The Risk Transformation Regulations 2017

• (b) if the shares in question fall within sub-paragraph (a) or (b) of regulation 110(1), such evidence of title to those shares as is required by the protected cell company's instrument of incorporation.

Transfers

121

• (1) A protected cell company may not register a transfer of shares unless—

• (a) the transfer documents relating to the transfer have been delivered to the protected cell company; or

• (b) title to the shares has been transmitted by operation of law.

• (2) Where transfer documents relating to a share transfer are delivered to a protected cell company, the protected cell company must amend the register of shareholders and index accordingly.

• (3) But a protected cell company may refuse to register a transfer of shares where—

• (a) a person holding shares issued on behalf of a part of the protected cell company is required to hold less or more than a specified number of shares issued on behalf of that part and the transfer would result in the transferor or transferee breaching that requirement;

• (b) the transfer would contravene a provision of the protected cell company's instrument of incorporation or a provision of law (including any law that is for the time being in force in a country or territory outside of the United Kingdom); or

• (c) the transferee fails to provide the protected cell company with such evidence as the protected cell company may reasonably require to satisfy the protected cell company that the transferee is a qualified investor within the meaning given by regulation 10.

• (4) A protected cell company—

• (a) may only refuse to register a transfer pursuant to sub-paragraph (a) or (b) of paragraph (3) during the period of 21 days commencing with the date the transfer documents are delivered to the protected cell company; and

• (b) must give the transferee written notice of a refusal to register a transfer of shares, unless the giving of such a notice would contravene a provision of law (including any law that is for the time being in force in a country or territory outside of the United Kingdom).

• (5) A transfer of shares by the personal representative of a deceased person is valid as if the personal representative had been the holder of the deceased person's shares at the time of the execution of the instrument of transfer.

Certification of transfer

122

• (1) Where, in respect of a transfer of shares, a protected cell company certifies that it has received the transfer documents, that certification is to be taken as a representation by the protected cell company to any person acting in reliance on the certification that there has been produced to the protected cell company sufficient evidence to show that the transferor has title to the shares in the absence of proof to the contrary.

• (2) A certification is made by a protected cell company if the instrument of transfer—

• (a) bears the words “ certificate lodged” or words to the like effect; and

• (b) is signed by a person acting under authority (whether express or implied) given by the protected cell company to issue and sign such certificates.

• (3) But a certificate is not to be taken as a representation that the transferor has any title to the shares in question.

• (4) Where a person acts in reliance on a false certification by a protected cell company which is made negligently or fraudulently, the protected cell company is liable to pay that person out of assets held by the protected cell company on behalf of the core any damages that the person has sustained.

Joint shareholdings

123

On the death of any one of the joint holders of a share, the survivors are to be the only persons recognised by the protected cell company as having any title to or any interest in those shares.

SECTION 6 — Distributions

Meaning of “distribution”

124

In regulations 125 and 126, “distribution” means every description of a distribution of an asset to a shareholder, except for the redemption or acquisition of shares held by that shareholder in accordance with regulation 106 or 107.

Distributions to holders of shares in a cell

125

• (1) This regulation applies where a protected cell company makes a distribution to a person holding a share issued by the protected cell company on behalf of a cell.

• (2) Where the cell is not a member of a group of cells, the protected cell company may only make the distribution if the following conditions are satisfied—

• (a) the distribution is made from assets held by the protected cell company on behalf of the cell; and

• (b) where the protected cell company has a liability to an undertaking arising under a contract made between the undertaking and the protected cell company acting on behalf of the cell, the undertaking has consented to the distribution (whether in the contract or otherwise).

• (3) Where the cell (“the relevant cell”) is a member of a group of cells, the protected cell company may only make the distribution if the following conditions are satisfied—

• (a) the distribution is made from assets held by the protected cell company on behalf of the relevant cell;

• (b) the protected cell company will, immediately after the distribution, hold sufficient assets on behalf of the relevant cell to enable the protected cell company to give effect to any enforceable arrangements made between the relevant cell and any other cell; and

• (c) where the protected cell company has a liability to an undertaking arising under a contract made between the undertaking and the protected cell company acting on behalf of a cell in that group of cells, the undertaking has consented to the distribution (whether in the contract or otherwise).

Distributions to holders of shares in the core

126

• (1) This regulation applies where a protected cell company makes a distribution to a person holding a share issued by the protected cell company on behalf of the core.

• (2) The distribution may only be made if the protected cell company has no cells.

• (3) The distribution must be made from assets held by the protected cell company on behalf of the core.

Persons holding investments in different parts of the protected cell company

127

• (1) This regulation applies where—

• (a) a person (“P”) holds investments issued on behalf of number of different parts of a protected cell company;

• (b) those investments include shares issued on behalf of a part of the protected cell company; and

• (c) the protected cell company makes a distribution to P in P's capacity as the holder of shares issued on behalf of that part of the protected cell company.

• (2) Regulations 125 and 126 apply to the distribution as if the only investment held by P were the shares issued on behalf of that part of the protected cell company.

Consequences of unlawful distribution

128

• (1) This regulation applies to a distribution, or a part of a distribution, which is made by a protected cell company—

• (a) from assets held on behalf of a part (“part A”) of the protected cell company;

• (b) to a person holding a share issued by the protected cell company on behalf of a part of a protected cell company (either part A or another part); and

• (c) in contravention of regulation 125 or 126.

• (2) If at the time of the distribution the person knows or has reasonable grounds for believing that it is made in contravention of regulation 125 or 126, the person is liable—

• (a) to repay the distribution (or that part of it, as the case may be) to the protected cell company; or

• (b) in the case of a distribution made otherwise than in cash, to pay the protected cell company a sum equal to the value of the distribution (or part of it) at that time.

• (3) This regulation is without prejudice to any obligation imposed apart from this regulation on a person to repay a distribution which was made unlawfully to that person.

• (4) A payment made to a protected cell company in accordance with paragraph (2) must be held by the protected cell company on behalf of part A.

SECTION 7 — Annual General Meetings

Requirement to hold an annual general meeting

129

• (1) A protected cell company must hold annual general meetings in accordance with this regulation unless the protected cell company elects to dispense with annual general meetings in accordance with regulation 130.

• (2) A protected cell company must hold its first annual general meeting before the end of a period of 18 months beginning with the date it is first authorised to carry out the activity specified in article 13A (transformer vehicles: insurance risk transformation) of the Regulated Activities Order.

• (3) A protected cell company must hold an annual general meeting in each calendar year after the year in which it holds its first annual general meeting, provided no more than 15 months elapse between the date of one annual general meeting and the date of the next annual general meeting.

Election to dispense with annual general meetings

130

• (1) The directors of a protected cell company may elect to dispense with the holding of annual general meetings by giving 60 days' written notice to all persons holding shares issued on behalf of the core of the protected cell company.

• (2) Where the directors of a protected cell company elect to dispense with annual general meetings, they may terminate that election by giving written notice to all persons holding shares issued on behalf of the core of the protected cell company.

• (3) An election has effect for the year in which it is made and all subsequent years, but does not affect any liability already incurred by reason of default in holding an annual general meeting.

• (4) Where an election is terminated—

• (a) the protected cell company must hold an annual general meeting within a period of 12 months beginning with the date on which the notice of termination is given; and

• (b) paragraph (3) of regulation 129 applies with the reference to “first annual general meeting” being treated as a reference to the annual general meeting held in accordance with sub-paragraph (a) of this paragraph.

SECTION 8 — Miscellaneous

Holding companies and subsidiaries: prohibition on shareholdings

131

• (1) A protected cell company may not hold shares in a company which is the protected cell company's holding company (within the meaning given by section 1159 of the Companies Act 2006).

• (2) An allotment or transfer of shares issued on behalf of the core or a cell of a protected cell company to a subsidiary (within the meaning given by section 1159 of the Companies Act 2006) of a protected cell company is void.

Contracts between the protected cell company and shareholders

132

A contract between a protected cell company and a person must be in writing or recorded in the minutes of the protected cell company where—

• (a) that person holds all the shares issued on behalf of the core of the protected cell company; and

• (b) the contract does not relate to the current business of the protected cell company or was concluded under unusual conditions.

Information on capital subscribed

133

• (1) If the protected cell company's instrument of incorporation specifies an amount of authorised capital in relation to any part of the protected cell company, the protected cell company must notify the FCA of the amount of capital subscribed in relation to that part, unless an increase in the capital subscribed necessitates an amendment to the instrument of incorporation.

• (2) The information referred to in paragraph (1) must be provided at least once a year.

CHAPTER 10 — Shareholder resolutions

Application

134

The provisions of this Chapter apply—

• (a) to the persons holding voting shares issued on behalf of the core of the protected cell company; and

• (b) with any necessary modifications, to the persons holding a class of such shares.

Resolutions

135

• (1) A resolution of the persons holding voting shares issued on behalf of the core of a protected cell company must be passed—

• (a) as a written resolution in accordance with regulation 137 (written resolutions); or

• (b) at a general meeting (see regulations 138 to 144).

• (2) For the purposes of this Chapter—

• (a) a resolution may be properly moved at a meeting unless—

• (i) it would, if passed, be ineffective (whether by reason of inconsistency with an enactment, the protected cell company's instrument of incorporation or otherwise);

• (ii) it is defamatory of any person; or

• (iii) it is frivolous or vexatious;

• (b) a resolution, notice or any other document may be sent in hard copy form or electronic form;

• (c) where a resolution must be sent to more than one person, the same copy may be sent to some or all of those persons in turn; and

• (d) where a request or a document which is sent to a protected cell company must be authenticated, the request or document must be authenticated in accordance with section 1146 (requirement of authentication) of the Companies Act 2006 (which applies for these purposes with the reference to a company's articles in subsection (4) being treated as a reference to the protected cell company's instrument of incorporation).

Shareholders acting informally (the Duomatic principle)

136

• (1) Any enactment or rule of law relating to a matter specified in paragraph (3) applies to voting shares issued on behalf of the core of the protected cell company as it applies to shares issued by a company registered under the Companies Act 2006.

• (2) Nothing in this Chapter affects an enactment or rule of law relating to a matter specified in paragraph (3).

• (3) The matters mentioned in paragraphs (1) and (2) are—

• (a) things done by the shareholders otherwise than by passing a resolution;

• (b) circumstances in which a shareholders' resolution is or is not treated as having been passed;

• (c) cases in which a person is precluded from alleging that a shareholders' resolution has not been duly passed.

Written resolutions

137

• (1) The following persons may propose a written resolution—

• (a) the directors of the protected cell company;

• (b) a person holding voting shares issued on behalf of the core of the protected cell company.

• (2) A written resolution must state a period of time, beginning with the circulation date, after which it will lapse.

• (3) Where the directors propose a written resolution, the protected cell company must send the resolution to all of the shareholders eligible to vote on it.

• (4) Where a shareholder proposes a written resolution, the protected cell company must send the resolution to all the shareholders eligible to vote on it, provided that—

• (a) the written resolution may properly be moved at a meeting of shareholders; and

• (b) the protected cell company has received requests to do so from persons representing not less than 5% of the total voting rights of those shareholders who are eligible to vote on the written resolution.

• (5) The requests referred to in paragraph (4)(b) must identify the resolution and must be authenticated by the person or persons making it.

• (6) The person proposing the written resolution may also require the protected cell company to circulate with the written resolution a statement of not more than 1,000 words on the subject matter of the resolution.

• (7) A person is deemed to have agreed to a written resolution where the protected cell company receives an authenticated document—

• (a) identifying the resolution to which it relates; and

• (b) indicating the person's agreement to the resolution.

• (8) Agreement to a written resolution may not be revoked.

• (9) A written resolution must be passed—

• (a) by a simple majority of the total voting rights of those shareholders who would be entitled to vote on the resolution on the date it is sent or submitted to the shareholders (or if copies are sent or submitted on different days, on the first of those days); and

• (b) before the resolution lapses.

• (10) But paragraph (9)(a) does not prevent the protected cell company's instrument of incorporation requiring a higher majority or unanimity.

Calling a shareholders' meeting

138

• (1) The directors of a protected cell company may call a general meeting.

• (2) The persons holding voting shares issued on behalf of the core of a protected cell company may require the directors to call a general meeting.

• (3) The directors are required to call a general meeting once the protected cell company has received requests to do so from persons representing at least 5% of the voting shares issued on behalf of the core of the protected cell company.

• (4) A request—

• (a) must state the general nature of the business to be dealt with at the meeting; and

• (b) may include the text of a resolution that may properly be moved and is intended to be moved at the meeting.

• (5) A request must be authenticated by the person or persons making it.

Directors' duty to call meetings required by members

139

• (1) Directors required under regulation 138(3) to call a general meeting must—

• (a) call the meeting before the end of a period of 21 days beginning with the date on which they become subject to the requirement; and

• (b) hold the meeting before the end of a period of 28 days beginning with the date of the notice convening the meeting.

• (2) If the requests received by the protected cell company identify a resolution to be moved at the meeting, notice of the meeting must include notice of the resolution.

• (3) The business that may be dealt with at the meeting includes a resolution of which notice is given in accordance with this regulation.

Notice required of meeting

140

• (1) A general meeting must be called by notice of at least 14 days.

• (2) Paragraph (1) does not apply where—

• (a) the protected cell company's instrument of incorporation requires a longer period; or

• (b) the meeting is an adjourned meeting.

• (3) Notice must be sent to—

• (a) every shareholder who is entitled to vote at the meeting;

• (b) any person who is entitled to a voting share in consequence of the death or bankruptcy of the person holding the voting share, provided the protected cell company has been notified of such an entitlement; and

• (c) every director.

• (4) In sub-paragraph (b) of paragraph (3), the reference to bankruptcy includes—

• (a) the sequestration of the estate of a person; or

• (b) a person's estate being the subject of a protected trust deed (within the meaning of the Bankruptcy (Scotland) Act 2016).

• (5) Paragraph (3) has effect subject to—

• (a) any enactment; or

• (b) any provision of the protected cell company's instrument of incorporation.

• (6) The notice must state—

• (a) the time and date of the meeting;

• (b) the place of the meeting; and

• (c) the general nature of the business to be dealt with at the meeting.

Accidental failure to give notice of resolution or meeting

141

• (1) Where a protected cell company gives notice of a general meeting or a resolution to be moved at a general meeting, an accidental failure to give notice to a person is to be disregarded for the purposes of determining whether notice of the meeting or resolution (as the case may be) is duly given.

• (2) Paragraph (1) has effect subject to any provision of the protected cell company's instrument of incorporation.

Procedure at general meetings

142

• (1) A person holding voting shares issued on behalf of the core of a protected cell company may be elected to chair a general meeting by a resolution passed by the persons holding voting shares, subject to any provision of the protected cell company's instrument of incorporation.

• (2) On a vote on a resolution at a meeting on a show of hands, a declaration by the person chairing the meeting that the resolution—

• (a) has or has not passed; or

• (b) has passed with a particular majority,

is conclusive evidence of that fact without proof of the number or proportion of the votes recorded in favour of or against the resolution.

• (3) An entry in respect of such a declaration in minutes of the meeting recorded in accordance with regulation 145 is also conclusive evidence of that fact without such proof.

• (4) Where a resolution is passed at an adjourned meeting of shareholders, the resolution is for all purposes to be treated as having been passed on the date on which it was in fact passed, and is not to be deemed passed on any earlier date.

Representation of corporations

143

• (1) If a corporation holds voting shares issued on behalf of the core of a protected cell company, the corporation may authorise a person to act as its representative at any meeting of shareholders.

• (2) The representative is entitled to exercise (on behalf of the corporation) the same powers as the corporation could exercise if it were an individual holding those voting shares.

Proxies

144

• (1) A person holding voting shares issued on behalf of the core of a protected cell company is entitled to appoint a proxy to exercise all or any of the person's rights to attend, speak at, chair and vote at a general meeting.

• (2) But a proxy must vote in accordance with any instructions given by the person appointing the proxy.

• (3) Termination of a person's authority to act as a proxy does not affect—

• (a) the validity of anything the proxy does as chair of the meeting;

• (b) a vote given by the proxy,

unless the protected cell company receives notice of termination before the commencement of the meeting.

• (4) Paragraph (3) has effect subject to any provision of the protected cell company's instrument of incorporation which requires notice of termination to be received by the protected cell company at a time which is earlier than the commencement of the meeting.

• (5) But a provision of the protected cell company's instrument of incorporation is void insofar as it requires the appointment of a proxy or the termination of such an appointment to be notified to the protected cell company earlier than 48 hours before the time for holding the meeting or adjourned meeting.

• (6) In calculating the period of 48 hours mentioned in paragraph (5), no account is to be taken of any part of a day that is not a working day.

Records of meetings

145

• (1) A protected cell company must keep records comprising—

• (a) copies of all resolutions passed at general meetings (including meetings of a sole shareholder); and

• (b) minutes of all proceedings at such meetings.

• (2) The records must be kept for at least ten years from the date of the resolution or meeting (as the case may be).

• (3) Where there is a record of a written resolution, the requirements of this Chapter as to the passing of the resolution are deemed to be complied with unless the contrary is proved.

• (4) The minutes of proceedings at a meeting, if purporting to be signed by the chair of the meeting or the chair of the next meeting, are evidence (in Scotland, sufficient evidence) of the proceedings at the meeting.

• (5) Where there is a record of proceedings at a meeting, then, until the contrary is proved—

• (a) the meeting is deemed duly held and convened;

• (b) all proceedings at the meeting are deemed to have duly taken place; and

• (c) all appointments at the meeting are deemed valid.

Inspection of records

146

• (1) The records referred to in regulation 145 must be kept available for inspection at the protected cell company's registered office or an alternative inspection location notified to the FCA in accordance with regulation 67.

• (2) A person holding voting shares issued on behalf of the core of the protected cell company may—

• (a) inspect the records without charge; and

• (b) require a copy of any of the records on payment of a fee (which may not exceed the administrative cost to the protected cell company of providing the copy).

CHAPTER 11 — Debentures (debt securities)

Debentures

147

A protected cell company may only issue debentures on behalf of a part of the protected cell company.

Transfers by a cell to a debenture holder

148

• (1) This regulation applies where a protected cell company transfers an asset held by the protected cell company to the holder of a debenture issued on behalf of a cell in full or partial satisfaction of any indebtedness arising under or acknowledged by the debenture.

• (2) Where the cell is not a member of a group of cells, the protected cell company may only transfer the asset if the following conditions are satisfied—

• (a) the asset is held by the protected cell company on behalf of the cell; and

• (b) where the protected cell company has a liability to an undertaking arising under a contract made between the undertaking and the protected cell company acting on behalf of the cell, the undertaking has consented to the transfer (whether in the contract or otherwise).

• (3) Where the cell (“the relevant cell”) is a member of a group of cells, the protected cell company may only transfer the asset if the following conditions are satisfied—

• (a) the asset is held by the protected cell company on behalf of the relevant cell;

• (b) the protected cell company will, immediately after the transfer, hold sufficient assets on behalf of the relevant cell to enable the protected cell company to give effect to any enforceable arrangements made between the relevant cell and any other cell; and

• (c) where the protected cell company has a liability to an undertaking arising under a contract made between the undertaking and the protected cell company acting on behalf of a cell in that group of cells, the undertaking has consented to the transfer (whether in the contract or otherwise).

Consequences of unlawful transfer

149

• (1) This regulation applies to a transfer, or a part of a transfer, which is made by a protected cell company—

• (a) from assets held on behalf of a part (“part A”) of the protected cell company;

• (b) to a person holding a debenture issued by the protected cell company on behalf of a part of a protected cell company (either part A or another part); and

• (c) in contravention of regulation 148.

• (2) If at the time of the transfer the person knows or has reasonable grounds for believing that it is made in contravention of regulation 148, the person is liable—

• (a) to repay the amount transferred (or that part of it, as the case may be) to the protected cell company; or

• (b) in the case of a transfer made otherwise than in cash, to pay the protected cell company a sum equal to the value of the transfer (or part of it) at that time.

• (3) This regulation is without prejudice to any obligation imposed apart from this regulation on a person to repay a transfer which was made unlawfully to that person.

• (4) A payment made to a protected cell company in accordance with paragraph (2) must be held by the protected cell company on behalf of part A.

Perpetual debentures

150

A condition contained in debentures, or in a deed for securing debentures, is not invalid by reason only that the debentures are made redeemable only—

• (a) on the happening of a contingency (however remote); or

• (b) on the expiration of a period (however long),

any rule of equity notwithstanding.

Enforcement of contract to subscribe for debentures

151

A contract with a protected cell company to take up and pay for debentures may be enforced by an order for specific performance.

Debentures to bearer (Scotland)

152

Notwithstanding anything in the statute of the Scots Parliament of 1696, chapter 25, debentures to bearer issued in Scotland are valid and binding according to their terms.

Liability of trustees of debentures

153

• (1) A provision contained in—

• (a) a trust deed for securing an issue of debentures by a protected cell company; or

• (b) any contract with the holders of debentures issued by a protected cell company, secured by a trust deed,

is void insofar as it would have the effect of exempting a trustee (“T”) of the deed from, or indemnifying T against, liability for breach of trust where T fails to show the degree of care and diligence required of T as trustee, having regard to the provisions of the trust deed conferring on T any powers, authorities or discretions.

• (2) Paragraph (1) does not invalidate—

• (a) a release otherwise validly given in respect of anything done or omitted to be done by T before the giving of the release;

• (b) any provision enabling such a release to be given—

• (i) on being agreed to by a majority of not less than 75% in value of the debenture holders present and voting in person or, where proxies are permitted, by proxy at a meeting summoned for the purpose; and

• (ii) either with respect to specific acts or omissions or on the trustee dying or ceasing to act.

CHAPTER 12 — Security interests

Creation of security interests

154

• (1) A protected cell company may only create or assert a security interest over assets held by the protected cell company on behalf of a part of the protected cell company if the security interest does not secure a liability or obligation which is incurred on behalf of, or which is attributable to, another part of the protected cell company.

• (2) A protected cell company may only create or assert a security interest over the undertaking of part of the protected cell company if the security interest does not secure a liability or obligation which is incurred on behalf of, or which is attributable to, another part of the protected cell company.

• (3) A security interest is void if it contravenes the requirements of paragraph (1) or (2).

• (4) In this regulation, “security interest” means—

• (a) a lien, pledge, charge or mortgage; or

• (b) a standard security, assignation in security or any other right in security constituted under the law of Scotland, including any heritable security.

Registration of charges

155

• (1) Part 25 (company charges) of the Companies Act 2006 applies in relation to a charge created by a protected cell company as it applies in relation to a charge created by a company registered under that Act .

• (2) In their application in relation to charges created by a protected cell company, the provisions of Part 25 of the Companies Act 2006 apply with the following modifications—

• (a) references to the registrar are to be treated as references to the FCA;

• (b) references to the registered number of a company which is a protected cell company are to be treated as references to the number given to the protected cell company by the FCA in accordance with regulation 31(1);

• (c) the modifications specified in the second column of Table 4 in relation to the sections of the Companies Act 2006 specified in the first column of Table 4.

Sections of Companies Act 2006	Modifications
Section 859D (particulars to be delivered to registrar)	In subsection (2)(b), treat the reference to the property and undertaking of the company as a reference to the property held by the protected cell company on behalf of the part of the protected cell company to which the charge relates and the undertaking of that part.
Section 859F (extension of period allowed for delivery)	In subsection (2)(a)(ii), treat the reference to the creditors or shareholders of the company as a reference to the persons who are creditors or shareholders in respect of the part of the protected cell company to which the charge relates.
Section 859H (consequence of failure to deliver charges)	In paragraphs (a) and (b) of subsection (3), treat the references to the company as references to the part of the protected cell company to which the charge relates. In paragraph (c) of subsection (3), treat the reference to a creditor of the company as a reference to a person who is a creditor in respect of the part of the protected cell company to which the charge relates.
Section 859K (registration of enforcement of security)	Ignore this section.
Section 859M (rectification of register)	In subsection (2)(a)(ii), treat the reference to the creditors or shareholders of the company as a reference to the persons who are creditors or shareholders in respect of the part of the protected cell company to which the charge relates.
Section 859P (companies to keep copies of instruments creating and amending charges)	Ignore subsection (5).
Section 859Q (instruments creating charges to be available for inspection)	In subsection (2)(b), treat the reference to a place specified in regulations under section 1136 of the Companies Act 2006 as a reference to an alternative inspection location notified to the FCA in accordance with regulation 67.
Section 859Q (instruments creating charges to be available for inspection)	In subsection (4)(a), treat the reference to any creditor or member of the company as a reference to any person who is a creditor or shareholder in respect of the part of the protected cell company to which the charge relates.
Section 893 (power to make provision for effect of registration in special register)	Ignore this section.
Section 894 (general power to make amendments to this Part)	Ignore this section.

• (3) In this regulation, “charge” has the meaning given by section 859A(7) of the Companies Act 2006.

CHAPTER 13 — Public offers of securities

Meaning of “securities”

156

In this Chapter, “securities” means shares or debentures.

Prohibition on offering securities to the public

157

• (1) A protected cell company must not—

• (a) offer to the public any securities issued on behalf of any part of the protected cell company; or

• (b) allot or agree to allot any securities issued on behalf of any part of the protected cell company with a view to their being offered to the public.

• (2) Unless the contrary is proved, an allotment or agreement to allot securities is presumed to be made with a view to their being offered to the public if an offer of the securities (or any of them) to the public is made—

• (a) within a period of six months beginning with the date of the allotment or agreement to allot; or

• (b) before the receipt by the protected cell company of the whole of the consideration to be received by it in respect of the securities.

Meaning of “offer to the public”

158

• (1) This regulation explains what is meant in regulation 157 by an offer of securities to the public.

• (2) An offer to the public includes an offer to any section of the public, however selected.

• (3) An offer is not to be regarded as an offer to the public if—

• (a) it is an offer made solely to qualified investors; and

• (b) it can properly be regarded, in all the circumstances, as not being calculated to result, directly or indirectly, in securities issued by the protected cell company becoming available to persons who are not qualified investors.

• (3A) In this regulation, “qualified investor” has the meaning given in regulation 10.

• (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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

Restraining order

159

• (1) The High Court or, in Scotland, the Court of Session may make an order under this regulation if it appears to the court on an application under this regulation that a protected cell company is proposing to act in contravention of regulation 157.

• (2) An order under this regulation is an order restraining the protected cell company from contravening that regulation.

• (3) An application for an order under this regulation may be made by—

• (a) the FCA;

• (b) a person holding securities issued by the protected cell company; or

• (c) a creditor of the protected cell company.

Remedial orders

160

• (1) A “remedial order” is an order for the purpose of putting a person affected by anything done in contravention of regulation 157 in the position the person would have been in if it had not been done.

• (2) The High Court or, in Scotland, the Court of Session may make a remedial order under this regulation if it appears to the court on an application under this regulation that a protected cell company has acted in contravention of regulation 157.

• (3) The following provisions are without prejudice to the generality of the power to make a remedial order.

• (4) Where a protected cell company has—

• (a) allotted securities pursuant to an offer to the public; or

• (b) allotted or agreed to allot securities with a view to their being offered to the public,

a remedial order may require any person knowingly concerned in the contravention of regulation 157 to offer to purchase any of those securities at such price and on such other terms as the court thinks fit.

• (5) A remedial order may be made—

• (a) against any person knowingly concerned in the contravention, whether or not the person is an officer of the protected cell company;

• (b) notwithstanding anything in the protected cell company's instrument of incorporation (which includes, for this purpose, the terms on which any securities are allotted or held);

• (c) whether or not the holder of the securities subject to the order is the person to whom the protected cell company allotted or agreed to allot them.

• (6) Where a remedial order is made in respect of a part of a protected cell company, the court may provide for the reduction of that part's capital accordingly.

Validity of allotment etc not affected

161

Nothing in this Chapter affects the validity of any allotment or sale of securities or of any agreement to allot or sell securities.

CHAPTER 14 — Accounts, reports, audit and auditors

Meaning of “Companies Act regime”

162

In this Chapter, “Companies Act regime” means Parts 15 (accounts and reports) and 16 (audit) of the Companies Act 2006 and all subordinate legislation made under those Parts.

Application of Companies Act regime

163

• (1) The Companies Act regime applies to protected cell companies as it applies to companies which—

• (a) are incorporated under the Companies Act 2006; and

• (b) are private companies limited by shares (within the meaning given by sections 3 and 4 of that Act).

• (2) In their application to protected cell companies, the provisions of the Companies Act regime apply with the following modifications—

• (a) references to the registrar are to be treated as references to the FCA;

• (b) references to the registered number of a company which is a protected cell company are to be treated as references to the number given to the protected cell company by the FCA under regulation 31(1);

• (c) references to the articles or constitution of a company which is a protected cell company are to be treated as references to the protected cell company's instrument of incorporation;

• (d) references to the members of a company which is a protected cell company are to be treated as references to the protected cell company's shareholders, except in the following sections of the Companies Act 2006 where they are to be treated as references to the persons holding shares issued by the protected cell company on behalf of the core—

• (i) section 485(4) (appointment of auditors of private company: general);

• (ii) section 488(1) (prevention by members of deemed re-appointment of auditor);

• (iii) section 492(1) (fixing of auditor's remuneration);

• (iv) section 502 (auditor's rights in relation to resolutions and meetings);

• (v) section 510(1) (resolution removing auditor from office);

• (vi) section 511 (special notice required for resolution removing auditor from office);

• (vii) section 515 (failure to re-appoint auditor: special notice required for resolution at general meeting) ;

• (viii) section 518 (rights of resigning auditor) ;

• (ix) section 536 (authorisation of agreement by members of the company);

• (e) references to an ordinary resolution of the members of a protected cell company are to be treated as references to a resolution of the persons holding shares issued by the protected cell company on behalf of the core which has been approved by a simple majority of the total voting rights of those shareholders who would be entitled to vote on the resolution;

• (f) references to the winding up of a company which is a protected cell company are to be treated as references to the winding up of any part of the protected cell company;

• (g) the modifications specified in the second column of Table 5 in relation to the provisions of the Companies Act 2006 specified in the first column of Table 5.

Provision	Modification
Section 388 (where and for how long records to be kept)	In subsection (1)(a), treat the reference to the registered office as including a reference to an alternative inspection location notified to the FCA in accordance with regulation 67.
Section 414C (contents of strategic report)	In subsection (1), treat the reference to section 172 of the Companies Act 2006 as a reference to that section as applied by regulation 83(1).
Section 502 (auditor's rights in relation to resolutions and meetings)	In subsection (1), treat the reference to Chapter 2 of Part 13 of the Companies Act 2006 as a reference to Chapter 10 of Part 4 of these Regulations.
Section 518 (rights of resigning auditor)	Where a protected cell company sends a notice or statement in accordance with this section, it must send a copy of that notice or statement to the persons holding shares or debentures issued by the protected cell company on behalf of a cell.
Section 518 (rights of resigning auditor)	Where such a person receives a copy of a notice of a general meeting, that person may attend (but not vote) at the general meeting.
Section 536 (authorisation of agreement by members of the company)	In subsection (2), treat the references to a resolution as references to a resolution of the persons holding shares issued by the protected cell company on behalf of the core.

Relationship with regulation 46

164

Any accounts or records which a protected cell company is required to keep in accordance with the Companies Act regime, as applied by regulation 163, are in addition to the accounts and records that the protected cell company must keep in accordance with regulation 46 (records and accounts of assets, liabilities and obligations).

Application of Part 42 (statutory auditors) of the Companies Act 2006

165

For the purposes of section 1210(1)(a) (meaning of “statutory auditor” etc) of the Companies Act 2006, a person appointed as an auditor of a protected cell company under Part 16 of the Companies Act 2006, as applied by regulation 163, is to be treated as an auditor appointed under Part 16 of that Act.

CHAPTER 15 — Insolvency

Insolvency of a cell

166

• (1) A cell of a protected cell company may be—

• (a) put into administration as if it were a company under Schedule B1 (administration) to the Insolvency Act 1986 or Schedule B1 (administration) to the Insolvency (Northern Ireland) Order 1989 ; or

• (b) wound up as if it were an unregistered company under Part 5 (winding up of unregistered companies) of the Insolvency Act 1986 or Part 6 (winding up of unregistered companies) of the Insolvency (Northern Ireland) Order 1989.

• (2) For these purposes, the insolvency legislation applies in relation to the cell with the modifications set out in Schedule 2.

• (3) Where a written demand is served on a cell by a creditor in accordance with section 222(1)(a) (inability to pay debts: unpaid creditor of £750 or more) of the Insolvency Act 1986 or Article 186(1)(a) (inability to pay debts: unpaid creditor of £750 or more) of the Insolvency (Northern Ireland) Order 1989, the cell may apply to the High Court (or in Scotland the Court of Session) for an injunction restraining (or in Scotland an interdict prohibiting) the creditor from presenting or giving notice of a winding-up petition as if the cell has distinct legal personality.

• (4) The entry of a cell of a protected cell company into administration or liquidation does not affect the power of the protected cell company or the directors of the protected cell company to act in relation to the core or the cells.

• (5) But the protected cell company and the directors of the protected cell company may not exercise a management power in relation to a cell in administration or liquidation without the consent of the administrator or liquidator of the cell.

• (6) For the purposes of paragraph (5)—

• (a) “management power” means a power which could be exercised so as to interfere with the exercise of the powers of the administrator or liquidator;

• (b) it is immaterial whether the power is conferred on the protected cell company or the directors by an enactment or an instrument; and

• (c) consent may be general or specific.

Insolvency of the core

167

• (1) The core of a protected cell company may be—

• (a) put into administration as if it were a company under Schedule B1 (administration) to the Insolvency Act 1986 or Schedule B1 (administration) to the Insolvency (Northern Ireland) Order 1989; or

• (b) wound up as if it were an unregistered company under Part 5 (winding up of unregistered companies) of the Insolvency Act 1986 or Part 6 (winding up of unregistered companies) of the Insolvency (Northern Ireland) Order 1989.

• (2) For these purposes, the insolvency legislation applies in relation to the core with the modifications set out in Schedule 3.

• (3) Where a written demand is served on the core by a creditor in accordance with section 222(1)(a) (inability to pay debts: unpaid creditor of £750 or more) of the Insolvency Act 1986 or Article 186(1)(a) (inability to pay debts: unpaid creditor of £750 or more) of the Insolvency (Northern Ireland) Order 1989, the core may apply to the High Court (or in Scotland the Court of Session) for an injunction restraining (or in Scotland an interdict prohibiting) the creditor from presenting or giving notice of a winding-up petition as if the core has distinct legal personality.

• (4) The entry of the core of a protected cell company into administration or liquidation does not affect the powers of the protected cell company or the directors of the protected cell company to act in relation to the core or the cells.

• (5) But the protected cell company and the directors of the protected cell company may not exercise a management power in relation to—

• (a) the core of the protected cell company; or

• (b) any cell of the protected cell company which is not in administration or liquidation,

without the consent of the administrator or liquidator of the core.

• (6) For the purposes of paragraph (5)—

• (a) “management power” means a power which could be exercised so as to interfere with the exercise of the powers of the administrator or liquidator;

• (b) it is immaterial whether the power is conferred on the protected cell company or the directors by an enactment or an instrument; and

• (c) consent may be general or specific.

Concurrent insolvency

168

Where two or more parts of a protected cell company are in administration or liquidation concurrently by virtue of regulation 166 or 167, then—

• (a) the insolvency legislation (as applied by regulations 166(2) or 167(2)) applies in relation to each part separately; and

• (b) the administrators or liquidators (as the case may be) of those parts must cooperate fully with each other in the discharge of their functions.

Disapplication of other insolvency proceedings

169

• (1) Except to the extent provided for in this Chapter—

• (a) a protected cell company may not propose a voluntary arrangement;

• (b) neither a protected cell company nor a part of a protected cell company may be placed into administration;

• (c) a receiver (including an administrative receiver) may not be appointed in respect of any property held by the protected cell company;

• (d) a protected cell company may not pass a resolution for the winding up of the protected cell company or any part of the protected cell company;

• (e) a winding-up order may not be made against the protected cell company or any part of the protected cell company;

• (f) the estate of a protected cell company or any part of a protected cell company may not be sequestrated under section 6 of the Bankruptcy (Scotland) Act 2016;

• (g) neither the protected cell company nor a part of the protected cell company may be subject to any other process under the insolvency legislation which applies to a person who is insolvent or who is likely to become insolvent .

• (2) The reference in paragraph (1)(d) to winding up includes a reference to a members' voluntary winding up under Chapter 3 of Part 4 of the Insolvency Act 1986 or Chapter 3 of Part 5 of the Insolvency (Northern Ireland) Order 1989.

CHAPTER 16 — Mergers and Divisions

Meaning of “transfer scheme”, “transferor” and “transferee”

170

• (1) A scheme is a transfer scheme for the purposes of this Chapter if it falls within Case 1, 2 or 3.

• (2) Case 1 is that the scheme results in the transfer of one or more cells from one protected cell company to another protected cell company.

• (3) Case 2 is that the scheme results in the transfer of the following from a protected cell company to another person—

• (a) all of the assets held by the protected cell company on behalf of a cell;

• (b) all of the liabilities incurred by the protected cell company on behalf of that cell;

• (c) all of the liabilities of the protected cell company which are attributable to the cell; and

• (d) all of the investments issued by the protected cell company on behalf of that cell;

and the scheme is not a Case 1 transfer scheme.

• (4) Case 3 is that the scheme results in the transfer of—

• (a) some or all of the assets of a person to a protected cell company, to be held by the protected cell company on behalf of a cell;

• (b) some or all of the liabilities of a person to the protected cell company, to be treated as liabilities incurred by the protected cell company on behalf of that cell; and

• (c) some or all of the investments issued by that person to the protected cell company, to be treated as investments issued by the protected cell company on behalf of that cell,

and the scheme is not a Case 1 transfer scheme.

• (5) In this Chapter—

• “the transferor” is the person transferring the cell, assets, liabilities or investments (as the case may be); and

• “the transferee” is the person to whom the cell, assets, liabilities or investments (as the case may be) are transferred.

Meaning of “reference date”

171

In this Chapter, the “reference date” means the date chosen by a person in accordance with paragraph (2) of regulation 173.

Meaning of “affected parties”

172

• (1) In this Chapter, “affected parties” means—

• (a) in a Case 1 transfer scheme—

• (i) the FCA;

• (ii) the PRA;

• (iii) an undertaking from whom the transferor has assumed a risk on behalf of a relevant cell;

• (iv) all investors holding investments issued by the transferor on behalf of a relevant cell;

• (v) any other person to whom the transferor has incurred a liability on behalf of a relevant cell; and

• (vi) so far as the transferor is aware, any other person to whom the transferor has incurred a liability which is attributable to a relevant cell;

• (b) in a Case 2 transfer scheme—

• (i) the FCA;

• (ii) the PRA;

• (iii) an undertaking from whom the transferor has assumed a risk on behalf of a relevant cell;

• (iv) all investors holding investments issued by the transferor on behalf of a relevant cell;

• (v) any other person to whom the transferor has incurred a liability on behalf of a relevant cell;

• (vi) so far as the transferor is aware, any other person to whom the transferor has incurred a liability which is attributable to a relevant cell; and

• (vii) any person to whom the transferee has a liability or to whom the transferee has issued an investment;

• (c) in a Case 3 transfer scheme—

• (i) the FCA;

• (ii) the PRA;

• (iii) any person to whom the transferor has a liability, or to whom the transferor has issued an investment, which is to be transferred to the transferee as a result of the transfer scheme;

• (iv) any undertaking from whom the transferee has assumed a risk on behalf of a relevant cell;

• (v) all investors holding investments issued by the transferee on behalf of a relevant cell;

• (vi) any other person to whom the transferee has incurred a liability on behalf of a relevant cell; and

• (vii) so far as the transferee is aware, any other person to whom the transferee has incurred a liability which is attributable to a relevant cell.

• (2) In this regulation, a “relevant cell” is the cell to which the transfer scheme relates and any other cell which has entered into enforceable arrangements with that cell.

Requirements on applicants

173

• (1) A person must comply with the following requirements before making an application under regulation 174 (fast track transfers) or regulation 175 (transfers sanctioned by court order).

• (2) The person who proposes to make the application must decide on a date (by virtue of regulation 171, this date is known as the “reference date”).

• (3) Within a period of 10 working days beginning with the reference date, a notice stating that the person proposes to make the application must be—

• (a) published—

• (i) in the London, Edinburgh and Belfast Gazettes;

• (ii) in two national newspapers in the United Kingdom; and

• (iii) in a national newspaper in each of the countries or territories in which a person who was an affected party on the reference date is located; and

• (b) sent to all the persons who were affected parties on the reference date.

• (4) The applicant must provide the following documents free of charge and without delay to the FCA, the PRA and any other person who requests them—

• (a) a statement setting out the terms of the proposed transfer scheme; and

• (b) a copy of the proposed application.

Application for fast track transfer

174

• (1) An application may be made to the FCA for a fast track transfer where—

• (a) the transfer scheme falls entirely within Case 1 or entirely within Case 2;

• (b) in the case of a transfer scheme falling within Case 2—

• (i) the transferee is a private company limited by shares and registered under the Companies Act 2006; and

• (ii) the directors of the transferee are permitted by the transferee's articles of association to do all the things necessary for the transferee to enter into and complete the transfer scheme;

• (c) the applicant has complied with the requirements of regulation 173;

• (d) all the affected parties have given their written consent to the transfer scheme;

• (e) the transferee has permission under Part 4A of FSMA to carry out the activity specified in article 13A of the Regulated Activities Order; and

• (f) the application is made before the end of a period of 30 working days beginning with the reference date.

• (2) The application may be made by—

• (a) the transferor;

• (b) the transferee;

• (c) if the core of the transferor is in administration or liquidation, the administrator or liquidator of the core; or

• (d) any combination of the above persons.

• (3) An application must be accompanied by—

• (a) a statement made by or on behalf of the transferor and transferee consenting to the transfer;

• (b) a statement made by the solicitor or counsel for the applicant verifying that the requirements of paragraph (1) are satisfied in relation to the transfer scheme; and

• (c) a statement made by the solicitor or counsel for the applicant setting out the changes which will need to be made to the information contained on the FCA's register as a result of the transfer scheme or, if no such changes are required, stating that fact.

• (4) Where the FCA considers that the application complies with the requirements of this regulation, the FCA must—

• (a) register the application; and

• (b) notify the applicant and the PRA accordingly.

• (5) For the purposes of deciding whether the application complies with the requirements of this regulation, the FCA may rely on the statement made by the solicitor or counsel for the applicant in accordance with paragraph (3)(b).

• (6) The notification under paragraph (4)(b) must state the time and date when the application was registered.

• (7) When the applicant receives notification under paragraph (4)(b), the applicant must do the following without delay—

• (a) inform the transferor (except where applicant is the transferor);

• (b) inform the transferee (except where the applicant is the transferee);

• (c) publish a notice confirming that the transfer scheme has taken effect in—

• (i) the London, Edinburgh and Belfast Gazettes;

• (ii) two national newspapers in the United Kingdom; and

• (iii) a national newspaper in each of the countries or territories in which a person who was an affected party on the reference date is located; and

• (d) send a notice confirming that the transfer scheme has taken effect to—

• (i) all the persons who were affected parties on the reference date; and

• (ii) if the applicant is aware that any other person has become an affected party since the reference date, that other person.

• (8) The notice referred to in sub-paragraphs (c) and (d) of paragraph (7) must state the time and date when the transfer scheme was registered.

Application for court order sanctioning transfer scheme

175

• (1) An application may be made to the court for an order sanctioning a transfer scheme.

• (2) An application may be made by—

• (a) the transferor;

• (b) the transferee;

• (c) where the transferor is a protected cell company and the core of the protected cell company is in administration or liquidation, the administrator or liquidator; or

• (d) any combination of the above persons.

• (3) “Court” means—

• (a) the High Court; or

• (b) in Scotland, the Court of Session.

• (4) The following are entitled to be heard on an application—

• (a) the FCA;

• (b) the PRA; and

• (c) any person who alleges that they would be adversely affected by the transfer scheme.

• (5) The court may make an order sanctioning a transfer scheme provided it is appropriate to sanction the scheme in all the circumstances of the case.

• (6) The court may not determine an application—

• (a) where the applicant has failed to comply with the requirements in paragraphs (3) and (4) of regulation 173; and

• (b) until after the end of a period of 15 working days beginning with the day the FCA and PRA were given the documents mentioned in paragraph (4) of regulation 173 (or if the FCA and PRA were given the documents on different dates, the later of the two dates).

• (7) But the court may waive the requirements of the following provisions in such circumstances and subject to such conditions as the court considers appropriate—

• (a) sub-paragraphs (ii) and (iii) of regulation 173(3)(a); and

• (b) paragraph (4) of regulation 173 in relation to any person other than the FCA and the PRA.

Effect of fast track transfer

176

• (1) A transfer scheme falling within regulation 174 takes effect on its registration by the FCA in accordance with paragraph (4)(a) of that regulation.

• (2) Where the transfer scheme falls within Case 1, the following occur as a result of registration—

• (a) the cell ceases to be a part of the transferor (and in relation to the transferor is deemed to be dissolved);

• (b) the cell becomes a part of the transferee (and in relation to the transferee is deemed to be created);

• (c) all of the assets held by the transferor on behalf of the cell are vested in the transferee and are deemed to be held by the transferee on behalf of the cell;

• (d) all of the liabilities or obligations incurred by the transferor on behalf of the cell become liabilities or obligations of the transferee and are deemed to be liabilities or obligations incurred by the transferee on behalf of the cell;

• (e) all of the liabilities or obligations of the transferor which are attributable to the cell become liabilities or obligations of the transferee and are deemed to be liabilities or obligations attributable to the cell;

• (f) where the transferor has, on behalf of the cell, entered into a contract with the transferee then, to the extent that the transferor was acting on behalf of the cell, regulation 74 applies to the contract after the transfer with the following modifications—

• (i) the contract is to be treated as if it were made between the cell and the part of the transferee on whose behalf the transferee was acting when it entered into the contract; and

• (ii) for the purposes of determining whether the requirements of regulation 69 or, where applicable, regulation 70 are satisfied in relation to the contract, the contract is to be treated as if it were made on the registration of the transfer scheme by the FCA;

• (g) where the transferor has, on behalf of the cell, entered into a contract with a person who is not the transferee then, to the extent that the transferor was acting on behalf of the cell, the contract is deemed to be novated to the transferee so that references to the transferor in the contract are (unless the context otherwise requires) read after the transfer as references to the transferee;

• (h) where the cell has entered into enforceable arrangements with another cell of the transferor, then—

• (i) where both cells are being transferred to the transferee at the same time, the enforceable arrangements take effect after the transfer as enforceable arrangements made between those cells by the transferee in accordance with these Regulations;

• (ii) in all other cases, the arrangements take effect after the transfer as if the terms of the arrangements are set out in a contract made between—

• (aa) the protected cell company on behalf of the other cell; and

• (bb) the transferee on behalf of the cell being transferred;

• (i) all of the investments issued by the transferor on behalf of the cell are deemed to be investments issued by the transferee on behalf of the cell;

• (j) where the investments concerned are shares, they are deemed to have been issued and allotted by the transferee in accordance with the requirements of this Part;

• (k) things done by the transferor on behalf of the cell are deemed to have been done by the transferee on behalf of the cell; and

• (l) things done to the transferor in respect of the cell are deemed to have been done to the transferee in respect of the cell.

• (3) Where the transfer scheme falls within Case 2, then the following occur as a result of registration—

• (a) all of the assets held by the transferor on behalf of the cell are vested in the transferee;

• (b) all of the liabilities or obligations incurred by the transferor on behalf of the cell become liabilities or obligations of the transferee;

• (c) all of the liabilities or obligations of the transferor which are attributable to the cell become liabilities or obligations of the transferee;

• (d) where the transferor has entered into a contract with the transferee on behalf of the cell then, to the extent that the transferor was acting on behalf of the cell, the terms of the contract cease to have effect after the transfer;

• (e) where the transferor has, on behalf of the cell, entered into a contract with a person who is not the transferee then, to the extent that the transferor was acting on behalf of the cell, the contract is deemed to be novated to the transferee so that references to the transferor in the contract are (unless the context otherwise requires) read after the transfer as references to the transferee;

• (f) where the cell has entered into enforceable arrangements with another cell of the transferor, those arrangements take effect after the transfer as if the terms of the arrangements are set out in a contract made between the protected cell company on behalf of the other cell and the transferee;

• (g) all of the investments issued by the transferor on behalf of the cell are deemed to be investments issued by the transferee;

• (h) things done by the transferor on behalf of the cell are deemed to have been done by the transferee;

• (i) things done to the transferor in respect of the cell are deemed to have been done to the transferee; and

• (j) the cell is deemed to be dissolved.

• (4) Where the investments referred to in paragraph (3)(g) are shares, then Chapter 3 (allotment of equity securities: existing shareholders' right of pre-emption) and Chapter 5 (payment for shares) of Part 17 (a company's share capital) of the Companies Act 2006 do not apply to the transferee in relation to the transfer of the shares.

• (5) Where property or a liability transferred in accordance with this regulation is governed by the law of any country or territory outside the United Kingdom, then the transferor must, if the transferee so requires, take all necessary steps for securing that the transfer is fully effective under the law of that country or territory.

• (6) Registration of a transfer scheme in accordance with regulation 174 is to be treated as an instrument of transfer for the purposes of any enactment requiring the delivery of an instrument of transfer for the registration of property.

Effect of court order sanctioning transfer scheme

177

• (1) If the court makes an order under regulation 175, it may by that or any subsequent order make such provision (if any) as it thinks fit—

• (a) for the transfer to the transferee of a cell forming part of the transferor;

• (b) for the transfer to the transferee of any property, liabilities or obligations of the transferor;

• (c) for the allotment or appropriation by the transferee of any shares or debentures issued by the transferor;

• (d) for the continuation by or against the transferee of any pending legal proceedings by or against the transferor;

• (e) for dealing with the interests of any person who, within such time and in such manner as the court may direct, objects to the transfer scheme;

• (f) for bringing the order to the attention of any person;

• (g) with respect to such incidental, consequential and supplementary matters as are, in its opinion, necessary to secure that the transfer scheme is fully and effectively carried out.

• (2) Where the court makes an order under paragraph (1) in respect of a protected cell company, the order may specify the part of the protected cell company to which the order relates.

• (3) An order under paragraph (1) may—

• (a) transfer property or liabilities whether or not the transferor otherwise has the capacity to effect the transfer in question;

• (b) make provision in relation to property which is held by the transferor as trustee;

• (c) make provision in relation to enforceable arrangements between cells;

• (d) make provision as to prospective or contingent rights or liabilities of the transferor, including provision as to the construction of instruments under which such rights or liabilities arise.

• (4) Paragraph (3)(a) is to be taken to include the power to make the following provision in an order—

• (a) for the transfer of property or liabilities which would not otherwise be capable of being transferred or assigned;

• (b) if the terms on which the transferor is entitled to property or is subject to liabilities include provision that has any of the effects specified in paragraph (5), for the transfer to take effect as if there were no such provision.

• (5) The effects mentioned in paragraph (4)(b) are that a transfer of the property or liability in question—

• (a) requires a person's consent or concurrence; or

• (b) contravenes or interferes with an interest or right, or otherwise incurs a liability.

• (6) Nothing in paragraph (4) is to be read as limiting the scope of paragraph (3).

• (7) If an order under paragraph (1) transfers a cell from the transferor to transferee, then the order has the effect specified in paragraph (2) of regulation 176, except to the extent that the order provides otherwise.

• (8) If an order under paragraph (1) makes provision for the transfer of property, liabilities or obligations, then the following occur as a result of the order—

• (a) the property is transferred to and vests in the transferee specified in the order; and

• (b) the liabilities or obligations are transferred to and become liabilities or obligations of the transferee specified in the order.

• (9) But if any property or liability included in an order under paragraph (1) is governed by the law of any country or territory outside the United Kingdom, the order may require the transferor, if the transferee so requires, to take all necessary steps for securing that the transfer is fully effective under the law of that country or territory.

• (10) Property transferred as a result of an order under paragraph (1) may, if the court so directs, vest free from any charge (or, in Scotland, security over property) which is (as a result of the transfer scheme) to cease to have effect.

• (11) An order under paragraph (1) which makes provision for the transfer of property is to be treated as an instrument of transfer for the purposes of any enactment requiring the delivery of an instrument of transfer for the registration of property.

• (12) The transferee must provide the FCA and PRA with two office copies of an order made under regulation 175 or 177 before the end of a period of 10 working days beginning with the making of the order, or such longer period as the FCA or PRA (as the case may be) directs.

CHAPTER 17 — Dissolution

Dissolution of a cell: procedure

178

• (1) A protected cell company's instrument of incorporation may contain provision for the dissolution of a cell, but that provision is subject to this regulation.

• (2) A protected cell company must notify the following people (the “interested persons”) if it intends to dissolve a cell—

• (a) any undertaking from whom the protected cell company has assumed a risk on behalf of a relevant cell;

• (b) any investor who holds an investment issued on behalf of a relevant cell;

• (c) any other creditor of the protected cell company in respect of a relevant cell;

• (d) the FCA; and

• (e) the PRA.

• (3) In paragraph (2), a “relevant cell” is—

• (a) the cell which the protected cell company intends to dissolve; and