The Uncertificated Securities Regulations 1992

• (a) the information referred to in section 179(2) was information relating to the business or other affairs of any person obtained by a person mentioned in paragraph

• (3) for the purposes of, or in the discharge of his functions under, these Regulations or provisions made under them (whether or not by virtue of any requirement to supply it made under these Regulations or those provisions);

• (b) the persons mentioned in section 179(3) were those mentioned in paragraph (3);

• (c) the references in section 180(1)(b), (h) and (m) to the 1986 Act included reference to these Regulations or provisions made under them;

• (d) the reference in section 180(1)(b) to proceedings before the Tribunal included a reference to proceedings on a matter referred to it under or by virtue of these Regulations;

• (e) the reference in section 180(1)(e)(iii) to the body administering a scheme established under section 54 of the 1986 Act included a reference to any person administering a scheme established under regulation 10 1;

• (f) the reference in section 180(1)(p) to a person appointed under section 106 of the 1986 Act included a reference to a person appointed under that section as it applies by virtue of regulation 110; and

• (g) the reference in section 180(1)(q) to an auditor of an authorised person or a person approved under section 108 of the 1986 Act included reference to an auditor of a participant or a person approved under section 108 of the 1986 Act as it applies by virtue of regulation 98.

• (3) The persons mentioned in paragraph (2) are:

• (a) the Secretary of State;

• (b) the Operator;

• (c) the Director General of Fair Trading;

• (d) any person administering a scheme established under regulation 105;

• (e) any member of the tribunal;

• (f) the Complaints Commissioner;

• (g) any person appointed to exercise functions under section 106 of the 1986 Act as it applies by virtue of regulation 110;

• (h) any designated agency; and

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

• (4) Section 179 of the 1986 Act as it applies by virtue of paragraph (2) shall not preclude the disclosure by any person of information for the purposes of enabling or assisting a person to discharge functions under these Regulations, or in compliance with the lawful requirements of an insolvency practitioner or the official receiver; nor shall section 179 itself preclude the disclosure of information by any person for the purposes of enabling or assisting a person to discharge functions under these Regulations.

• (5) Section 181 of the 1986 Act shall apply to information relating to the business or other affairs of any person which was obtained (whether or not by virtue of any requirement to supply it) directly or indirectly by the Operator or any person appointed to exercise any powers under section 106 of the 1986 Act as it applies by virtue of regulation 110 (or any officer or servant of the Operator or any such person) for the purposes of or in the discharge of any functions under these Regulations or provisions made under them as it applies to information of the kind mentioned in section 181(3) of the 1986 Act.

Data protection

114

Section 190 of the 1986 Act shall apply as if in subsection (a) the reference to a self-regulating organisation included a reference to the Operator, and as if the reference to the functions there mentioned included a reference to functions relating to admission to the system, termination of participation, the imposition of restrictions, and the replacement and supervision of participants.

Restriction of Rehabilitation of Offenders Act 1974

115

Section 189 of the 1986 Act shall apply as if in Schedule 14 to that Act:

• (a) Part I (exempted proceedings) included a reference to proceedings with respect to admission to the system, termination of participation, the imposition of restrictions, and the replacement and supervision of participants;

• (b) Part II, first column (exempted questions) included a reference to the Operator, and the second column thereof included a reference to a participant an applicant for participation and an individual who is an associate of such participant or applicant (whether or not an individual);

• (c) Part III, paragraph 1, first column (exempted actions) included a reference to the Operator; and

• (d) Part II, paragraph 4, first column (exempted questions) and Part III, paragraph 2, first column (exempted actions) included a reference to a participant and an applicant for participation.

Duties to be actionable

116

• (1) Unless otherwise provided in these Regulations (and in particular subject to paragraph (2)) any duty imposed on a person (other than the Secretary of State or the Director General of Fair Trading) by virtue of these Regulations is a duty owed by him:

• (a) to any person to whom the duty is stated as being owed, or

• (b) failing any such statement, to any person who may be affected by a failure to perform the duty,

and a breach of the duty is actionable (subject to the defences and other incidents applying to actions for breach of statutory duty and to paragraph (3)).

• (2) A duty imposed on the Operator by, or relating to the matters dealt with in, the following provisions of these Regulations shall not be actionable under paragraph (1): Parts II (other than regulation 4(a)), IX, X, XII and XIV.

• (3) No person shall be regarded as being in breach of any duty imposed on that person by virtue of these Regulations if and to the extent that compliance by that person with the duty is, in all the circumstances, impossible.

• (4) Where any duty imposed by virtue of these Regulations on a person, being a body corporate, has been breached, and it is established that any officer of the body or any person who was purporting to act in that capacity knowingly and wilfully participated in the breach, that person shall be jointly and severally liable with the body corporate for the breach.

Operator’s exemption from liability for damages

117

• (1) Section 187(4) of the 1986 Act shall apply to the Operator and to its officers, servants and agents in the exercise of their regulatory functions under these Regulations as it does to the functions mentioned in that section.

• (2) In this regulation “regulatory functions” means any functions under, or relating to the matters dealt with in, Parts II (other than regulation 4(a)), IX, X, XII and XIV.

Breach of duty not to avoid transactions

118

The breach of any duty imposed on any person by these Regulations does not, unless otherwise provided, of itself invalidate any transfer of a unit of a security (or the entitlement to it) effected or other act done in contravention of, or as a consequence of the contravention .of, that duty.

Memorandum and articles of a company to he subject to the provisions of Regulations

119

• (1) For the purposes of section 14 of the 1985 Act (Effect of memorandum and articles) the provisions of these Regulations, in so far as they concern members of the company, shall be regarded as provisions of the 1985 Act and accordingly the provisions of the memorandum and articles of association of a company shall have effect subject to the provisions of these Regulations, so far as applicable.

• (2) Where the shares, or any class of shares, of a company have been converted into, or issued in, uncertiticated form under the provisions of Part IX of these Regulations the board of directors of the company may by resolution alter the memorandum and articles of association of the company in so far as may be necessary to remove any inconsistency between the memorandum or those articles of association and these Regulations.

• (3) Where any alteration is made in a company’s memorandum or articles under this regulation, a copy of the resolution of the directors concerned, together with a copy of the memorandum or articles as amended, shall be delivered to the registrar of companies for registration not later than 10 working days after the resolution of the board of directors concerned is passed.

Subsection (3) of section 18 of the 1985 Act shall have effect in relation to a breach of the requirement in this paragraph as it applies in relation to a breach of that section.

Terms of issue of securities

120

• (1) The terms of issue of a security may make additional provision with respect to the holding and transfer of units of the security under these Regulations and in relation to the holding and transfer of entitlements to such units.

This regulation is without prejudice to regulation 81(2).

• (2) The holder of an entitlement to a unit of an uncertiticated security and a person for whom it is held shall be bound by the terms of issue of the security applicable to such holder or person respectively.

In particular the holder. of an entitlement to a share in a company and the person for whom it is held shall be bound by the terms of the memorandum and articles of the company applicable to such holder or person respectively.

Consequential provisions

121

Schedule 8 to these Regulations has effect so as to make provision.consequential on and further to these Regulations.

Transitional provisions

122

Schedule 9 to these Regulations shall have effect with respect to the transitional matters therein mentioned.

Application to Northern Ireland

123

In the application of these Regulations to Northern Ireland:

• (a) in regulations 16, 84(5), 119(1) and paragraph 1 of Schedule 8 references to the 1985 Act include references to the 1986 Order;

• (b) in regulation 18(2):

• (i) for the reference to section 53(1)(c) of the Law of Property Act 1925 there is substituted a reference to section 6 of the Statute of Frauds (Ireland) 1695[^f00016];

• (ii) for the reference to section 136 of the Law of Property Act 1925 there is substituted a reference to section 87 of the Judicature (Northern Ireland) Act 1978[^f00017];

• (c) in regulation 2(1), in the definitions of “insolvency practitioner” and “official receiver”, the references respectively to sections 388 and 399 of the Insolvency Act 1986 include a reference respectively to Articles 3 (disregarding paragraph thereof) and 2 of the Insolvency (Northern Ireland) Order 1989[^f00018] and in regulation 47 the reference to that Act includes a reference to that Order;

• (d) in regulation 69(2) for the reference to section 4 of the Powers of Attorney Act 1971 there is substituted a reference to section 3 of the Powers of Attorney Act (Northern Ireland) 1971[^f00019];

• (e) in regulation 64(4) the reference to the Interpretation Act 1978 included a reference to the Interpretation Act (Northern Ireland) 1954;

• (f) references to provisions of the 1985 Act are references to the equivalent provisions of the 1986 Order and in particular for the references to the 1985 Act listed in column 1 of Schedule 10 to these Regulations in the provisions of these Regulations listed in column 2 of that Schedule there is substituted the references to the 1986 Order listed in column 3 of that Schedule; and

• (g) references to the Companies Acts include references to the Companies Orders.

SCHEDULE 1 — COMPANY CONTROLLERS: FURTHER PROVISIONS

Transfers of entitlements held by a primary company controller effected by the company

1

• (1) A company may at any time effect a transfer of any entitlements to units of an uncertificated security of the company held by a primary company controller (in his or its capacity as such controller) to another primary company controller appointed by the company, to hold those entitlements for those persons for whom they were held by the first mentioned controller. The transfer may be effected by the company amending its record of entitlements so as to debit the first mentioned controller and credit the second mentioned, without the necessity of the company obtaining any notification of a transaction or consent from the first mentioned controller.

• (2) It shall be the duty of the first mentioned controller, and (where a body corporate) of any officer of it (and of any insolvency practitioner appointed in relation to that controller), to preserve and deliver up to the company as soon as practicable a copy of the record of account holders relating to the entitlements transferred together with all other records and documents held by the controller which relate to those entitlements (in particular copies of any instructions received by the controller under regulation 34).

It is also the duty of such a person to notify the company of any entitlements to which regulations 34, 51, 52 or 53 apply.

• (3) Any transfer under this paragraph shall be without prejudice to any claim the first mentioned controller may have for breach of contract or to any claim that may exist against that controller.

Transfers of entitlements held, by an alternative company controller at the direction of the company

2

• (1) A company which has appointed an alternative company controller may at any time give notice to the Operator that it is terminating that appointment.

• (2) The Operator shall, within 5 working days of its receipt of such a notice or such other time as the Operator may have agreed with the company, effect a transfer of any entitlements to units of an uncertificated security of the company held by the alternative company controller concerned (in his or its capacity as such controller) to such other alternative company controller as may have been nominated by the company or (failing such a nomination) to a primary company controller, such controller having a duty to hold those entitlements for those persons for whom they were held by the first mentioned controller.

The transfer may be effected by the Operator amending its record of entitlements so as to debit the first mentioned controller and either:

• (a) (where the transfer is to another alternative company controller) crediting the controller to which the entitlements are being transferred; or

• (b) (where the transfer is to a primary company controller) notifying the company of the debiting of the first mentioned controller,

without (in either case) the necessity of the Operator obtaining a notification of a transaction or any consent to the transfer from the first mentioned controller.

Having received a notification under (b), the company shall forthwith amend its own record of entitlements so as to credit the entitlements concerned to a primary company controller.

• (3) It shall be the duty of the first mentioned controller, and (where a body corporate) of any offer of it and of any insolvency practitioner appointed in relation to that controller, to preserve and deliver up to the company as soon as practicable a copy of the record of account holders relating to the entitlements transferred together with all other records and documents held by the controller which relate to those entitlements (in particular copies of any instructions received by the controller under regulation 34).

It is also the duty of such a person to notify the company of any entitlements to which regulations 34, 51, 52 or 53 apply.

• (4) Any transfer under this paragraph shall be without prejudice to any claim the first mentioned controller may have for breach of contract or to any claim that may exist against that controller.

Effect of transfer of entitlements

3

• (1) Where under paragraph 1 or 2 of this Schedule a company or (as the case may be) the Operator transfers entitlements from one company controller to another, any instructions received by the first mentioned controller with regard to those entitlements prior to the transfer which have not been acted upon at the time of transfer may (and in the case of instructions received under regulation 34 shall) be treated as instructions received by the other controller, to the extent that satisfactory evidence of them is obtained by the other controller and the other controller is satisfied that he or it has established the number of entitlements to be held for the account holder concerned.

Where the other controller has reason to believe that an entitlement transferred is or may be one to which regulation 34,51,52 or 53 applies, it shall take reasonable steps to ascertain whether or not the entitlement is subject to the regulation in question.

• (2) A company or, as the case may be, the Operator may treat consents and notifications of transactions with respect to an entitlement given by a replaced company controller before the transfer as being given on behalf of the replacement controller.

Where this sub-paragraph is taken advantage of by a company or the Operator, the replacement controller shall not be liable for any defect in, or lack of authority for, the giving of the consent or notification.

• (3) A standing instruction to register given by a replaced company controller shall be treated as having been given on behalf of the replacement controller; the replacement controller shall not, however, be liable for any defect in such an instruction to register solely by reason of the provisions of this sub-paragraph.

• (4) For the purposes of these Regulations, a company controller’s appointment shall be deemed to continue until a transfer of entitlements held by him or it has been effected.

• (5) It shall be the duty of any replacement controller which has received any records, or copies of records, under this Schedule, to permit their inspection and copying by any person who is an officer of the replaced controller or any insolvency practitioner who is appointed in relation to that controller or the official receiver.

• (6) As soon as practicable after a transfer under this Schedule has been effected, the company concerned shall inform any account holders concerned of the transfer and the identity of the con-troller to whom the entitlements have been transferred.

SCHEDULE 2 — MAINTENANCE OF APPROPRIATE REGISTER: GENERAL PROVISIONS

Register of members

1

• (1) Section 352 of the 1985 Act shall apply with respect to such part of a company’s register of members as concerns uncertificated shares, save that:

• (a) subsection (2)(b) shall only apply where a person is registered other than at a periodic update of the register;

• (b) subsection (2)(c) shall not apply; and

• (c) the following sub-paragraph shall have effect in place of section 352(6).

• (2) A company shall keep for a period of 20 years a copy of each periodic revision hereunder of its register of members.

• (3) Section 358 of the 1985 Act shall not apply with respect to such part of a company’s register of members as concerns uncertificated shares.

Register of debenture holders

2

Section 191 of the 1985 Act shall apply with respect to a register of debenture holders maintained under section 190 of that Act to the extent that that register concerns uncertificated debentures as if:

• (a) the words “except when duly closed” in subsection (1); and

• (b) sub-section (6)

were omitted.

SCHEDULE 3 — REGISTER EVENTS

Security	Matters to be determined by appropriate register
Shares	The members of the company eligible to receive any dividend or distribution or other benefit or to be granted any right by reference to:
	—the fact of their membership of the company (or of any particular class of shareholder) or
	—the number of shares (or of a particular class) held by them, and the number of shares (where relevant) in relation to which the member is so eligible.
	The members of the company entitled to receive (whether generally or as the holders of any particular class of shares) any document required by or under any enactment, or by the memorandum or articles of association of the company, to be sent to the members by the company or its directors.
	The members of the company who are eligible to exercise any right vested in the holders of the company’s shares (or any class of the same) which falls to be exercised on a particular date (whether or not that right may also be exercised at an earlier date), including the right to vote at any meeting of the company (or at any class meeting), and the number of shares (where relevant) in relation to which the member is so eligible.
	The members of the company who are to be affected by any subdivision or consolidation of the company’s share capital (or of any class of the same) and the number of shares in relation to which the member is so affected.
Debentures	The debenture holders eligible to receive any payment of interest or principal or other benefit or to be granted any right by reference. to the fact of their being debenture holders, or the number of debentures held by them, and the number of debentures (where relevant) in relation to which the holder is so eligible.
	The debenture holders entitled to receive any document required by any enactment, or by the terms of issue of the debentures, to be sent to the debenture holders by the company or its directors.
	The debenture holders who are eligible to exercise any right vested in the holders of the debentures which falls to be exercised on a particular date (whether or not that right may also be exercised at an earlier date), including the right to vote at any meeting of the holders of the debentures, and the number of debentures (where relevant) in relation to which the holder is so eligible.
Other types of securities	The holders of the security eligible to receive any distribution, payment of interest or principal or other benefit or to be granted any right by reference to the fact of their being holders of the security, or the number of units of the security held by them, and the number of units (where relevant) in relation to which the holder is so eligible.
	The holders of the security entitled to receive any document required by any enactment, or by the terms of issue of the security, to be sent to the holders of the security by the company or its directors.
	The holders of the security who are eligible to exercise any right vested in the holders of the security which falls to be exercised on a particular date (whether or not that right may also be exercised at an earlier date), including the right to vote at any meeting of the holders of the security, and the number of units of the security (where relevant) in relation to which the holder is so eligible.

SCHEDULE 4 — FORM OF CONVERSION CERTIFICATE: CERTIFICATED SECURITY INTO UNCERTIFICATED SECURITY

Certificate of conversion of certificated [security] [securities] into uncertificated [security] [securities] pursuant to Part IX of the Uncertificated Securities Regulations 1992.

SCHEDULE 5 — FURTHER PROVISION WITH RESPECT TO CONVERSION OF CERTIFICATED AND ISSUE OF UNCERTIFICATED SECURITIES

PART I — CONVERSION

Instruments of transfer received late

1

• (1) Any proper instrument of transfer received by the company after the relevant date (within the meaning of regulation 75(6)) but prior to conversion (subject to any direction that may have been given by the Operator under that regulation) shall be sent by the company to the company controller or controllers who are to hold or who are holding the entitlements to the units concerned, who shall treat the instrument as if it were an instruction under regulation 33 to hold any entitlements concerned to the person named therein as transferee.

• (2) Any such instrument received after conversion shall cease to have effect; the company shall inform the person lodging such an instruction as soon as reasonably practicable of this fact.

Communications received early

2

Any communication of whatsoever nature purportedly received or sent in accordance with the system with respect to units of the security prior to the conversion of the security may be taken by the recipient as though the communication were received or sent immediately after con-version, except for the purposes of regulation 68.

Pledged securities (England and Wales and Northern Ireland)

3

• (1) This paragraph applies so as to enable a person (“the pledgee”) holding a certificate to a unit of the security, with or without a signed instrument of transfer, as security for any obligation under the law of England and Wales or Northern Ireland to obtain equivalent security upon con-version.

• (2) A pledgee of a unit of the security of a company may, at any time prior to the conversion being effected but after the publication of the first notice published under regulation 75, notify the company in writing of his interest in the unit, attaching to the notice a certified copy of the certificate to the unit and of any instrument of transfer held.

• (3) It is the duty of a company in receipt of a notification under sub-paragraph (2) to ensure that, on or before the conversion of the security, the controller which holds the entitlement to the unit:

• (a) (where the notification attaches a copy certificate only) is informed of the pledgee’s interest in the unit; or

• (b) (where the notification attaches a copy certificate and copy signed instrument of transfer) is given a copy of the notification and its enclosures.

A controller:

• (i) informed of a pledgee’s interest under sub-paragraph (a) shall be under a duty to inform the pledgee that he or it is on notice of the interest (together with the date on which he or it was informed of the interest) and not to transfer any relevant entitlements held for the account holder concerned, or act upon any instructions received under regulation 33 in relation to such entitlements, without giving 14 days prior notice to the pledgee of his or its intention to do so; or

• (ii) in receipt of a notification, copy certificate and copy signed instrument of transfer under sub-paragraph (b) shall treat the notification as an instruction of the kind referred to in regulation 34.

• (4) It shall be lawful for a pledgee to make a notification under this paragraph without having obtained the consent of the holder of the unit.

• (5) In this paragraph “pledgee” means any person interested by way of security in a unit by reason of the deposit of the certificate to it, including an equitable mortgagee and “certified copy” means a copy certified as a true copy by a notary, notary public or other person authorised by law, in the place where the pledgee has a place of business or (being an individual) resides or (being a body corporate) is incorporated, to administer oaths or authenticate documents.

• (6) This paragraph applies notwithstanding any provision in any agreement to the contrary.

Existing certificates

4

Notwithstanding regulation 48(2), any certificate properly extant at the moment of conversion shall remain (if it otherwise would be) prima facie evidence, and in Scotland sufficient evidence unless the contrary is shown, of the title to the unit immediately prior to its conversion.

Existing agreements for transfer

5

Where at the date of conversion there is a contract for the transfer of a unit of the security which has, by that date, not been completed by the registration of the transferee as the holder of the unit in question, regulations 48(3) and 49 shall have effect with respect to that contract unless paragraph 1 of this Schedule applies.

Existing rights to transfer and existing transmissions by operation of law

6

• (1) Where a circumstance has occurred prior to the date of conversion which would have been a relevant circumstance, within the meaning of regulation 51, had the security then been in uncertificated form, that regulation shall apply as if the relevant circumstance had occurred immediately after conversion.

• (2) Where the company has actual knowledge of the circumstance the company shall give notice of it to any controller which is to hold the entitlement to the unit at the moment of conversion and regulation 51 shall apply with any necessary modifications.

Existing restrictions on transfer

7

• (1) This paragraph applies where, immediately prior to the date of conversion, there is extant in relation to any unit of the certificated security concerned any injunction, interdict or other Order to which regulation 52 would, if the security concerned had been an uncertificated security at the time of the making of the injunction, interdict or Order, have applied.

• (2) Where this paragraph applies the company shall give notice of the injunction, interdict or Order (if on actual notice of it) and its terms to the controller which is to hold the entitlement to the unit at the moment of conversion and regulation 52 shall apply with any necessary modifications.

Existing prohibitions 011 transfer

8

• (1) This paragraph applies where, immediately prior to the date of conversion, there is extant in relation to any unit of the certificated security concerned any restriction to which regulation 53 would, if the security concerned had been an uncertificated security at the time of the imposition of the restriction, have applied.

• (2) That regulation shall apply as if the restriction had occurred immediately after conversion.

• (3) The company shall give notice of the restriction (if on actual notice of it) and its terms to the controller which is to hold the entitlement to the unit at the moment of conversion.

Application of provisions in memoranda and articles and terms of issue

9

• (1) This paragraph applies to any provision (in the case of shares) in a company’s memorandum and articles of association, or (in the case of any security) in the terms of issue of the security, under which in certain circumstances any person specified may transfer, of their own authority, shares or other units of a security registered in the name of a person to another person, but is subject to any contrary provision that may be made in such provision.

• (2) A provision to which this paragraph applies shall be construed (if it would not otherwise be) as a provision to to which regulation 51 applies.

PART II — ISSUE

Communications received early

10

Any communication of whatsoever nature purportedly received or sent in accordance with the system with respect to units of an uncertificated security prior to the issue of the units may be taken by the recipient as though the communication were received or sent immediately after their issue except for the purposes of regulation 68.

SCHEDULE 6 — FORM OF CONVERSION CERTIFICATE: UNCERTIFICATED SECURITY INTO CERTIFICATED SECURITY

Certificate of conversion of uncertificated [security] [securities] into certificated [security] [securities] pursuant to Part X of the Uncertificated Securities Regulations 1992.

SCHEDULE 7 — FURTHER PROVISION WITH RESPECT TO CONVERSION OF UNCERTIFICATED INTO CERTIFICATED SECURITIES

Communications received

1

Any communication of whatsoever nature purportedly received or sent by any person in accordance with the system with respect to units of the security to be converted after the date selected by the Operator under regulation 85(2) shall not have effect (unless expressly provided otherwise in these Regulations).

Conditional instructions in connection with the giving of security

2

Where a controller has issued or is required under Part X to issue proper instructions to register with respect to a unit of an uncertiticated security which is in the process of conversion into certificated form, and the entitlement to that unit is one with respect to which an instruction is outstanding of the kind referred to in regulation 34, he or it shall notify the company of that fact as soon as reasonably practicable; where the company receives such notice the company shall nonetheless execute the relevant instruction to register in accordance with its terms, but the company shah send the certificate for the unit concerned to the person it is notified by the controller is the person specified in the instruction under regulation 34 and shall not, pending the receipt of the certificate by that person, certify a transfer of that unit under section 184 of the 1985 Act.

Existing agreements for transfer

3

Where at the date of conversion there is a contract for the transfer of a unit of a security which has, by that date, not been completed by the registration of the transferee as the holder of the units in question, regulations 48(3) and 49 shall cease to have effect with respect to that contract and such terms shall be taken as being implied into that contract as would have been implied if it had been entered into after conversion of the security into certificated form.

Existing restrictions on transfer

4

• (1) This paragraph applies where, immediately prior to the date of conversion, there is extant in relation to any unit of the certificated security concerned any injunction, interdict or other Order to which regulation 52 applies.

• (2) The controller shall give notice of the injunction, interdict or other Order and its terms to the company prior to conversion.

Existing prohibitions on transfer

5

• (1) This paragraph applies where, immediately prior to the date of conversion, there is extant in relation to any unit of the certificated security concerned any restriction to which regulation 53 applies.

• (2) A controller which has a restricted entitlement (within the meaning of that regulation) shall notify the company of the restriction and its terms (unless the restriction was imposed as a con-sequence of actions taken by the company).

SCHEDULE 8 — CONSEQUENTIAL AND FURTHER PROVISIONS

Entitlement as an interest in a share

1

For the purposes of the following provisions of the 1985 Act, the interest an account holder has in an entitlement to a share (that is to say the right, under these Regulations, to enforce the performance of the controller’s duties in connection with the entitlement) shall be treated as an interest in the share itself:

• (a) Part VI; and

• (b) sections 324 to 326, 328 and 346, together with Schedule 13.

References to instruments of transfer and their execution

2

References in any enactment or instrument:

• (a) to an instrument of transfer with respect to any units of securities shah include a reference to an instruction to a controller holding entitlements to the units under regulation 33 or any other instruction required from the transferor, under these Regulations, in order that a unit of a security be transferred; and

• (b) to the execution of such an instrument shall include a reference to the transferor of a unit of a security giving such an instruction.

Contents of annual return

3

Section 364A of the 1985 Act shah apply to a company any of whose shares are uncertificated with the following modifications:

• (a) in place of the information required by sub-section (4)(b), the annual return of the company shall.contain a list of the names and addresses of every person who has appeared on the register of members of the company at some point in the period since the date to which the last annual return was made up (or, in the case of the first return, since the incorporation of the company) and who is not a member of the company on the date to which the return is made up; and

• (b) in place of the information required by sub-section (S)(b), the annual return of the company shall state the number of shares (if any) by which the holding of each member and each person referred to in sub—paragraph (a) has increased or diminished at each periodic update of the register of members since the date to which the last annual return was made up (or, in the case of the first return, since the incorporation of the company) and the date of each update concerned.

Share warrants to hearer

4

• (1) For the purposes of these Regulations as they apply to shares of a company, any share warrants to bearer issued under section 188 of the 1985 Act shall be regarded as forming a separate class of certificated shares.

• (2) Accordingly shares of a class in respect of which such warrants are in issue are to be converted by a resolution of the holders of the registered shares only and not the holders of any warrants in issue.

• (3) A company may continue to issue such warrants notwithstanding that the shares concerned are uncertificated, but only where the entitlement to the share in respect of which the warrant is proposed to be issued is held by a primary company controller.

Section 355 of the 1985 Act shall continue to apply.

• (4) Upon the issue of such a warrant with respect to a share the company shall instruct the primary company controller to cease to hold the relevant entitlement for the account holder and the company shall strike the relevant entitlement from its record of entitlements.

Paragraph 8 of this Schedule shall apply with any necessary modifications.

• (5) Upon the surrender of a warrant with respect to a share the company shall instruct the primary company controller to hold an entitlement to the share concerned for the person registered as its holder and the company shall credit the entitlement to the share concerned to the controller in its record of entitlements.

Regulation 82(1) shall apply with any necessary modifications,

Overseas brand registers

5

• (1) For the purposes of these Regulations as they apply to shares of a company, any share registered in an overseas branch register to which section 362 of the 1985 Act applies shall be regarded as forming a separate class of certificated shares.

• (2) Accordingly shares of a class in respect of which such shares are in issue are to be converted by a resolution of the holders of the shares registered on the register maintained by the company under section 352 of the 1985 Act (“the principal register”) only and not the holders of shares registered on the overseas branch register.

• (3) Paragraph 2(2) of Schedule 14 to the 1985 Act shall apply in such a case as if the principal register were maintained only in accordance with the 1985 Act and not in accordance with these Regulations.

• (4) A company may only transfer the registration of a share between an overseas branch register and the principal register where the entitlement to the share is or will be held by a primary company controller.

• (5) Upon the transfer of a share to an overseas branch register the company shall instruct the primary company controller concerned to cease to hold an entitlement for the relevant account holder and the company shall strike the entitlement from its record of entitlements.

Paragraph 8 of this Schedule shall apply with any necessary modifications.

• (6) Upon the transfer of a share to the principal register the company shall instruct a primary company controller to hold an entitlement to the share for the person registered or to be registered as its holder and the company shall credit the entitlement to the share concerned to the controller in its record of entitlements.

Regulation 82(1) shall apply with any necessary modifications.

Requirements to deliver up certificate

6

• (1) A provision of any enactment or instrument which requires, for any purpose, a certificate to be delivered up for cancellation or inspection shall be construed, in connection with a unit of an uncertificated security, as requiring a statement from the controller holding the entitlement to the unit, certified by him or it to be a true statement, that he or it holds the entitlement for the person registered as the holder as at the date on which the certificate is to be delivered up (specifying it) and that he has no reason to believe that the entitlement is to a restricted unit within the meaning of regulation 53.

It is the duty of a controller:

• (a) to provide such a statement upon the request of an account holder, provided he or it has received such information as he or it may reasonably require that the statement is required; and

• (b) to ensure that the statement is accurate.

• (2) If a certified statement has been issued by a controller under this paragraph, he or it shall not consent to the transfer of, or act upon any instruction under regulation 33 in relation to, an entitlement covered by the statement, unless the statement is returned to the controller for cancellation.

• (3) A certified statement given under this paragraph shall be prima facie evidence, and in Scotland sufficient evidence unless the contrary is shown, of the fact that the entitlement is held for the person concerned as at the date specified.

Registration of controller’s default nominee

7

• (1) This paragraph applies where, by virtue of any provision of these Regulations (other than regulation 38 as it applies with respect to a refusal of registration under regulation 21), a controller’s default nominee is registered in that capacity as the holder of any unit of a security.

• (2) Unless otherwise provided (in the case of shares) in a company’s articles of association or (in the case of any security) in the terms of issue of such security, a period during which an account holder of a controller is omitted from the appropriate register for an uncertificated security as a consequence of the registration of that controller’s default nominee shall be treated, for the purposes of any qualifying period for any benefit or the exercise of any right conferred by the articles or (as the case may be) the terms of issue, as a period during which the account holder was registered as holder of the relevant number of units.

For this purpose the relevant number of units are those units which the account holder was registered with (on the instructions of the controller concerned) immediately prior to the registration of the default nominee.

Cancellation &c of a unit of a security

8

• (1) Where for any reason a unit of a security ceases to be in issue, the entitlement to that unit shall cease to exist.

• (2) Where any units of a security are consolidated into one unit or a unit is subdivided, the entitlements to those units shall be consolidated into one entitlement or (as the case may be) be subdivided into entitlements to the subdivided units.

Modifications of Part XIIIA of the 1985 Act

9

• (1) Where an offeror (as defined in section 428 of the 1985 Act) proposes to give a notice to any holder of uncertificated shares under section 429 or section 430A(3) of the 1985 Act it shall inform the company of that fact and the company shall, within 2 working days, issue a general call for instructions, specifying such date (being a date which may be the subject of a general call for instructions) as the offeror shall request as the date by reference to which the register of members is to be updated (save that such a general call shall not be issued if the date requested is a fixed register date with respect to the shares).

• (2) Within 3 working days of receipt of proper instructions to register received in response to the general call, the company shall update its register of members and supply a copy of the same to the offeror.

• (3) The offeror shall be entitled to rely on that copy of the register of members for the purposes of sending out any notice under the provisions of Part XIIIA notwithstanding the fact that such a register may include the name of any controller’s default nominee.

• (4) Section 430(6) of the 1985 Act shall not apply in the case of a takeover offer (as defined in section 428 of the 1985 Act) in relation to uncertificated shares.

• (5) Section 430(5) shall be construed in the case of a takeover offer for uncertificated shares (or such part of a takeover offer as relates to uncertificated shares) as requiring the notice referred to in that subsection to be sent to the Operator and the company.

• (6) In addition to sending the notice referred to in section 430(5) of the 1985 Act the offeror shall notify the Operator and the company of the name of the controller which is to hold the entitlements to the shares to which the notice relates (“the offeror’s controller”).

• (7) The receipt of the notices under paragraphs (5) and (6) by the Operator has the same effect as if the Operator had:

• (a) received a notification of a transaction under which the entitlements to the shares to which the notice relates are to be transferred to the offeror’s controller; and

• (b) obtained the consent to the transfer of those entitlements from any controller concerned.

• (8) Where the offeror’s controller is a primary company controller, the company shall send any notice received by it under paragraphs (5) and (6) to such controller and, if it has more than one, to each of its primary company controllers and the receipt of the notice:

• (a) by the company, where the company has more than one such controller, has the same effect as if it had:

• (i) received a notification of a transaction under which any entitlements to the shares to which the notice relates which are held by another primary company controller are to be transferred to the offeror’s controller; and

• (ii) obtained the consent to the transfer of those entitlements from any controller concerned; and

• (b) by the offeror’s controller has the same effect as if it had received an instruction under regulation 33 under which any entitlements to the shares to which the notice relates which are held by it are to be held for the offeror.

• (9) In the case of uncertificated shares, any communication referred to in sections 430(3)(a), 430A(1) or 430A(2) may be made, where the entitlements concerned are held by a commercial controller, by means of the Operator’s part of the system instead of in writing.

Relationship of Regulations to 1985 Act

10

In sections 704(5), 706(1), 707(1), 707A(1), 708(1)(a) and (4), 709(1) and (3) of the 1985 Act, references to the Companies Acts shall include these Regulations (“Regulations” here excluding any rules made under regulation 112).

SCHEDULE 9 — TRANSITIONAL PROVISIONS

Existing resolutions

1

• (1) A special resolution passed by the company prior to the coming into force of these Regulations which authorises the directors of the company to convert securities of the company into uncertificated form, and to issue units of securities in such form, under any Regulations that might be made by the Secretary of State under section 207 of the 1989 Act shall be regarded as an enabling resolution for the purposes of Part IX of these Regulations.

• (2) An extraordinary resolution passed by the holders of a security prior to the coming into force of these Regulations which authorises the directors of the company to convert the security into an uncertiticated security in accordance with any Regulations that might be made by the Secretary of State under section 207 of the 1989 Act, without the necessity of any further resolution being passed and notwithstanding that the rights and obligations of a holder of a security may be thereby affected, shall be regarded as a relevant resolution for the purposes of regulation 75; provided that no resolution shall be so regarded if, in addition to conversion, it deals with any other business.

Inconsistent provisions of existing instruments

2

Any provision in any instrument constituting the terms of issue of a security which has been executed prior to the Secretary of State giving his consent under regulation 5 which is inconsistent with the terms of these Regulations:

• (a) shall not be construed as preventing the conversion of the security into uncertificated form; and

• (b) where the security is converted into uncertificated form, shall cease to have effect to the extent that it is inconsistent with these Regulations.

SCHEDULE 10 — ADAPTATIONS IN RESPECT OF NORTHERN IRELAND

Column 1	Column 2	Column 3
Reference to the 1985 Act	Provision of these Regulations	Reference to the 1986 Order
Section 14	Regulation 84(5), 119(1)	Article 25
Section 18	Regulation 119	Article 29
Section 24	Regulation 61(7)	Article 34
Section 182	Regulation 18(2)	Article 192
Section 183	Regulation 18(2)	Article 193
Section 184	Paragraph 2 of Schedule 7	Article 194
Section 185	Regulation 48(1)	Article 195
Section 186	Regulation 48(2)	Article 196
Section 188	Paragraph 4(1) of Schedule 8	Article 198
Section 190	Paragraph 2 of Schedule 2	Article 199
Section 191	Regulation 91(2); paragraph 2 of Schedule 2	Article 200
Part VI	Regulation 23, paragraph 1(1) of Schedule 8	Part VII
Section 262	Regulation 29(2)	Article 270
Sections 324 to 326, 328 and 346, together with Schedule 13	Regulation 23(1), paragraph l(1) of Schedule 8	Articles 332 to 334, 336 and 354 together with Schedule 13
Section 346	Regulation 29(2)	Article 354
Section 352	Regulations 2, 9(8), 56, 73(1); paragraph l(1) of Schedule 2; paragraph 5(2) of Schedule 8	Article 360
Section 353	Regulations 26(1), 26(3)	Article 361
Section 355	Paragraph 4(3) of Schedule 8	Article 363
Section 356	Regulation 26(2), 26(3)	Article 364
Section 357	Regulation 26(3)	Article 365
Section 358	Paragraph 1(3) of Schedule 2	Article 366
Section 359	Regulation 73	Article 367
Section 360	Regulation 67(2)	Article 368
Section 362	Paragraph 5(1) of Schedule 8	Article 370
Section 364A	Paragraph 3 of Schedule 8	Article 372A
Section 380	Regulations 77(2), 89(4)	Article 388
Section 402	Regulation 91(1)	Article 410
Part XIIIA	Paragraph 9 of Schedule 8	Part XIVA
Section 428	Paragraph 9(1) and (4) of Schedule 8	Article 421
Section 429	Paragraph 9(1) of Schedule 8	Article 422
Section 430	Regulation 112, Paragraph 9 of Schedule 8	Article 423
Section 430A	Paragraph 9 of Schedule 8	Article 423A
Section 430B	Regulation 112	Article 423B
Sections 706(1), 707(1), 707A(1), 708(1)(a) and (4), 709(I) and (3)	Paragraph 10 of Schedule 8	Articles 655(1), 656(1), 6561(1), 657(1)(a), 658(1) and (3)
Section 723A	Regulation 26	Article 627A
Section 735	Regulation 2	Article 3
Paragraph 2 of Schedule 14	Paragraph 5 of Schedule 8	Paragraph 2 of Schedule 14

Signed

John Redwood — Minister for Corporate Affairs, — 11th February 1992

Explanatory note

(This note is not part of the Regulations)

1 These Regulations make provision for the transfer of title to a unit of a security of a company (for example a share or a debenture) and the evidencing of such title without a written instrument in accordance with a computer-based system of procedures devised by the London Stock Exchange and known as Taurus. These computer-based procedures are enshrined in the procedures set out in these Regulations, together with additional procedures and requirements to be contained in rules made under them (in the Regulations the procedures so set out are known as “the system”). A security, units of which are transferred under the Regulations, is known in them as an “uncertificated security”.

2 The new procedures centre round a power, known in the Regulations as an “entitlement”, to issue instructions to register a person as the holder of a unit of an uncertificated security. This power will be conferred upon persons known as “controllers” in the Regulations, whose function (and duty) is to hold entitlements, and to exercise them, on behalf of their clients (who are known as “account holders” in the Regulations)—in particular to instruct their clients' registration as the holders of the underlying units of securities. Whether or not a particular controller has the power to register a person as holder of a particular unit of an uncertificated security is to be determined by whether it is recorded as holding that entitlement on a “record of entitlements”. The entitlements held by a controller are held to the order of the clients for whom they hold them. The entitlements are themselves transferable by book entries in records of entitlements.

3 Title to a unit of an uncertificated security is transferred, under the Regulations, as a consequence of the registration by the issuing company of a person on the register of holders of the security in question (known as “the appropriate register”), in response to an instruction (known as “a proper instruction to register”) issued by a controller. The Regulations require the appropriate register to be updated periodically, rather than continuously, as consequence of the fact that proper instructions to register need only identify the transferee of a unit and not its transferor (and therefore there is a need for the instructions to be given with respect to a specified date).

4 The new procedures depend upon the existence of a person known as “the Operator” who is to provide or stipulate for the computer-based facilities for the operation of the major part of the system and is to operate that part (the part being known in the Regulations as “the Operator’s part of the system”). As this part of the system is computer-based, provision is made in the Regulations as to the reliance that can be placed on electronic communications passing through it which purport to be given by, or on behalf of, persons. It will be possible under the system to transfer units of a security by dealing directly with company-appointed controllers without involving the Operator; the paper-based procedures for doing so constitute the other part of the system.

5 The Operator in addition has conferred on it, or is the potential recipient of a delegation of, certain ancillary functions, such as functions with respect to the admission of securities and participants into the system.

6 Part I of the Regulations defines certain terms for the Regulations as a whole and deals with the delegation of functions to the Operator.

7 Part II of the Regulations, in Chapter I, makes provision with respect to the commencement of the operation of the system and the supervision of the Operator. Chapter II of Part II makes provision with respect to how controllers become authorised to hold entitlements on behalf of account holders and related matters. Two types of controllers are provided for in the Regulations, controllers appointed by the company to act without charge for investors (known as “company controllers”) and controllers who are to perform their functions for investors on a commercial basis under contract (known as “commercial controllers”). A person using a commercial controller is required to appoint that controller as his agent for the effecting of certain communications through the Operator’s part of the system. Chapter III of the Part makes provisions for persons (known as “approved persons”) who have the function under the Regulations of being the means whereby instructions may be given to company controllers through the Operator’s computer-based procedures. Otherwise such controllers receive instructions in writing. (Commercial con-trollers and their account holders make their own arrangements by contract.)

8 Part III of the Regulations sets out how the title to a unit of an uncertiticated security is transferred and recorded. Regulation 16 provides that the holders of the units of an uncertificated security are to continue to be recorded in the register appropriate for that security. Regulation 17 provides that that register (if it would not otherwise be) is to be prima facie evidence of title. Regulation 18 provides that transfers of units of an uncertificated security may only be effected in accordance with the Regulations. Regulation 19 provides that the transfer of title to a unit of an uncertificated security is effected by registration of a person on the appropriate register as transferee in response to a proper instruction to register. Regulation 20 defines a proper instruction to register as an instruction to register containing certain particulars which is issued by a controller holding the entitlement to the unit concerned (in most cases) at the date by reference to which the register is made up. Regulation 21 requires a company to act upon a proper instruction to register when received, save in certain limited circumstances.

9 Part IV of the Regulations makes provision for entitlements and their transfer. It also deals with the relationship between a controller and its account holders. Regulation 22 defines what an entitlement is and provides that a record of entitlements maintained by the Operator or a company under regulations 24 or 25 is to be conclusive (except in certain limited circumstances) of whether a controller has an entitlement. Regulations 30 to 32 deal with the transfer of entitlements where such transfer is required to give effect to an underlying transaction with respect to a unit of a security (because transferor and transferee of the security are account holders of different controllers). Regulation 33 makes provision where no transfer of an entitlement is necessary to give effect to an underlying transaction with respect to a unit of security, because both transferor and transferee are, or are to be, clients of the same controller. Regulation 34 permits equitable mortgages to be created under the uncertificated procedures under the law of England and Wales and Northern Ireland, notwithstanding the fact that no certificates are in issue which may be deposited with a lender.

10 Part V of the Regulations makes further provision with respect to registration and the maintenance of the appropriate register for an uncertificated security. Chapter I puts a duty on controllers to issue proper instructions to register in certain circumstances and deals with the consequences where they fail to do so, or issue too many instructions. Chapter II deals with the maintenance of an appropriate register, requiring that it be updated periodically, though allowing intermediate registrations where a transferor is in fact identified in a proper instruction to register. It provides that the register must be updated upon the occurrence of certain events (by the company calling for the issue of proper instructions to register) and in any event at least once in every five weeks. Chapter III of the Part makes provision with respect to the updating of an appropriate register where the company concerned is being wound up.

11 Part VI of the Regulations makes a number of ancillary provisions necessitated by the creation of uncertificated securities. It excludes certain inconsistent requirements of enactments and rules of law, implies certain terms into contracts for the transfer of units of an uncertificated security, ensures that trustees may hold (consistently with their duties) units of such a security and deals with circumstances under which there is a transfer of a unit of an—uncertificated security or rights in relation to it by operation of law, the imposition of a restriction on its transfer as a result of a court order and a prohibition on its transfer under an enactment.

12 Part VII of the Regulations makes further provision with respect to the Operator, controllers and other participants in the system. It in particular contains provisions dealing with the management by the Operator of the system, the making of communications by means of the system and for persons known as “default nominees” of controllers (whose function it is to be registered as the holder of a unit of an uncertiticated security where a controller for any reason fails to issue a proper instruction to register in respect of the unit or the company, for any lawful reason, refuses to act upon a proper instruction to register). It also makes provision with respect to service of documents on the Operator and controllers and with respect to statements of account to be sent by controllers to their account holders.

13 Part VIII of the Regulations makes a number of provisions with respect to the procedures and records and registers to be maintained under the Regulations. Amongst other things, it allows rectification of records and registers by the person maintaining them or by court order.

14 Part IX of the Regulations makes provision with respect to the conversion of certificated securities into uncertificated securities transferable under the Regulations. Conversion is effected by the signature of a certificate by two Directors or a Director and Secretary. It is however the duty of a company not to convert any securities inter alia unless (save in certain defined cases) it has made adequate preparations and two resolutions have been passed by a three quarters majority: one by the shareholders of the company approving the entry of any securities of the company into the system, the other by the holders of the security to be converted consenting to the conversion.

15 Part X of the Regulations makes provision for the re-conversion of uncertificated securities into certificated securities. Procedures are established for voluntary re-conversion and also (in certain circumstances) for compulsory re-conversion (for example where the holders of an uncertiticated security have resolved upon conversion or a company has failed to perform its functions under the Regulations with respect to the security).

16 Part XI of the Regulations makes special provision for certain securities and for interests in securities. It, inter alia, enables issues of debentures to be transferred under the Regulations (provided that those debentures have certain characteristics) and enables interests in units of securities to be transferred in the same manner as units of the securities themselves.

17 Part XII of the Regulations concerns the admission and supervision of participants in the system.

18 Part XIII deals with investigations and complaints in respect of the system. It provides for the appointment of a Complaints Commissioner to investigate complaints, for him to make reports and for references to the Financial Services Tribunal to consider findings made by the Complaints Commissioner upon the application of persons aggrieved.

19 Part XIV makes provision for a compensation scheme for those persons who have suffered loss as a result of the failure of a participant to perform functions under the Regulations. Payment under the scheme is to be made in certain defined circumstances.

20 Part XV makes miscellaneous and general provisions. It permits the charging of fees and makes provision for competition scrutiny of the system. Regulation 112 empowers the making of rules inter alia providing for ancillary and supplementary procedures and requirements. Regulation 116 provides that any duty imposed by the Regulations is actionable as a breach of statutory duty, subject to the usual defences. However, Regulation 118 provides that any breach of duty is not to avoid any act done in contravention of the duty. Certain consequential and transitional provisions are made and regulation 123 adapts the Regulations in so far as they apply to the law of Northern Ireland.

Footnotes

[^f00001]: 1989 c. 40.

[^f00002]: 1971 c. 62.

[^f00003]: 1985 c. 6.

[^f00004]: 1986 c. 60.

[^f00005]: S.I. 1986/1032 (N.I.6).

[^f00006]: 1978 c. 30.

[^f00007]: 1954 c. 33 (N.I.)

[^f00008]: 1986 c. 45.

[^f00009]: The Financial Services Tribunal was established by section 95 of the 1986 Act.

[^f00010]: 1971 c. 80.

[^f00011]: Section 192 of the Financial Services Act 1986 (c. 60) was substituted by section 201 of the Companies Act 1989 (c. 40).

[^f00012]: 1925 c. 20.

[^f00013]: 1921 c. 58.

[^f00014]: 1971 c. 27.

[^f00015]: Regulation 3(10) makes equivalent provision where power to make rules under this regulation is delegated tothe Operator.

[^f00016]: 1695 c. 12 (Ir.).

[^f00017]: 1978 c. 23.

[^f00018]: S.I. 1989/2405 (N.I. 19).

[^f00019]: 1971 c. 33 (N.I.).