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Ensuring access to the UK for Gibraltar-based firms

  • United Kingdom
  • Financial services and markets regulation
  • Financial institutions

28-10-2019

On 22 October 2019, the UK Government issued a new amendment to its temporary permissions regime (“TPR”). This update specifically addresses issues faced by Gibraltar-based firms.

The TPR enables EEA firms and funds which passport into the UK to continue operating in the UK if the existing passporting regime falls away abruptly when the UK leaves the EU. With the chance of a negotiated exit on 31 October looking increasingly slim, this update was clearly necessary. Indeed, we anticipated that “a new replacement framework” for Gibraltar would need to be issued back in our June client briefing. This framework has now arrived in the form of statutory instrument 2019 No.1370: The Cross Border Distribution of Funds, Proxy Advisors, Prospectus and Gibraltar (Amendment) (UK Exit) Regulations 2019 (the “Instrument”). You can read it in full here.

Main changes

The Instrument makes a number of key changes to existing laws and regulations. Many of these ‘amendments’ are in fact continuity measures. A case in point is the treatment of rules on the EU cross-border distribution of collective investment undertakings (“CBDF regulations”). Provisions in the Instrument will revoke the EU CBDF regulation on Exit Day and simultaneously amend UK law to ensure that the regime remains in force for Gibraltar-based firms.

Further amendments ensure that existing PRIIPs prospectus exemptions will remain in place after Exit Day. The Instrument’s accompanying Explanatory Memorandum states that this measure was introduced to ensure that Gibraltar-based firms did not operate at a comparative disadvantage. The memorandum can be read in full here.

In addition, the Instrument resolves a number of the specific issues posed by Britain’s departure. The effect of these amendments is twofold:

(1) Updates to Proxy Advisors (Shareholders' Rights) Regulations 2019 (“PA Regulation”): the Instrument ensures that PA Regulation will only apply to proxy advisors that provide services to shareholders with shares in UK or Gibraltarian-registered companies. The company in questions must be trading on a UK or Gibraltarian regulated market and have their registered office in the UK, or provide services through a UK establishment. These measures ensure that PA Regulations will not apply to proxy advisors registered in the UK offering services exclusively to shareholders with shares in EEA registered companies, trading on EEA markets.

(2) Updates to Packaged Retail and Insurance-based Investment Products (Amendment) (EU Exit) Regulations 2019: Essentially a transitional measure, the Instrument waives the key investor document (“KID”) requirements that would otherwise apply to UCITS marketed in the UK. The KID exemption will remain in force until 31 December 2021, though the accompanying memorandum indicates that this date will be kept under Government review.

How Eversheds Sutherland can help

Since June 2016, our lawyers and consultants have advised various institutions passporting into the UK from EU27 Member States and passporting from the UK into the EU27 on Brexit planning and Brexit related issues.

We would be happy to discuss how we can help you with your Brexit planning and execution of those plans.

For more information contact

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