The Uncertificated Securities Regulations 2001

PART 5 — MISCELLANEOUS AND SUPPLEMENTAL

MISCELLANEOUS

Construction of references to transfers etc.

37

References in any enactment or rule of law to a proper instrument of transfer or to a transfer with respect to securities, or any expression having like meaning, shall be taken to include a reference to an Operator-instruction to a participating issuer to register a transfer of title on the relevant issuer register of securities in accordance with the Operator-instruction.

Certain formalities and requirements not to apply

38

• (1) Any requirements in an enactment or rule of law which apply in respect of the transfer of securities otherwise than by means of a relevant system shall not prevent—

• (a) an Operator from registering a transfer of title to uncertificated units of a security upon settlement of a transfer of such units in accordance with his rules; or

• (b) an Operator-instruction from requiring a participating issuer to register a transfer of title to uncertificated units of a security.

• (2) Subject to regulation 32(7), notwithstanding any enactment, instrument or rule of law, a participating issuer shall not issue a certificate in relation to any uncertificated units of a participating security.

• (3) A document issued by or on behalf of a participating issuer purportedly evidencing title to an uncertificated unit of a participating security shall not be evidence of title to the unit of the security; and in particular—

• (a) section 768 of the 2006 Act shall not apply to any document issued with respect to uncertificated shares; and

• (b) regulation 9(3) of the 2004 Regulations and regulation 6(3) of the 1974 Regulations shall not apply to any document issued with respect to uncertificated units of a public sector security.

• (4) Any requirement in or under any enactment to endorse any statement or information on a certificate evidencing title to a unit of a security—

• (a) shall not prohibit the conversion into, or issue of, units of the security in uncertificated form; and

• (b) in relation to uncertificated units of the security, shall be taken to be a requirement for the relevant participating issuer to provide the holder of the units with the statement or information on request by him.

• (5) Sections 53(1)(c) and 136 of the Law of Property Act 1925 (which impose requirements for certain dispositions and assignments to be in writing) shall not apply (if they would otherwise do so) to—

• (a) any transfer of title to uncertificated units of a security by means of a relevant system; and

• (b) any disposition or assignment of an interest in uncertificated units of a security title to which is held by a relevant nominee.

• (6) In paragraph (5) “relevant nominee” means a subsidiary undertaking of an Operator designated by him as a relevant nominee in accordance with such rules and practices as are mentioned in paragraph 25(f) of Schedule 1.

• (7) Section 772 of the 2006 Act shall not apply in relation to the transfer of uncertificated units of a security by means of a relevant system.

Fees charged by Operators

39

• (1) Subject to paragraph (2), nothing in these Regulations prevents an Operator from charging a fee for carrying out any function under Part 3 of these Regulations.

• (2) An Operator may not charge a fee to a participating issuer for maintaining or keeping and entering up an Operator register of securities.

Trusts, trustees and personal representatives etc.

40

• (1) Unless expressly prohibited from transferring units of a security by means of any computer-based system, a trustee or personal representative shall not be chargeable with a breach of trust or, as the case may be, with default in administering the estate by reason only of the fact that—

• (a) for the purpose of acquiring units of a security which he has the power to acquire in connection with the trust or estate, he has paid for the units under arrangements which provide for them to be transferred to him from a system-member but not to be so transferred until after the payment of the price;

• (b) for the purpose of disposing of units of a security which he has power to dispose of in connection with the trust or estate, he has transferred the units to a system-member under arrangements which provide that the price is not to be paid to him until after the transfer is made; or

• (c) for the purpose of holding units of a security belonging to the trust or estate in uncertificated form and for transferring title to them by means of a relevant system, he has become a system-member.

• (2) Notwithstanding sections 750 and 751 of the 2006 Act, a trustee of a trust deed for securing an issue of debentures shall not be chargeable with a breach of trust by reason only of the fact that he has assented to an amendment of the trust deed only for the purposes of—

• (a) allowing the holding of debentures in uncertificated form;

• (b) allowing the exercise of rights attaching to the debentures by means of a relevant system; or

• (c) allowing the transfer of title to the debentures by means of a relevant system,

provided that he has given or caused to be given notice of the amendment in accordance with the trust deed not less than 30 days prior to its becoming effective to all persons registered as holding the debentures on a date not more than 21 days before the dispatch of the notice.

• (3) Without prejudice to regulation 23(3) or section 126 of the 2006 Act, the Operator shall not be bound by or compelled to recognise any express, implied or constructive trust or other interest in respect of uncertificated units of a security, even if he has actual or constructive notice of the said trust or interest.

• (4) Paragraph (3) shall not prevent, in the case of a participating issuer constituted under the law of Scotland, an Operator giving notice of a trust to the participating issuer on behalf of a system-member.

Notices of meetings etc.

41

• (1) For the purposes of determining which persons are entitled to attend or vote at a meeting, and how many votes such persons may cast, the participating issuer may specify in the notice of the meeting a time, not more than 48 hours before the time fixed for the meeting, by which a person must be entered on the relevant register of securities in order to have the right to attend or vote at the meeting.

• (2) Changes to entries on the relevant register of securities after the time specified by virtue of paragraph (1) shall be disregarded in determining the rights of any person to attend or vote at the meeting, notwithstanding any provisions in any enactment, articles of association or other instrument to the contrary.

• (3) For the purposes of—

• (a) serving notices of meetings, whether under section 310(1) of the 2006 Act, any other enactment, a provision in the articles of association or any other instrument; or

• (b) sending copies of the documents required to be sent to any person by section 423(1) of the 2006 Act,

a participating issuer may determine that persons entitled to receive such notices, or copies of such documents (as the case may be), are those persons entered on the relevant register of securities at the close of business on a day determined by him.

• (4) The day determined by a participating issuer under paragraph (3) may not be more than 21 days before the day that the notices of the meeting, or the copies of the documents as the case may be, are sent.

• (5) This regulation is without prejudice to the protection afforded—

• (a) by paragraph 5(3) of Schedule 4, to a participating issuer which is a company; and

• (b) by paragraph 13(4) or 15(3) of Schedule 4, to a participating issuer.

• (6) In calculating the period mentioned in paragraph (1) above no account shall be taken of any part of a day that is not a working day.

Notices to minority shareholders

42

• (1) Paragraphs (2) to (4) shall apply in relation to any uncertificated units of a security (other than a wholly dematerialised security) to which a notice given under section 979 of the 2006 Act relates, in place of the provisions of section 981(7) of that Act.

• (2) Immediately on receipt of a copy sent under section 981(6)(a) of the 2006 Act of a notice given under section 979 relating to uncertificated units of a participating security (whether or not it also relates to certificated units of the security), a company which is a participating issuer shall—

• (a) by issuer-instruction—

• (i) inform the Operator that the copy notice has been received, and

• (ii) identify the holding of uncertificated units of the participating security to which the notice relates; and

• (b) enter the name of the relevant system-member on an issuer register of securities as the holder of those uncertificated units.

• (3) On receipt of an issuer-instruction under paragraph (2)(a), the Operator shall delete any entry in an Operator register of securities which shows the relevant system-member as the holder of the uncertificated units of the participating security to which the notice relates.

• (4) On registration on an issuer register of securities (in accordance with paragraph (2)(b)) of the relevant system-member as the holder of the uncertificated units of the participating security to which the notice relates, the participating issuer—

• (a) shall be under the same obligation to enter the offeror on that register as the holder of those units, in place of the relevant system-member, as it would be if it had received an Operator-instruction under regulation 28(2) requiring it to register a transfer of title to those units in that manner; and regulation 28(9) shall have effect accordingly; and

• (b) where the terms of issue of the security in question provide for a certificate to be issued, shall issue to the offeror a certificate in respect of those units.

• (5) Subsection (1) of section 776 of the 2006 Act shall apply in relation to the issue of a certificate by a participating issuer pursuant to paragraph (4)(b) as it applies in relation to the completion and having ready for delivery by a company of share certificates, debentures or certificates of debenture stock; and in that subsection as it so applies the reference to the date on which a transfer is lodged with the company shall be a reference to the date on which the participating issuer receives the copy notice sent under section 981(6)(a) of the 2006 Act.

• (6) Such sanctions as apply to a company and its officers in the event of a default in complying with subsection (1) of section 776 of the 2006 Act shall apply to a participating issuer and his officers in the event of a default in complying with paragraph (4)(b) in accordance with the requirements laid down in paragraph (5).

• (7) Paragraphs (8) to (11) shall apply in relation to any units of a wholly dematerialised security to which a notice given under section 979 of the 2006 Act relates, in place of the provisions of section 981(7) of that Act.

• (8) Immediately on receipt of a copy sent under section 981(6)(a) of the 2006 Act of a notice given under section 979 relating to units of a wholly dematerialised security, a company which is a participating issuer shall—

• (a) by issuer-instruction—

• (i) inform the Operator that the copy notice has been received; and

• (ii) identify the holding of units of the wholly dematerialised security to which the notice relates; and

• (b) by a further issuer-instruction, inform the Operator of the name of the transferee.

• (9) On receipt of an issuer-instruction under paragraph (8)(a), the Operator shall delete any entry in an Operator register of securities which shows the relevant system-member as the holder of the units to which the notice relates.

• (10) On receipt of an issuer-instruction under paragraph (8)(b), the Operator shall enter the transferee on the relevant Operator register of securities as the holder of the units to which the notice relates, in place of the relevant system-member.

• (11) Where an Operator deletes an entry in an Operator register of securities pursuant to paragraph (9)—

• (a) the units of the wholly dematerialised security to which the notice relates shall notwithstanding that deletion, continue to be regarded as uncertificated units for the purposes of these Regulations until the Operator enters the transferee on the relevant Operator register of securities as the holder of those units;

• (b) subject to—

• (i) subparagraph (c) or (d), as the case may be; and

• (ii) any enactment or rule of law,

the relevant system-member shall, notwithstanding that deletion, retain title to the units of the wholly dematerialised security to which the notice relates until the transferee is entered on the relevant Operator register of securities pursuant to paragraph (10);

• (c) in the case of a security constituted under the law of England and Wales or Northern Ireland, the transferee shall acquire an equitable interest in the units of the wholly dematerialised security to which the notice relates;

• (d) in the case of a security constituted under the law of Scotland, the relevant system-member shall hold the units of the wholly dematerialised security to which the notice relates on trust for the benefit of the transferee.

• (12) Such sanctions as apply to a company and its officers in the event of a default in complying with subsections (1) and (2) of section 771 of the 2006 Act shall apply—

• (a) to a participating issuer and his officers in the event of a default in complying with paragraph (2)(b) or (8); and

• (b) to an Operator and his officers in the event of a default in complying with paragraph (3), (9) or (10).

• (13) For the purposes of this regulation—

• (a) “offeror” has the meaning in section 991(1) of the 2006 Act;

• (b) “relevant system-member” means the system-member identified in the copy notice sent under section 981(6)(a) of the 2006 Act as the holder of the uncertificated units, or as the case may be the units of the wholly dematerialised security, to which the notice relates; and

• (c) “transferee” means the offeror or, if the offeror is not a system-member, the system-member in whose name the units of the wholly dematerialised security to which the notice given under section 979 of the 2006 Act relates are to be registered on the Operator register of securities.

• (14) The reference in section 987(8) of the 2006 Act to section 981(7) shall be taken to include a reference to the provisions of paragraphs (4), (8) and (9).

Irrevocable powers of attorney

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• (1) This regulation applies where the terms of an offer for all or any uncertificated units of a participating security provide that a person accepting the offer creates an irrevocable power of attorney in favour of the offeror, or a person nominated by the offeror, in the terms set out in the offer.

• (2) An acceptance communicated by properly authenticated dematerialised instruction in respect of uncertificated units of a security shall constitute a grant of an irrevocable power of attorney by the system-member accepting the offer in favour of the offeror, or person nominated by the offeror, in the terms set out in the offer.

• (3) Where the contract constituted by such offer and acceptance as are referred to in paragraphs (1) and (2) respectively is governed by the law of England and Wales, section 4 of the Powers of Attorney Act 1971[^f00014] shall apply to a power of attorney constituted in accordance with this regulation.

• (4) A declaration in writing by the offeror stating the terms of a power of attorney and that it has been granted by virtue of this regulation and stating the name and address of the grantor shall be prima facie evidence, and in Scotland sufficient evidence unless the contrary is shown, of the grant; and any requirement in any enactment, rule of law, or instrument to produce a copy of the power of attorney, or such a copy certified in a particular manner, shall be satisfied by the production of the declaration or a copy of the declaration certified in that manner.

• (5) In the application of this regulation to an offer, acceptance or contract governed by the law of Scotland, any reference to an irrevocable power of attorney shall mean and include reference to an irrevocable mandate, however expressed.

Actual notice

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For the purpose of determining under these Regulations whether a person has actual notice of a fact, matter or thing that person shall not under any circumstances be taken to be concerned to establish whether or not it exists or has occurred.

Participating securities issued in uncertificated form

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Nothing in these Regulations shall require—

• (a) a participating issuer or its officers to maintain a register which records how many units of a wholly dematerialised security are held in certificated form; or

• (b) an Operator or participating issuer, or their officers, to take any action to change a unit of a wholly dematerialised security from uncertificated form to certificated form or vice versa.

DEFAULTS AND CONTRAVENTIONS

Breaches of statutory duty

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• (1) A default in complying with, or a contravention of, regulation 16(8), 19(2), 25(1), 26, 28(5) or (6), 32(5), 33(5), or 42(2) or (8) shall be actionable at the suit of a person who suffers loss as a result of the default or contravention, or who is otherwise adversely affected by it, subject to the defences and other incidents applying to actions for breach of statutory duty.

• (2) Paragraph (1) shall not affect the liability which any person may incur, nor affect any right which any person may have, apart from paragraph (1).

Liability of officers for contraventions

47

• (1) In regulation 16(7), 20(7), 21(5), 22(5), 28(9), 32(9) or (10), 33(11) or 42(6) or (12) an officer of a participating issuer shall be in default in complying with, or in contravention of, the provision mentioned in that regulation if, and only if, he knowingly and wilfully authorised or permitted the default or contravention.

• (2) In regulation 20(7), 21(4), 22(4), 27(9), 32(9), 33(11) or 42(12) an officer of an Operator shall be in default in complying with, or in contravention of, the provision mentioned in that regulation if, and only if, he knowingly and wilfully authorised or permitted the default or contravention.

Exemption from liability

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Regulations 21(5), 28(9), 32(9) and (10), and 33(11) shall not apply to any of the following or its officers—

• (a) the Crown;

• (b) any person acting on behalf of the Crown;

• (c) the Bank of England;

• (d) the Registrar of Government Stock;

• (e) any previous Registrar of Government Stock; or

• (f) in respect of a security which immediately before it became a participating security was transferable by exempt transfer within the meaning of the Stock Transfer Act 1982, a participating issuer.

NORTHERN IRELAND

Application to Northern Ireland

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• (1) In their application to Northern Ireland, these Regulations shall have effect with the following modifications.

• (2) In regulation 38(5)—

• (a) for the reference to section 53(1)(c) of the Law of Property Act 1925 there shall be substituted a reference to section 6 of the Statute of Frauds (Ireland) 1695[^f00016]; and

• (b) for the reference to section 136 of the Law of Property Act 1925 there shall be substituted a reference to section 87 of the Judicature (Northern Ireland) Act 1978[^f00017].

• (3) In regulation 43(3) for the reference to section 4 of the Powers of Attorney Act 1971 there shall be substituted a reference to section 3 of the Powers of Attorney Act (Northern Ireland) 1971[^f00018].

• (4) In Schedule 4—

• (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (c) in paragraph 6(1), for the words from “in the case of a company registered in England and Wales” to the end there shall be substituted “elsewhere than in Northern Ireland”;

• (d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (e) in paragraph 16(2), for subparagraphs (a) and (b) there shall be substituted “in Northern Ireland”; and

• (f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

TRANSITORY PROVISIONS, AMENDMENTS AND REVOCATIONS

Transitory provisions

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Schedule 6 (transitory provisions) shall have effect.

Minor and consequential amendments

51

Schedule 7 (minor and consequential amendments) shall have effect.

Revocations

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• (1) The following provisions of the 1965 Regulations are hereby revoked, namely—

• regulation 4(3) and (4);

• regulations 4A and 4B;

• regulation 6(5);

• regulation 17(7);

• regulation 18(5);

• regulation 19(2);

• regulation 20(2); and

• Schedule 1.

• (2) The following provisions of the 1974 Regulations are hereby revoked, namely—

• regulation 6(6);

• regulation 6A;

• regulation 7(1)(b), (4) and (5);

• regulation 8(2) and (3);

• regulation 9(4);

• regulation 10(3);

• regulation 16(4);

• regulation 21(3); and

• Schedule 2.

• (3) The 1995 Regulations are hereby revoked.

• (4) The following provisions of the Open-Ended Investment Companies Regulations 2001[^f00020] are hereby revoked, namely—

• regulation 47(1);

• in Schedule 3— paragraph 2(2), paragraph 5(1)(c) and the word “and” immediately before it, and paragraph 6(3)(d) and the word “and” immediately before it;

• paragraph 3 of Schedule 4; and

• paragraph 12 of Schedule 7.

SCHEDULE 1 — Requirements for operation of a relevant system

Arrangements and resources

1

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Financial resources

2

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Promotion and maintenance of standards

3

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Operation of the relevant system

4

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System security

5

• (1) A relevant system must satisfy the requirements of sub-paragraphs (3) to (6).

• (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (3) Each dematerialised instruction must be authenticated—

• (a) in accordance with the specifications of the Operator, and those specifications shall provide that each dematerialised instruction is identifiable as being from the computers of the Operator or of a particular system-participant; or

• (b) if it is sent to the Operator by, or by the Operator to, a depositary, a clearing house or an exchange, in accordance with specifications of that depositary, clearing house or exchange to which the Operator has agreed and which provide that each dematerialised instruction—

• (i) is identifiable as being from the computers of the Operator or of the depositary, clearing house or exchange which sent it; ...

• (ii) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (4) Each dematerialised instruction must, in accordance with any relevant rules of the Operator and with the specifications of the Operator or the specifications referred to in subparagraph (3)(b) (as the case may be), express by whom it has been sent and, where relevant, on whose behalf it has been sent.

• (5) Each dematerialised instruction must, in accordance with any relevant rules of the Operator and with the specifications of the Operator or the specifications referred to in subparagraph (3)(b) (as the case may be), indicate—

• (a) where it is sent to a system-participant or the Operator, that it is addressed to that system-participant or the Operator;

• (b) where it is sent to a person who is using the facilities of a sponsoring system-participant to receive dematerialised instructions, that it is addressed to that person and the sponsoring system-participant; and

• (c) where it is sent to the Operator in order for him to send an Operator-instruction to a system-participant, that it is addressed to the Operator, to the system-participant and, if the system-participant is acting as a sponsoring system-participant, to the relevant person on whose behalf the sponsoring system-participant receives dematerialised instructions.

• (6) The relevant system must minimise the possibility for a system-participant to send a dematerialised instruction on behalf of a person from whom he has no authority.

• (7) For the purposes of this paragraph—

• “clearing house” means a body or association—which is a recognised clearing house within section 285(1)(b) of the 2000 Act;which is authorised under that Act to provide clearing services in the United Kingdom; ...which is ... a third country central counterparty within the meaning of section 285(1) of the 2000 Act; orwhich provides services outside the United Kingdom which are similar in nature to those provided by any such body or association, and which is regulated or supervised in the provision of those services by a regulatory body or agency of government;

• “depositary” means a CSD or third-country CSD within the meaning of the CSD regulation as amended from time to time or a body or association carrying on business outside the United Kingdom with whom an Operator has made arrangements—to enable system-members to hold (whether directly or indirectly) and transfer title to securities (other than participating securities) by means of facilities provided by that body or association; orto enable that body or association to permit persons to whom it provides services in the course of its business to hold (whether directly or indirectly) and transfer title to participating securities by means of the Operator’s relevant system; and

• “exchange” means a body or association—which is a recognised investment exchange within section 285(1)(a) of the 2000 Act;which is authorised under that Act to provide a facility for the matching and execution of transactions in securities in the United Kingdom; orwhich provides services outside the United Kingdom which are similar in nature to those provided by any such body or association, and which is regulated or supervised in the provision of those services by a regulatory body or agency of government.

System capabilities

6

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7

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8

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9

A relevant system must enable an Operator to comply with his obligations to keep all necessary Operator registers of securities in accordance with these Regulations.

10

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11

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12

A relevant system must be able to permit each participating issuer to inspect the entries from time to time appearing in an Operator register of securities (other than an Operator register of eligible debt securities) relating to any participating security issued by him.

13

A relevant system must be able to establish, where there is a transfer of uncertificated units of a security to a system-member for value, that a settlement bank has agreed to make payment in respect of the transfer, whether alone or taken together with another transfer for value.

14

A relevant system must ensure that the Operator-system is able to generate Operator-instructions—

• (a) requiring participating issuers to amend the appropriate issuer registers of securities kept by them;

• (b) informing participating issuers in a way which enables them to amend the appropriate records of securities kept by them; and

• (c) informing settlement banks of their payment obligations.

15

A relevant system must—

• (a) enable a system-member—

• (i) to grant authority to a sponsoring system-participant to send properly authenticated dematerialised instructions on his behalf; and

• (ii) to limit such authority by reference to the net value of the units of the securities to be transferred in any one day; and

• (b) prevent the transfer of units in excess of that limit.

16

For the purposes of paragraph 15(a)(ii), once authority is granted pursuant to a system charge (within the meaning of regulation 3 of the Financial Markets and Insolvency Regulations 1996[^f00021]) a limit of such authority shall not be imposed or changed without the consent of the donee of that authority.

17

Nothing in paragraph 15 or 16 shall be taken, in respect of an authority, to modify or derogate from the protections given by or under any enactment to a donee of the authority or a third person.

18

A relevant system must enable system-members—

• (a) to change the form in which they hold units of a participating security; and

• (b) where appropriate, to require participating issuers to issue certificates relating to units of a participating security held or to be held by them.

19

Paragraph 18 shall not apply to any wholly dematerialised security.

Operating procedures

20

A relevant system must comprise procedures which provide that it responds only to properly authenticated dematerialised instructions which are attributable to a system-user or an Operator.

21

• (1) Subject to subparagraphs (2) to (5), a relevant system must comprise procedures which provide that an Operator only registers a transfer of title to uncertificated units of a security or generates an Operator-instruction requiring a participating issuer to register such a transfer, and only generates an Operator-instruction informing a settlement bank of its payment obligations in respect of such a transfer, if—

• (a) it has—

• (i) received a system-member instruction which is attributable to the transferor; or

• (ii) been required to do so by a court in the United Kingdom or by or under an enactment;

• (b) it has—

• (i) established that the transferor has title to such number of units as is in aggregate at least equal to the number to be transferred; or

• (ii) established that the transfer is one of two or more transfers which may be registered in accordance with regulation 30(2);

• (c) in the case of a transfer to a system-member for value, it has established that a settlement bank has agreed to make payment in respect of the transfer, whether alone or taken together with another transfer for value; and

• (d) the transfer is not in excess of any limit which by virtue of paragraph 15(a)(ii) the transferor has set on an authority given by him to a sponsoring system-participant.

• (2) Subparagraph (1)(a) shall not prevent the registration by an Operator of a transfer of title to uncertificated units of a security, or the generation of an Operator-instruction, in accordance with procedures agreed between the Operator and the transferor to enable the transfer by means of a relevant system of uncertificated units of a security provided that such transfer is for the purpose of, or relates to, facilitating the provision of financial credit or financial liquidity to the transferor by a settlement bank, the Bank of England, the European Central Bank, any other central bank, or any other body having functions as a monetary authority.

• (3) A relevant system must comprise procedures which provide that—

• (a) the Operator may amend an Operator register of securities; and

• (b) an Operator-instruction requiring a participating issuer to register a transfer of uncertificated units of a security, or informing a settlement bank of its payment obligations in respect of such a transfer, may be generated,

if necessary to correct an error and if in accordance with the rules made and practices instituted by the Operator in order to comply with this Schedule.

• (4) A relevant system must comprise procedures which provide that—

• (a) the Operator may amend an Operator register of securities; and

• (b) an Operator-instruction requiring a participating issuer to register a transfer of units of a wholly dematerialised security, or informing a settlement bank of its payment obligations in respect of such a transfer, may be generated,

if necessary to effect a transfer of such units, on the termination of participation in the relevant system by the system-member by whom those units are held and if in accordance with the rules made and practices instituted by the Operator in order to comply with this Schedule, to a person nominated under the Operator’s rules.

• (5) Subparagraph (1)(a) shall not prevent the registration by an Operator of a transfer of title to uncertificated units of a security, or the generation of an Operator-instruction, in order to give effect to the procedures referred to in subparagraph (3) or (4).

22

• (1) Subject to subparagraph (2), a relevant system must comprise procedures which provide that an Operator-instruction to a participating issuer relating to a right, privilege or benefit attaching to or arising from an uncertificated unit of a security, is generated only if it has—

• (a) received a properly authenticated dematerialised instruction attributable to the system-member having the right, privilege or benefit requiring the Operator to generate an Operator-instruction to the participating issuer; or

• (b) been required to do so by a court in the United Kingdom or by or under an enactment.

• (2) A relevant system must comprise procedures which provide that an Operator-instruction to a participating issuer relating to a right, privilege or benefit attaching to or arising from an uncertificated unit of a security, may be generated if necessary to correct an error and if in accordance with the rules made and practices instituted by an Operator in order to comply with this Schedule.

23

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

24

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Rules and practices

25

An Operator’s rules and practices—

• (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (b) must make provision as to the manner in which a system-member or the relevant participating issuer may change the form in which that system-member holds units of a participating security (other than a wholly dematerialised security);

• (c) must make provision for a participating issuer to cease to participate in respect of a participating security so as—

• (i) to minimise so far as practicable any disruption to system-members in respect of their ability to transfer the relevant security; and

• (ii) to provide the participating issuer with any relevant information held by the Operator relating to the uncertificated units of the relevant security held by system-members;

• (d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (e) must make provision—

• (i) as to which of the Operator’s records are to constitute an Operator register of securities in relation to a participating security, or a participating security of a particular kind; and

• (ii) as to the times at which, and the manner in which, a participating issuer may inspect an Operator register of securities (other than an Operator register of eligible debt securities) in accordance with paragraph 12;

• (f) if they make provision for the designation of a subsidiary undertaking as a relevant nominee, must require that the relevant nominee maintain adequate records of—

• (i) the names of the persons who have an interest in the securities it holds; and

• (ii) the nature and extent of their interests; and

• (g) must make provision for the authentication by the Operator of any written notification given under regulation 25(3) or 32(2)(c).

26

An Operator’s rules and practices must require—

• (a) that each system-participant is able to send and receive properly authenticated dematerialised instructions;

• (b) that each system-member has arrangements—

• (i) for properly authenticated dematerialised instructions attributable to him to be sent;

• (ii) for properly authenticated dematerialised instructions to be received by or for him; and

• (iii) with a settlement bank for payments to be made, where appropriate, for units of a security transferred by means of the relevant system; and

• (c) that each participating issuer is able to respond with sufficient speed to Operator-instructions.

27

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

SCHEDULE2 — PREVENTION OF EXCESSIVE REGULATORY PROVISION

Examination of rules and practices

1

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Modification of paragraph 1 where delegation order is made

2

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Reports by the Office of Fair Trading

3

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Investigations by the Office of Fair Trading

4

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Exemptions from the Fair Trading Act 1973

5

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Exemptions from the Competition Act 1998

6

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Supplementary provisions

7

• (1) Any direction given under this Schedule shall, on the application of the person by whom it was given, be enforceable by injunction or, in Scotland, by an order for specific performance under section 45 of the Court of Session Act 1988.

• (2) The fact that any rules made by an Operator have been altered by or pursuant to a direction given by the Treasury under this Schedule shall not preclude their subsequent alteration or revocation by the Operator.

• (3) In determining under this Schedule whether any guidance has, or is likely to have, any particular effect the Treasury and the Director may assume that the persons to whom it is addressed will act in conformity with it.

SCHEDULE 3 — Procedure for giving directions

1

Before—

• (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (c) giving a direction under regulation 8,

the Bank of England must give written notice of its intention to do so to the Operator.

2

A notice under paragraph 1 shall—

• (a) state why the Bank of England intends to ... give the direction; and

• (b) draw attention to the right to make representations conferred by paragraph 3.

3

Before the end of the period for making representations, the Operator may make representations to the Bank of England.

4

The period for making representations is such period as is specified in the notice (which may, in any particular case, be extended by the Bank of England).

5

In deciding whether to ... give the direction ... the Bank of England must have regard to any representations made in accordance with paragraph 3.

6

• (1) When the Bank of England has decided whether to—

• (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (c) give the direction;

it must give the Operator written notice of its decision and the reasons for its decision.

7

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

8

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

SCHEDULE 4 — KEEPING OF REGISTERS AND RECORDS OF PARTICIPATING SECURITIES

Interpretation

1

In this Schedule—

• “uncertificated shares” means shares title to which may be transferred by means of a relevant system; and “certificated shares” means shares which are not uncertificated shares; and

• “uncertificated stock” means stock title to which may be transferred by means of a relevant system; and “certificated stock” means stock which is not uncertificated stock.

Registers of Members

2

• (1) Every participating issuer which is a company shall enter in its issuer register of members—

• (a) the names and addresses of the members;

• (b) the date on which each person was registered as a member; and

• (c) the date at which any person ceased to be a member.

• (2) With the names and addresses of the members there shall be entered a statement—

• (a) of the certificated shares held by each member, distinguishing each share by its number (so long as the share has a number) and, where the company has more than one class of issued shares, by its class; and

• (b) of the amount paid or agreed to be considered as paid on the certificated shares of each member.

• (3) Where the company has converted any of its shares into stock and given notice of the conversion to the registrar of companies, the issuer register of members shall show the amount and class of the certificated stock held by each member, instead of the amount of shares and the particulars relating to shares specified in subparagraph (2).

• (4) Subject to subparagraph (5), section 113 of the 2006 Act shall not apply to a company which is a participating issuer, other than as respects any overseas branch register.

• (5) Section 113(7) and (8) of the 2006 Act shall apply to a participating issuer which is a company which makes default in complying with this paragraph and every officer of it who is in default as if such a default were a default in complying with section 113 of that Act.

• (6) An entry relating to a former member of the company may be removed from the issuer register of members after the expiration of 10 years beginning with the day on which he ceased to be a member.

• (7) For the purposes of this paragraph references to an issuer register of members shall not be taken to include an overseas branch register.

3

Section 123 of the 2006 Act shall apply to a participating issuer which is a private company limited by shares as if references therein to the company’s register of members were references to its issuer register of members.

4

• (1) In relation to every participating issuer which is a company, an Operator of a relevant system shall, in respect of any class of shares which is a participating security for the purposes of that system, enter on an Operator register of members—

• (a) the names and addresses of the members who hold uncertificated shares in the company;

• (b) with those names and addresses a statement of the uncertificated shares held by each member and, where the company has more than one class of issued uncertificated shares, distinguishing each share by its class; and

• (c) where the company has converted any of its shares into stock and given notice of the conversion to the registrar of companies, the Operator register of members shall show the amount and class of uncertificated stock held by each member, instead of the amount of shares and the particulars relating to shares specified in subparagraph (b).

• (2) An entry relating to a member of a company who has ceased to hold any uncertificated shares in the company may be removed from the Operator register of members after the expiration of 10 years beginning with the day on which he ceased to hold any such shares.

• (3) For the purposes of this paragraph references to an Operator register of members shall not be taken to include an overseas branch register.

• (4) Members of a company who hold shares in uncertificated form may not be entered as holders of those shares on an overseas branch register.

Records of uncertificated shares

5

• (1) Every participating issuer which is a company shall enter in its record of uncertificated shares—

• (a) the same particulars, so far as practicable, as are required by paragraph 4(1) to be entered in the Operator register of members; and

• (b) a statement of the amount paid or agreed to be considered as paid on the uncertificated shares of each member.

• (2) A company to which this paragraph applies shall, unless it is impracticable to do so by virtue of circumstances beyond its control, ensure that the record of uncertificated shares is regularly reconciled with the Operator register of members.

• (3) Provided that it has complied with subparagraph (2), a company shall not be liable in respect of any act or thing done or omitted to be done by or on behalf of the company in reliance upon the assumption that the particulars entered in any record of uncertificated shares which the company is required to keep by these Regulations accord with the particulars entered in its Operator register of members.

• (4) Section 113(7) and (8) of the 2006 Act shall apply to a participating issuer which is a company which makes default in complying with this paragraph and every officer of it who is in default as if such a default were a default in complying with section 113 of that Act.

Location of issuer register of members and records of uncertificated shares, and ancillary matters

6

• (1) Subject to subparagraph (2), a company’s issuer register of members and its record of uncertificated shares shall be kept available for inspection at its registered office or at a place specified in regulations made under section 1136 of the 2006 Act

• (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

but the issuer register of members must not be kept available for inspection, in the case of a company registered in England and Wales, at any place elsewhere than in England and Wales or, in the case of a company registered in Scotland, at any place elsewhere than in Scotland.

• (2) A company’s issuer register of members and its record of uncertificated shares shall at all times be kept available for inspection at the same place.

• (3) Subject as follows, every participating issuer which is a company shall send notice ... to the registrar of companies of the place where its issuer register of members and its record of uncertificated shares are kept available for inspection, and of any change in that place, provided that any notice sent by such a company in accordance with section 114(2) of the 2006 Act, and which has effect on the coming into force of these Regulations, shall be treated as being a notice sent in compliance with this subparagraph.

• (4) The notice need not be sent if the issuer register of members and the record of uncertificated shares have at all times since they came into existence been kept available for inspection at the company’s registered office.

• (5) Subject to subparagraph (6), section 114 of the 2006 Act shall not apply to a company which is a participating issuer.

• (6) Section 114 (6) of the 2006 Act shall apply to a participating issuer which is a company which makes default in complying with subparagraph (2) at any time, or makes default for 14 days in complying with subparagraph (3), and every officer of it who is in default as if such a default were a default in complying with section 114(2) of that Act.

7

• (1) Every participating issuer which is a company having more than 50 members shall, unless the particulars required by paragraph 2(1) to be entered in the issuer register of members are kept in such a form as to constitute in themselves an index, keep an index of the names of the members of the company and shall, within 14 days after the date on which any alteration is made in the issuer register of members or the Operator register of members, make any necessary alteration in the index.

• (2) The index shall in respect of each member contain a sufficient indication to enable the account of that member in the issuer register of members and, in the case of a member who holds uncertificated shares in the company, in the record of uncertificated shares, to be readily found.

• (3) The index shall be at all times kept available for inspection at the same place as the issuer register of members and the record of uncertificated shares.

• (4) Subject to subparagraph (5), section 115 of the 2006 Act shall not apply to a company which is a participating issuer.

• (5) Section 115(5) and (6) of the 1985 Act shall apply to a participating issuer which is a company which makes default in complying with this paragraph and every officer of it who is in default as if such a default were a default in complying with section 115 of that Act.

8

Section 122 of the 2006 Act shall apply to a company which is a participating issuer as if references in that section to the company’s register of members were references instead to its issuer register of members.

9

Sections 115 to 118 of the 2006 Act shall apply to a company which is a participating issuer as if—

• (a) references in those provisions to the company’s register of members were references to its issuer register of members and its record of uncertificated shares; and

• (b) references in section 116 to the company’s index of members’ names were references to the index required to be kept by paragraph 7,

and references to the 2006 Act in the Companies (Fees for Inspection and Copying of Company Records) Regulations 2007 and the Companies (Fees for Inspection and Copying of Company Records) Regulations 2008 shall be construed accordingly.

10

Where under paragraph 6(1), a company’s issuer register of members and record of uncertificated shares is kept available for inspection at the office of some person other than the company, and by reason of any default of his the company fails to comply with—

• paragraph 6(2) (record of uncertificated shares to be kept available for inspection with issuer register of members);

• paragraph 6(3) (notice to registrar);

• paragraph 7(3) (index to be kept available for inspection with issuer register of members and record of uncertificated shares); or

• section 116 of the 2006 Act (rights to inspect and require copies),

or with any requirement of the 2006 Act as to the production of the register of members or any part thereof, that other person is liable to the same penalties as if he were an officer of the company who was in default, and the power of the court under section 118(3) of the 2006 Act extends to the making of orders against that other and his officers and servants.

11

Where, under section 125 of the 2006 Act, the court orders rectification of the register of members of a company which is a participating issuer, it shall not order the payment of any damages under subsection (2) of that section to the extent that such rectification relates to the company’s Operator register of members and does not arise from an act or omission of the Operator on the instructions of that company or from fraud or other wilful default, or negligence, on the part of that company.

Registers of general public sector securities

12

• (1) Where an Operator of a relevant system is required to maintain an Operator register of general public sector securities, that register shall comprise the following particulars which the Operator shall enter on it, namely—

• (a) the names and addresses of the persons holding units of the relevant participating security in uncertificated form; and

• (b) how many units of that security each such person holds in that form.

• (2) The following provisions of the 2004 Regulations shall not apply in respect of units of general UK Government securities held in uncertificated form—

• regulations 7 to 9;

• regulations 12 to 14;

• regulations 16 to 24;

• regulation 28; and

• regulations 30 to 31.

• (3) The following provisions of the 1974 Regulations shall not apply in respect of units of general local authority securities held in uncertificated form—

• regulations 5 and 6;

• regulations 8 to 14;

• regulation 16; and

• regulation 21.

Records of uncertificated general public sector securities

13

• (1) The participating issuer shall enter in a record of uncertificated general public sector securities the same particulars, so far as is practicable, as are required by paragraph 12(1) to be entered in the relevant Operator register of general public sector securities.

• (2) In respect of every participating security which is a general UK Government security, the record of uncertificated general public sector securities shall be kept by the Registrar of Government Stock.

• (3) The participating issuer shall, unless it is impracticable to do so by virtue of circumstances beyond his control, ensure that the record of uncertificated general public sector securities is regularly reconciled with the Operator register of general public sector securities.

• (4) Provided that he has complied with subparagraph (3), a participating issuer shall not be liable in respect of any act or thing done or omitted to be done by him or on his behalf in reliance upon the assumption that the particulars entered in any record of uncertificated general public sector securities which he is required to keep by these Regulations accord with the particulars entered in the Operator register of general public sector securities to which the record relates.

• (5) The provisions of the Bankers' Books Evidence Act 1879[^f00026] shall apply for the purpose of proving any entry in the record of uncertificated general public sector securities as if the participating issuer were a bank and a banker within the meaning of that Act, and as if such entry in the record, or, where the information recorded therein is not in readable form and is later transcribed into readable form, the transcribed version of such entry, were an entry in a banker’s book.

Registers of corporate securities

14

• (1) Where an Operator of a relevant system is required to maintain an Operator register of corporate securities, that register shall comprise the following particulars which the Operator shall enter on it, namely—

• (a) the names and addresses of the persons holding units of the relevant participating security in uncertificated form; and

• (b) how many units of that security each such person holds in that form.

• (2) Sections 743 to 748 of the 2006 Act shall not apply to any part of an Operator register of corporate securities.

Records of uncertificated corporate securities

15

• (1) A participating issuer shall enter in a record of uncertificated corporate securities the same particulars, so far as practicable, as are required by paragraph 14(1) to be entered in the relevant Operator register of corporate securities.

• (2) A participating issuer to which this paragraph applies shall, unless it is impracticable to do so by virtue of circumstances beyond its control, ensure that the record of uncertificated corporate securities is regularly reconciled with the Operator register of corporate securities.

• (3) Provided that it has complied with subparagraph (2), a participating issuer shall not be liable in respect of any act or thing done or omitted to be done by it or on its behalf in reliance upon the assumption that the particulars entered in any record of uncertificated corporate securities which the participating issuer is required to keep by these Regulations accord with the particulars entered in any Operator register of corporate securities relating to it.

• (4) In the case of a participating issuer which is a company, the record of uncertificated corporate securities shall be kept at the same place as the part of any register of debenture holders maintained by the company would be required to be kept.

• (5) Sections 744(1) to (4) and 746 of the 2006 Act shall apply in relation to a record of uncertificated corporate securities maintained by a participating issuer which is a company, so far as that record relates to debentures, as they apply or would apply to any register of debenture holders maintained by the company; and references to the 2006 Act in the Companies (Fees for Inspection and Copying of Company Records) Regulations 2007 and the Companies (Fees for Inspection and Copying of Company Records) Regulations 2008 shall be construed accordingly.

• (6) Any provision of an enactment or instrument which requires a register of persons holding securities (other than shares or public sector securities) to be open to inspection shall also apply to the record of uncertificated corporate securities relating to any units of those securities which are participating securities.

Miscellaneous

16

• (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (2) Every register which an Operator is required to maintain by virtue of these Regulations (other than an Operator register of eligible debt securities) which relates to securities issued by a company shall be deemed to be kept—

• (a) in the case of a company registered in England and Wales, in England and Wales; or

• (b) in the case of a company registered in Scotland, in Scotland.

17

• (1) An entry in a register of securities or in a record of securities relating to a person who no longer holds the securities which are the subject of the entry may be removed from the register or the record (as the case may be) after the expiration of 20 years beginning with the day on which the person ceased to hold any of those securities.

• (2) Subparagraph (1) does not apply in respect of an entry in a register of members.

18

Sections 1134, 1135 and 1138 of the 2006 Act shall apply—

• (a) to any register, record or index required to be kept by any person in accordance with these Regulations as they apply to any register, record or index required by the Companies Acts to be kept by a company; and

• (b) to an Operator and its officers as they apply to a company and its officers.

19

• (1) Such sanctions as apply to a company and its officers in the event of a default in complying with section 113 of the 2006 Act shall apply to an Operator and his officers in the event of a default in complying with paragraph 4, 12 or 14.

• (2) Such sanctions as apply to the registrar, within the meaning of the 1974 Regulations, in the event of a default in complying with regulation 5 of those Regulations shall apply to a participating issuer and his officers in the event of a default in complying with paragraph 13 in respect of a local authority security falling within paragraph (a)(i) of the definition of “local authority security.

• (2A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (3) Such sanctions as apply in the event of a default in complying with the requirement to maintain a register imposed by the relevant enactment or instrument referred to in regulation 22(1) shall apply to—

• (a) a participating issuer other than a company; and

• (b) a participating issuer which is a company, in relation to so much of the record of uncertificated corporate securities as does not relate to debentures,

and his officers in the event of a default in complying with paragraph 15.

• (4) Subparagraphs (2) and (3) shall not apply to any of the following or its officers—

• (a) the Crown;

• (b) any person acting on behalf of the Crown;

• (c) the Bank of England;

• (d) the Registrar of Government Stock;

• (e) any previous Registrar of Government Stock; or

• (f) in respect of a security which immediately before it became a participating security was transferable by exempt transfer within the meaning of the Stock Transfer Act 1982, a participating issuer.

20

An officer of a participating issuer shall be in default in complying with, or in contravention of paragraph 2, 5, 6, 7, 13 or 15, or section 1138 of the 2006 Act as applied by paragraph 18, if, and only if, he knowingly and wilfully authorised or permitted the default or contravention.

21

An officer of an Operator shall be in default in complying with, or in contravention of, the provisions referred to in paragraph 19(1) of this Schedule, or of section 1138 of the 2006 Act as applied by paragraph 18, if, and only if, he knowingly and wilfully authorised or permitted the default or contravention.

SCHEDULE 5 — ADAPTATIONS IN RESPECT OF NORTHERN IRELAND

Column 1	Column 2	Column 3
References to the 1985 Act	Provisions of these Regulations	Reference to the 1986 Order[^f00027]
Section 182	Paragraph 7 of Schedule 7	Article 192
Section 183	Regulations 27(8) and (9), 28(8) and (9), 32(9), 33(11), 38(7) and 42(12) Paragraph 8 of Schedule 7	Article 193
Section 185	Regulations 32(8) and (10) and 42(5) and (6)	Article 195
Section 186	Regulation 38(3)	Article 196
Section 188	Regulation 18	Article 198
Section 190	Paragraph 14 of Schedule 4	Article 199
Section 191	Paragraphs 14 and 15 of Schedule 4	Article 200
Section 192	Regulation 40(2)	Article 201
Section 209	Paragraph 9 of Schedule 7	Article 217
Section 238	Regulation 41(3)	Article 246
Section 352	Regulations 20(7), 21(4) and 22(4) Paragraphs 2, 5 and 19 of Schedule 4	Article 360
Section 352A	Paragraph 3 of Schedule 4	Article 360A
Section 353	Paragraph 6 of Schedule 4	Article 361
Section 354	Paragraph 7 of Schedule 4	Article 362
Section 355	Paragraph 8 of Schedule 4	Article 363
Section 356	Paragraphs 9 and 10 of Schedule 4	Article 364
Section 357	Paragraph 6 of Schedule 4	Article 365
Section 358	Regulation 26	Article 366
Section 359	Paragraph 11 of Schedule 4	Article 367
Section 360	Regulation 40(3)	Article 368
Section 361	Regulation 24(4)	Article 369
Section 370	Regulation 41(3)	Article 378
Section 376	Regulation 16(7)	Article 384
Section 380	Paragraph 10 of Schedule 7	Article 388
Section 428	Regulation 42(13)	Article 421
Section 429	Regulation 42(1), (2), (7), (8) and (13)	Article 422
Section 430	Regulation 42(1), (2), (5), (7), (8), (13) and (14)	Article 423
Section 430D	Regulation 42(13) and (14)	Article 423D
Section 722	Paragraphs 18, 20 and 21 of Schedule 4	Article 671
Section 723	Paragraph 18 of Schedule 4	Article 672
Section 735	Regulation 3(1)	Article 3
Section 744	Regulation 3(1)	Article 2
Paragraph 25 of Schedule 13	Paragraph 9 of Schedule 4	Paragraph 24 of Schedule 13

SCHEDULE 6 — TRANSITORY PROVISIONS

1

Prior to the day on which section 19 of the 2000 Act comes into force, each provision of these Regulations specified in this Schedule shall have effect modified as provided in this Schedule.

2

The definition of “securities” in regulation 3(1) shall be modified by the substitution of the words “the 1986 Act” for the words “section 235 of the 2000 Act”.

3

Regulation 5 shall be modified by the substitution for paragraph (4) of—

(4) Where the Treasury refuse an application for approval they shall give the applicant a written notice to that effect stating the reasons for the refusal.

4

Regulation 7 shall be modified by—

• (a) the insertion in paragraph (2) of the words “subject to paragraph (3)” after the words “they may”; and

• (b) the substitution for paragraphs (3) to (6) of—

(3) Subsections (2) to (7) and (9) of section 11 of the 1986 Act shall apply in relation to the withdrawal by the Treasury of approval from an Operator under paragraph (2) as they apply in relation to the revocation by the Secretary of State of a recognition order under subsection (1) of that section; and in those subsections as they so apply— (a) any reference to a recognised organisation shall be taken to be a reference to an Operator; (b) any reference to members of a recognised organisation shall be taken to be a reference to system-users; (c) any reference to the Secretary of State shall be taken to be a reference to the Treasury; (d) any reference to an order other than a recognition order shall be taken to be a reference to a written instrument; and (e) the reference in subsection (6) to the interests of investors shall be taken to be a reference to the interests of system-users.

5

Regulation 8 shall be modified by—

• (a) the substitution for paragraph (4) of—

(4) Before giving a direction under paragraph (2)(b) the Treasury shall— (a) if the circumstances permit, consult the Operator and afford him an opportunity to make representations; and (b) so far as is practicable to estimate it, have regard to the cost to the Operator of complying with any term of any direction and to the costs to other persons resulting from the Operator’s compliance.

; and

• (b) the omission of paragraphs (5) and (7).

6

In regulation 9—

• (a) paragraph (7) shall be modified by the substitution of the words “Subsections (6) and (7) of section 61 of the 1986 Act” for the words “Subsections (3) to (5) and (8) of section 382 of the 2000 Act”;

• (b) paragraphs (10) to (12) shall be modified by the substitution of the words “investment business within the meaning of the 1986 Act” for the words from “business of any of the following kinds” in paragraph (10) to the end of paragraph (12).

7

Regulation 11(1) shall be modified to read—

(1) If it appears to the Treasury that there is a body corporate— (a) to which functions have been transferred under section 114 of the 1986 Act; and (b) which is able and willing to discharge all or any of the functions conferred by this Part of these Regulations, they may, subject to paragraphs (2) and (5), by instrument in writing delegate all or any of those functions to that body; and a body to which functions are so delegated is referred to in these Regulations as a “designated agency”.

8

In paragraph 5(7) of Schedule 1—

• (a) paragraph (a) of the definition of “clearing house” shall be modified by the substitution of the words “for the purposes of the 1986 Act” for the words “within section 285(1)(b) of the 2000 Act”; and

• (b) paragraph (a) of the definition of “exchange” shall be modified by the substitution of the words “for the purposes of the 1986 Act” for the words “within section 285(1)(a) of the 2000 Act”.

9

Schedule 2 shall be modified by—

• (a) the substitution for subparagraph (5) in paragraph 1 of—

(5) Subsections (2) to (5), (7) and (9) of section 11 of the 1986 Act shall apply in relation to the withdrawal of approval under subparagraph (3) as they apply in relation to the revocation by the Secretary of State of a recognition order under subsection (1) of that section; and in those subsections as they so apply— (a) any reference to a recognised organisation shall be taken to be a reference to an Operator; (b) any reference to members of a recognised organisation shall be taken to be a reference to system-users; (c) any reference to the Secretary of State shall be taken to be a reference to the Treasury; and (d) any reference to an order other than a recognition order shall be taken to be a reference to a written instrument.

• (b) the omission from paragraph 2 of subparagraph (5); and

• (c) the insertion after paragraph 7 of a new paragraph reading—

(8) (1) Before the Treasury exercise a power under paragraph 1(3)(b) or (c), or their power to refuse leave under paragraph 2(2), or their power to give a direction under paragraph 2(4), in respect of an Operator, they shall— (a) give written notice of their intention to do so to the Operator and take such steps (whether by publication or otherwise) as they think appropriate for bringing the notice to the attention of any other person who in their opinion is likely to be affected by the exercise of the power; and (b) have regard to any representation made within such time as they consider reasonable by the Operator or by any such other person. (2) A notice under subparagraph (1) shall give particulars of the manner in which the Treasury propose to exercise the power in question and state the reasons for which they propose to act; and the statement of reasons may include matters contained in any report received by them under paragraph 3.

SCHEDULE 7 — MINOR AND CONSEQUENTIAL AMENDMENTS

Part 1 — Primary Legislation

The National Debt Act 1870

1

In section 3 of the National Debt Act 1870[^f00028], for the definition of “Stockholder” there shall be substituted—

• “Stockholder” means a person holding stock, being entered as such in—a register kept by the Bank of England or the Bank of Ireland under regulation 1 of the Government Stock Regulations 1965; ora register kept by the Operator of a relevant system under the Uncertificated Securities Regulations 2001 (and “Operator” and “relevant system” shall have the same meanings as they have in those Regulations):

The National Debt (Stockholders Relief) Act 1892

2

In subsection (1) of section 2 of the National Debt (Stockholders Relief) Act 1892[^f00029], for the word “inscribed” there shall be substituted “entered in a relevant register”.

The Finance (No. 2) Act 1915

3

In section 48 of the Finance (No. 2) Act 1915[^f00030]—

• (a) after “Director of Savings,” there shall be inserted “to the Operator of any relevant system”; and

• (b) after “by that person” there shall be inserted “; and in this section “Operator” and “relevant system” have the same meanings as they have in the Uncertificated Securities Regulations 2001”.

The Finance Act 1916

4

In section 67 of the Finance Act 1916[^f00031]—

• (a) after “Director of Savings,” there shall be inserted “the Operator of any relevant system”; and

• (b) at the end of that section there shall be added “; and in this section “Operator” and “relevant system” have the same meanings as they have in the Uncertificated Securities Regulations 2001”.

The Finance Act 1949

5

In section 48 of the Finance Act 1949[^f00032]—

• (a) in subsection (1), after “Bank of England” where it first appears there shall be inserted “or the Operator of any relevant system”;

• (b) in the proviso to subsection (1)—

• (i) for “the Bank of England shall not” there shall be substituted “neither the Bank of England nor any such Operator shall”; and

• (ii) for “to the Bank” there shall be substituted “to the Bank, or to that Operator as the case may be,”;

• (c) in subsection (2), after “Bank of England” there shall be inserted “or the Operator, as the case may be,”; and

• (d) after subsection (4) the following subsection shall be added—

(5) In this section, “Operator” and “relevant system” have the same meanings as they have in the Uncertificated Securities Regulations 2001.

The Finance (No. 2) Act 1975

6

In section 73 of the Finance (No. 2) Act 1975[^f00033]—

• (a) in subsection (4), after “means” in the definition of “the Bank” there shall be inserted “(subject to subsection (4A))”; and

• (b) after subsection (4) the following subsection shall be added—

(4A) In the case of units of stock which are recorded on a register kept by the Operator of a relevant system— (a) the reference to the Bank in subsection (1) so far as it relates to paragraph (c) of that subsection; and (b) the references to the Bank in subsections (2) and (3) so far as they apply for the purposes of that paragraph, shall be taken to be references to that Operator; and in this subsection “Operator” and “relevant system” have the same meanings as in the Uncertificated Securities Regulations 2001.

The Companies Act 1985

7

In subsection (1)(b) of section 182 of the 1985 Act, after “simplified process)” there shall be inserted “and to regulations made under section 207 of the Companies Act 1989 (which enable title to securities to be evidenced and transferred without a written instrument).”.

8

In subsection (1) of section 183 of that Act, after “Stock Transfer Act 1982” there shall be inserted “or is in accordance with regulations made under section 207 of the Companies Act 1989.”.

9

In section 209(9B)(b) of the 1985 Act, for “Uncertificated Securities Regulations 1995” there shall be substituted “Uncertificated Securities Regulations 2001”.

10

In subsection (4) of section 380 of the 1985 Act, after paragraph (k) the following paragraphs shall be added—

(l) a resolution of the directors passed by virtue of regulation 16(2) of the Uncertificated Securities Regulations 2001 (which allows title to a company’s shares to be evidenced and transferred without written instrument); and (m) a resolution of a company passed by virtue of regulation 16(6) of the Uncertificated Securities Regulations 2001 (which prevents or reverses a resolution of the directors under regulation 16(2) of those Regulations).

The Financial Services Act 1986

11

In subsection (1) of section 180 of the 1986 Act, after paragraph (n) the following paragraph shall be added—

(nn) to an Operator approved under the Uncertificated Securities Regulations 2001 if the information is necessary to ensure the proper functioning of a relevant system within the meaning of those Regulations in relation to defaults and potential defaults by market-participants;

12

In the 1986 Act, in—

• (a) paragraph 16A(a) of Schedule 1;

• (b) Note (3) to that paragraph; and

• (c) subparagraph (5B)(a) of paragraph 18 of Schedule 1,

for “Uncertificated Securities Regulations 1995” in each place where it occurs there shall be substituted “Uncertificated Securities Regulations 2001”.

The Banking Act 1987

13

In the Banking Act 1987[^f00034], in—

• (a) paragraph 11B in the first column of the Table in section 84(1);

• (b) section 84(11)(e),

for “Uncertificated Securities Regulations 1995” there shall be substituted “Uncertificated Securities Regulations 2001”.

Part 2 — Subordinate Legislation

The Government Stock Regulations 1965

14

In the 1965 Regulations—

• (a) in regulation 1(3), for “Subject (in the case of stock which is a participating security) to any provision made by or under the 1995 Regulations, in” there shall be substituted “In”;

• (b) in regulation 2(1), for “Subject to Regulation 5 of the Stock Transfer (Gilt-edged Securities) (CGO Service) Regulations 1985 and (in the case of stock which is a participating security) any provision made by or under the 1995 Regulations, every” there shall be substituted “Every”;

• (c) in regulation 3B(2), for “the register” there shall be substituted—

(a) a register kept under regulation 1(1) or (1A) hereof; or (b) a register kept by the Operator of a relevant system under the 2001 Regulations,

• (d) in regulation 4[^f00035]—

• (i) the words “and Regulation 4B” shall be omitted from paragraph (1);

• (ii) after paragraph (4) there shall be inserted—

(5) Units of stock which are recorded on a register kept by the Operator of a relevant system under the 2001 Regulations shall be transferable in no other manner than by means of that system in accordance with those Regulations. (6) A strip shall be transferable in no other manner than by means of a relevant system operated by an Operator in accordance with the 2001 Regulations.

• (e) in regulation 5, for “Subject (in the case of stock which is a participating security) to any provision made by or under the 1995 Regulations, the” there shall be substituted “The”;

• (f) in regulation 10—

• (i) for “Subject (in the case of stock which is a participating security) to any provision made by or under the 1995 Regulations, the” there shall be substituted “The”; and

• (ii) there shall be omitted the words from “or, in the case of an exempt transfer” to the end;

• (g) in regulation 14(6), 15(4) and 16(4)—

• (i) there shall be omitted the words “to Regulation 4B and”; and

• (ii) for “the 1995 Regulations” there shall be substituted “the 2001 Regulations”;

• (h) in regulation 23(1), for ““the 1995 Regulations” means the Uncertificated Securities Regulations 1995 as amended from time to time;” there shall be substituted ““the 2001 Regulations” means the Uncertificated Securities Regulations 2001 as amended from time to time;”;

• (i) in regulation 23(1), the definitions of “the CGO Service”; “CGO Service member”; and “an exempt transfer” shall be omitted; and

• (j) in regulation 23(1A), for “the 1995 Regulations” there shall be substituted “the 2001 Regulations”.

The Local Authority (Stocks and Bonds) Regulations 1974

15

In the 1974 Regulations—

• (a) in regulation 1(3)—

• (i) for ““the 1995 Regulations” means the Uncertificated Securities Regulations 1995 as amended from time to time;” there shall be substituted ““the 2001 Regulations” means the Uncertificated Securities Regulations 2001 as amended from time to time;”; and

• (ii) the definitions of “the CGO Service”; “CGO Service member”; “the CGO Service Regulations”; and “exempt transfer” shall be omitted;

• (b) in regulation 6(1), for “Subject to regulation 6A below the” there shall be substituted “The”;

• (c) in regulation 7—

• (i) in paragraph (1)(a), for “paragraph (5)” there shall be substituted “paragraph (1A)”;

• (ii) after paragraph (1) there shall be inserted as a new paragraph—

(1A) Units of stock, or of bonds, which are recorded on a register kept by the Operator of a relevant system under the 2001 Regulations shall be transferable in no other manner than by means of that system in accordance with those Regulations.

; and

• (iii) in paragraph (3), there shall be omitted “and any record of a transfer effected through the medium of the CGO Service,” and “or, as the case may be, the exempt transfer”; and

• (d) in regulation 13(2)—

• (i) for “Subject (in the case of stock or a bond which is a participating security) to any provision made by or under the 1995 Regulations, the” there shall be substituted “The”; and

• (ii) there shall be omitted the words from “or, in the case of an exempt transfer” to the end.

The Exchange of Securities (General) Rules 1979

16

In the Exchange of Securities (General) Rules 1979[^f00036]—

• (a) in rule 3, the definitions of “the CGO Service”; “CGO Service member”; and “an exempt transfer” shall be omitted; and

• (b) in rule 6—

• (i) for paragraph (1A) there shall be substituted—

(1A) Where the acceptance relates to a holding of uncertificated units of a security and at the time of acceptance that holding is transferable by means of a relevant system in accordance with the Uncertificated Securities Regulations 2001 as amended from time to time— (a) paragraph (1)(c) of this Rule shall not apply, and (b) the acceptance may be made by such means of electronic communication, and subject to such conditions, as the Treasury may approve for that purpose.

; and

• (ii) there shall be inserted as a new paragraph after paragraph (1A)—

(1B) In paragraph (1A), the expressions “uncertificated units of a security” and “relevant system” shall have the same meanings as they have in the Uncertificated Securities Regulations 2001.

The Companies (Registers and other Records) Regulations 1985

17

In the Companies (Registers and other Records) Regulations 1985[^f00037]—

• (a) in regulation 1—

• (i) in paragraph (2), at the end of the definition of “register” there shall be inserted “or regulation 20 of the 2001 Regulations”; and

• (ii) at the end of paragraph (2) there shall be inserted—

• “the 2001 Regulations” means the Uncertificated Securities Regulations 2001; and expressions defined in the 2001 Regulations shall have the same meaning in these Regulations.

• (b) at the end of regulation 2 there shall be inserted as new paragraphs—

(5) This regulation applies with respect to an issuer of register members and a record of uncertificated shares which is kept by a company by recording the matters in question otherwise than in legible form— (a) as it applies to a register of members under the Act which is kept in like fashion; and (b) as if references to the Act were references to the 2001 Regulations. (6) This Regulation applies with respect to an index kept by virtue of paragraph 7 of Schedule 4 to the 2001 Regulations which is kept by a company by recording the matters in question otherwise than in legible form— (a) as it applies to an index of a register of members under the Act which is kept in like fashion; and (b) as if references to the Act were references to the 2001 Regulations.

• (c) at the end of regulation 3 there shall be inserted as a new paragraph—

(6) In the case of a company which is a participating issuer, references in this regulation to the register of members shall be taken to be a reference to the company’s issuer register of members and record of uncertificated shares.

; and

• (d) in regulation 6—

• (i) in paragraph (1), after “the Act” there shall be inserted “or the 2001 Regulations”; and

• (ii) after paragraph (2) there shall be inserted as a new paragraph—

(2A) In the case of a company which is a participating issuer, paragraph (2) shall apply as if— (a) references to the register of members were references to the company’s issuer register of members and record of uncertificated shares; and (b) the reference to the index of the register of members were a reference to an index kept by virtue of paragraph 7 of Schedule 4 to the 2001 Regulations.

The Stamp Duty Reserve Tax Regulations 1986

18

In the Stamp Duty Reserve Tax Regulations 1986[^f00038], in the definition of “the Treasury Regulations” in regulation 2, for “Uncertificated Securities Regulations 1995” there shall be substituted “Uncertificated Securities Regulations 2001”.

The Companies (Registers and other Records) Regulations (Northern Ireland) 1986

19

In the Companies (Registers and other Records) Regulations (Northern Ireland) 1986 [^f00039]—

• (a) in regulation 1—

• (i) at the end of the definition of “register” in paragraph (2) there shall be inserted “or regulation 20 of the 2001 Regulations”; and

• (ii) at the end of paragraph (2) there shall be inserted—

• “the 2001 Regulations” means the Uncertificated Securities Regulations 2001; and expressions defined in the 2001 Regulations shall have the same meaning in these Regulations.

• (b) at the end of regulation 3 there shall be inserted as new paragraphs—

(5) This Regulation applies with respect to an issuer register of members and a record of uncertificated shares which is kept by a company by recording the matters in question otherwise than in legible form— (a) as it applies to a register of members under the Order which is kept in like fashion; and (b) as if references to the Order were references to the 2001 Regulations. (6) This Regulation applies with respect to an index kept by virtue of paragraph 7 of Schedule 4 to the 2001 Regulations which is kept by a company by recording the matters in question otherwise than in legible form— (a) as it applies to an index of a register of members under the Order which is kept in like fashion; and (b) as if references to the Order were references to the 2001 Regulations.

• (c) at the end of regulation 4 there shall be inserted as a new paragraph—

(6) In the case of a company which is a participating issuer, references in this regulation to the register of members shall be taken to be a reference to the company’s issuer register of members and record of uncertificated shares.

• (d) in regulation 7—

• (i) in paragraph (1), after “the Order” there shall be inserted “or the 2001 Regulations”; and

• (ii) after paragraph (2) there shall be inserted as a new paragraph—

(2A) In the case of a company which is a participating issuer, paragraph (2) shall apply as if— (a) references to the register of members were references to the company’s issuer register of members and record of uncertificated shares; and (b) the reference to the index of the register of members were a reference to an index kept by virtue of paragraph 7 of Schedule 4 to the 2001 Regulations.

The Financial Markets and Insolvency Regulations 1996

20

In the Financial Markets and Insolvency Regulations 1996[^f00040]—

• (a) in regulation 2(1)—

• (i) in the definition of “register of securities”, for “a register maintained by the issuer, whether by virtue of the 1995 Regulations or otherwise” there shall be substituted “a register, whether maintained by virtue of the Uncertificated Securities Regulations 2001 or otherwise”;

• (ii) the definition of “the 1995 Regulations” shall be omitted;

• (iii) in the definition of “relevant nominee”, for “paragraph 19(d) of Schedule 1 to the 1995 Regulations” there shall be substituted “paragraph 25(f) of Schedule 1 to the Uncertificated Securities Regulations 2001”;

• (iv) in the definition of “transfer”, for “the generation of an Operator-instruction requiring a participating issuer to register a system-member on the relevant register of securities as the holder of those units;” there shall be substituted “the registration of a transfer of title to those units in the relevant Operator register of securities;”; and

• (v) in the full-out to regulation 2(1), for “the 1995 Regulations” there shall be substituted “the Uncertificated Securities Regulations 2001”;

• (b) in regulation 2(2)(a), for “regulation 19 of the 1995 Regulations” there shall be substituted “regulation 20, 21 or 22 of the Uncertificated Securities Regulations 2001”; and