What is a change in control?
A person who decides to acquire or increase control in a dual-regulated firm must apply to the PRA for approval by means of a change in control application (known as ‘Section 178 notices’). Application forms can be found under ‘Key Resources’ on the Submitting, assessing and determining page. The roles of the PRA and the FCA in assessing change in control applications are outlined in the document ‘PRA and FCA roles’ available below under Key Resources.
Approval must be obtained before effecting a change in control. It is a criminal offence under section 191F of the Financial Services and Markets Act (FSMA) to acquire or increase control without notifying the PRA and receiving approval first. Inserting a holding company is considered a change in control event which the PRA must approve in advance, even though the ultimate controller is not changing.
Controllers must notify the PRA in writing of a reduction or cessation of control prior to effecting the change, although the PRA’s approval is not required.
The following details must be provided to the PRA:
- details of the current and proposed shareholding in the authorised firm; and
- who the shares are being sold to.
The pre-application stage is designed to assist the prospective controller to understand the change in control process with a view to increasing the likelihood of submitting a complete application.
The PRA may require additional information in support of the Section 178 notice. It is recommended that the applicant discusses the necessity of a pre-application meeting by emailing PRA-ChangeinControl@bankofengland.co.uk. Applicants may submit a Section 178 notice without prior contact, but this increases the likelihood of an application being acknowledged as incomplete.