Legalize / United Kingdom / Public General Act

Financial Services Act 1986 (repealed)

Type Public General Act

Publication 1986-11-07

State In force

Department Statute Law Database

Source legislation.gov.uk

articles Not indexed

Reform history JSON API

(1) After section 31 of the Insurance Companies Act 1982 there shall be inserted—

(31A) (1) An insurance company to which this Part of this Act applies which carries on long term business in the United Kingdom shall secure that adequate arrangements are in force for securing that transactions affecting assets of the company (other than transactions outside its control) do not operate unfairly between the section 28 fund or funds and the other assets of the company or, in a case where the company has more than one identified fund, between those funds. (2) In this section— - " the section 28 fund or funds" means the assets representing the fund or funds maintained by the company under section 28(1) (b) above; and - " identified fund ", in relation to a company, means assets representing the company's receipts from a particular part of its long term business which can be identified as such by virtue of accounting or other records maintained by the company.

(2) In section 71(7) of that Act (which lists the provisions of that Act default in complying with which is not an offence) before the word " or " there shall be inserted the word " 31A ".

Regulations in respect of linked long term policies

137

In section 78(2) of the Insurance Companies Act 1982 (regulations in respect of linked long term policies) after paragraph (a) there shall be inserted—

(aa) restricting the proportion of those benefits which may be determined by reference to property of a specified description or a specified index ;

Insurance brokers

138

(1) Rules made under section 8 of the Insurance Brokers (Registration) Act 1977 may require an applicant for registration or enrolment to state whether he is an authorised person or exempted person under Part I of this Act and, if so, to give particulars of the authorisation or exemption; and an individual shall be treated as satisfying the requirements of section 3(2)(a) of that Act (applicant for registration to satisfy Council as to his character and suitability) if he is an authorised person or a member of a partnership or unincorporated association which is an authorised person.

(2) In drawing up any statement under section 10 of that Act or making any rules under section 11 or 12 of that Act after the coming into force of this section the Insurance Brokers Registration Council shall take proper account of any provisions applicable to, and powers exercisable in relation to, registered insurance brokers or enrolled bodies corporate under this Act.

(3) In section 12(1) and (2) of that Act (which requires the Council to make professional indemnity rules) for the words " The Council shall " there shall be substituted the words " The Council may ".

(4) In section 15 of that Act (erasure from register and list for unprofessional conduct etc.) after subsection (2) there shall be inserted—

(2A) The Disciplinary Committee may, if they think fit, direct that the name of a registered insurance broker or enrolled body corporate shall be erased from the register or list if it appears to the Committee that any responsible person has concluded that the broker (or a related person) or the body corporate has contravened or failed to comply with— (a) any provision of the Financial Services Act 1986 or any rule or regulation made under it to which he or it is or was subject at the time of the contravention or failure; or (b) any rule of any recognised self-regulating organisation or recognised professional body (within the meaning of that Act), to which he is or was subject at that time. (2B) In subsection (2A) above— (a) " responsible person " means a person responsible under the Financial Services Act 1986 or under the rules of any recognised self-regulating organisation or recognised professional body (within the meaning of that Act) for determining whether any contravention of any provision of that Act or rules or regulations made under it or any rules of that organisation or body has occurred ; and (b) " related person" means a partnership or unincorporated association of which the broker in question is (or was at the time of the failure or contravention in question) a member or a body corporate of which he is (or was at that time) a director.

(5) The Insurance Brokers Registration Council shall cooperate, by the sharing of information and otherwise, with the Secretary of State and any other authority, body or person having responsibility for the supervision or regulation of investment business or other financial services.

(6) For the purposes of the said Act of 1977 " authorised insurers " shall include—

(a) an insurance company the head office of which is in a member State other than the United Kingdom and which is entitled to carry on there insurance business corresponding to that mentioned in the definition of " authorised insurers "in that Act; and

(b) an insurance company which has a branch or agency in such a member State and is entitled under the law of that State to carry on there insurance business corresponding to that mentioned in that definition.

Industrial assurance

139

(1) In section 5 of the Industrial Assurance Act 1923 (prohibition on issue of illegal policies) the references to policies which are illegal or not within the legal powers of a society or company shall not be construed as applying to any policy issued—

(a) in the course of carrying on investment business in contravention of section 3 above; or

(b) in the course of carrying on insurance business in contravention of section 2 of the Insurance Companies Act 1982.

(2) In section 20(4) of the said Act of 1923 the reference to a person employed by a collecting society or industrial assurance company and in section 34 of that Act the references to a person in the regular employment of such a society or company shall include references to an appointed representative of such a society or company but as respects section 34 only if the contract in question is an investment agreement.

(3) Where it appears to the Industrial Assurance Commissioner that rules made by virtue of section 48(2)(f) (or corresponding rules made by a recognised self-regulating organisation) make arrangements for the settlement of a dispute referred to him under section 32 of the said Act of 1923 or that such rules relate to some of the matters in dispute he may, if he thinks fit, delegate his functions in respect of the dispute so as to enable it to be settled in accordance with the rules.

(4) If such rules provide that any dispute may be referred to the Industrial Assurance Commissioner he may deal with any dispute referred to him in pursuance of those rules as if it were a dispute referred under section 77 of the Friendly Societies Act 1974 and may delegate his functions in respect of any such dispute to any other person.

(5) The foregoing provisions of this section shall apply to Northern Ireland with the substitution for the references to sections 5, 20(4), 32 and 34 of the said Act of 1923 and section 77 of the said Act of 1974 of references to Articles 20, 27(2), 36 and 38 of the Industrial Assurance (Northern Ireland) Order 1979 and section 65 of the Friendly Societies Act (Northern Ireland) 1970 and for the references to the Industrial Assurance Commissioner of references to the Industrial Assurance Commissioner for Northern Ireland.

PART III — Friendly Societies

Friendly societies

140

Schedule 11 to this Act shall have effect as respects the regulation of friendly societies.

Indemnity schemes

141

(1) Any two or more registered friendly societies may, notwithstanding any provision to the contrary in their rules, enter into arrangements for the purpose of making funds available to meet losses incurred by any society which is a party to the arrangements or by the members of any such society by virtue of their membership of it.

(2) No such arrangements shall come into force unless they have been approved by the Chief Registrar of friendly societies or, as the case may be, the Registrar of Friendly Societies for Northern Ireland.

PART IV — Official Listing of Securities

Official listing

142

(1) No investment to which this section applies shall be admitted to the Official List of The Stock Exchange except in accordance with the provisions of this Part of this Act.

(2) Subject to subsections (3) and (4) below, this section applies to any investment falling within paragraph 1, 2, 4 or 5 of Schedule 1 to this Act

(3) In the application of those paragraphs for the purposes of subsection (2) above—

(a) paragraphs 1, 4 and 5 shall have effect as if paragraph 1 did not contain the exclusion relating to building societies, industrial and provident societies or credit unions;

(b) paragraph 2 shall have effect as if it included any instrument falling within paragraph 3 issued otherwise than by the government of a member State or a local authority in a member State ; and

(4) The Secretary of State may by order direct that this section shall apply also to investments falling within paragraph 6 of Schedule 1 to this Act or to such investments of any class or description.

(5) An order under subsection (4) above shall be subject to annulment in pursuance of a resolution of either House of Parliament.

(6) In this Part of this Act " the competent authority " means, subject to section 157 below, the Council of The Stock Exchange ; and that authority may make rules (in this Act referred to as " listing rules ") for the purposes of any of the following provisions.

(7) In this Part of this Act—

" issuer ", in relation to any securities, means the person by whom they have been or are to be issued except that in relation to a certificate or other instrument falling within paragraph 5 of Schedule 1 to this Act it means the person who issued or is to issue the securities to which the certificate or instrument relates ;

" the Official List" means the Official List of The Stock Exchange;

" securities " means investments to which this section applies ;

and references to listing are references to inclusion in the Official List in pursuance of this Part of this Act.

(8) Any functions of the competent authority under this Part of this Act may be exercised by any committee, sub-committee, officer or servant of the authority except that listing rules—

(a) shall be made only by the authority itself or by a committee or sub-committee of the authority; and

(b) if made by a committee or sub-committee, shall cease to have effect at the end of the period of twenty-eight days beginning with the day on which they are made (but without prejudice to anything done under them) unless before the end of that period they are confirmed by the authority.

(9) Nothing in this Part of this Act affects the powers of the Council of The Stock Exchange in respect of investments to which this section does not apply and such investments may be admitted to the Official List otherwise than in accordance with this Part of this Act

Applications for listing

143

(1) An application for listing shall be made to the competent authority in such manner as the listing rules may require.

(2) No application for the listing of any securities shall be made except by or with the consent of the issuer of the securities.

(3) No application for listing shall be made in respect of securities to be issued by a private company or by an old public company within the meaning of section 1 of the Companies Consolidation (Consequential Provisions) Act 1985 or the corresponding Northern Ireland provision.

Admission to list

144

(1) The competent authority shall not admit any securities to the Official List except on an application duly made in accordance with section 143 above and unless satisfied that—

(a) the requirements of the listing rules made by the authority for the purposes of this section and in force when the application is made; and

(b) any other requirements imposed by the authority in relation to that application,

are complied with.

(2) Without prejudice to the generality of the power of the competent authority to make listing rules for the purposes of this section, such rules may, in particular, require as a condition of the admission of any securities to the Official List—

(a) the submission to, and approval by, the authority of a document (in this Act referred to as " listing particulars ") in such form and containing such information as may be specified in the rules; and

(b) the publication of that document;

or, in such cases as may be specified by the rules, the publication of a document other than listing particulars.

(3) The competent authority may refuse an application—

(a) if it considers that by reason of any matter relating to the issuer the admission of the securities would be detrimental to the interests of investors; or

(b) in the case of securities already officially listed in another member State, if the issuer has failed to comply with any obligations to which he is subject by virtue of that listing.

(4) The competent authority shall notify the applicant of its decision on the application within six months from the date on which the application is received or, if within that period the authority has required the applicant to furnish further information in connection with the application, from the date on which that information is furnished.

(5) If the competent authority does not notify the applicant of its decision within the time required by subsection (4) above it shall be taken to have refused die application.

(6) When any securities have been admitted to the Official List their admission shall not be called in question on the ground that any requirement or condition for their admission has not been complied with.

Discontinuance and suspension of listing

145

(1) The competent authority may, in accordance with the listing rules, discontinue the listing of any securities if satisfied that there are special circumstances which preclude normal regular dealings in the securities.

(2) The competent authority may in accordance with the listing rules suspend the listing of any securities.

(3) Securities the listing of which is suspended under subsection (2) above shall nevertheless be regarded as listed for the purposes of sections 153 and 155 below.

(4) This section applies to securities included in the Official List at the coming into force of this Part of this Act as it applies to securities included by virtue of this Part.

General duty of disclosure in listing particulars

146

(1) In addition to the information specified by listing rules or required by the competent authority as a condition of the admission of any securities to the Official List any listing particulars submitted to the competent authority under section 144 above shall contain all such information as investors and their professional advisers would reasonably require, and reasonably expect to find there, for the purpose of making an informed assessment of—

(a) the assets and liabilities, financial position, profits and losses, and prospects of the issuer of the securities; and

(b) the rights attaching to those securities.

(2) The information to be included by virtue of this section shall be such information as is mentioned in subsection (1) above which is within the knowledge of any person responsible for the listing particulars or which it would be reasonable for him to obtain by making enquiries.

(3) In determining what information is required to be included in listing particulars by virtue of this section regard shall be had—

(a) to the nature of the securities and of the issuer of the securities;

(b) to the nature of the persons likely to consider their acquisition;

(c) to the fact that certain matters may reasonably be expected to be within the knowledge of professional advisers of any kind which those persons may reasonably be expected to consult; and

(d) to any information available to investors or their professional advisers by virtue of requirements imposed under section 153 below or by or under any other enactment or by virtue of requirements imposed by a recognised investment exchange for the purpose of complying with paragraph 2{2)(b) of Schedule 4 to this Act.

Supplementary listing particulars

147

(1) If at any time after the preparation of listing particulars for submission to the competent authority under section 144 above and before the commencement of dealings in the securities following their admission to the Official List—

(a) there is a significant change affecting any matter contained in those particulars whose inclusion was required by section 146 above or by listing rules or by the competent authority; or

(b) a significant new matter arises the inclusion of information in respect of which would have been so required if it had arisen when the particulars were prepared,

the issuer of the securities shall, in accordance with listing rules made for the purposes of this section, submit to the competent authority for its approval and, if approved, publish supplementary listing particulars of the change or new matter.

(2) In subsection (1) above "significant" means significant for the purpose of making an informed assessment of the matters mentioned in section 146(1) above.

(3) Where the issuer of the securities is not aware of the change or new matter in question he shall not be under any duty to comply with subsection (1) above unless he is notified of it by a person responsible for the listing particulars ; but it shall be the duty of any person responsible for those particulars who is aware of such a matter to give notice of it to the issuer.

(4) Subsection (1) above applies also as respects matters contained in any supplementary listing particulars previously published under this section in respect of the securities in question.

Exemptions from disclosure

148

(1) The competent authority may authorise the omission from listing particulars or supplementary listing particulars of any information the inclusion of which would otherwise be required by section 146 above—

(a) on the ground that its disclosure would be contrary to the public interest;

(b) subject to subsection (2) below, on the ground that its disclosure would be seriously detrimental to the issuer of the securities ; or

(c) in the case of securities which fall within paragraph 2 of Schedule 1 to this Act as modified by section 142 (3)(b) above and are of any class specified by listing rules, on the ground that its disclosure is unnecessary for persons of the kind who may be expected normally to buy or deal in the securities.

(2) No authority shall be granted under subsection (l)(b) above in respect of, and no such authority shall be regarded as extending to, information the non-disclosure of which would be likely to mislead a person considering the acquisition of the securities as to any facts the knowledge of which it is essential for him to have in order to make an informed assessment.

(3) The Secretary of State or the Treasury may issue a certificate to the effect that the disclosure of any information (including information that would otherwise have to be included in particulars for which they are themselves responsible) would be contrary to the public interest and the competent authority shall be entitled to act on any such certificate in exercising its powers under subsection (l)(a) above.

(4) This section is without prejudice to any powers of the competent authority under rules made by virtue of section 156(2) below.

Registration of listing particulars

149

(1) On or before the date on which listing particulars or supplementary listing particulars are published as required by listing rules a copy of the particulars shall be delivered for registration to the registrar of companies and a statement that a copy has been delivered to him shall be included in the particulars.

(2) In subsection (1) above " the registrar of companies" means—

(a) if the securities in question are or are to be issued by a company incorporated in Great Britain, the registrar of companies in England and Wales or the registrar of companies in Scotland according to whether the company's registered office is in England and Wales or in Scotland;

(b) if the securities in question are or are to be issued by a company incorporated in Northern Ireland, the registrar of companies for Northern Ireland ;

(3) If any particulars are published without a copy of them having been delivered as required by this section the issuer of the securities in question and any person who is knowingly a party to the publication shall be guilty of an offence and liable—

(a) on conviction on indictment, to a fine ;

(b) on summary conviction, to a fine not exceeding the statutory maximum.

Compensation for false or misleading particulars

150

(1) Subject to section 151 below, the person or persons responsible for any listing particulars or supplementary listing particulars shall be liable to pay compensation to any person who has acquired any of the securities in question and suffered loss in respect of them as a result of any untrue or misleading statement in the particulars or the omission from them of any matter required to be included by section 146 or 147 above.

(2) Where listing rules require listing particulars to include information as to any particular matter on the basis that the particulars must include a statement either as to that matter or, if such is the case, that there is no such matter, the omission from the particulars of the information shall be treated for the purposes of subsection (1) above as a statement that there is no such matter.

(3) Subject to section 151 below, a person who fails to comply with section 147 above shall be liable to pay compensation to any person who has acquired any of the securities in question and suffered loss in respect of them as a result of the failure.

(4) This section does not affect any liability which any person may incur apart from this section.

(5) References in this section to the acquisition by any person of securities include references to his contracting to acquire them or an interest in them.

(6) No person shall by reason of being a promoter of a company or otherwise incur any liability for failing to disclose any information which he would not be required to disclose in listing particulars in respect of a company's securities if he were responsible for those particulars or, if he is responsible for them, which he is entitled to omit by virtue of section 148 above.

Exemption from liability to pay compensation

151

(1) A person shall not incurr any liability under section 150(1) above for any loss in respect of securities caused by any such statement or omission as is there mentioned if he satisfies the court that at the time when the particulars were submitted to the competent authority he reasonably believed, having made such enquiries (if any) as were reasonable, that the statement was true and not misleading or that the matter whose omission caused the loss was properly omitted and—

(a) that he continued in that belief until the time when the securities were acquired; or

(b) that they were acquired before it was reasonably practicable to bring a correction to the attention of persons likely to acquire the securities in question ; or

(c) that before the securities were acquired he had taken all such steps as it was reasonable for him to have taken to secure that a correction was brought to the attention of those persons ; or

(d) that he continued in that belief until after the commencement of dealings in the securities following their admission to the Official List and that the securities were acquired after such a lapse of time that he ought in the circumstances to be reasonably excused.

(2) A person shall not incur any liability under section 150(1) above for any loss in respect of securities caused by a statement purporting to be made by or on the authority of another person as an expert which is, and is stated to be, included in the particulars with that other person's consent if he satisfies the court that at the time when the particulars were submitted to the competent authority he believed on reasonable grounds that the other person was competent to make or authorise the statement and had consented to its inclusion in the form and context in which it was included and—

(a) that he continued in that belief until the time when the securities were acquired; or

(b) that they were acquired before it was reasonably practicable to bring the fact that the expert was not competent or had not consented to the attention of persons likely to acquire the securities in question ; or

(c) that before the securities were acquired he had taken all such steps as it was reasonable for him to have taken to secure that that fact was brought to the attention of those persons ; or

(d) that he continued in that belief until after the commencement of dealings in the securities following their admission to the Official List and that the securities were acquired after such a lapse of time that he ought in the circumstances to be reasonably excused.

(3) Without prejudice to subsections (1) and (2) above, a person shall not incur any liability under section 150(1) above for any loss in respect of any securities caused by any such statement or omission as is there mentioned if he satisfies the court—

(a) that before the securities were acquired a correction, or where the statement was such as is mentioned in subsection (2), the fact that the expert was not competent or had not consented had been published in a manner calculated to bring it to the attention of persons likely to acquire the securities in question ; or

(b) that he took all such steps as it was reasonable for him to take to secure such publication and reasonably believed that it had taken place before the securities were acquired.

(4) A person shall not incur any liability under section 150(1) above for any loss resulting from a statement made by an official person or contained in a public official document which is included in the particulars if he satisfies the court that the statement is accurately and fairly reproduced.

(5) A person shall not incur any liability under section 150(1) or (3) above if he satisfies the court that the person suffering the loss acquired the securities in question with knowledge that the statement was false or misleading, of the omitted matter or of the change or new matter, as the case may be.

(6) A person shall not incur any liability under section 150(3) above if he satisfies the court that he reasonably believed that the change or new matter in question was not such as to call for supplementary listing particulars.

(7) In this section "expert" includes any engineer, valuer, accountant or other person whose profession, qualifications or experience give authority to a statement made by him; and references to the acquisition of securities include references to contracting to acquire them or an interest in them.

Persons responsible for particulars

152

(1) For the purposes of this Part of this Act the persons responsible for listing particulars or supplementary listing particulars are—

(a) the issuer of the securities to which the particulars relate;

(b) where the issuer is a body corporate, each person who is a director of that body at the time when the particulars are submitted to the competent authority;

(c) where the issuer is a body corporate, each person who has authorised himself to be named, and is named, in the particulars as a director or as having agreed to become a director of that body either immediately or at a future time ;

(d) each person who accepts, and is stated in the particulars as accepting, responsibility for, or for any part of, the particulars;

(e) each person not falling within any of the foregoing paragraphs who has authorised the contents of, or any part of, the particulars.

(2) A person is not responsible for any particulars by virtue of subsection (1)(b) above if they are published without his knowledge or consent and on becoming aware of their publication he forthwith gives reasonable public notice that they were published without his knowledge or consent.

(3) Where a person has accepted responsibility for, or authorised, only part of the contents of any particulars, he is responsible under subsection (1)(d) or (e) above for only that part and only if it is included in (or substantially in) the form and context to which he has agreed.

(4) Where the particulars relate to securities which are to be issued in connection with an offer by (or by a wholly-owned subsidiary of), the issuer for, or an agreement for the acquistion by (or by a wholly-owned subsidiary of) the issuer of, securities issued by another person or in connection with any arrangement whereby the whole of the undertaking of another person is to become the undertaking of the issuer (of a wholly-owned subsidiary of the issuer or of a body corporate which will become such a subsidiary by virtue of the arrangement) then if—

(a) that other person ; and

(b) where that other person is a body corporate, each person who is a director of that body at the time when the particulars are submitted to the competent authority and each other person who has authorised himself to be named, and is named, in the particulars as a director of that body,

is responsible by virtue of paragraph (d) of subsection (1) above for any part of the particulars relating to that other person or to the securities or undertaking to which the offer, agreement or arrangement relates, no person shall be responsible for that part under paragraph (a), (b) or (c) of that subsection but without prejudice to his being responsible under paragraph (d).

(5) Neither paragraph (b) nor paragraph (c) of subsection (1) above applies in the case of an issuer of international securities of a class specified by listing rules for the purposes of section 148(l)(c) above; and neither of those paragraphs nor paragraph (b) of subsection (4) above applies in the case of any director certified by the competent authority as a person to whom that paragraph should not apply by reason of his having an interest, or of any other circumstances, making it inappropriate for him to be responsible by virtue of that paragraph.

(6) In subsection (5) above " international securities " means any investment falling within paragraph 2 of Schedule 1 to this Act as modified by section 142(3)(b) above which is of a kind likely to be dealt in by bodies incorporated in or persons resident in a country or territory outside the United Kingdom, is denominated in a currency other than sterling or is otherwise connected with such a country or territory.

(7) In this section " wholly-owned subsidiary ", in relation to a person other than a body corporate, means any body corporate that would be his wholly-owned subsidiary if he were a body corporate.

(8) Nothing in this section shall be construed as making a person responsible for any particulars by reason of giving advice as to their contents in a professional capacity.

(9) Where by virtue of this section the issuer of any shares pays or is liable to pay compensation under section 150 above for loss suffered in respect of shares for which a person has subscribed no account shall be taken of that liability or payment in determining any question as to the amount paid on subscription for those shares or as to the amount paid up or deemed to be paid up on them.

Obligations of issuers of listed securities

153

(1) Listing rules may specify requirements to be complied with by issuers of listed securities and make provision with respect to the action that may be taken by the competent authority in the event of non-compliance, including provision—

(a) authorising the authority to publish the fact that an issuer has contravened any provision of the rules; and

(b) if the rules require an issuer to publish any information, authorising the authority to publish it in the event of his failure to do so.

(2) This section applies to the issuer of securities included in the Official List at the coming into force of this Part of this Act as it applies to the issuer of securities included by virtue of this Part.

Advertisements etc. in connection with listing applications

154

(1) Where listing particulars are or are to be published in connection with an application for the listing of any securities no advertisement or other information of a kind specified by listing rules shall be issued in the United Kingdom unless the contents of the advertisement or other information have been submitted to the competent authority and that authority has either—

(a) approved those contents; or

(b) authorised the issue of the advertisement or information without such approval.

(2) An authorised person who contravenes this section shall be treated as having contravened rules made under Chapter V of Part I of this Act or, in the case of a person who is an authorised person by virtue of his membership of a recognised self-regulating organisation or certification by a recognised professional body, the rules of that organisation or body.

(3) Subject to subsection (4) below, a person other than an authorised person, who contravenes this section shall be guilty of an offence and liable—

(a) on conviction on indictment, to imprisonment for a term not exceeding two years or to a fine or to both;

(b) on summary conviction, to a fine not exceeding the statutory maximum.

(4) A person who in the ordinary course of a business other than investment business issues an advertisement or other information to the order of another person shall not be guilty of an offence under this section if he proves that he believed on reasonable grounds that the advertisement or information had been approved or its issue authorised by the competent authority.

(5) Where information has been approved, or its issue has been authorised, under this section neither the person issuing it nor any person responsible for, or for any part of, the listing particulars shall incur any civil liability by reason of any statement in or omission from the information if that information and the listing particulars, taken together, would not be likely to mislead persons of the kind likely to consider the acquisition of the securities in question.

Fees

155

Listing rules may require the payment of fees to the competent authority in respect of applications for listing and the retention of securities in the Official List

Listing rules: general provisions

156

(1) Listing rules may make different provision for different cases.

(2) Listing rules may authorise the competent authority to dispense with or modify the application of the rules in particular cases and by reference to any circumstances.

(3) Listing rules shall be made by an instrument in writing.

(4) Immediately after an instrument containing listing rules is made it shall be printed and made available to the public with or without payment.

(5) A person shall not be taken to have contravened any listing rule if he shows that at the time of the alleged contravention the instrument containing the rule had not been made available as required by subsection (4) above.

(6) The production of a printed copy of an instrument purporting to be made by the competent authority on which is endorsed a certificate signed by an officer of the authority authorised by it for that purpose and stating—

(a) that the instrument was made by the authority;

(b) that the copy is a true copy of the instrument; and

shall be prima facie evidence or, in Scotland, sufficient evidence of the facts stated in the certificate.

(7) Any certificate purporting to be signed as mentioned in subsection (6) above shall be deemed to have been duly signed unless the contrary is shown.

(8) Any person wishing in any legal proceedings to cite an instrument made by the competent authority may require the authority to cause a copy of it to be endorsed with such a certificate as is mentioned in subsection (6) above.

Alteration of competent authority

157

(1) The Secretary of State may by order transfer the functions as competent authority of the Council of The Stock Exchange to another body or other bodies either at the request of the Council or if it appears to him—

(a) that the Council is exercising those functions in a manner which is unnecessary for the protection of investors and fails to take into account the proper interests of issuers and proposed issuers of securities; or

(b) that it is necessary to do so for the protection of investors.

(2) The Secretary of State may by order transfer all or any of the functions as competent authority from any body or bodies to which they have been previously transferred under this section to another body or bodies.

(3) Any order made under subsection (1) above at the request of the Council shall be subject to annulment in pursuance of a resolution of either House of Parliament; and no other order shall be made under this section unless a draft of it has been laid before and approved by a resolution of each House of Parliament.

(4) An order under this section shall not affect anything previously done by any body (" the previous authority ") in the exercise of functions which are transferred by the order to another body (" the new authority ") and may contain such supplementary provisions as the Secretary of State thinks necessary or expedient, including provisions—

(a) for modifying or excluding any provision of this Part of this Act in its application to any such functions;

(b) for the transfer of any property, rights or liabilities relating to any such functions from the previous authority to the new authority;

(c) for the carrying on and completion by the new authority of anything in process of being done by the previous authority when the order takes effect; and

(d) for the substitution of the new authority for the previous authority in any instrument, contract or legal proceedings.

(5) If by virtue of this section the function of admission to or discontinuance or suspension of listing is exercisable otherwise than by the Council of The Stock Exchange, references in this Part of this Act to the competent authority admitting securities to the Official List or to discontinuing or suspending the listing of any securities shall be construed as references to the giving of directions to the Council of The Stock Exchange to admit the securities or to discontinue or suspend their listing; and it shall be the duty of the Council to comply with any such direction.

PART V — Offers of Unlisted Securities

Preliminary

158

(1) This Part of this Act applies to any investment—

(a) which is not listed, or the subject of an application for listing, in accordance with Part IV of this Act; and

(b) falls within paragraph 1, 2, 4 or 5 of Schedule 1 to this Act

(2) In the application of those paragraphs for the purposes of subsection (1) above—

(a) paragraphs 4 and 5 shall have effect with the omission of references to investments falling within paragraph 3; and

(b) paragraph 4 shall have effect as if it referred only to instruments issued by the person issuing the investment to be subscribed for.

(3) In this Part of this Act—

" issuer ", in relation to any securities, means the person by whom they have been or are to be issued except that in relation to a certificate or other instrument falling within paragraph 5 of Schedule 1 to this Act it means the person who issued or is to issue the securities to which the certificate or instrument relates;

" securities" means investments to which this section applies.

(4) For the purposes of this Part of this Act an advertisement offers securities if—

(a) it invites a person to enter into an agreement for or with a view to subscribing for or otherwise acquiring or underwriting any securities; or

(b) it contains information calculated to lead directly or indirectly to a person entering into such an agreement.

(5) In this Part of this Act " the registrar of companies ", in relation to any securities, means—

(a) if the securities are or are to be issued by a company incorporated in Great Britain, the registrar of companies in England and Wales or the registrar of companies in Scotland according to whether the company's registered office is in England and Wales or in Scotland ;

(b) if the securities are or are to be issued by a company incorporated in Northern Ireland, the registrar of companies for Northern Ireland ;

(6) In this Part of this Act " approved exchange ", in relation to dealings in any securities, means a recognised investment exchange approved by the Secretary of State for the purposes of this Part of this Act either generally or in relation to such dealings, and the Secretary of State shall give notice in such manner as he thinks appropriate of the exchanges which are for the time being approved.

Offers of securities on admission to approved exchange

159

(1) Subject to subsection (2) and section 161 below, no person shall issue or cause to be issued in the United Kingdom an advertisement offering any securities on the occasion of their admission to dealings on an approved exchange or on terms that they will be issued if admitted to such dealings unless—

(a) a document (in this Part of this Act referred to as a " prospectus ") containing information about the securities has been submitted to and approved by the exchange and delivered for registration to the registrar of companies; or

(b) the advertisement is such that no agreement can be entered into in pursuance of it until such a prospectus has been submitted, approved and delivered as aforesaid.

(2) Subsection (1) above does not apply if a prospectus relating to the securities has been delivered for registration under this Part of this Act in the previous twelve months and the approved exchange certifies that it is satisfied that persons likely to consider acquiring the securities will have sufficient information to enable them to decide whether to do so from that prospectus and any information published in connection with the admission of the securities.

Other offers of securities

160

(1) Subject to subsections (5) and (6) and section 161 below, no person shall issue or cause to be issued in the United Kingdom an advertisement offering any securities which is a primary or secondary offer within the meaning of this section unless—

(a) he has delivered for registration to the registrar of companies a prospectus relating to the securities and expressed to be in respect of the offer ; or

(b) the advertisement is such that no agreement can be entered into in pursuance of it until such a prospectus has been delivered by him as aforesaid.

(2) For the purposes of this section a primary offer is an advertisement issued otherwise than as mentioned in section 159(1) above inviting persons to enter into an agreement for or with a view to subscribing (whether or not in cash) for or underwriting the securities to which it relates or containing information calculated to lead directly or indirectly to their doing so.

(3) For the purposes of this section a secondary offer is any other advertisement issued otherwise than as mentioned in section 159(1) above inviting persons to enter into an agreement for or with a view to acquiring the securities to which it relates or containing information calculated to lead directly or indirectly to their doing so, being an advertisement issued or caused to be issued by—

(a) a person who has acquired the securities from the issuer with a view to issuing such an advertisement in respect of them;

(b) a person who, with a view to issuing such an advertisement in respect of them, has acquired the securities otherwise than from the issuer but without their having been admitted to dealings on an approved exchange or held by a person who acquired them as an investment and without any intention that such an advertisement should be issued in respect of them ; or

(c) a person who is a controller of the issuer or has been such a controller in the previous twelve months and who is acting with the consent or participation of the issuer in issuing the advertisement.

(4) For the purposes of subsection (3)(a) above it shall be presumed in the absence of evidence to the contrary that a person has acquired securities with a view to issuing an advertisement offering the securities if he issues it or causes it to be issued—

(a) within six months after the issue of the securities ; or

(b) before the consideration due from him for their acquisition is received by the person from whom he acquired them.

(5) Subsection (1) above does not apply to a secondary offer if such a prospectus as is mentioned in that subsection has been delivered in accordance with that subsection in respect of an offer of the same securities made in the previous six months by a person making a primary offer or a previous secondary offer.

(6) Subsection (1) above does not apply to an advertisement issued in such circumstances as may be specified by an order made by the Secretary of State for the purpose of exempting from that subsection—

(a) advertisements appearing to him to have a private character, whether by reason of a connection between the person issuing them and those to whom they are addressed or otherwise;

(b) advertisements appearing to him to deal with investments only incidentally;

(d) such other classes of advertisement as he thinks fit.

(7) Without prejudice to subsection (6)(c) above an order made by the Secretary of State may exempt from subsection (1) above an advertisement issued in whatever circumstances if it relates to securities appearing to him to be of a kind that can be expected normally to be bought or dealt in only by persons sufficiently expert to understand any risks involved.

(8) An order under subsection (6) or (7) above may require any person who by virtue of the order is authorised to issue an advertisement to comply with such requirements as are specified in the order.

(9) An order made by virtue of subsection (6)(a), (b) or (c) or by virtue of subsection (7) above shall be subject to annulment in pursuance of a resolution of either House of Parliament; and no order shall be made by virtue of subsection (6)(d) above unless a draft of it has been laid before and approved by a resolution of each House of Parliament.

Exceptions

161

(1) Sections 159 and 160 above do not apply to any advertisement offering securities if the offer is conditional on their admission to listing in accordance with Part IV of this Act and section 159 above does not apply to any advertisement offering securities if they have been listed in accordance with that Part in the previous twelve months and the approved exchange in question certifies that persons likely to consider acquiring them will have sufficient information to enable them to decide whether to do so.

(2) Neither of those sections applies to any such advertisement as is mentioned in section 58(2) above.

(3) Neither of those sections applies if other securities issued by the same person (whether or not securities of the same class as those to which the offer relates) are already dealt in on an approved exchange and the exchange certifies that persons likely to consider acquiring the securities to which the offer relates will have sufficient information to enable them to decide whether to do so having regard to the steps that have been taken to comply in respect of those other securities with the requirements imposed by the exchange for the purpose of complying with paragraph 2(2) (b) of Schedule 4 to this Act, to the nature of the securities to which the offer relates, to the circumstances of their issue and to the information about the issuer which is available to investors by virtue of any enactment.

(4) If it appears to the Secretary of State that the law of a country or territory outside the United Kingdom provides investors in the United Kingdom with protection at least equivalent to that provided by Part IV of this Act or this Part of this Act in respect of securities dealt in on an exchange or exchanges in that country or territory he may by order specify circumstances in which those sections are not to apply to advertisements offering those securities.

(5) An order under subsection (4) above shall be subject to annulment in pursuance of a resolution of either House of Parliament.

Form and content of prospectus

162

(1) A prospectus shall contain such information and comply with such other requirements as may be prescribed by rules made by the Secretary of State for the purposes of this section.

(2) Rules under this section may make provision whereby compliance with any requirements imposed by or under the law of a country or territory outside the United Kingdom is treated as compliance with any requirements of the rules.

(3) If it appears to the Secretary of State that an approved exchange has rules in respect of prospectuses relating to securities dealt in on the exchange, and practices in exercising any powers conferred by the rules, which provide investors with protection at least equivalent to that provided by rules under this section he may direct that any such prospectus shall be subject to the rules of the exchange instead of the rules made under this section.

General duty of disclosure in prospectus

163

(1) In addition to the information required to be included in a prospectus by virtue of rules applying to it by virtue of section 162 above a prospectus shall contain all such information as investors and their professional advisers would reasonably require, and reasonably expect to find there, for the purpose of making an informed assessment of—

(a) the assets and liabilities, financial position, profits and losses, and prospects of the issuer of the securities; and

(b) the rights attaching to those securities.

(2) The information to be included by virtue of this section shall be such information as is mentioned in subsection (1) above which is within the knowledge of any person responsible for the prospectus or which it would be reasonable for him to obtain by making enquiries.

(3) In determining what information is required to be included in a prospectus by virtue of this section regard shall be had—

(a) to the nature of the securities and of the issuer of the securities;

(b) to the nature of the persons likely to consider their acquisition;

(c) to the fact that certain matters may reasonably be expected to be within the knowledge of professional advisers of any kind which those persons may reasonably be expected to consult; and

(d) to any information available to investors or their professional advisers by virtue of any enactment or by virtue of requirements imposed by a recognised investment exchange for the purpose of complying with paragraph 2(2)(b) of Schedule 4 to this Act.

Supplementary prospectus

164

(1) Where a prospectus has been registered under this Part of this Act in respect of an offer of securities and at any time while an agreement in respect of those securities can be entered into in pursuance of that offer—

(a) there is a significant change affecting any matter contained in the prospectus whose inclusion was required by rules applying to it by virtue of section 162 above or by section 163 above ; or

(b) a significant new matter arises the inclusion of information in respect of which would have been so required if it had arisen when the prospectus was prepared,

the person who delivered the prospectus for registration to the registrar of companies shall deliver to him for registration a supplementary prospectus containing particulars of the change or new matter.

(2) In subsection (1) above " significant " means significant for the purpose of making an informed assessment of the matters mentioned in section 163(1) above.

(3) Where the person who delivered the prospectus for registration is not aware of the change or new matter in question he shall not be under any duty to comply with subsection (1) above unless he is notified of it by a person responsible for the prospectus ; but any person responsible for the prospectus who is aware of such a matter shall be under a duty to give him notice of it.

(4) Subsection (1) above applies also as respects matters contained in a supplementary prospectus previously registered under this section in respect of the securities in question.

Exemptions from disclosure

165

(1) If in the case of any approved exchange the Secretary of State so directs, the exchange shall have power to authorise the omission from a prospectus or supplementary prospectus of any information the inclusion of which would otherwise be required by section 163 above—

(a) on the ground that its disclosure would be contrary to the public interest;

(b) subject to subsection (2) below, on the ground that its disclosure would be seriously detrimental to the issuer of the securities; or

(c) in the case of securities which fall within paragraph 2 of Schedule 1 to this Act and are of any class specified by the rules of the exchange, on the ground that its disclosure is unnecessary for persons of the kind who may be expected normally to buy or deal in the securities.

(2) No authority shall be granted under subsection (1)(6) above in respect of, and no such authority shall be regarded as extending to, information the non-disclosure of which would be likely to mislead a person considering the acquisition of the securities as to any facts the knowledge of which it is essential for him to have in order to make an informed assessment.

(3) The Secretary of State or the Treasury may issue a certificate to the effect that the disclosure of any information (including information that would otherwise have to be included in a prospectus or supplementary prospectus for which they are themselves responsible) would be contrary to the public interest and the exchange shall be entitled to act on any such certificate in exercising its powers under subsection (l)(a) above.

Compensation for false or misleading prospectus

166

(1) Subject to section 167 below, the person or persons responsible for a prospectus or supplementary prospectus shall be liable to pay compensation to any person who has acquired the securities to which the prospectus relates and suffered loss in respect of them as a result of any untrue or misleading statement in die prospectus or the omission from it of any matter required to be included by section 163 or 164 above.

(2) Where rules applicable to a prospectus by virtue of section 162 above require it to include information as to any particular matter on the basis that the prospectus must include a statement either as to that matter or, if such is the case, that there is no such matter, the omission from the prospectus of the information shall be treated for the purpose of subsection (1) above as a statement that there is no such matter.

(3) Subject to section 167 below, a person who fails to comply with section 164 above shall be liable to pay compensation to any person who has acquired any of the securities in question and suffered loss in respect of them as a result of the failure.

(4) This section does not affect any liability which any person may incur apart from this section.

(5) References in this section to the acquisition by any person of securities include references to his contracting to acquire them or an interest in them.

Exemption from liability to pay compensation

167

(1) A person shall not incur any liability under section 166(1) above for any loss in respect of securities caused by any such statement or omission as is there mentioned if he satisfies the court that at the time when the prospectus or supplementary prospectus was delivered for registration he reasonably believed, having made such enquiries (if any) as were reasonable, that the statement was true and not misleading or that the matter whose omission caused the loss was properly omitted and—

(a) that he continued in that belief until the time when the securities were acquired ; or

(b) that they were acquired before it was reasonably practicable to bring a correction to the attention of persons likely to acquire the securities in question ; or

(c) that before the securities were acquired he had taken all such steps as it was reasonable for him to have taken to secure that a correction was brought to the attention of those persons ; or

(d) that the securities were acquired after such a lapse of time that he ought in the circumstances to be reasonably excused;

but paragraph (d) above does not apply where the securities are dealt in on an approved exchange unless he satisfies the court that he continued in that belief until after the commencement of dealings in the securities on that exchange.

(2) A person shall not incur any liability under section 166(1) above for any loss in respect of securities caused by a statement purporting to be made by or on the authority of another person as an expert which is, and is stated to be, included in the prospectus or supplementary prospectus with that other person's consent if he satisfies the court that at the time when the prospectus or supplementary prospectus was delivered for registration he believed on reasonable grounds that the other person was competent to make or authorise the statement and had consented to its inclusion in the form and context in which it was included and—

(a) that he continued in that belief until the time when the securities were acquired ; or

(b) that they were acquired before it was reasonably practicable to bring the fact that the expert was not competent or had not consented to the attention of persons likely to acquire the securities in question ; or

(c) that before the securities were acquired he had taken all such steps as it was reasonable for him to have taken to secure that that fact was brought to the attention of those persons ; or

(d) that the securities were acquired after such a lapse of time that he ought in the circumstances to be reasonably excused;

(3) Without prejudice to subsections (1) and (2) above, a person shall not incur any liability under section 166(1) above for any loss in respect of any securities caused by any such statement or omission as is there mentioned if he satisfies the court—

(a) that before the securities were acquired a correction or, where the statement was such as is mentioned in subsection (2) above, the fact that the expert was not competent or had not consented had been published in a manner calculated to bring it to the attention of persons likely to acquire the securities in question; or

(b) that he took all such steps as it was reasonable for him to take to secure such publication and reasonably believed that it had taken place before the securities were acquired.

(4) A person shall not incur any liability under section 166(1) above for any loss resulting from a statement made by an official person or contained in a public official document which is included in the prospectus or supplementary prospectus if he satisfies the court that the statement is accurately and fairly reproduced.

(5) A person shall not incur any liability under section 166(1) or (3) above if he satisfies the court that the person suffering the loss acquired the securities in question with knowledge that the statement was false or misleading, of the omitted matter or of the change or new matter, as the case may be.

(6) A person shall not incur any liability under section 166(3) above if he satisfies the court that he reasonably believed that the change or new matter in question was not such as to call for a supplementary prospectus.

(7) In this section " expert" includes any engineer, valuer, accountant or other person whose profession, qualifications or experience give authority to a statement made by him; and references to the acquisition of securities include references to contracting to acquire them or an interest in them.

Persons responsible for prospectus

168

(1) For the purposes of this Part of this Act the persons responsible for a prospectus or supplementary prospectus are—

(a) the issuer of the securities to which the prospectus or supplementary prospectus relates;

(b) where the issuer is a body corporate, each person who is a director of that body at the time when the prospectus or supplementary prospectus is delivered for registration;

(c) where the issuer is a body corporate, each person who has authorised himself to be named, and is named, in the prospectus or supplementary prospectus as a director or as having agreed to become a director of that body either immediately or at a future time ;

(d) each person who accepts, and is stated in the prospectus or supplementary prospectus as accepting, responsibility for, or for any part of, the prospectus or supplementary prospectus;

(e) each person not falling within any of the foregoing paragraphs who has authorised the contents of, or of any part of, the prospectus or supplementary prospectus.

(2) A person is not responsible under subsection (l)(a), (b) or (c) above unless the issuer has made or authorised the offer in relation to which the prospectus or supplementary prospectus was delivered for registration; and a person is not responsible for a prospectus or supplementary prospectus by virtue of subsection (l)(b) above if it is delivered for registration without his knowledge or consent and on becoming aware of its delivery he forthwith gives reasonable public notice that it was delivered without his knowledge or consent.

(3) Where a person has accepted responsibility for, or auth-arised, only part of the contents of any prospectus or supplementary prospectus he is responsible under subsection (l)(d) or (e) above for only that part and only if it is included in (or substantially in) the form and context to which he has agreed.

(4) Where a prospectus or supplementary prospectus relates to securities which are to be issued in connection with an offer by (or by a wholly-owned subsidiary of) the issuer for, or an agreement for the acquisition by (or by a wholly-owned subsidiary of) the issuer of, securities issued by another person or in connection with any arrangement whereby the whole of the undertaking of another person is to become the undertaking of the issuer (of a wholly-owned subsidiary of the issuer or of a body corporate which will become such a subsidiary by virtue of the arrangement) then if—

(a) that other person; and

(b) where that other person is a body corporate, each person who is a director of that body at the time when the prospectus or supplementary prospectus is delivered for registration and each other person who has authorised himself to be named, and is named, in the prospectus or supplementary prospectus as a director of that body,

is responsible by virtue of paragraph (d) of subsection (1) above for any part of the prospectus or supplementary prospectus relating to that other person or to the securities or undertaking to which the offer, agreement or arrangement relates, no person shall be responsible for that part under paragraph (a), (b) or (c) of that subsection but without prejudice to his being responsible under paragraph (d).

(5) Neither paragraph (b) nor paragraph (c) of subsection (1) above nor paragraph (b) of subsection (4) above applies in the case of any director if the prospectus or supplementary prospectus is subject to the rules of an approved exchange by virtue of section 162(3) above and he is certified by the exchange as a person to whom that paragraph should not apply by reason of his having an interest, or of any other circumstances, making it inappropriate for him to be responsible by virtue of that paragraph.

(6) In this section " wholly-owned subsidiary ", in relation to a person other than a body corporate, means any body corporate that would be his wholly-owned subsidiary if he were a body corporate.

(7) Nothing in this section shall be construed as making a person responsible for any prospectus or supplementary prospectus by reason only of giving advice as to its contents in a professional capacity.

(8) Where by virtue of this section the issuer of any shares pays or is liable to pay compensation under section 166 above for loss suffered in respect of shares for which a person has subscribed no account shall be taken of that liability or payment in determining any question as to the amount paid on subscription for those shares or as to the amount paid up or deemed to be paid up on them.

Terms and implementation of offer

169

(1) The Secretary of State may make rules—

(a) regulating the terms on which a person may offer securities by an advertisement to which this Part of this Act applies; and

(b) otherwise regulating his conduct with a view to ensuring that the persons to whom the offer is addressed are treated equally and fairly.

(2) Rules under this section may, in particular, make provision with respect to the giving of priority as between persons to whom an offer is made and with respect to the payment of commissions.

(3) Section 162(2) above shall apply also to rules made under this section.

Advertisements by private companies and old public companies

170

(1) No private company and no old public company shall issue or cause to be issued in the United Kingdom any advertisement offering securities to be issued by that company.

(2) Subsection (1) above shall not apply to an advertisement issued in such circumstances as may be specified by an order made by the Secretary of State for the purpose of exempting from that subsection such advertisements as are mentioned in section 160(6)(a), (b) or (c) above.

(3) An order under subsection (2) above may require any person who by virtue of the order is authorised to issue an advertisement to comply with such requirements as are specified in the order.

(4) An order under subsection (2) above shall be subject to annulment in pursuance of a resolution of either House of Parliament

(5) In this section " old public company " has the meaning given in section 1 of the Companies Consolidation (Consequential Provisions) Act 1985 or the corresponding Northern Ireland provision.

Contraventions

171

(1) An authorised person who—

(a) contravenes section 159 or 160 above or rules made under section 169 above ;

(b) contravenes any requirement imposed by an order under section 160(6) or (7) or 170 above ; or

(c) on behalf of a company issues or causes to be issued an advertisement which that company is prohibited from issuing by section 170 above,

shall be treated as having contravened rules made under Chapter V of Part I of this Act or, in the case of a person who is an authorised person by virtue of his membership of a recognised self-regulating organisation or certification by a recognised pro fessional body, the rules of that organisation or body.

(2) Section 57 above shall apply to a company which issues or causes to be issued an advertisement in contravention of section 170 above as it applies to a person who issues an advertisement in contravention of that section.

(3) A person, other than an authorised person, who contravenes section 159 or 160, the rules made under section 169 or any requirement imposed by an order under section 160(6) or (7) or 170 above shall be guilty of an offence and liable—

(a) on conviction on indictment, to imprisonment for a term not exceeding two years or to a fine or to both;

(b) on summary conviction, to imprisonment for a term not exceeding six months or to a fine not exceeding the statutory maximum or to both.

(4) A person who in the ordinary course of a business other than investment business issues an advertisement to the order of another person shall not be guilty of an offence under subsection (3) above in respect of a contravention of section 159 or 160 above if he proves that he believed on reasonable grounds that neither section 159 nor section 160 above applied to the advertisement or that one of those sections had been complied with in respect of the advertisement.

(5) Without prejudice to any liability under section 166 above, a person shall not be regarded as having contravened section 159 or 160 above by reason only of a prospectus not having fully complied with the requirements of this Part of this Act as to its form and content.

(6) Any contravention to which this section applies shall be actionable at the suit of a person who suffers loss as a result of the contravention subject to the defences and other incidents applying to actions for breach of statutory duty.

PART VI — Takeover Offers

Takeover offers

172

(1) The provisions set out in Schedule 12 to this Act shall be substituted for sections 428, 429 and 430 of the Companies Act 1985.

(2) Subsection (1) above does not affect any case in which the offer in respect of the scheme or contract mentioned in section 428(1) was made before the coming into force of this section.

PART VII — Insider Dealing

Information obtained in official capacity: public bodies

173

(1) In section 2 of the Company Securities (Insider Dealing) Act 1985 (abuse of information obtained by Crown servants in official capacity) for the word " Crown " wherever it occurs there shall be substituted the word " public ".

(2) At the end of that section there shall be added—

(4) ' Public servant * means— (a) a Crown servant; (b) a member, officer or servant of a designated agency, competent authority or transferee body (within the meaning of the Financial Services Act 1986); (c) an officer or servant of a recognised self-regulating organisation, recognised investment exchange or recognised clearing house (within the meaning of that Act); (d) any person declared by an order for the time being in force under subsection (5) to be a public servant for the purposes of this section. (5) If it appears to the Secretary of State that the members, officers or employees of or persons otherwise connected with any body appearing to him to exercise public functions may have access to unpublished price sensitive information relating to securities, he may by order declare that those persons are to be public servants for the purposes of this section. (6) The power to make an order under subsection (5) shall be exercisable by statutory instrument and an instrument containing such an order shall be subject to annulment in pursuance of a resolution of either House of Parliament."

Market makers, off-market dealers etc.

174

(1) In subsection (1) of section 3 of the Company Securities (Insider Dealing) Act 1985 (actions not prohibited by sections 1 and 2 of that Act) at the end of paragraph (c) there shall be inserted the words

; or (d) doing any particular thing in relation to any particular securities if the information— (i) was obtained by him in the course of a business of a market maker in those securities in which he was engaged or employed, and (ii) was of a description which it would be reasonable to expect him to obtain in the ordinary course of that business, and he does that thing in good faith in the course of that business.

(2) At the end of that subsection there shall be inserted—

' Market maker ' means a person (whether an individual, partnership or company) who— holds himself out at all normal times in compliance with the rules of a recognised stock exchange as willing to buy and sell securities at prices specified by him; and is recognised as doing so by that recognised stock exchange.

(3) The existing provisions of section 4 of that Act (off-market deals in advertised securities) shall become subsection (1) of that section and after that subsection there shall be inserted—

(2) In its application by virtue of this section the definition of "market maker" in section 3(1) shall have effect as if the references to a recognised stock exchange were references to a recognised investment exchange (other than an overseas investment exchange) within the meaning of the Financial Services Act 1986.

(4) In section 13 of that Act

(a) in subsection (1) (which defines dealing in securities and provides that references to dealing on a recognised stock exchange include dealing through an investment exchange) the words from " and references " onwards shall be omitted ; and

(b) for subsection (3) (definition of off-market dealer) there shall be substituted—

(3) ' Off-market dealer' means a person who is an authorised person within the meaning of the Financial Services Act 1986.

Price stabilisation

175

For section 6 of the Company Securities (Insider Dealing) Act 1985 (international bonds) there shall be substituted—

(6) (1) No provision of section 1, 2, 4 or 5 prohibits an individual from doing anything for the purpose of stabilising the price of securities if it is done in conformity with rules made under section 48 of the Financial Services Act 1986 and— (a) in respect of securities which fall within any of paragraphs 1 to 5 of Schedule 1 to that Act and are specified by the rules ; and (b) during such period before or after the issue of those securities as is specified by the rules. (2) Any order under subsection (8) of section 48 of that Act shall apply also in relation to subsection (1) of this section.

Contracts for differences by reference to securities

176

After subsection (1) of section 13 of the Company Securities (Insider Dealing) Act 1985 (definition of dealing in securities), there shall be inserted—

(1A) For the purposes of this Act a person who (whether as principal or agent) buys or sells or agrees to buy or sell investments within paragraph 9 of Schedule 1 to the Financial Services Act 1986 (contracts for differences etc.) where the purpose or pretended purpose mentioned in that paragraph is to secure a profit or avoid a loss wholly or partly by reference to fluctuations in the value or price of securities shall be treated as if he were dealing in those securities.

Investigations into insider dealing

177

(1) If it appears to the Secretary of State that there are circumstances suggesting that there may have been a contravention of section 1, 2, 4 or 5 of the Company Securities (Insider Dealing) Act 1985, he may appoint one or more competent inspectors to carry out such investigations as are requisite to establish whether or not any such contravention has occurred and to report the results of their investigations to him.

(2) The appointment under this section of an inspector may limit the period during which he is to continue his investigation or confine it to particular matters.

(3) If the inspectors consider that any person is or may be able to give information concerning any such contravention they may require that person—

(a) to produce to them any documents in his possession or under his control relating to the company in relation to whose securities the contravention is suspected to have occurred or to its securities ;

(b) to attend before them ; and

and it shall be the duty of that person to comply with that requirement.

(4) An inspector may examine on oath any person who he considers is or may be able to give information concerning any such contravention, and may administer an oath accordingly.

(5) The inspectors shall make such interim reports to the Secretary of State as they think fit or he may direct and on the conclusion of the investigation they shall make a final report to him.

(6) A statement made by a person in compliance with a requirement imposed by virtue of this section may be used in evidence against him.

(7) A person shall not under this section be required to disclose any information or produce any document which he would be entitled to refuse to disclose or produce on grounds of legal professional privilege in proceedings in the High Court or on grounds of confidentiality as between client and professional legal adviser in proceedings in the Court of Session.

(8) Nothing in this section shall require a person carrying on the business of banking to disclose any information or produce any document relating to the affairs of a customer unless—

(a) the customer is a person who the inspectors have reason to believe may be able to give information concerning a suspected contravention ; and

(b) the Secretary of State is satisfied that the disclosure or production is necessary for the purposes of the investigation.

(9) Where a person claims a lien on a document its production under this section shall be without prejudice to his lien.

(10) In this section "document" includes information recorded in any form; and in relation to information recorded otherwise than in legible form references to its production include references to producing a copy of the information in legible form.

Penalties for failure to co-operate with s. 177 investigations

178

(1) If any person—

(a) refuses to comply with any request under subsection (3) of section 177 above ; or

(b) refuses to answer any question put to him by the inspectors appointed under that section with respect to any matter relevant for establishing whether or not any suspected contravention has occurred,

the inspectors may certify that fact in writing to the court and the court may inquire into the case.

(2) If, after hearing any witness who may be produced against or on behalf of the alleged offender and any statement which may be offered in defence, the court is satisfied that he did without reasonable excuse refuse to comply with such a request or answer any such question, the court may—

(a) punish him in like manner as if he had been guilty of contempt of the court; or

(b) direct that the Secretary of State may exercise his powers under this section in respect of him ;

and the court may give a direction under paragraph (b) above notwithstanding that the offender is not within the jurisdiction of the court if the court is satisfied that he was notified of his right to appear before the court and of the powers available under this section.

(3) Where the court gives a direction under subsection (2) (b) above in respect of an authorised person the Secretary of State may serve a notice on him—

(a) cancelling any authorisation of his to carry on investment business after the expiry of a specified period after the service of the notice ;

(b) disqualifying him from becoming authorised to carry on investment business after the expiry of a specified period;

(c) restricting any authorisation of his in respect of investment business during a specified period to the performance of contracts entered into before the notice comes into force;

(d) prohibiting him from entering into transactions of a specified kind or entering into them except in specified circumstances or to a specified extent;

(e) prohibiting him from soliciting business from persons of a specified kind or otherwise than from such persons; or

(f) prohibiting him from carrying on business in a specified manner or otherwise than in a specified manner.

(4) The period mentioned in paragraphs (a) and (c) of subsection (3) above shall be such period as appears to the Secretary of State reasonable to enable the person on whom the notice is served to complete the performance of any contracts entered into before the notice comes into force and to terminate such of them as are of a continuing nature.

(5) Where the court gives a direction under subsection (2)(b) above in the case of an unauthorised person the Secretary of State may direct that any authorised person who knowingly transacts investment business of a specified kind, or in specified circumstances or to a specified extent, with or on behalf of that unauthorised person shall be treated as having contravened rules made under Chapter V of Part I of this Act or, in the case of a person who is an authorised person by virtue of his membership of a recognised self-regulating organisation or certification by a recognised professional body, the rules of that organisation or body.

(6) A person shall not be treated for the purposes of subsection (2) above as having a reasonable excuse for refusing to comply with a request or answer a question in a case where the contravention or suspected contravention being investigated relates to dealing by him on the instructions or for the account of another person, by reason that at the time of the refusal—

(a) he did not know the identity of that other person ; or

(b) he was subject to the law of a country or territory outside the United Kingdom which prohibited him from disclosing information relating to the dealing without the consent of that other person, if he might have obtained that consent or obtained exemption from that law.

(7) A notice served on a person under subsection (3) above may be revoked at any time by the Secretary of State by serving a revocation notice on him; and the Secretary of State shall revoke such a notice if it appears to him that he has agreed to comply with the relevant request or answer the relevant question.

(8) The revocation of such a notice as is mentioned in subsection (3)(a) above shall not have the effect of reviving the authorisation cancelled by the notice except where the person would (apart from the notice) at the time of the revocation be an authorised person by virtue of his membership of a recognised self-regulating organisation or certification by a recognised professional body ; but nothing in this subsection shall be construed as preventing any person who has been subject to such a notice from again becoming authorised after the revocation of the notice.

(9) If it appears to the Secretary of State—

(a) that a person on whom he serves a notice under subsection (3) above is an authorised person by virtue of an authorisation granted by a designated agency or by virtue of membership of a recognised self-regulating organisation or certification by a recognised professional body; or

(b) that a person on whom he serves a revocation notice under subsection (7) above was such an authorised person at the time that the notice which is being revoked was served,

he shall serve a copy of the notice on that agency, organisation or body.

(10) The functions to which section 114 above applies shall include the functions of the Secretary of State under this section but any transfer of those functions shall be subject to a reservation that they are to be exercisable by him concurrently with the designated agency and so as to be exercisable by the agency subject to such conditions or restrictions as the Secretary of State may from time to time impose.

PART VIII — Restrictions on Disclosure of Information

Restrictions on disclosure of information

179

(1) Subject to section 180 below, information which is restricted information for the purposes of this section and relates to the business or other affairs of any person shall not be disclosed by a person mentioned in subsection (3) below (" the primary recipient") or any person obtaining the information directly or indirectly from him without the consent of the person from whom the primary recipient obtained the information and if different, the person to whom it relates.

(2) Subject to subsection (4) below, information is restricted information for the purposees of this section if it was obtained by the primary recipient for the purposes of, or in the discharge of his functions under, this Act or any rules or regulations made under this Act (whether or not by virtue of any requirement to supply it made under those provisions).

(3) The persons mentioned in subsection (1) above are—

(a) the Secretary of State;

(b) any designated agency, transferee body or body administering a scheme under section 54 above ;

(d) the Chief Registrar of friendly societies;

(e) the Registrar of Friendly Societies for Northern Ireland ;

(f) the Bank of England ;

(g) any member of the Tribunal;

(h) any person appointed or authorised to exercise any powers under section 94, 106 or 177 above ; and

(i) any officer or servant of any such person.

(4) Information shall not be treated as restricted information for the purposes of this section if it has been made available to the public by virtue of being disclosed in any circumstances in which or for any purpose for which disclosure is not precluded by this section.

(5) Subject to section 180 below, information obtained by the competent authority in the exercise of its functions under Part IV of this Act or received by it pursuant to a Community obligation from any authority exercising corresponding functions in another member State shall not be disclosed without the consent of the person from whom the competent authority obtained the information and, if different, the person to whom it relates.

(6) Any person who contravenes this section shall be guilty of an offence and liable—

(a) on conviction on indictment, to imprisonment for a term not exceeding two years or to a fine or to both ;

(b) on summary conviction, to imprisonment for a term not exceeding three months or to a fine not exceeding the statutory maximum or to both.

Exceptions from restrictions on disclosure

180

(1) Section 179 above shall not preclude the disclosure of information—

(a) with a view to the institution of or otherwise for the purposes of criminal proceedings :

(b) with a view to the institution of or otherwise for the purposes of any civil proceedings arising under or by virtue of this Act or proceedings before the Tribunal;

(c) for the purpose of enabling or assisting the Secretary of State to exercise any powers conferred on him by this Act or by the enactments relating to companies insurance companies or insolvency or for the purpose of enabling or assisting any inspector appointed by him under the enactments relating to companies to discharge his functions;

(d) for the purpose of enabling or assisting the Department of Economic Development for Northern Ireland to exercise any powers conferred on it by the enactments relating to companies or insolvency or for the purpose of enabling or assisting any inspector appointed by it under the enactments relating to companies to discharge his functions;

(e) for the purpose of enabling or assisting a designated agency or transferee body or the competent authority to discharge its functions under this Act or of enabling or assisting the body administering a scheme under section 54 above to discharge its functions under the scheme;

(f) for the purpose of enabling or assisting the Bank of England to discharge its functions under the Banking Act 1979 or any other functions ;

(g) for the purpose of enabling or assisting the Deposit Protection Board to discharge its functions under that Act;

(h) for the purpose of enabling or assisting the Chief Registrar of friendly societies or the Registrar of Friendly Societies for Northern Ireland to discharge his functions under this Act or under the enactments relating to friendly societies or building societies ;

(i) for the purpose of enabling or assisting the Industrial Assurance Commissioner or the Industrial Assurance Commissioner for Northern Ireland to discharge his functions under the enactments relating to industrial assurance;

(j) for the purpose of enabling or assisting the Insurance Brokers Registration Council to discharge its functions under the Insurance Brokers (Registration) Act 1977;

(k) for the purpose of enabling or assisting an official receiver to discharge his functions under the enactments relating to insolvency or for the purpose of enabling or assisting a body which is for the time being a recognised professional body for the purposes of section 391 of the Insolvency Act 1986 to discharge its functions as such;

(l) for the purpose of enabling or assisting the Building Societies Commission to discharge its functions under the Building Societies Act 1986 ;

(m) for the purpose of enabling or assisting the Director General of Fair Trading to discharge his functions under this Act;

(n) for the purpose of enabling or assisting a recognised self-regulating organisation, recognised investment exchange, recognised professional body, or recognised clearing house to discharge its functions as such;

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