Financial Services and Markets Bill

Financial Services and Markets Bill - continued	House of Commons

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	PART II
	REGULATED AND PROHIBITED ACTIVITIES
	The general prohibition
The general prohibition.	17. - (1) No person may carry on a regulated activity in the United Kingdom, or purport to do so, unless he is-
	(a) an authorised person; or
	(b) an exempt person in relation to that activity.
	(2) The prohibition is referred to in this Act as the general prohibition.
	Requirement for permission
Authorised persons acting without permission.	18. - (1) If an authorised person carries on a regulated activity in the United Kingdom, or purports to do so, otherwise than in accordance with permission-
	(a) given to him by the Authority under Part IV, or
	(b) resulting from any other provision of this Act,
	he is to be taken to have contravened a requirement imposed on him by the Authority under this Act.
	(2) But no provision made by or under this Act is to be read as causing such a contravention to affect the rights or obligations of any party to a transaction which constitutes, or is part of, a regulated activity.
	Financial promotion
Restrictions on financial promotion.	19. - (1) A person must not communicate or cause to be communicated-
	(a) an invitation to engage in investment activity, or
	(b) information which is intended or might reasonably be presumed to be intended to lead directly or indirectly to engagement in such activity,
	unless he is an authorised person or the content of the communication is approved for the purposes of this section by an authorised person.
	(2) In the case of a communication originating outside the United Kingdom, subsection (1) only applies if the communication is capable of having an effect in the United Kingdom.
	(3) The Treasury may by order specify circumstances (which may include compliance with rules made under section 116) in which subsection (1) does not apply.
	(4) In subsection (1), references to engaging in investment activity are to-
	(a) entering or offering to enter into an agreement the making or performance of which by either party constitutes a controlled activity; or
	(b) exercising any rights conferred by an investment to acquire, dispose of, underwrite or convert an investment.
	(5) An activity is a controlled activity if-
	(a) it is an activity of a specified kind or one which falls within a specified class of activity; and
	(b) it relates to an investment of a specified kind, or to one which falls within a specified class of investment.
	(6) Schedule 2 applies for the purposes of subsection (5), with references to section 20 being read as references to that subsection.
	(7) Nothing in Schedule 2, as applied by subsection (6), limits the powers conferred by subsection (5).
	(8) "Investment" includes any asset, right or interest.
	(9) "Specified" means specified in an order made by the Treasury.
	Regulated activities
The classes of activity and categories of investment.	20. - (1) An activity is a regulated activity for the purposes of this Act if it is an activity of a specified kind which-
	(a) relates to an investment of a specified kind; or
	(b) in the case of an activity of a kind which is also specified for the purposes of this paragraph, is carried on in relation to property of any kind.
	(2) Schedule 2 makes provision supplementing this section.
	(3) Nothing in Schedule 2 limits the powers conferred by subsection (1).
	(4) "Investment" includes any asset, right or interest.
	(5) "Specified" means specified in an order made by the Treasury.
	Offences
Contravention of the general prohibition.	21. - (1) A person who contravenes the general prohibition is guilty of an offence and liable-
	(a) on summary conviction, to imprisonment for a term not exceeding six months or a fine not exceeding the statutory maximum, or both;
	(b) on conviction on indictment, to imprisonment for a term not exceeding two years or a fine, or both.
	(2) In this Act "an authorisation offence" means an offence under this section.
	(3) In proceedings for an authorisation offence it is a defence for the accused to show that he took all reasonable precautions and exercised all due diligence to avoid committing the offence.
False claims to be authorised or exempt.	22. - (1) A person who is neither an authorised person nor, in relation to the regulated activity in question, an exempt person is guilty of an offence if he-
	(a) describes himself (in whatever terms) as an authorised person;
	(b) describes himself (in whatever terms) as an exempt person in relation to the regulated activity; or
	(c) behaves, or otherwise holds himself out, in a manner which indicates (or which is reasonably likely to be understood as indicating) that he is-
	(i) an authorised person; or
	(ii) an exempt person in relation to the regulated activity.
	(2) In proceedings for an offence under this section it is a defence for the accused to show that he took all reasonable precautions and exercised all due diligence to avoid committing the offence.
	(3) A person guilty of an offence under this section is liable on summary conviction to imprisonment for a term not exceeding six months or a fine not exceeding level 5 on the standard scale, or both.
	(4) But where the conduct constituting the offence involved or included the public display of any material, the maximum fine for the offence is level 5 on the standard scale multiplied by the number of days for which the display continued.

Prepared 17 June 1999