Identifying controllers – example structure chart [pdf]

In an effort to ensure that FCA-regulated financial services firms are well-managed and operate with integrity, the Financial Conduct Authority (FCA) requires notification when there’s a change in control, such as a change in ownership, acquisition of a significant number of shares, or changes in key personnel that could affect the management or decision-making of a firm. This notification obligation helps the FCA assess whether the individuals or entities gaining control meet the regulatory standards and are fit and proper to be involved in the management of a regulated firm. It also enables the FCA to monitor potential risks associated with changes in control that might impact a firm’s stability, operations, or compliance with regulatory obligations.
In view of this significance, the FCA has updated its website and issued a revised chart in relation to the determination of who is to be considered a „controller“ of a firm for purposes of the beforementioned notification requirement.
In this context, the FCA notes that it considers a controller to be an individual or entity that holds 10% or more of the shares or voting power in a UK-authorized legal person or its parent undertaking, or has the ability to exercise significant influence over the management of such legal person. As this is an overly simplified explanation and for a comprehensive understanding, the FCA urges firms to refer to Section 422 of FSMA 2000 for an exact definition. Nevertheless, taking this simplified definition into account, the presented chart illustrates which acquisitions or changes in the structure of an FCA-supervised firm would trigger the notification requirement.