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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