Investment regulation - UK
Reference
Regulatory structure
Please refer to the Market infrastructure - UK page for the complete information about the regulatory structure.
Holding restrictions
Disclaimer
The information contained in the Holding Restrictions is based on the legal opinion obtained by CBL that was issued on 2 October 2020. CFCL believes the information to be correct as of that date but disclaims any responsibility as to the accuracy and completeness of the information after that date. In the case of discrepancy between the information provided by CFCL and the local laws and regulations, the latter shall prevail. The Holding Restrictions do not constitute legal advice and clients should seek advice from independent professional counsel.
Clients are responsible for ensuring compliance with the holding restrictions and agree to indemnify and hold harmless, CFCL, for any loss, expense, liability, damage, or claims, whether direct or indirect, against or incurred by CFCL arising out of or resulting from such non-compliance.
Holding restrictions – Register Market – UK
Restrictions on clients
No general restrictions on client residency for holdings held through CFCL. However, certain funds may impose specific restrictions on investor domicile. Clients must refer to and abide by the restrictions (if any) contained in the fund prospectus before entering into transactions.
Restrictions on settlement
There is no general restriction on settlement on UK investment funds through CFCL. However, certain funds may impose specific settlement/transfer restrictions. Clients must refer to and abide by the restrictions (if any) contained in the fund prospectus before entering into transactions.
Holding restrictions – CSD Market – UK
There are no holding restrictions in the UK market.
Disclosure requirements
Introductory information and categories
This section provides general information about the disclosure requirements for fund securities holdings with which Clearstream Fund Centre must, according to the information available at the time of the present publication, comply with each of the domestic markets and fund markets covered by the disclosure requirements.
Fund securities that are held remotely are usually not disclosed by CFCL. A disclosure request received by CFCL regarding such a holding will be forwarded to the relevant client without assessing its validity and the CFCL client shall handle the request on a voluntary basis.
Disclosure requirements are only available for those countries where CFCL has a link to the respective domestic market or direct access to local domiciled funds that are held in Clearstream’s name on the register.
For fund securities holdings where CFCL has no such link or direct access to the register, clients must be aware that local laws might provide for mandatory disclosure. A disclosure request in this regard will be forwarded to clients without assessing its validity. Clients commit not to unreasonably withhold their consent to such a request and agree to indemnify CFCL for damages resulting directly from non-compliance with mandatory local disclosure requirements.
In most cases, the obligation to disclose is based on the domestic equivalent of a Companies Act, relevant investment funds act or anti-money laundering act and covers all security types.
In some instances, the obligation to disclose is based on stock exchange laws or regulations and only applies to listed domestic and foreign securities.
The disclosure requirements do not constitute legal advice and the clients should seek independent professional advice in relation to fund securities deposited with CFCL, especially as, for those jurisdictions in which no disclosure obligation falls on CFCL, there may be separate disclosure requirements that apply directly to clients of CFCL, shareholders and beneficial owners.
Note: CFCL is not always given comprehensive information or advised of changes affecting local disclosure requirements.
It remains the sole responsibility of the client to ensure compliance with local disclosure requirements. If a requirement is not met, it is the client who will be liable to any related penalty. Clients are therefore advised to seek independent legal advice on the existence and interpretation of local disclosure requirements.
In the case of a discrepancy between the general information contained in this document and the information provided by CFCL for a specific market, as applicable (irrespective of whether this information has been obtained from an agent of Clearstream Fund Centre, or, as the case may be, a foreign regulator of a branch of CFCL), the information provided by CFCL for the specific market as applicable, shall prevail.
N.B.: In all countries, if it is suspected that a disclosure obligation has been breached (for example, that a threshold of holdings under custody has been crossed without being reported), the regulators and the authorities may have the power to investigate. Moreover, in all countries, disclosure obligations might be triggered by enforceable judgements of the competent jurisdiction of the country in question.
Disclosure categories
Clearstream Fund Centre classifies disclosure scenarios according to the following market categories:
Markets where disclosure by Clearstream Banking as custodian of Clearstream Fund Centre to issuers, investment fund managers and/or to regulators or market authorities is mandatory under applicable law.
Markets where disclosure by Clearstream Banking as custodian of Clearstream Fund Centre of account holders to issuers, investment fund managers and/or foreign regulators or market authorities is a legal obligation in respect of securities in specific circumstances.
Markets where there is no obligation for Clearstream Banking as custodian to disclose account holders to issuers, investment fund managers and/or regulators, notwithstanding any disclosure requirement falling directly on clients of Clearstream Fund Centre, shareholders and/or beneficial owners or notwithstanding disclosure necessary to obey an enforceable judgement of the country in question.
Disclosure requirements – Register Market – UK
Disclosure Category 1
For the UK Domestic Market with a CSD link, Clearstream Fund Centre S.A. (“CFCL”) may be required under The UK laws and regulations to disclose the identity and holdings of clients and/or ultimate beneficial owners, upon request, in the case of holding investment funds in the UK.
Consent
In order to comply with the applicable legislation, clients with holdings in UK investment funds or entering into transactions in The United Kingdom market must consent, and are hereby deemed to consent, to the required legal disclosure. Such consent includes the appointment of the requestor (for example, the Fund Manager, Transfer Agent, Regulator) as their attorney-in-fact, under power of attorney, to collect from CFCL the required information to be disclosed. Clients who do not grant such authority cannot hold such investment funds / financial instruments in their accounts with CFCL.
Disclosure requirement
Clients are advised that the local laws and regulations may oblige CFCL to disclose the requested information on CFCL clients and ultimate beneficial owners to the party that is entitled by law to receive such information.
Background and legal basis
As a matter of English law, investment funds that are not public companies and its agents are generally not entitled to the right to request disclosure of the identity and holdings of CBL clients and ultimate beneficial owners.
Sanctions
The investment fund may refuse or even terminate the business relationship if CFCL clients or ultimate beneficial owners fail to comply with the disclosure request.
The client undertakes to hold CFCL harmless and to indemnify CFCL from any loss, claim, liability, or expense asserted against or imposed upon CFCL as a result of the client failure, whatever the failure, to comply with these disclosure requests.
Disclosure requirements – CSD Market – UK
Disclosure Category 1
In the case of holdings in UK equities, CFCL is under an obligation, under Section 793 of the Companies Act 2006, to disclose the identity and holdings of clients holding applicable positions.
In the case of threshold crossing disclosures the investors are directly responsible for disclosing such information to the relevant parties, the exchange, issuer, regulator, etc.
Consent
In order to comply with the legislation as mentioned below, clients entering into transactions in the UK market consent and are hereby deemed to consent to disclosure and to the appointment of the issuer, regulator or other requesting party as their attorney-in-fact, under power of attorney to collect from CFCL such information as is required to be disclosed.
Disclosure requirements
Clients are advised that local laws and regulations (including the UK City Code on Takeovers and Mergers) may require CFCL to disclose securities trading and holding information and the identity of the ultimate beneficial owners of certain securities.
Background and legal basis
- Market Abuse Regulation relating to disclosure under Article 22 of that Regulation.
- FCA Rules.
- Section 793 of the Companies Act 2006.
Section 793 of the Companies Act 2006 gives a public company the power to investigate ownership of its shares.
A written notice (the “793 Notice”) is sent by the company to any person or company that holds or has held any of its share capital during the three years immediately preceding the date of issue of the 793 Notice, irrespective of the size of the holding.
The notice is addressed to the person or company whose name appears in the shares register. If this is a nominee, the notice will be passed on to the person or company represented by the nominee. The company can request that the final beneficial owner be revealed.
The UK market recognises the nominee concept and all UK shares held by CBL clients are registered in the name of Vidacos Nominees Ireland Ltd. The Companies Act 2006 gives the company the right to require disclosure down to the level of the final beneficial owner.
Although it may very rarely happen, the Financial Services Authority (FSA) can apply to the UK courts to have a court order granted to allow the FSA to request disclosure. Such an order would only be issued in serious cases (such as fraud or national security), where there appears to be evidence indicative of a crime.
Directive (EU) 2017/828 of 17 May 2017 amending Directive 2007/36/EC with regard to the encouragement of long-term shareholder engagement (the second shareholder’s rights directive “SRD II”) was transposed into Statutory Instrument 2020 No. 717 on 9 July 2020 (SDR II Law).
Obligation to report threshold crossings
In accordance with the London Stock Exchange (LSE) rules, Panel of Takeover and Mergers board (PTM) rules, an investor who acquires, exceeds or falls below 3%, 4%, 5%, 6%, 7%, 8%, 9%, 10% and each 1% threshold thereafter up to 100% of a UK Company, must, under the Companies Act 1985 Section 198, disclose their interests to the London Stock Exchange and the company, within two days. The company may impose sanctions if disclosure not completed.
Disclaimer
Please refer to Disclosure Requirements - UK for complete information on the disclosure requirements for UK.
The information contained in the disclosure requirements is based on the legal opinion obtained by CFCL acting as a sub-custodian for CFCL that was issued on 2 October 2020. CFCL believes the information to be correct as of that date but disclaims any responsibility as to the accuracy and completeness of the information after that date. In the case of discrepancy between the information provided by CFCL and the local laws and regulations, the latter shall prevail. The disclosure requirements do not constitute legal advice and clients should seek advice from independent professional counsel.
Clients are responsible for ensuring compliance with the disclosure requirements and agree to indemnify and hold harmless, CFCL, for any loss, expense, liability, damage or claims, whether direct or indirect, against or incurred by CFCL arising out of or resulting from such non-compliance.