised clearing house acting in that way; or

(ii) a recognised investment exchange.

(4C) No person may be a nominee for the purposes of this section unless he is a person designated for those purposes in the rules of the recognised investment exchange in question.

(4D) Expressions used in subsections (4B) and (4C) have the same meaning as in Part 18 of the Financial Services and Markets Act 2000.

Section 8 Disclosure of interests in shares: interests to be disclosed

(1) Section 199 of the 1985 Act (interests in shares required to be disclosed) is amended as follows.

(2) In subsection (2A), in paragraph (a) for “authorised to” substitute “who may lawfully”.

(3) For subsections (6) and (7) substitute—

(6) For the purposes of subsection (2A), a person (“A”) may lawfully manage investments belonging to another if—

(a) A can manage those investments in accordance with a permission which A has under Part 4 of the Financial Services and Markets Act 2000;

(b) A is an EEA firm of the kind mentioned in sub-paragraph (a) or (b) of paragraph 5 of Schedule 3 to that Act, and can manage those investments in accordance with its EEA authorisation;

(c) A can, in accordance with section 327 of that Act, manage those investments without contravening the prohibition contained in section 19 of that Act; or

(d) A can lawfully manage those investments in another Member State and would, if he were to manage those investments in the United Kingdom, require permission under Part 4 of that Act.

(7) References in this section to the management of investments must be read with—

(a) section 22 of the Financial Services and Markets Act 2000;

(b) any relevant order under that section; and

(c) Schedule 2 to that Act.

(4) In subsection (8)—

(a) in paragraph (b) for the words from the beginning to “conferred” substitute “is certified by the competent authority in that member State as complying with the conditions imposed”; and

(b) for “subsection (8) of section 86 of the Financial Services Act 1986” substitute “subsection (5) of section 264 of the Financial Services and Markets Act 2000”.

Section 9 Disclosure of interests in shares: interests to be disregarded

For section 209(2) of the 1985 Act (interests in shares to be disregarded for purposes of disclosure requirements) substitute—

(2) An interest in shares is an exempt security interest for the purposes of subsection (1)(c) if the condition mentioned in subsection (2A) is satisfied and it is held by—

(a) a person who has permission under Part 4 of the Financial Services and Markets Act 2000 to accept deposits;

(b) an EEA firm of the kind mentioned in paragraph 5(b) of Schedule 3 to that Act;

(c) a person authorised under the law of a member State other than the United Kingdom to accept deposits who—

(i) would not qualify for authorisation under paragraph 12 of Schedule 3 to that Act; and

(ii) would require permission under another provision of that Act to accept such deposits in the United Kingdom;

(d) an authorised insurance undertaking;

(e) a person authorised under the law of a member State to deal in securities or derivatives, who deals in securities or derivatives on a relevant stock exchange or a relevant investment exchange, whether as a member or otherwise;

(f) a relevant stock exchange;

(g) a relevant investment exchange;

(h) a recognised clearing house;

(i) the Bank of England; or

(j) the central bank of a member State other than the United Kingdom.

(2A) The condition is that the interest in the shares must be held by way of security only for the purposes of a transaction entered into in the ordinary course of his or its business as a person or other body falling within any of paragraphs (a) to (j) of subsection (2).

(2B) Paragraphs (a) to (c) of subsection (2) must be read with—

(a) section 22 of the Financial Services and Markets Act 2000;

(b) any relevant order under that section; and

(c) Schedule 2 to that Act.

(2C) But paragraph (a) of subsection (2) does not include—

(a) a building society incorporated, or deemed to be incorporated, under the Building Societies Act 1986; or

(b) a credit union, within the meaning of the Credit Unions Act 1979 of the Credit Unions (Northern Ireland) Order 1985.

Section 10 Disclosure of interests in shares: interpretation

(1) Subsection (1) of section 220 of the 1985 Act (interpretation of Part 6) is amended in accordance with paragraphs (2) to (8).

(2) The definitions of “authorised credit institution” and “designated agency” are repealed.

(3) In the definition of “authorised unit trust scheme” for “Chapter VIII of Part I of the Financial Services Act 1986” substitute “Part 17 of the Financial Services and Markets Act 2000”.

(4) For the definition of “derivatives” substitute—

“derivatives” means options and futures in relation to shares;

(5) After the definition of “derivatives” insert—

“EEA authorisation” has the same meaning as in paragraph 6 of Schedule 3 to the Financial Services and Markets Act 2000;

(6) In the definition of “operator” for “section 75(8) of the Financial Services Act 1986” substitute “section 237(2) of the Financial Services and Markets Act 2000”.

(7) For the definition which begins ““recognised clearing house”,” substitute—

“recognised clearing house” has the same meaning as in the Financial Services and Markets Act 2000;

“recognised scheme” has the same meaning as in Part 17 of the Financial Services and Markets Act 2000;

(8) In the definition of “units” for “section 75 of the Financial Services Act 1986” substitute “section 237(2) of the Financial Services and Markets Act 2000”.

(9) After section 220(1) of the 1985 Act insert—

(1A) References in subsection (1) to contracts of insurance (of any description), options and futures must be read with—

(a) section 22 of the Financial Services and Markets Act 2000;

(b) any relevant order under that section; and

(c) Schedule 2 to that Act.

Section 11 Limitations on exemptions for small and medium-sized companies in relation to accounts etc.

(1) Section 247A of the 1985 Act (limitations on exemptions for small and medium-sized companies in relation to accounts etc.) is amended as follows.

(2) In subsection (1), for paragraph (a) substitute—

(a) the company is, or was at any time within the financial year to which the accounts relate—

(i) a public company,

(ii) a person who has permission under Part 4 of the Financial Services and Markets Act 2000 to carry on one or more regulated activities, or

(iii) a person who carries on insurance market activity;

(3) In subsection (2), for paragraphs (b) to (d) substitute—

(b) a person who has permission under Part 4 of the Financial Services and Markets Act 2000 to carry on a regulated activity, or

(c) a person who carries on an insurance market activity.

Section 12 Limitations on exemptions for small and medium-sized groups

In subsection (2) of section 248 of the Act (exemption for small and medium-sized groups), for paragraphs (b) to (d) substitute—

(b) a person who has permission under Part 4 of the Financial Services and Markets Act 2000 to carry on a regulated activity, or

(c) a person who carries on an insurance market activity.

Section 13 Limitations on exemptions for dormant companies

In subsection (3) of section 249AA of the Act (dormant companies) , for paragraphs (a) and (b) substitute—

(a) a person who has permission under Part 4 of the Financial Services and Markets Act 2000 to carry on one or more regulated activities; or

(b) a person who carries on insurance market activity

Section 14 Cases where exemptions not available

(1) Subsection (1) of section 249B of the Act (cases where exemptions not available) is amended as follows.

(2) For paragraph (b) substitute—

(b) it was a person who had permission under Part 4 of the Financial Services and Markets Act 2000 to carry on a regulated activity,

(3) After paragraph (b) insert—

(bb) it carried on an insurance market activity,

(4) For paragraph (d) substitute—

(d) it was an appointed representative, within the meaning of section 39 of the Financial Services and Markets Act 2000,

Section 15 Summary financial statements by listed public companies

In section 251(1) of the 1985 Act (summary financial statements by listed public companies) , for the definition of “listed”, and the word “and” preceding it, substitute—

“listed” means included in the official list by the competent authority for the purposes of Part 6 of the Financial Services and Markets Act 2000 (official listing); and

“the official list” has the meaning given in section 103(1) of that Act.

Section 16 Meaning of “banking partnership”

(1) For subsection (2) of section 255D of the 1985 Act (power to apply provisions to banking) substitute—

(2) A “banking partnership” means a partnership which has permission under Part 4 of the Financial Services and Markets Act 2000.

(2A) But a partnership is not a banking partnership if it has permission to accept deposits only for the purpose of carrying on another regulated activity in accordance with that permission.

(2) After subsection (4) of that section insert—

(5) Subsections (2) and (2A) must be read with—

(a) section 22 of the Financial Services and Markets Act 2000;

(b) any relevant order under that section; and

(c) Schedule 2 to that Act.

Section 17 Other distributions by investment companies

(1) Section 265 of the 1985 Act (other distributions by investment companies) is amended as follows.

(2) In subsection (4)(a) the words “within the meaning of the Financial Services Act 1986” are repealed.

(3) After subsection (4) insert—

(4A) In subsection (4)(a) “recognised investment exchange” and “overseas investment exchange” have the same meaning as in Part 18 of the Financial Services and Markets Act 2000.

Section 18 Realised profits of an insurance company with long term business

(1) Section 268 of the 1985 Act (realised profits of insurance company with long term business) is amended as follows.

(2) In subsection (1)—

(a) for “an insurance company to which Part II of the Insurance Companies Act 1982 applies” substitute “an authorised insurance company”; and

(b) in paragraph (a), for “in accordance with section 30(1) of that Act or carried forward unappropriated as mentioned in section 30(7) of that Act” substitute “or, as the case may be, carried forward unappropriated, in accordance with asset identification rules made under section 142(2) of the Financial Services and Markets Act 2000”.

(3) In subsection (3)—

(a) for paragraph (a) substitute—

(a) “actuarial investigation” means—

(i) an investigation made into the financial condition of an authorised insurance company in respect of its long term business, carried out once in every period of twelve months in accordance with rules made under Part 10 of the Financial Services and Markets Act 2000 by an actuary appointed as actuary to that company; or

(ii) an investigation made into the financial condition of an authorised insurance company in respect of its long term business carried out in accordance with a requirement imposed under section 166 of that Act by an actuary appointed as actuary to that company;

(b) for paragraph (b) substitute—

(b) “long term business” means business which consists of effecting or carrying out contracts of long term insurance.

(4) After subsection (3) insert—

(4) The definition of “long term business” in subsection (3) must be read with—

(a) section 22 of the Financial Services and Markets Act 2000;

(b) any relevant order under that section; and

(c) Schedule 2 to that Act.

Section 19 Exceptions to rules relating to substantial property transactions involving directors

In section 321(4) of the 1985 Act (exceptions to rules in section 320: transactions through independent broker on recognised investment exchange) , for “Financial Services Act 1986” substitute “Financial Services and Markets Act 2000”.

Section 20 Duty of company to notify recognised investment exchange of certain matters concerning directors notified to the company

(1) Section 329 of the 1985 Act (duty of company to notify recognised investment exchange of matters notified to it under sections 324 or 328) is amended as follows.

(2) In subsection (1) the words “within the meaning of the Financial Services Act 1986” are repealed.

(3) After subsection (3) insert—

(4) In subsection (1) “recognised investment exchange” and “overseas investment exchange” have the same meaning as in Part 18 of the Financial Services and Markets Act 2000.

Section 21 Investigation of share dealing

In section 446 of the 1985 Act (investigation of share dealing) , for subsection (4) substitute—

(4) Sections 434 to 436 apply for the purposes of an investigation under this section to the following persons as they apply to officers of the company or of the other body corporate—

(a) an authorised person;

(b) a relevant professional;

(c) a person not falling within paragraph (a) or (b) who may carry on a regulated activity without contravening the prohibition imposed by section 19 of the Financial Services and Markets Act 2000; and

(d) in relation to an authorised person, to a relevant professional or to a person falling within paragraph (c)—

(i) if it is a body corporate, any person who is or has been an officer of it;

(ii) if it is a partnership, any person who is or has been a partner in it;

(iii) if it is an unincorporated association, any person who is or has been a member of its governing body or an officer of it.

(4A) In subsection (4)—

“authorised person” has the meaning given in section 31(2) of the Financial Services and Markets Act 2000;

“relevant professional” means a member of a profession in relation to which a body has been designated under section 326(1) of that Act, and, in relation to such a profession, “member” has the meaning given in section 325(2) of that Act.

Section 22 Provision for security of information obtained

(1) Section 449 of the 1985 Act (provision for security of information obtained under section 447 of that Act) is amended as follows.

(2) In subsection (1), the following are repealed—

(a) in paragraph (c), the words “, or under section 94 or 177 of the Financial Services Act 1986,”;

(b) in paragraph (d), the words “the Insurance Companies Act 1982,”;

(c) paragraphs (de) and (df); and

(d) paragraph (i).

(3) In subsection (1)(cc), for the words from “or appointed” to “Financial Services Act 1986” substitute “section 447 of this Act”.

(4) After subsection (1)(cc) insert—

(cd) for the purposes of enabling or assisting a person appointed under—

(i) section 167 of the Financial Services and Markets Act 2000 (general investigations),

(ii) section 168 of that Act (investigations in particular cases),

(iii) section 169(1)(b) of that Act (investigation in support of overseas regulator),

(iv) section 284 of that Act (investigations into affairs of certain collective investment schemes), or

(v) regulations made as a result of section 262(2)(k) of that Act (investigations into open-ended investment companies),

to conduct an investigation to discharge his functions;

(5) In subsection (1)(d), for words from “the Financial Services Act 1986” to the end substitute “, Part 2, 3 or 7 of the Companies Act 1989 or the Financial Services and Markets Act 2000;”.

(6) For paragraphs (fa) to (h) of subsection (1) substitute—

(fa) for the purposes of enabling or assisting the Financial Services Authority to discharge its functions under the legislation relating to friendly societies or to industrial and provident societies, under the Building Societies Act 1986, under Part 7 of the Companies Act 1989 or under the Financial Services and Markets Act 2000;

(fb) for the purposes of enabling or assisting the competent authority for the purposes of Part 6 of the Financial Services and Markets Act 2000 to discharge its functions under that Part;

(g) for the purposes of enabling or assisting a body corporate established in accordance with section 212(1) of the Financial Services and Markets Act 2000 (compensation scheme manager) to discharge its functions;

(h) for the purposes of any proceedings before the Financial Services Tribunal by virtue of the Financial Services and Markets Act 2000 (Transitional Provisions) (Partly Completed Procedures) Order 2001;

(ha) with a view to the institution of, or otherwise for the purposes of, proceedings before the Financial Services and Markets Tribunal;

(hb) for the purpose of enabling or assisting a recognised investment exchange or a recognised clearing house to discharge its functions as such;

(hc) for the purpose of enabling or assisting a body designated under section 326(1) of the Financial Services and Markets Act 2000 (designated professional bodies) to discharge its functions in its capacity as a body designated under that section;

(7) In subsection (1A), before paragraph (a) insert—

(aa) in paragraph (hb) “recognised investment exchange” and “recognised clearing house” has the same meaning as in section 285 of the Financial Services and Markets Act 2000;

(8) Subsection (1D) is repealed.

(9) In subsection (3)(b) , the words “or under section 94 or 177 of the Financial Services Act 1986” are repealed.

(10) After subsection (3)(b) insert—

(ba) a person appointed under—

(i) section 167 of the Financial Services and Markets Act 2000 (general investigations),

(ii) section 168 of that Act (investigations in particular cases),

(iii) section 169(1)(b) of that Act (investigation in support of overseas regulator),

(iv) section 284 of that Act (investigations into affairs of certain collective investment schemes), or

(v) regulations made as a result of section 262(2)(k) of that Act (investigations into open-ended investment companies),

to conduct an investigation;

(11) In subsection (3), in paragraph (c), for the words from “under” to “Financial Services Act 1986” substitute “under section 447 of this Act”.

(12) In subsection (3), for paragraphs (ha) to (k) substitute—

(ha) the Financial Services Authority;

Section 23 Punishment for destroying etc documents of an authorised insurance company

(1) Section 450 of the 1985 Act (punishment for destroying, mutilating etc company documents) is amended as follows.

(2) In subsection (1) the words “, or of an insurance company to which Part II of the Insurance Companies Act 1985 applies,” are repealed.

(3) After that subsection insert—

(1A) Subsection (1) applies to an officer of an authorised insurance company which is not a body corporate as it applies to an officer of a company.

Section 24 Disclosure of information by inspectors

For subsection (3) of section 451A of the 1985 Act (disclosure of information by inspectors) substitute—

(3) Information to which this section applies may also be disclosed by an inspector appointed under this Part to—

(a) another inspector appointed under this Part;

(b) a person appointed under—

(i) section 167 of the Financial Services and Markets Act 2000 (general investigations),

(ii) section 168 of that Act (investigations in particular cases),

(iii) section 169(1)(b) of that Act (investigation in support of overseas regulator),

(iv) section 284 of that Act (investigations into affairs of certain collective investment schemes), or

(v) regulations made as a result of section 262(2)(k) of that Act (investigations into open-ended investment companies),

to conduct an investigation; or

(c) a person authorised to exercise powers under—

(i) section 447 of this Act; or

(ii) section 84 of the Companies Act 1989 (exercise of powers to assist overseas regulatory authority).

Section 25 Production of documents subject to customer confidentiality

(1) Section 452 of the 1985 Act (privileged information) is amended as follows.

(2) In subsection (3) , for the words from “or the customer is a person on whom a requirement has been imposed under that section,” to the end of that subsection, substitute

or the customer is—

(a) a person on whom a requirement has been imposed under that section, or

(b) a person on whom a requirement to produce information or documents has been imposed by the Secretary of State, or by a person appointed by the Secretary of State to conduct an investigation, under section 171 or 173 of the Financial Services and Markets Act 2000.

Section 26 Companies to which section 460 applies

For subsection (1) of section 460 of the 1985 Act (order on application of the Secretary of State) substitute—

(1) If it appears to the Secretary of State that—

(a) the affairs of a company to which this subsection applies are being or have been conducted in a manner which is unfairly prejudicial to the interests of its members generally or of some part of its members, or

(b) any actual or proposed act or omission of a company to which this subsection applies, including an act or omission on its behalf, is or would be so prejudicial,

he may himself (in addition to or instead of presenting a petition for the winding up of the company) apply to the court by petition for an order under this Part.

(1A) Subsection (1) applies to a company in respect of which—

(a) the Secretary of State has received a report under section 437 of this Act;

(b) the Secretary of State has exercised his powers under section 447 or 448 of this Act;

(c) the Secretary of State or the Financial Services Authority has exercised his or its powers under Part 11 of the Financial Services and Markets Act 2000; or

(d) the Secretary of State has received a report from an investigator appointed by him or the Financial Services Authority under that Part.

Section 27 Application of section 720 to insurers

(1) Section 720 of the 1985 Act (certain companies to publish periodical statement) is amended as follows.

(2) In subsection (1) for “insurance company” substitute “insurer”.

(3) In subsection (5) for “insurance company” substitute “insurer”.

(4) For subsection (6) substitute—

(6) This section does not apply to an insurer which is—

(a) an insurance company which is subject to, and complies with, rules made by the Financial Services Authority under Part 10 of the Financial Services and Markets Act 2000 as to the accounts and balance sheet to be prepared annually and deposited; or

(b) an EEA firm of the kind mentioned in paragraph 5(d) of Schedule 3 to the Financial Services and Markets Act 2000, if the firm complies with the provisions of law of its home State as to the accounts and balance sheets to be prepared annually and deposited.

(5) After subsection (7) insert—

(8) For the purposes of this section—

(a) “insurer” means a person who effects or carries out contracts of insurance in the United Kingdom; and

(b) “contract of insurance” includes a contract of insurance under which the benefits provided by the insurer are exclusively or primarily benefits in kind in the event of accident to or breakdown of a vehicle.

(9) Subsection (8) must be read with—

(a) section 22 of the Financial Services and Markets Act 2000;

(b) any relevant order under that Schedule; and

(c) Schedule 2 to that Act.

Section 28 References to the Companies Acts in certain provisions to include references to the Financial Services and Markets Act 2000

In section 735B of the 1985 Act (construction of certain references to the Companies Acts) for “Parts IV and V of the Financial Services Act 1986” substitute “Part 6 of the Financial Services and Markets Act 2000”.

Section 29 Meaning of “offer to the public”, “banking company”, “insurance company” and “authorised insurance company”

After section 742 of the 1985 Act, insert—

Meaning of “offer to the public”

(742A)

(1) Any reference in Part IV (allotment of shares and debentures) or Part VII (accounts) to offering shares or debentures to the public is to be read as including a reference to offering them to any section of the public, however selected.

(2) This section does not require an offer to be treated as made to the public if it can properly be regarded, in all the circumstances—

(a) as not being calculated to result, directly or indirectly, in the shares or debentures becoming available for subscription or purchase by persons other than those receiving the offer; or

(b) as being a domestic concern of the persons receiving and making it.

(3) An offer of shares in or debentures of a private company (other than an offer to which subsection (5) applies) is to be regarded (unless the contrary is proved) as being a domestic concern of the persons making and receiving it if—

(a) it is made to—

(i) an existing member of the company making the offer,

(ii) an existing employee of that company,

(iii) the widow or widower of a person who was a member or employee of that company,

(iv) a member of the family of a person who is or was a member or employee of that company, or

(v) an existing debenture holder; or

(b) it is an offer to subscribe for shares or debentures to be held under an employee’s share scheme.

(4) Subsection (5) applies to an offer—

(a) which falls within paragraph (a) or (b) of subsection (3); but

(b) which is made on terms which permit the person to whom it is made to renounce his right to the allotment of shares or issue of debentures.

(5) The offer is to be regarded (unless the contrary is proved) as being a domestic concern of the persons making and receiving it if the terms are such that the right may be renounced only in favour—

(a) of any person mentioned in subsection (3)(a); or

(b) in the case of an employee’s share scheme, of a person entitled to hold shares or debentures under the scheme.

(6) For the purposes of subsection (3)(a)(iv), the members of a person’s family are—

(a) the person’s spouse and children (including step-children) and their descendants, and

(b) any trustee (acting in his capacity as such) of a trust the principal beneficiary of which is the person him or herself or of any of those relatives.

(7) Where an application has been made to the competent authority in any EEA State for the admission of any securities to official listing, then an offer of those securities for subscription or sale to a person whose ordinary business it is to buy or sell shares or debentures (whether as principal or agent) is not to be regarded as an offer to the public for the purposes of this Part.

(8) For the purposes of subsection (7)—

(a) “competent authority” means a competent authority appointed for the purposes of the Council Directive of 28 May 2001 on the admission of securities to official stock exchange listing and on information to be published on those securities; and

(b) “official listing” means official listing pursuant to that directive.

Meaning of “banking company”

(742B)

(1) Subject to subsection (2), “banking company” means a person who has permission under Part 4 of the Financial Services and Markets Act 2000 to accept deposits.

(2) A banking company does not include—

(a) a person who is not a company, and

(b) a person who has permission to accept deposits only for the purpose of carrying on another regulated activity in accordance with that permission.

(3) This section must be read with—

(a) section 22 of the Financial Services and Markets Act 2000;

(b) any relevant order under that section; and

(c) Schedule 2 to that Act.

Meaning of “insurance company” and “authorised insurance company”

(742C)

(1) For the purposes of this Act, “insurance company” has the meaning given in subsection (2) and “authorised insurance company” has the meaning given in subsection (4).

(2) Subject to subsection (3), “insurance company” means a person (whether incorporated or not)—

(a) who has permission under Part 4 of the Financial Services and Markets Act 2000 to effect or carry out contracts of insurance; or

(b) who carries on insurance market activity; or

(c) who may effect or carry out contracts of insurance under which the benefits provided by that person are exclusively or primarily benefits in kind in the event of accident to or breakdown of a vehicle, and does not fall within paragraph (a).

(3) An insurance company does not include a friendly society, within the meaning of section 116 of the Friendly Societies Act 1992.

(4) An “authorised insurance company” means a person falling within paragraph (a) of subsection (2).

(5) References in this section to contracts of insurance and the effecting or carrying out of such contracts must be read with -

(a) section 22 of the Financial Services and Markets Act 2000;

(b) any relevant order under that section; and

(c) Schedule 2 to that Act.

Section 30 Interpretation of the 1985 Act

In section 744 of the 1985 Act (interpretation) —

(a) the definitions of “banking company” and “insurance company” are repealed;

(b) after the definition of “the insider dealing legislation” insert—

“insurance market activity” has the meaning given in section 316(3) of the Financial Services and Markets Act 2000;

(c) before the definition of “the registrar of companies” insert—

“regulated activity” has the meaning given in section 22 of the Financial Services and Markets Act 2000;

Section 31 Table of defined expressions

In the Table in section 744A (index of defined expressions) —

(a) after the entry relating to “articles” insert—

(b) in the second column of the entry relating to “banking company”, for “section 744” substitute “section 742B”;

(c) in the second column of the entry relating to “insurance company”, for “section 744” substitute “section 742C”;

(d) after the entry relating to “insurance company” insert—

(e) after the entry relating to “registrar and registrar of companies” insert—

Section 32 Form and content of company accounts

For paragraph 84 of Schedule 4 to the 1985 Act (form and content of company accounts: listed investments) substitute—

(84)

(1) “Listed investment” means an investment as respects which there has been granted a listing on—

(a) a recognised investment exchange other than an overseas investment exchange; or

(b) a stock exchange of repute outside Great Britain.

(2) “Recognised investment exchange” and “overseas investment exchange” have the meaning given in Part 18 of the Financial Services and Markets Act 2000.

Section 33 Disclosure of information: emoluments and other benefits of directors and others

(1) Paragraph 1(5) of Schedule 6 to the 1985 Act (disclosure of information: emoluments and other benefits of directors and others) is amended as follows.

(2) For the definition of “listed company” substitute—

“listed company” means a company—

whose securities have been admitted to the official list in accordance with the provisions of Part 6 of the Financial Services and Markets Act 2000; or

dealings in whose securities are permitted on any recognised investment exchange approved by the Treasury in accordance with regulations made under section 2(2) of the European Communities Act 1972 with respect to dealings in unlisted securities;

(3) After the definition of “net value” insert—

“the official list” has the meaning given in section 103(1) of the Financial Services and Markets Act 2000;

(4) After the definition of “qualifying services” insert—

“recognised investment exchange” has the same meaning as in the Financial Services and Markets Act 2000;

Section 34 Form and content of company accounts: small companies

For paragraph 54 of Schedule 8 to the 1985 Act (form and content of company accounts for small companies: listed investments) substitute—

(54)

(1) “Listed investment” means an investment as respects which there has been granted a listing on—

(a) a recognised investment exchange other than an overseas investment exchange; or

(b) a stock exchange of repute outside Great Britain.

(2) “Recognised investment exchange” and “overseas investment exchange” have the meaning given in Part 18 of the Financial Services and Markets Act 2000.

Section 35 Meaning of “deposit-taking business”, “chief executive” and “manager”

(1) Schedule 9 to the 1985 Act (special provisions for banking companies and groups) is amended as follows.

(2) In Part II (consolidated accounts) , in paragraph 1 (undertakings to be included in consolidation)—

(a) in sub-paragraph (1) for “banking business” substitute “deposit-taking business”; and

(b) for sub-paragraph (2) substitute—

(2) For the purposes of this paragraph “deposit-taking business” means the activity of accepting deposits by way of business, but does not include accepting deposits only for the purpose of carrying on another regulated activity.

(c) after sub-paragraph (2) insert—

(3) References in sub-paragraph (2) to deposits and their acceptance, and to regulated activities must be read with—

(a) section 22 of the Financial Services and Markets Act 2000;

(b) any relevant order under that section; and

(c) Schedule 2 to that Act.

(3) In Part IV of that Schedule (additional disclosure: emoluments and other benefits of directors and others), in sub-paragraph (1)(b) of paragraph 3 (other transactions and agreements) for “within the meaning of the Banking Act 1987” substitute “within the meaning of the Financial Services and Markets Act 2000”.

Section 36 Form and content of accounts of insurance companies and groups

(1) Schedule 9A to the 1985 Act (form and content of accounts of insurance companies and groups) is amended in Part I (individual accounts) as follows.

(2) In paragraph 6—

(a) the existing text is numbered sub-paragraph (1);

(b) for “to business within Classes 1 and 2 of Schedule 2 to the 1982 Act” substitute “to business which consists of effecting or carrying out relevant contracts of general insurance”;

(c) after sub-paragraph (1) insert—

(2) For the purposes of paragraph (1), a contract of general insurance is a relevant contract if the risk insured against relates to—

(a) accident; or

(b) sickness.

(3) Sub-paragraph (2) must be read with—

(a) section 22 of the Financial Services and Markets Act 2000;

(b) any relevant order under that section; and

(c) Schedule 2 to that Act.

(3) In Part I, in paragraph 9—

(a) the existing text is numbered sub-paragraph (1);

(b) in sub-paragraph (1)(a), for “business within the classes of insurance specified in Schedule 2 to the 1982 Act” substitute “business which consists of effecting or carrying out contracts of general insurance”;

(c) in sub-paragraph (1)(b), for “business within the classes of insurance specified in Schedule 1 to that Act” substitute “business which consists of effecting or carrying out contracts of long term insurance”; and

(d) after sub-paragraph (1) insert—

(2) In sub-paragraph (1), references to—

(a) contracts of general or long term insurance; and

(b) the effecting or carrying out of such contracts,

must be read with section 22 of the Financial Services and Markets Act 2000, any relevant order under that section, and Schedule 2 to that Act.

(4) In Section B (the required format for accounts), in note (24) (Equalisation provision) of the Notes on the balance sheet format for “the amount of any reserve maintained by the company under section 34A of the Insurance Companies Act 1982” substitute “the amount of any equalisation reserve maintained in respect of general business by the company, in accordance with rules made by the Financial Services Authority under Part X of the Financial Services and Markets Act 2000”.

(5) In paragraph 11 (managed funds), for sub-paragraph (1)(a) substitute—

(a) the management of which constitutes long term insurance business, and

(6) In Part I, for paragraph 50 (equalisation reserves) substitute—

(50) The amount of any equalisation reserve maintained in respect of general business, in accordance with rules made by the Financial Services Authority under Part X of the Financial Services and Markets Act 2000, shall be determined in accordance with such rules.

(7) In paragraph 81 (interpretations of Part I), in sub-paragraph (1)—

(a) omit the definition of “the 1982 Act”;

(b) for the definition of “general business” substitute—

“general business” means business which consists of effecting or carrying out contracts of general insurance;

(c) for the definition of “long term business” substitute—

“long term business” means business which consists of effecting or carrying out contracts of long term insurance;

(d) in the definition of “long term fund” for “in accordance with the provisions of the 1982 Act” substitute “in accordance with rules made by the Financial Services Authority under Part X of the Financial Services and Markets Act 2000”; and

(e) for the definition of “policy holder” substitute—

“policy holder” has the meaning given in any relevant order under section 424(2) of the Financial Services and Markets Act 2000;

Section 37 Share dealing by directors etc.: supplementary provision

(1) Paragraph 11 of Schedule 13 to the 1985 Act (share dealing by directors etc.: provision supplementary to sections 324 to 328) is amended as follows.

(2) The existing provision becomes sub-paragraph (1).

(3) In that sub-paragraph, in paragraph (a), the words “within the meaning of the Financial Services Act 1986” are repealed.

(4) After that sub-paragraph, insert—

(2) “Unit trust scheme” and “authorised unit trust scheme” have the meaning given in section 237 of the Financial Services and Markets Act 2000.

Section 38 Repeal of spent provisions

The following provisions of the Companies Consolidation (Consequential Provisions) Act 1985 are repealed—

(a) section 25; and

(b) in Schedule 2, the entries relating to—

(i) the Policyholders Protection Act 1975;

(ii) the Insurance Brokers (Registration) Act 1977; and

(iii) the Insurance Companies Act 1982.

Section 39 Disqualification after investigation of company

In section 8 of the Company Directors Disqualification Act 1986 (disqualification after company investigation) , for subsection (1) substitute—

(1) If it appears to the Secretary of State from investigative material that it is expedient in the public interest that a disqualification order should be made against a person who is, or has been, a director or shadow director of a company, he may apply to the court for such an order.

(1A) “Investigative material” means—

(a) a report made by inspectors under—

(i) section 437 of the Companies Act 1985;

(ii) section 167, 168, 169 or 284 of the Financial Services and Markets Act 2000; or

(iii) where the company is an open-ended investment company (within the meaning of that Act) regulations made as a result of section 262(2)(k) of that Act; and

(b) information or documents obtained under—

(i) section 447 or 448 of the Companies Act 1985;

(ii) section 2 of the Criminal Justice Act 1987;

(iii) section 28 of the Criminal Law (Consolidation)(Scotland) Act 1995;

(iv) section 83 of the Companies Act 1989; or

(v) section 165, 171, 172, 173 or 175 of the Financial Services and Markets Act 2000.

Section 40 Interpretation of the 1986 Order

In Article 2(3) of the Companies (Northern Ireland) Order 1986 (“the 1986 Order”) (interpretation) —

(a) the definitions of “banking company” and “insurance company” are revoked; and

(b) after the definition of “the insider dealing legislation” insert—

“insurance market activity” has the meaning given in section 316(3) of the Financial Services and Markets Act 2000;

(c) before the definition of “the registrar of companies” insert—

regulated activity has the meaning given in section 22 of the Financial Services and Markets Act 2000;

Section 41 Table of defined expressions

In the Table in Article 2A of the 1986 Order (index of defined expressions) —

(a) after the entry relating to “articles” insert—

(b) in the second column of the entry relating to “banking company”, for “Article 2(3)” substitute “Article 10B”;

(c) in the second column of the entry relating to “insurance company”, for “Article 2(3)” substitute “Article 10C”;

(d) after the entry relating to “insurance company” insert—

(e) after the entry relating to “registrar and registrar of companies” insert—

Section 42 References to the Companies Orders in certain provisions to include references to the Financial Services and Markets Act 2000

In Article 2B of the 1986 Order (construction of certain references to the Companies Orders) for “Parts IV and V of the Financial Services Act 1986” substitute “Part 6 of the Financial Services and Markets Act 2000”.

Section 43 Meaning of “offer to the public”, “banking company”, “insurance company” and “authorised insurance company”

After Article 10 of the 1986 Order, insert—

Meaning of “offer to the public”

(10A)

(1) Any reference in Part V (allotment of shares and debentures) or Part VIII (accounts) to offering shares or debentures to the public is to be read as including a reference to offering them to any section of the public, however selected.

(2) This Article does not require an offer to be treated as made to the public if it can properly be regarded, in all the circumstances—

(a) as not being calculated to result, directly or indirectly, in the shares or debentures becoming available for subscription or purchase by persons other than those receiving the offer; or

(b) as being a domestic concern of the persons receiving and making it.

(3) An offer of shares in or debentures of a private company (other than an offer to which paragraph (5) applies) is to be regarded (unless the contrary is proved) as being a domestic concern of the persons making and receiving it if—

(a) it is made to—

(i) an existing member of the company making the offer;

(ii) an existing employee of that company;

(iii) the widow or widower of a person who was a member or employee of that company;

(iv) a member of the family of a person who is or was a member or employee of that company; or

(v) an existing debenture holder; or

(b) it is an offer to subscribe for shares or debentures to be held under an employee’s share scheme.

(4) Paragraph (5) applies to an offer—

(a) which falls within sub-paragraph (a) or (b) of paragraph (3); but

(b) which is made on terms which permit the person to whom it is made to renounce his right to the allotment of shares or issue of debentures.

(5) The offer is to be regarded (unless the contrary is proved) as being a domestic concern of the persons making and receiving it if the terms are such that the right may be renounced only in favour—

(a) of any person mentioned in paragraph (3)(a); or

(b) in the case of an employee’s share scheme, of a person entitled to hold shares or debentures under the scheme.

(6) For the purposes of paragraph (3)(a)(iv), the members of a person’s family are—

(a) the person’s spouse and children (including step-children) and their descendants, and

(b) any trustee (acting in his capacity as such) of a trust the principal beneficiary of which is the person him or herself or of any of those relatives.

(7) Where an application has been made to the competent authority in any EEA State for the admission of any securities to official listing, then an offer of those securities for subscription or sale to a person whose ordinary business it is to buy or sell shares or debentures (whether as principal or agent) is not to be regarded as an offer to the public for the purposes of this Part.

(8) For the purposes of paragraph (7)—

(a) “competent authority” means a competent authority appointed for the purposes of the Council Directive of 28 May 2001 on the admission of securities to official stock exchange listing and on information to be published on those securities; and

(b) “official listing” means official listing pursuant to that directive.

Meaning of “banking company”

(10B)

(1) Subject to paragraph (2), “banking company” means a person who has permission under Part 4 of the Financial Services and Markets Act 2000 to accept deposits.

(2) A banking company does not include—

(a) a person who is not a company, and

(b) a person who has permission to accept deposits only for the purpose of carrying on another regulated activity in accordance with that permission.

(3) This Article must be read with—

(a) section 22 of the Financial Services and Markets Act 2000;

(b) any relevant order under that section; and

(c) Schedule 2 to that Act.

Meaning of “insurance company” and “authorised insurance company”

(10C)

(1) For the purposes of this Order, “insurance company” has the meaning given in paragraph (2) and “authorised insurance company” has the meaning given in paragraph (4).

(2) Subject to paragraph (3), “insurance company” means a person (whether incorporated or not)—

(a) who has permission under Part 4 of the Financial Services and Markets Act 2000 to effect or carry out contracts of insurance;

(b) who carries on insurance market activity; or

(c) who may effect or carry out contracts of insurance under which the benefits provided by that person are exclusively or primarily benefits in kind in the event of accident to or breakdown of a vehicle, and does not fall within sub-paragraph (a).

(3) An insurance company does not include a friendly society, within the meaning of section 116 of the Friendly Societies Act 1992.

(4) An “authorised insurance company” means a person falling within sub-paragraph (a) of paragraph (2).

(5) References in this Article to contracts of insurance and the effecting or carrying out of such contracts must be read with—

(a) section 22 of the Financial Services and Markets Act 2000;

(b) any relevant order under that section; and

(c) Schedule 2 to that Act.

Section 44 Membership of holding company

(1) Article 33 of the 1986 Order (membership of holding company) is amended as follows.

(2) In paragraph (3)(a) the words “(within the meaning of the Financial Services Act 1986)” are repealed.

(3) After paragraph (3) insert—

(3A) In paragraph (3)(a) “recognised investment exchange” and “overseas investment exchange” have the same meaning as in Part 18 of the Financial Services and Markets Act 2000.

Section 45 Repeal of unnecessary provisions

Articles 69 and 70 of the 1986 Order (so far as those Articles continue to have effect) are repealed.

Section 46 Purchase by company of its own shares: definition of “off-market” and “market” purchase

(1) Article 173 of the 1986 Order (meaning of “off-market” and “market” purchase) is amended as follows.

(2) In paragraph (2)(a) for “Part IV of the Financial Services Act 1986” substitute “Part 6 of the Financial Services and Markets Act 2000”.

(3) For paragraph (4) substitute—

(4) “Recognised investment exchange” means a recognised investment exchange other than an overseas investment exchange.

(5) Expressions used in the definition contained in paragraph (4) have the same meaning as in Part 18 of the Financial Services and Markets Act 2000.

Section 47 Duty of company as to issue of certificates

For paragraph (4) of Article 195 of the 1986 Order (duty of company to issue certificates in relation to shares allotted or transferred) substitute—

(4) Paragraph (4A) applies in relation to a company—

(a) of which shares or debentures are allotted to a financial institution,

(b) of which debenture stock is allotted to a financial institution, or

(c) with which a transfer for transferring shares, debentures or debenture stock to a financial institution is lodged.

(4A) The company is not required, in consequence of that allotment or transfer, to comply with paragraph (1).

(4B) “Financial institution” means—

(a) a recognised clearing house acting in relation to a recognised investment exchange; or

(b) a nominee of—

(i) a recognised clearing house acting in that way; or

(ii) a recognised investment exchange.

(4C) No person may be a nominee for the purposes of this Article unless he is a person designated for those purposes in the rules of the recognised investment exchange in question.

(4D) Expressions used in paragraphs (4B) and (4C) have the same meaning as in Part 18 of the Financial Services and Markets Act 2000.

Section 48 Disclosure of interests in shares: interests to be disclosed

(1) Article 207 of the 1986 Order (interests in shares required to be disclosed) is amended as follows.

(2) In paragraph (2A) , in sub-paragraph (a) for “authorised to” substitute “who may lawfully”.

(3) In that paragraph, in sub-paragraph (b), for paragraphs (ii) and (iii) substitute—

or

(ii) a recognised scheme;

(4) For paragraphs (6) and (7) substitute—

(6) For the purposes of paragraph (2A), a person (“A”) may lawfully manage investments belonging to another if—

(a) A can manage those investments in accordance with the permission which A has under Part 4 of the Financial Services and Markets Act 2000;

(b) A is an EEA firm of the kind mentioned in sub-paragraph (a) or (b) of paragraph 5 of Schedule 3 to that Act, and can manage those investments in accordance with its EEA authorisation;

(c) A can, in accordance with section 327 of that Act, manage those investments without contravening the prohibition contained in section 19 of that Act; or

(d) A can lawfully manage those investments in another Member State and would, if he were to manage those investments in the United Kingdom, require permission under Part 4 of that Act.

(7) References in this Article to the management of investments must be read with—

(a) section 22 of the Financial Services and Markets Act 2000;

(b) any relevant order under that section; and

(c) Schedule 2 to that Act.

(5) In paragraph (8)—

(a) in sub-paragraph (b) for the words from the beginning to “conferred” substitute “is certified by the competent authority in that member State as complying with the conditions imposed”; and

(b) for “subsection (8) of section 86 of the Financial Services Act 1986” substitute “subsection (5) of section 264 of the Financial Services and Markets Act 2000”.

Section 49 Disclosure of interests in shares: interests to be disregarded

For paragraph (2) of Article 217 of the 1986 Order (interests in shares to be disregarded for purposes of disclosure requirements) substitute—

(2) An interest in shares is an exempt security interest for the purposes of paragraph (1)(c) if the condition mentioned in paragraph (2A) is satisfied and the interest is held by—

(a) a person who has permission under Part 4 of the Financial Services and Markets Act 2000 to accept deposits;

(b) an EEA firm of the kind mentioned in paragraph 5(b) of Schedule 3 to that Act which has permission under paragraph 15 of that Schedule (as a result of qualifying for authorisation under paragraph 12 of that Schedule) to accept deposits;

(c) a person authorised under the law of a member State other than the United Kingdom to accept deposits who—

(i) would not qualify for authorisation under paragraph 12 of Schedule 3 to that Act, and

(ii) would require permission under another provision of that Act to accept such deposits in the United Kingdom;

(d) an authorised insurance undertaking;

(e) a person authorised under the law of a member State to deal in securities or derivatives, who deals in securities or derivatives on a relevant stock exchange or a relevant investment exchange, whether as a member or otherwise;

(f) a relevant stock exchange;

(g) a relevant investment exchange;

(h) a recognised clearing house;

(i) the Bank of England; or

(j) the central bank of a member State other than the United Kingdom.

(2A) The condition is that the interest in the shares must be held by way of security only for the purposes of a transaction entered into in the ordinary course of his or its business as a person or other body falling within any of sub-paragraphs (a) to (j) of paragraph (2).

(2B) Sub-paragraphs (a) to (c) of paragraph (2) must be read with—

(a) section 22 of the Financial Services and Markets Act 2000;

(b) any relevant order under that section; and

(c) Schedule 2 to that Act.

(2C) But sub-paragraph (a) of paragraph (2) does not include—

(a) a building society incorporated, or deemed to be incorporated, under the Building Societies Act 1986; or

(b) a credit union, within the meaning of the Credit Unions Act 1979 or the Credit Unions (Northern Ireland) Order 1985.

Section 50 Disclosure of interests in shares: interpretation

(1) Paragraph (1) of Article 228 of the 1986 Order (interpretation of Part 7) is amended in accordance with sub-paragraphs (2) to (8).

(2) The definitions of “authorised credit institution” and “designated agency” are repealed.

(3) In the definition of “authorised unit trust scheme” for “Chapter VIII of Part I of the Financial Services Act 1986” substitute “Part 17 of the Financial Services and Markets Act 2000”.

(4) For the definition of “derivatives” substitute—

“derivatives” means options and futures in relation to shares;

(5) After the definition of “derivatives” insert—

“EEA authorisation” has the meaning given in paragraph 6 of Schedule 3 to the Financial Services and Markets Act 2000;

(6) In the definition of “operator” for “section 75(8) of the Financial Services Act 1986” substitute “section 237(2) of the Financial Services and Markets Act 2000”.

(7) For the definition which begins ““recognised clearing house”, substitute—

“recognised clearing house” has the same meaning as in the Financial Services and Markets Act 2000;

“recognised scheme” has the same meaning as in Part 17 of the Financial Services and Markets Act 2000;

(8) In the definition of “units” for “section 75 of the Financial Services Act 1986” substitute “section 237(2) of the Financial Services and Markets Act 2000”.

(9) After paragraph (1) of Article 228 of the 1986 Order insert—

(1A) References in paragraph (1) to contracts of insurance (of any description), options and futures must be read with—

(a) section 22 of the Financial Services and Markets Act 2000;

(b) any relevant order under that section; and

(c) Schedule 2 to that Act.