I move amendment No. 284:
In page 154, after section 207, to insert the following new section:
"213.—(1) Notwithstanding any other powers which may be available to the Bank under any other enactment, order or regulation, the Bank may impose such conditions for the granting of an authorisation to a company under section 212 as it considers appropriate and prudent for the purposes of the orderly and proper regulation of the business of investment companies.
(2) Conditions imposed under subsection (1) may be imposed generally, or by reference to particular classes of company or business, or by reference to any other matter the Bank considers appropriate and prudent for the purposes of the orderly and proper regulation of the business of investment companies.
(3) The power to impose conditions referred to in subsection (1) shall include a power to impose such further conditions from time to time as the Bank considers appropriate and prudent for the purposes of the orderly and proper regulation of the business of investment companies.
(4) Without prejudice to the generality of subsections (1), (2) and (3), conditions imposed by the Bank on an investment company may make provision for any or all of the following matters—
(a) investment policies of the company,
(b) prospectuses and other information disseminated by the company,
(c) the vesting of the assets or specified assets of the company in a person nominated by the Bank with such of the powers or duties of a trustee with regard to the company as are specified by the Bank,
(d) such other supervisory and reporting requirements and conditions relating to its business as the Bank considers appropriate and prudent to impose on the company from time to time for the purposes referred to in the aforesaid subsections.
(5) A company shall comply with any conditions relating to its authorisation or business imposed by the Bank.".
Part XII exempts a particular type of investment company from what might be considered as some basic principles of company law. This is a recognition of the unique nature of these companies as investment vehicles. These exemptions can only be considered if this type of company is tightly contained in a supervisory or regulatory regime.
New section 213 puts the second element of the supervisory regime in place. It allows the bank, notwithstanding any other powers in its possession, to impose conditions for the granting of an authorisation to the Part XII company. This will enable the bank to regulate the way in which these companies can operate. The bank can, under subsection (2) of this new section, impose conditions generally or by reference to specific classes of company or business. This provision is desirable as the bank may wish to discriminate between different types of investment companies. For example, it may feel that an investment company which sells its shares to the public needs to be subjected to more rigorous conditions than an investment company whose members are only to be a selected group of major companies. This particular distinction is not unlikely. Some of the companies which would be established, particularly in the IFSC, will be established to manage investment capital of major international firms. The bank will not only be able to impose conditions at the time of authorisation, as subsection (3) of this new section will allow them to impose further conditions from time to time. This is desirable to allow the bank to respond to changing conditions.
Subsection (4), while not restricting the type of conditions which the bank might impose, refers to four specific areas which might be covered by conditions. Paragraph (a) refers to the investment policies of these companies. While these companies are not subject to the investment constraints of UCITS it is still desirable that the bank, if it sees fit, should be able to impose conditions in relation to investment policies. Paragraph (b) refers to a prospectus and other information disseminated by the company. As this type of information will form the basis on which investors will make decisions. It is important to the company that the bank can impose conditions in this area. Paragraph (c) refers to the vesting of assets by the company in a person nominated by the bank. In this regard it should be noted that it is not uncommon where this type of company operates internationally, including under the UCIT's directive, to entrust its assets to what are known as "depositories". The UCITS regulations refer to such a depository as a trustee. Normally a depository is a licensed bank or a similar institution. Apart from holding its assets in safe-keeping, the depository may have the duty to ensure that the investment company acts in accordance with its articles of association. This paragraph specifically adverts to the possibility of the bank imposing conditions with regard to this type of depository or trustee. Paragraph (d) refers generally to conditions which the bank considers prudent to impose for the purpose of orderly and proper regulation of the business of Part XII investment companies.