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Update to General Licensing Policy 4 May 2007

The Financial Supervision Commission has today published a revised version of its General Licensing Policy for those seeking a banking, investment business or fiduciary services licence. Three aspects of the policy have been revised:

1. 2006 Act Companies

Companies registered under the Companies Act 2006 (“2006 Act companies”) may be licensed as investment businesses or fiduciaries, subject to specified requirements to ensure an appropriate level of transparency and corporate governance, which would be applied through binding licence conditions.

2006 Act companies may not hold banking licences, because such companies can reduce their share capital without the need to apply to the Courts.

The Insurance and Pensions Authority is also examining the possible uses of 2006 Act companies for businesses authorised or registered by the Authority with a view to permitting their use in certain circumstances and with appropriate safeguards in place to ensure comparable levels of transparency and corporate governance. The Authority will be issuing further details in this regard shortly.

These restrictions on 2006 Act companies will apply only to licence applicants and licenceholders, and not to other 2006 Act companies.

2. Sole Traders and Partnerships

Existing sole trader and partnership licenceholders may continue to operate. However, the Commission has decided to cease to licence new sole traders or partnerships (except for a restricted category of fiduciary licence that is designed for natural persons only).

3. Custodians of Collective Investment Schemes

Custodians of certain types of collective investment scheme may now operate under a category 3 group (b) or a category 5 investment business licence.

The Commission is currently consulting the fund management industry in relation to the use of 2006 Act companies as vehicles for the operation of collective investment schemes.

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