Section 1267: Competent Authority’s power to call for information
1621. Section 1267 inserts three new sections into Part 6 of FSMA: sections 89H to 89J.
1622. New section 89H permits the Authority to call for information from specified persons, set out in subsection (2), including issuers of shares and their auditors and directors, and voteholders and their auditors, directors and persons controlling or controlled by voteholders.
1623. Subsection (3) limits the Authority to requesting information and documents reasonably required in connection with the transparency rules. Subsection (4) enables the Authority to determine the timeframe for production and provision of information, and the location for the information to be provided. Subsection (5) makes it clear that the production of the material as required by this section does not affect any lien on a document.
1624. New section 89I sets outs the requirements connected with the Authority’s power to call for information. The Authority will be empowered to specify the form of the information or documents it calls for under section 89H (1), and may require its authentication or verification (subsection (2)). The Authority is permitted, under subsection (3), to take copies of and extracts from the documentation provided, and may also require the persons providing the information, or any “relevant person” within the meaning of subsection (4) (which includes directors, auditors, actuaries, accountants, lawyers and employees), to submit an explanation of any documentation produced.
1625. If a person fails to comply with the requirement to produce a document, the Authority is permitted under subsection (5) to require a person to state where the document is.
1626. New section 89J sets out the supplementary provisions in relation to the competent authority’s power to call for information in sections 89H and 89I.
Section 1268: Powers exercisable in case of infringement of transparency obligation
1627. Section 1268 inserts four new sections into Part 6 of FSMA: sections 89K to 89N.
1628. The four new sections set out the Authority’s powers in case of infringement of transparency obligations. Section 89K enables the Authority to make a public statement if an issuer is failing or has failed to comply with its obligations. It may only do so after it has issued a warning notice to the issuer (subsection (2)), and after any representations from the issuer, it has provided the issuer with a decision notice (subsection (3)). Subsection (4) requires the Authority to provide the issuer with notice that it has a right to refer the matter to the Tribunal.
1629. New section 89L gives the Authority the power, in certain circumstances, to suspend or prohibit trading of securities admitted to trading on a regulated market, or to request the market operator to suspend or prohibit such trading. The powers are to be used where the Authority suspects (subsections (2) and (3)) or finds (subsection 4) applicable breaches of transparency obligations. The Authority’s powers to request a market operator to prohibit trading could be used where and issuer whose home member State is the UK is listed in another EEA State.
1630. Section 89M sets out the procedures relating to the suspension and prohibition powers of the Authority set out in section 89L.
1631. New section 89N sets out the right for those who receive a decision notice or a notice under section 89M to refer matters to the Tribunal.
Section 1269: Corporate governance rules
1632. Section 1269 inserts new section 89O into FSMA which gives the Authority a power (under Part 6 of FSMA) to make rules implementing, enabling the implementation of or dealing with matters arising out of Community obligations on corporate governance of issuers on a regulated market.
1633. This rule-making power will enable the Authority to make corporate governance rules to cover issuers for whom the UK is the home member State, and whose securities are traded on a regulated market in the UK or elsewhere in the EEA.
1634. Subsection (2) sets out the type of corporate governance provision covered by this rule making power. These include:
• the nature, constitution or functions of the organs of issuers;
• the manner in which organs of the issuer conduct themselves;
• the requirements imposed on organs of the issuer;
• the relationship between the different organs of the issuer;
• the relationship between the organs of the issuer and the members of the issuer (or holders of the issuer's securities).
1635. Subsection (3) provides that greater burdens must not be imposed by corporate governance rules on issuers whose securities are traded outside the UK than those imposed by corporate governance rules or listing rules on issuers with securities on UK markets.
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