Statement of Guidance - Cessation and Non-Commencement of Business (Securities Investment Business)

Summary

This is a CIMA Statement of Guidance addressing what securities investment business licensees must do when they stop carrying on licensed business, or fail to start it after being licensed. It sets out the Authority's expectations for winding down client business properly, protecting clients if a key individual dies or becomes incapacitated, and notifying CIMA about cessation plans. It applies to holders of securities investment business licences, referred to as "licence holders" or "firms".

• Winding down business: Any outstanding investment business or custody services must be completed or transferred to another licence holder before withdrawal.
• Supporting evidence: Withdrawal must be supported by either an auditor's report confirming a proper wind-down or a directors' resolution confirming that any non-wind-down will not prejudice creditors or clients, along with return of the licence certificate.
• Death or incapacity of a key individual: Firms must make protective arrangements for clients and disclose the responsible backup licence holder to CIMA both at application and on an ongoing basis.
• Notification obligations: Firms must notify CIMA of changes to this backup arrangement and give advance notice before ceasing business.
• Non-commencement of business: Firms that have been licensed but not yet commenced business are expected to start within six months of the licence date unless CIMA agrees otherwise in writing.

Key obligations

• Notify the Authority of any change to the business plan submitted at licensing or subsequently
• On withdrawing from investment business or related custody services, ensure outstanding business is properly completed or transferred to another licence holder
• Provide the Authority with an Auditor's report confirming proper wind-down, or a Directors' Resolution confirming that not winding down will not prejudice creditors or clients, together with return of the licence certificate
• Where client interests would be significantly affected by the death or incapacity of a key individual, make arrangements to protect those clients' interests
• Provide the Authority, at licence application and thereafter, with the name, address and other requested details of a licence holder arranged to protect clients in the event of death or incapacity of the key individual
• Notify the Authority immediately of any change in the person responsible for protecting clients' interests in the event of cessation of business
• Notify the Authority in writing of the date on which the firm will cease to carry on investment business and the reasons for cessation, not less than 28 days in advance, or immediately if advance notice is not possible
• Commence business within 6 months of the date of the licence unless the Authority agrees otherwise in writing

Applies to

securities investment business licence holders, firms licensed to carry on investment business

Deadlines

• not less than 28 days in advance: Firm must notify the Authority in writing of the date it will cease carrying on investment business and reasons, or immediately if 28 days' notice is not possible
• within 6 months of the date of the licence: Firm should commence business within this period unless the Authority agrees otherwise in writing