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The Risk Transformation Regulations 2017

Draft. This instrument was laid in draft and may differ from the one made. Look for the made version under its title.

Draft 2017, ISBN 9780111160596

Original text. legislation.gov.uk does not revise statutory instruments, so later amendments are not shown here. Changes made to it are listed under each provision when known.

Draft Regulations laid before Parliament under paragraph 2 of Schedule 2 to the European Communities Act 1972 and sections 22B and 429(1) and (2) of, and paragraph 26(2) of Schedule 2 to, the Financial Services and Markets Act 2000, for approval by resolution of each House of Parliament.

Financial Services And Markets

Made ***

Coming into force in accordance with regulation 1(2)

The Treasury are a government department designatedf1 for the purposes of section 2(2) of the European Communities Act 1972f2 in relation to financial services.

In the opinion of the Treasury, one of the effects of these Regulations is that an activity which is not a regulated activity, within the meaning of the Financial Services and Markets Act 2000f3, will become a regulated activity.

In the opinion of the Treasury, one of the effects of these Regulations is that an activity will become a PRA-regulated activity within the meaning of the Financial Services and Markets Act 2000f4.

A draft of these Regulations has been laid before and approved by a resolution of each House of Parliament in accordance with paragraph 2 of Schedule 2 to the European Communities Act 1972f5 and sections 22B and 429(1) and (2) of, and paragraph 26(2) of Schedule 2 to, the Financial Services and Markets Act 2000f6.

The Treasury, in exercise of the powers conferred by section 2(2) of the European Communities Act 1972f7 and sections 22(1) and (5), 22A, 55C, 284A, 426 and 428(3) of, and paragraph 25 of Schedule 2 to, the Financial Services and Markets Act 2000f8, make the following Regulations:

Annotations to the whole text

Footnotes

f1

S.I. 2012/1759.

f2

1972 c. 68. Section 2(2) was amended by section 27 of the Legislative and Regulatory Reform Act 2006 (c. 51) and by section 3 of, and the Schedule to, the European Union (Amendment) Act 2008 (c. 7). By virtue of the amendment to section 1(2) made by section 1 of the European Economic Area Act 1993 (c. 51), regulations may be made under section 2(2) to implement obligations of the United Kingdom created by or arising under the Agreement on the European Economic Area signed at Oporto on 2nd May 1992 (Cm 2073, OJ No L1, 3.11.1994, p.3) and the Protocol adjusting that Agreement signed at Brussels on 17th March 1993 (Cm 2183, OJ No L1, 3.1.1994, p.572).

f3

2000 c.8. “Regulated activity” is defined in section 22 of the Act, which has been amended by section 7(1) of the Financial Services Act 2012 (c.21).

f4

“PRA-regulated activity” is defined in section 22A of the Financial Services and Markets Act 2000, which was inserted by section 9 of the Financial Services Act 2012.

f5

Paragraph 2 has been amended by section 27(2)(a) of the Legislative and Regulatory Reform Act 2006.

f6

Section 55C was inserted by section 11(2) of the Financial Services Act 2012 (c.21). Section 284A was inserted by sections 31(1) and (2) of the Bank of England and Financial Services Act 2016 (c.14).

f7

Section 2(2) has been amended by section 27(2)(a) of the Legislative and Regulatory Reform Act 2006 and section 3(3) of, and the Schedule to, the European Union (Amendment) Act 2008.

f8

Paragraph 25 of Schedule 2 was amended by sections 8(1) and (2) of the Financial Services Act 2012.

Contents

  1. Part 1: General
  2. 1Citation and commencement
  3. 2Interpretation: general
  4. 3Meaning of “group of cells”
  5. Part 2: Authorisation and supervision of insurance risk transformation
  6. 4Amendment of FSMA
  7. 5Amendment of the Regulated Activities Order
  8. 6Amendment of the Financial Services and Markets Act 2000 (PRA-regulated Activities) Order 2013
  9. 7Limitation on transformer vehicles’ activities
  10. 8Disapplication of Part 12 of FSMA
  11. 9Transformer vehicles which are not Solvency 2 special purpose vehicles
  12. Part 3: Offers of investments by transformer vehicles
  13. 10Meaning of “qualified investor”
  14. 11Investments to be offered only to qualified investors
  15. Part 4: Protected Cell Companies
  16. Chapter 1: Overview
  17. 12Overview
  18. Chapter 2: Registration
  19. Obtaining registration
  20. 13Method of forming a protected cell company
  21. 14Application to register a protected cell company
  22. 15Application for permission to carry out a regulated activity
  23. 16Applications for approval of persons
  24. 17The name of a protected cell company
  25. 18Particulars of directors
  26. 19Instrument of incorporation: requirements
  27. 20Instrument of incorporation: model articles
  28. 21Requirements for registration
  29. 22Representations against refusal of registration
  30. 23Registration and certificates of incorporation
  31. 24Registration: notification to appropriate registrar
  32. 25Effect of registration
  33. Amendments to registration
  34. 26Changes to name and registered office
  35. 27FCA’s approval for amendments to instrument of incorporation
  36. 28Procedure when refusing approval of proposed amendment
  37. 29Notification of appropriate registrar
  38. The register
  39. 30Register of protected cell companies
  40. 31Registered numbers
  41. 32Information on register
  42. 33Directors: residential addresses and dates of birth
  43. 34Delivery of documents to the FCA
  44. 35Keeping of records by the FCA
  45. 36Publication of register
  46. 37Inspection of records kept by the FCA
  47. 38Provision of information for publication on European e-Justice portal
  48. 39Documents relating to Welsh protected cell companies
  49. 40FCA’s notice to resolve inconsistency on the register
  50. 41Rectification of the register under court order
  51. Chapter 3: Structure of a protected cell company
  52. 42The core
  53. 43The cells
  54. 44Assets, liabilities and obligations
  55. 45Liabilities and obligations which are not incurred on behalf of a part
  56. 46Records and accounts of assets, liabilities and obligations
  57. 47Assets to be held in accordance with records and accounts
  58. 48Segregation within a protected cell company
  59. 49Third parties circumventing segregation
  60. 50Set-off: modification of insolvency legislation
  61. Chapter 4: Movements of assets, liabilities and obligations within a protected cell company
  62. 51Meaning of “records and accounts”
  63. 52Movement of assets between cells
  64. 53Movement of assets from a cell to core
  65. 54Movement of liabilities and obligations
  66. 55Procedure for moving an asset, liability or obligation
  67. 56Reallocations pursuant to mistakes in the records and accounts
  68. Chapter 5: Operation of a protected cell company
  69. 57Objects of a protected cell company
  70. 58Offence of carrying on other activities
  71. 59Creation of a cell
  72. 60Assumption of risk: notification to PRA
  73. 61Company seal: England and Wales, and Northern Ireland
  74. 62Contracts: England and Wales, and Northern Ireland
  75. 63Execution of documents: England and Wales, and Northern Ireland
  76. 64Execution of documents: Scotland
  77. 65Execution of deeds by attorney: England and Wales, and Northern Ireland
  78. 66Official seal for share certificates
  79. 67Alternative inspection location
  80. Chapter 6: Arrangements and contracts between cells
  81. 68Creation of arrangements between cells
  82. 69Creation of arrangements between cells: procedure
  83. 70Arrangements between cells: amendment and cancellation
  84. 71Arrangements between cells: enforcement
  85. 72Arrangements between cells: records and accounts
  86. 73Inspection of directors’ resolutions
  87. 74Contracts between parts of a protected cell company
  88. Chapter 7: Dealings with third parties
  89. 75Change of name
  90. 76Change of address of registered office
  91. 77Name and other particulars to appear in correspondence
  92. 78Contracts
  93. 79Terms implied into contracts
  94. 80Reliance on the register
  95. 81Capacity of protected cell company
  96. Chapter 8: Directors
  97. 82Requirement for a director
  98. 83Directors’ duties
  99. 84Offence of failing to comply with certain duties
  100. 85Directors’ powers
  101. 86Appointment
  102. 87Removal
  103. 88Notification to the FCA
  104. 89Invalidity of certain transactions involving directors
  105. 90Inspection of directors’ service contracts
  106. Chapter 9: Shares and shareholders
  107. Shares
  108. 91Types of shares
  109. 92Nature of shares
  110. 93Rights attaching to shares
  111. 94Changes to rights attaching to shares
  112. 95Amendments to the instrument of incorporation
  113. 96Prohibition on bearer shares
  114. 97Compensation
  115. 98Restraint and ratification by shareholders
  116. 99Contravention of regulation 91(4) or 93(3)
  117. Issue, allotment and alteration of share capital
  118. 100Nominal value
  119. 101Numbering of shares
  120. 102Power of directors to allot shares
  121. 103Sub-division or consolidation of shares
  122. 104Redenomination of shares
  123. 105Redenomination: supplementary
  124. 106Acquisition and redemption of shares issued by a cell
  125. 107Acquisition and redemption of shares issued by the core
  126. 108Consequences of unlawful acquisition or redemption
  127. 109Penalty for contravention of this Section
  128. Share certificates
  129. 110Share certificates
  130. 111Contents of share certificate
  131. 112Evidence of title
  132. Register of shareholders
  133. 113The register of shareholders
  134. 114Contents of the register
  135. 115Location
  136. 116Index
  137. 117Inspection
  138. 118Power of court to rectify the register
  139. Share transfers
  140. 119General
  141. 120Meaning of “transfer documents”
  142. 121Transfers
  143. 122Certification of transfer
  144. 123Joint shareholdings
  145. Distributions
  146. 124Meaning of “distribution”
  147. 125Distributions to holders of shares in a cell
  148. 126Distributions to holders of shares in the core
  149. 127Persons holding investments in different parts of the protected cell company
  150. 128Consequences of unlawful distribution
  151. Annual General Meetings
  152. 129Requirement to hold an annual general meeting
  153. 130Election to dispense with annual general meetings
  154. Miscellaneous
  155. 131Holding companies and subsidiaries: prohibition on shareholdings
  156. 132Contracts between the protected cell company and shareholders
  157. 133Information on capital subscribed
  158. Chapter 10: Shareholder resolutions
  159. 134Application
  160. 135Resolutions
  161. 136Shareholders acting informally (the Duomatic principle)
  162. 137Written resolutions
  163. 138Calling a shareholders’ meeting
  164. 139Directors’ duty to call meetings required by members
  165. 140Notice required of meeting
  166. 141Accidental failure to give notice of resolution or meeting
  167. 142Procedure at general meetings
  168. 143Representation of corporations
  169. 144Proxies
  170. 145Records of meetings
  171. 146Inspection of records
  172. Chapter 11: Debentures (debt securities)
  173. 147Debentures
  174. 148Transfers by a cell to a debenture holder
  175. 149Consequences of unlawful transfer
  176. 150Perpetual debentures
  177. 151Enforcement of contract to subscribe for debentures
  178. 152Debentures to bearer (Scotland)
  179. 153Liability of trustees of debentures
  180. Chapter 12: Security interests
  181. 154Creation of security interests
  182. 155Registration of charges
  183. Chapter 13: Public offers of securities
  184. 156Meaning of “securities”
  185. 157Prohibition on offering securities to the public
  186. 158Meaning of “offer to the public”
  187. 159Restraining order
  188. 160Remedial orders
  189. 161Validity of allotment etc not affected
  190. Chapter 14: Accounts, reports, audit and auditors
  191. 162Meaning of “Companies Act regime”
  192. 163Application of Companies Act regime
  193. 164Relationship with regulation 46
  194. 165Application of Part 42 (statutory auditors) of the Companies Act 2006
  195. Chapter 15: Insolvency
  196. 166Insolvency of a cell
  197. 167Insolvency of the core
  198. 168Concurrent insolvency
  199. 169Disapplication of other insolvency proceedings
  200. Chapter 16: Mergers and Divisions
  201. 170Meaning of “transfer scheme”, “transferor” and “transferee”
  202. 171Meaning of “reference date”
  203. 172Meaning of “affected parties”
  204. 173Requirements on applicants
  205. 174Application for fast track transfer
  206. 175Application for court order sanctioning transfer scheme
  207. 176Effect of fast track transfer
  208. 177Effect of court order sanctioning transfer scheme
  209. Chapter 17: Dissolution
  210. 178Dissolution of a cell: procedure
  211. 179Dissolution of a cell: effect on property and liabilities
  212. 180Dissolution of a protected cell company
  213. 181Restoration: applications to court
  214. 182Restoration: who may apply
  215. 183Restoration: when an application may be made
  216. 184Decision on application for restoration
  217. 185Effect of court order for restoration
  218. Chapter 18: Offences
  219. 186Offences by a body corporate
  220. 187Jurisdiction and procedure in respect of offences
  221. Chapter 19: Miscellaneous
  222. 188Time period for giving notice to FCA
  223. 189Imposition of further requirements by the FCA or PRA
  224. 190Consequential amendments to legislation
  225. 191Transitional provision: existing companies registered under the Companies Act 2006
  226. Signature
  227. Schedule 1Welsh equivalents of English words and expressions
  228. Schedule 2: Administration and liquidation of cells: modification of insolvency legislation
  229. 1Duties and powers confined to the cell
  230. 2General application of the insolvency legislation
  231. 3Jurisdiction within the United Kingdom
  232. 4Restrictions on applying for winding up
  233. 5Appointment of administrator
  234. 6Giving of notice
  235. 7Part 24 of FSMA: references to “regulated activities” and “PRA-authorised person”
  236. 8Further modifications to specific provisions of the Insolvency Act 1986 and the Insolvency (Northern Ireland) Order 1989
  237. 9Further modification to subordinate legislation
  238. Schedule 3: Administration and liquidation of the core: modification of insolvency legislation
  239. 1Meaning of “relevant office holder”
  240. 2Duties and powers of a relevant office holder appointed in respect of the core
  241. 3General application of the insolvency legislation
  242. 4Jurisdiction within the United Kingdom
  243. 5Restriction on applying for winding up
  244. 6Appointment of administrator
  245. 7Giving notice
  246. 8Dissolution
  247. 9Part 24 of FSMA: references to “regulated activities” and “PRA-authorised person”
  248. 10Further modification to specific provisions of the Insolvency Act 1986 and the Insolvency (Northern Ireland) Order 1989
  249. 11Further modifications to subordinate legislation
  250. Schedule 4: Consequential amendments to legislation
  251. Part 1: Consequential amendments to primary legislation
  252. 1Stock Transfer Act 1963
  253. 2Stock Transfer Act (Northern Ireland) 1963
  254. 3Company Directors Disqualification Act 1986
  255. 4Companies Act 2006
  256. Part 2: Consequential amendments to secondary legislation
  257. 5The Company Directors Disqualification (Northern Ireland) Order 2002
  258. 6Unregistered Companies Regulations 2009
  259. 7Company, Limited Liability Partnership and Business (Names and Trading Disclosures) Regulations 2015
  260. Explanatory note