1 Citation, commencement, application and interpretation

(1)    These Regulations may be cited as the Markets in Financial Instruments Directive (Consequential Amendments) Regulations 2007 and come into force on 1st November 2007.

(2)    Regulations 2, 4, 5 and 7 have effect for financial years ending on or after 1st November 2007, subject to regulation 8.

(3)    In these Regulations, “financial year” has the same meaning as in section 223 of the Companies Act 1985 or in Northern Ireland in Article 231 of the Companies (Northern Ireland) Order 1986.

NOTES
Initial Commencement
Specified date

Specified date: 1 November 2007: see para (1) above.

Partnership & Limited Partnership99 Company Law & Business Entities99

2 Amendments to the Companies Act 1985

2Amendments to the Companies Act 1985

(1)    The Companies Act 1985 is amended as follows.

(2)    In section 247A (cases in which special provisions for small and medium-sized companies do not apply)—

(a)    in subsection (1B)(b), for “an ISD investment firm” substitute “a MiFID investment firm”;

(b)    in subsection (2)(ba), for “an ISD investment firm” substitute “a MiFID investment firm”.

(3)    In section 248 (exemption for small and medium-sized groups), in subsection (2)(ba), for “an ISD investment firm” substitute “a MiFID investment firm”.

(4)    In section 249AA (dormant companies), in subsection (3)(a), for “an ISD investment firm” substitute “a MiFID investment firm”.

(5)    In section 249B (cases where exemptions from audit for certain small companies not available), in subsection (1)(b), for “an ISD investment firm” substitute “a MiFID investment firm”.

(6)    In section 262 (minor definitions relating to Part 7), in subsection (1)—

(a)    omit the definition of “ISD investment firm”;

(b)    at the appropriate place insert—

““MiFID investment firm” means an investment firm within the meaning of Article 4.1.1 of Directive 2004/39/EC of the European Parliament and of the Council of 21 April 2004 on markets in financial instruments, other than—

(a)    a company to which that Directive does not apply by virtue of Article 2 of that Directive,

(b)    a company which is an exempt investment firm within the meaning of regulation 4A(3) of the Financial Services and Markets Act 2000 (Markets in Financial Instruments) Regulations 2007, and

(c)    any other company which fulfils all the requirements set out in regulation 4C(3) of those Regulations;”.

(7)    In section 262A (index of defined expressions)—

(a)    omit the entry for “ISD investment firm”;

(b)    at the appropriate place insert—

““MiFID investment firmsection 262(1)”.
NOTES
Initial Commencement
Specified date

Specified date: 1 November 2007: see reg 1(1).

Accounting92 Investment Firms95 Partnership & Limited Partnership99 Financial Services & Activities94 Company Law & Business Entities99 Insurance Law94 Banking & Finance Law94 Auditing92 Financial Institutions95

3 Amendments to the Companies Act 2006

3Amendments to the Companies Act 2006

(1)    The Companies Act 2006 is amended as follows.

(2)    In section 384 (companies excluded from the small companies regime)—

(a)    in subsection (1)(b), for “an ISD investment firm” substitute “a MiFID investment firm”;

(b)    in subsection (2)(d), for “an ISD investment firm” substitute “a MiFID investment firm”.

(3)    In section 467 (companies excluded from being treated as medium-sized), in subsection (2)(d), for “an ISD investment firm” substitute “a MiFID investment firm”.

(4)    In section 474 (minor definitions relating to Part 15), in subsection (1)—

(a)    omit the definition of “ISD investment firm”;

(b)    at the appropriate place insert—

““MiFID investment firm” means an investment firm within the meaning of Article 4.1.1 of Directive 2004/39/EC of the European Parliament and of the Council of 21 April 2004 on markets in financial instruments, other than—

(a)    a company to which that Directive does not apply by virtue of Article 2 of that Directive,

(b)    a company which is an exempt investment firm within the meaning of regulation 4A(3) of the Financial Services and Markets Act 2000 (Markets in Financial Instruments) Regulations 2007, and

(c)    any other company which fulfils all the requirements set out in regulation 4C(3) of those Regulations;”.

(5)    In section 478 (companies excluded from small companies exemption), in paragraph (b)(i), for “an ISD investment firm” substitute “a MiFID investment firm”.

(6)    In section 481 (companies excluded from dormant companies exemption), in paragraph (a), for “an ISD investment firm” substitute “a MiFID investment firm”.

(7)    In section 539 (minor definitions relating to Part 16)—

(a)    omit the definition of “ISD investment firm”;

(b)    at the appropriate place insert—

““MiFID investment firm” means an investment firm within the meaning of Article 4.1.1 of Directive 2004/39/EC of the European Parliament and of the Council of 21 April 2004 on markets in financial instruments, other than—

(a)    a company to which that Directive does not apply by virtue of Article 2 of that Directive,

(b)    a company which is an exempt investment firm within the meaning of regulation 4A(3) of the Financial Services and Markets Act 2000 (Markets in Financial Instruments) Regulations 2007, and

(c)    any other company which fulfils all the requirements set out in regulation 4C(3) of those Regulations;”.

(8)    In Schedule 8 (index of defined expressions)—

(a)    omit the entry for “ISD investment firm”;

(b)    at the appropriate place insert—

““MiFID investment firm
—in Part 15section 474(1).
—in Part 16section 539”.
NOTES
Initial Commencement
Specified date

Specified date: 1 November 2007: see reg 1(1).

Accounting93 Partnership & Limited Partnership95 Investment Firms97 Financial Services & Activities94 Company Law & Business Entities91 Insurance Law94 Companies & Corporate Bodies91 Banking & Finance Law94 Company Accounting & Financial Disclosure91 Auditing93 Financial Institutions97

4 Amendments to the Companies (Northern Ireland) Order 1986

4Amendments to the Companies (Northern Ireland) Order 1986

(1)    The Companies (Northern Ireland) Order 1986 is amended as follows.

(2)    In Article 255A (cases in which special provisions for small and medium-sized companies do not apply)—

(a)    in paragraph (1B)(b), for “an ISD investment firm” substitute “a MiFID investment firm”;

(b)    in paragraph (2)(ba), for “an ISD investment firm” substitute “a MiFID investment firm”.

(3)    In Article 256 (exemption for small and medium-sized groups), in paragraph (2)(ba), for “an ISD investment firm” substitute “a MiFID investment firm”.

(4)    In Article 257AA (dormant companies), in paragraph (3)(a), for “an ISD investment firm” substitute “a MiFID investment firm”.

(5)    In Article 257B (cases where exemptions not available), in paragraph (1)(b), for “an ISD investment firm” substitute “a MiFID investment firm”.

(6)    In Article 270 (minor definitions relating to Part 8)—

(a)    omit the definition of “ISD investment firm”;

(b)    at the appropriate place insert—

““MiFID investment firm” means an investment firm within the meaning of Article 4.1.1 of Directive 2004/39/EC of the European Parliament and of the Council of 21 April 2004 on markets in financial instruments, other than—

(a)    a company to which that Directive does not apply by virtue of Article 2 of that Directive,

(b)    a company which is an exempt investment firm within the meaning of regulation 4A(3) of the Financial Services and Markets Act 2000 (Markets in Financial Instruments) Regulations 2007, and

(c)    any other company which fulfils all the requirements set out in regulation 4C(3) of those Regulations;”.

(7)    In Article 270A (index of defined expressions)—

(a)    omit the entry for “ISD investment firm”;

(b)    at the appropriate place insert—

“MiFID investment firmArticle 270”.
NOTES
Initial Commencement
Specified date

Specified date: 1 November 2007: see reg 1(1).

Accounting95 Investment Firms95 Partnership & Limited Partnership97 Financial Services & Activities94 Company Law & Business Entities97 Insurance Law94 Banking & Finance Law94 Auditing95 Financial Institutions95

5 Amendment to the Limited Liability Partnerships Regulations 2001

5Amendment to the Limited Liability Partnerships Regulations 2001

In Schedule 1 to the Limited Liability Partnerships Regulations 2001 (modifications to provisions of Part 7 of the Companies Act 1985 applied by those Regulations), in the entry relating to subsection (3) of section 249AA (dormant companies), for “an ISD investment firm” substitute “a MiFID investment firm”.

NOTES
Initial Commencement
Specified date

Specified date: 1 November 2007: see reg 1(1).

Accounting93 Partnership & Limited Partnership95 Company Law & Business Entities95 Limited Liability Partnerships95 Auditing93

6 Amendment to the Financial Services and Markets Act 2000 (Gibraltar) Order 2001

6Amendment to the Financial Services and Markets Act 2000 (Gibraltar) Order 2001

In article 2 of the Financial Services and Markets Act 2000 (Gibraltar) Order 2001, in paragraph (1A), for “investment services directive” substitute “markets in financial instruments directive”.

NOTES
Initial Commencement
Specified date

Specified date: 1 November 2007: see reg 1(1).

Accounting93 Partnership & Limited Partnership95 Financial Services & Activities93 Company Law & Business Entities95 Insurance Law93 Banking & Finance Law93 Auditing93

7 Amendment to the Limited Liability Partnerships Regulations (Northern Ireland) 2004

7Amendment to the Limited Liability Partnerships Regulations (Northern Ireland) 2004

In Schedule 1 to the Limited Liability Partnerships Regulations (Northern Ireland) 2004 (modifications to provisions of Part 8 of the 1986 Order applied by those Regulations), in the entry relating to paragraph (3) of Article 257AA (dormant companies), for “an ISD investment firm” substitute “a MiFID investment firm”.

NOTES
Initial Commencement
Specified date

Specified date: 1 November 2007: see reg 1(1).

Accounting93 Partnership & Limited Partnership95 Company Law & Business Entities95 Limited Liability Partnerships95 Auditing93

8 Transitional provision: accounting and audit requirements

8Transitional provision: accounting and audit requirements

(1)    This regulation has effect for a financial year (“the transitional financial year”) beginning before, but ending on or after, 1st November 2007.

(2)    In the enactments amended by regulations 2, 4, 5 and 7 the references to a “MiFID investment firm” do not include a person who satisfies conditions A and B.

(3)    Condition A is satisfied if, at any time that is within the transitional financial year and is before 1st November 2007, the person would have been a MiFID investment firm if Directive 2004/39/EC of the European Parliament and of the Council of 21 April 2004 on markets in financial instruments had had effect at that time.

(4)    In paragraph (3), “MiFID investment firm” has the same meaning as in section 262 of the Companies Act 1985 (as it has effect on 1st November 2007, disregarding this regulation).

(5)    Condition B is satisfied if the person—

(a)    was not, at any time that is within the transitional financial year and is before 1st November 2007, an ISD investment firm within the meaning of section 262 of the Companies Act 1985 (as it had effect at that time), and

(b)    would not, at any time that is within the transitional financial year and is on or after 1st November 2007, have been such a firm if that section and Council Directive 93/22/EC of 10 May 1993 on investment services in the securities field had had effect at that time as they had effect immediately before 1st November 2007.

NOTES
Initial Commencement
Specified date

Specified date: 1 November 2007: see reg 1(1).

Accounting93 Partnership & Limited Partnership95 Company Law & Business Entities95 Auditing93

Signature

Dave Watts

Frank Roy

Two of the Lords Commissioners of Her Majesty's Treasury

9th October 2007

Accounting94 Partnership & Limited Partnership95 Company Law & Business Entities95 Auditing94

EXPLANATORY NOTE

EXPLANATORY NOTE (This note is not part of the Regulations)

These Regulations amend the Companies Act 1985 (c 6), the Companies Act 2006 (c 46), the Companies (Northern Ireland) Order 1986 (SI 1986/1032 (NI 6)), the Limited Liability Partnerships Regulations 2001 (SI 2001/1090), the Financial Services and Markets Act 2000 (Gibraltar) Order 2001 (SI 2001/3084) and the Limited Liability Partnerships Regulations (Northern Ireland) 2004 (SR (NI) 2004 No 307) in consequence of Directive 2004/39/EC of the European Parliament and of the Council of 21 April 2004 on markets in financial instruments (OJ No L 145, 30.4.2004, p 1) (“MiFID”). MiFID is also implemented by other statutory instruments including the Financial Services and Markets Act 2000 (Markets in Financial Instruments) Regulations 2007 (SI 2007/126 amended by SI 2007/763 and 2160) and the Financial Services and Markets Act 2000 (Regulated Activities) (Amendment No 3) Order 2006 (SI 2006/3384) and by the Financial Services Authority using powers under the Financial Services and Markets Act 2000 (c 8).

Regulations 2 to 5 and 7 update the class of companies and limited liability partnerships which should not be able to take advantage of accounting and auditing exemptions otherwise conferred by the Companies Acts 1985 and 2006 when the instruments implementing MiFID come into force (on 1st November 2007). References to “an ISD investment firm” are replaced by references to “a MiFID investment firm”. The amendments to the Companies Act 1985, the Companies (Northern Ireland) Order 1986 and the regulations applying to limited liability partnerships have effect for financial years ending on or after 1st November 2007, subject to transitional provision in regulation 8 exempting companies which will be MiFID investment firms but which were not ISD investment firms from the accounting and audit requirements for their transitional financial years.

Article 2 of the Gibraltar Order permits Gibraltar-based investment firms to be treated as having an entitlement corresponding to the entitlement of investment firms authorised in other EEA states under Council Directive 93/22/EEC of 10 May 1993 on investment services in the securities field (OJ No L 141, 11.6.1993, p 27) to establish a branch or provide services (“the passport rights”) in the United Kingdom. Regulation 6 amends article 2 to permit Gibraltar-based investment firms to be treated as having an entitlement corresponding to the entitlement of investment firms authorised in other EEA states under MiFID to exercise passport rights in the United Kingdom.

A transposition note has been prepared which sets out how the main elements of MiFID are transposed into United Kingdom law. A Regulatory Impact Assessment of the effect of the instruments transposing MiFID on the costs of business has been prepared. Both may be obtained from the Financial Services Strategy Team, HM Treasury, 1 Horse Guards Road, London SW1A 2HQ. They are also available on HM Treasury's website (www.hm-treasury.gov.uk). Copies of both documents have been placed in the libraries of both Houses of Parliament.

Accounting95 Partnership & Limited Partnership94 Investment Firms96 Financial Services & Activities93 Company Law & Business Entities93 Insurance Law93 Companies & Corporate Bodies93 Banking & Finance Law93 Company Classification, Formation & Registration93 Auditing95 Financial Institutions96 Limited Liability Partnerships94

Practice Areas