New Regime For Change Of Control Of Insurance Companies
(2007/44/EC) (the "Directive") applies to persons
seeking to gain influence/control over authorised firms in the
insurance, banking and securities sectors. Concerns have been
expressed about integration and perhaps a reluctance to effect
cross-border mergers and acquisitions as a result of differing
approaches across the EU. Implementation must take place across
Member States by 21 March 2009.
The change of control regime in the United Kingdom
The change of control regime under the Financial Services and
Markets Act 2000 is well established but has not been without its
critics. For example, it is often not clear to parties when an
application has started and the fact of the application itself
means building in a potential 3 month delay to any proposed change
of control, in effect stalling the M&A process.
Whilst in our experience this problem is generally mitigated by
the FSA coming back with a decision well within the 3 month
timeframe, an expedited process is not guaranteed.
The Directive
This particular issue is dealt with head-on in the Directive
with a 60 working day deadline for the relevant supervisory
authority to make its assessment. This 60 working days period can
only be interrupted once for the regulator to ask for additional
information, and such interruption may last for no more than 20
days. Further requests for information can be made by the regulator
but these will not "stop the clock".
An exhaustive list of assessment criteria is also set out within
the Directive. The criteria include consideration of the reputation
of the potential acquirer, the reputation and experience of those
who will direct the business of the target post acquisition, the
financial position of the acquirer and any potential increase of
money laundering or terrorist financing.
Supervisory authorities cannot use any other criteria. This is
designed to meet head-on the charge that some Member States might
use a change of control regime in a political manner to reject
applications that are not viewed as being in their national
interest. In our view, however, the criteria set out in the
Directive are not specific enough to limit the charge that the
rejection has been made on spurious grounds against the spirit of
the Directive.
Implementation in the UK
A consultation paper issued in September 2008 gave an indication
of how the Directive will be implemented in the United Kingdom.
Please follow the following link to the consultation paper:
http://www.fsa.go...
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