Authorised professional firms post n2
20 Sep 04
A reminder of the authorisation requirements under Part IV of the Financial Services and Markets Act 2000
Authorised Professional Firms (‘Firms’) are reminded of the need to re-apply for Financial Services Authority (‘FSA’) authorisation when contemplating a change of corporate or legal status. If the proposed change creates a distinct legal entity from the authorised entity, a fresh Part IV permission will be required to carry on regulated activities. Part IV permissions can not be transferred from one legal entity to another.
Firms are reminded of the general prohibition contained in section 19 of the Financial Services and Markets Act 2000 (‘FSMA’) which provides that “no person may carry on a regulated activity in the United Kingdom, or purport to do so, unless he is an authorised person; or an exempt person.”
The circumstances of Part IV authorisation for the most prevalent forms of legal entity are summarised below.
1 A sole trader
2 A body corporate (a limited liability partnership (‘LLP’) or a limited company)
3 A partnership
A sole trader
- Authorisation is granted in the name of the individual and is personal to the individual. The authorisation ceases upon death or retirement of the individual. If the business is continued by a successor then a fresh application for Part IV permission will have to be made in the name of the successor.
- Should the individual decide to incorporate his business a fresh application will need to be made, in the name of the body corporate, given the change in the legal status of the person carrying on the regulated activities. See section 2 below.
A body corporate (a LLP or a limited company)
- Authorisation is granted in the name of the body corporate. If it is intended at any time that the body corporate should be dissolved, the firm will need to apply for a cancellation of its Part IV permission.
- If an authorised partnership incorporates itself under the Limited Liability Partnerships Act 2000, then a fresh application for Part IV permission will need to be made in the name of the LLP so that that entity may conduct regulated activities.
A partnership
- In accordance with section 32 of FSMA, authorisation is granted in the name of the partnership.
- In accordance with AUTH 3.11.2G(2) the authorisation of a partnership is not affected by its dissolution provided that the substantive continuity test is passed. This requires that the partners remain substantially the same and the whole or substantially the whole of the business of the unincorporated business is retained.
- A partnership cannot consist of one person. If one of the partners in a partnership of two leaves the partnership, and a further partner is not found the remaining partner will need to apply for authorisation as an individual.
Any questions or queries in relation to this matter should be directed to the Corporate Authorisations department at the FSA.