Summary Of The Recently Published GFSC Guidance Note In Respect Of Material Changes To A Regulated Firm Or Its Business

• Published date: 04 September 2023
• Subject Matter: Finance and Banking, Corporate/Commercial Law, Financial Services, Corporate and Company Law, Corporate Governance
• Law Firm: ISOLAS
• Author: Mr Christian Caetano

Introduction

The Financial Services Act 2019 (Amendment No. 4) Regulations 2023 were published on Thursday 24th August 2023 and came into operation on the day of publication. The principal effect of these Regulations was to amend Section 83A of the Financial Services Act 2019 (the "FSA").

Pursuant to Section 83A, firms regulated by the Gibraltar Financial Services Commission ("GFSC") are obliged to obtain the GFSC's consent to any material change that they propose to make to either their business plan, financial resources or corporate governance arrangements, insofar as such changes may affect their continuing satisfaction of the FSA's Threshold Conditions.

Core Principles

The obligations under Section 83A complement the 12th Core Principle of the Financial Services (Core Principles) Regulations 2022 (the "12th Core Principle"), which itself requires firms to deal with the GFSC in an open, co-operative and timely way, as well as disclose to the GFSC any matter of which the regulator would reasonably expect notice.

In this respect, it should be noted that the Financial Services (Core Principles) Regulations 2022 are to be revoked and restated by the, also recently published, Financial Services (Core Principles and Consumer Duty) Regulations 2023. The 12th Core Principle will therefore, in practice, remain applicable to GFSC regulated firms under the latter referenced Regulations.

Section 83A Consent Applications to the GFSC

In accordance with Section 83A, firms are required to assess and determine whether a proposed change to its business plan, financial resources or corporate governance meets the relevant criteria in Section 83A. Where a firm considers that the criteria has been satisfied, then an application for consent must be submitted to the GFSC.
Such applications must be submitted to the GFSC by way of the new GFSC Consent Application Form, together with all supporting documents. Following receipt of a duly completed application, the GFSC would then undertake an initial assessment of whether the proposed change falls within scope of Section 83A. The GFSC will assess each consent application on a case-by-case basis and will have regard in its assessment to all matters that it considers relevant.

GFSC Assessment Process

As part of its initial assessment, the GFSC will also consider any further assessments which it may be obliged to undertake depending on the extent of the proposed change(s), including whether a variation of a firm's Part 7 Permission...