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Getting FSA Authorised ­ Why, What and How?

Indirect Investment briefing February 2009

WHY GET AUTHORISED? FSA authorisation allows a fund manager more flexibility in how it markets to, sells to and advises investors of a fund. The fact that a fund manager is an authorised entity can also provide comfort to investors. For these reasons, even in circumstances where a firm can be managed without authorisation, more and more fund managers are opting to become FSA authorised. However, the advantages of authorisation need to be balanced against the enhanced compliance obligations and FSA oversight that come with it. WHAT DOES IT INVOLVE? Fund managers must apply for FSA authorisation for the regulated activities they will conduct. Any fund manager who wishes to carry on business in another EEA State may do so if it is within the scope of a relevant EU Single Market Directive, such as MiFID. The exercise of such rights is known as 'passporting'. Fund managers should anticipate which countries they will operate the fund into and agree with the FSA that their permissions will be extended to cover these territories. HOW DO YOU DO IT? A fund manager who wants to become FSA authorised must complete the relevant forms and documentation necessary for the FSA to understand: · What permissions the applicant firm is seeking (depending on the regulated activities that it will carry out); · Which individuals in the firm will carry out the regulated activities; and · Who will control the applicant firm. A key issue in getting authorised is determining what the firm's capital adequacy requirements will be, in particular to comply with the FSA rules on capital maintenance. Given the recent market turmoil, this is currently of particular interest to the FSA. AND THEN? Once authorised, fund managers must ensure ongoing compliance with the FSA rules and regulations. The FSA is a principles- based regulator and the FSA expects regulated firms to reflect its high level principles throughout their business. In addition, the FSA lays down specific rules that firms must adhere to in their day-to-day practice.

We would be happy to come and talk to you about getting FSA authorised or any issue concerning the obligations of a regulated fund manager.

CONTACT Please talk to your usual Nabarro contact or Amanda Howard, Partner T +44 (0)20 7524 6342 [email protected]

London Lacon House, 84 Theobald's Road, London WC1X 8RW T +44 (0)20 7524 6000 F +44 (0)20 7524 6524 Alliance firms: France August & Debouzy Gilles August T +33 (0)1 45 61 51 80 www.august-debouzy.com Germany GSK Stockmann & Kollegen Rainer Stockmann T +49 (30) 20 39 07 - 0 www.gsk.de Italy Nunziante Magrone Gianmatteo Nunziante T +39 06 695181 www.nunziantemagrone.it Spain Rodés & Sala Gonzalo Rodés T +34 932 413 740 www.rodesysala.com Sheffield 1 South Quay, Victoria Quays, Sheffield S2 5SY T +44 (0)114 279 4000 F +44 (0)114 278 6123 Brussels 209A Avenue Louise, 1050 Brussels, Belgium T +32 2 626 0740 F +32 2 626 0749

Nabarro LLP Registered office: Lacon House, 84 Theobald's Road, London, WC1X 8RW. Nabarro LLP is a limited liability partnership registered in England and Wales (registered number OC334031) and is regulated by the Solicitors Regulation Authority. A list of members of Nabarro LLP is open to inspection at the registered office. The term partner is used to refer to a member of Nabarro LLP. Disclaimer Detailed specialist advice should be obtained before taking or refraining from any action as a result of the comments made in this publication, which are only intended as a brief introduction to the particular subject. This information is correct on the date of publication. We cannot be responsible for links to external websites that may become broken in the future. © Nabarro LLP 2009

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