Uncertificated Securities (Guernsey) Regulations, 2009

Summary

These Regulations create the legal framework allowing title to securities in Guernsey to be evidenced and transferred electronically through a computerised settlement system (CSS), without a paper instrument. They set out how the Guernsey Financial Services Commission approves or recognises operators of such systems, how issuers may hold and transfer securities in uncertificated form, and the legal effect of authenticated computer instructions.

• Operator approval and recognition: The Commission may approve Guernsey-based applicants or recognise overseas-approved operators to run a computerised settlement system, subject to conditions and to satisfying Schedule requirements.
• Ongoing supervision: Authorised operators must supply information on request, deliver copies of rules or guidance and any changes to the Commission, and comply with Commission directions; the Commission may seek injunctions and can suspend or revoke approval/recognition on specified grounds (insolvency, non-compliance, reputational risk, dormancy, etc.).
• Issuer participation and registers: Companies and other issuers using a CSS may hold securities in uncertificated form, must maintain registers reflecting entries made through the system, register transfers as required, notify the operator of certain matters, and allow conversion between certificated and uncertificated form.
• Computer instructions: Authenticated computer instructions have defined legal effect: senders generally cannot deny their accuracy, addressees may rely on them subject to exceptions, and liability rules apply for hackers' instructions or induced operator instructions.
• Post-termination duties: Where an operator's authorisation is suspended, revoked or withdrawn, participants remain bound by obligations under the Regulations until liabilities are discharged, and the operator must promptly inform the Commission and participants of steps being taken.

A Schedule sets detailed requirements operators must meet for approval, including record-keeping, reconciliation of records with issuers' registers, error-correction procedures, and rules binding members and issuers on transfer processing and termination of participation.

Key obligations

• Applicants for approval or recognition as a CSS operator must provide the Commission with information, documents and a copy of intended rules and guidance as required.
• A recognised operator must notify the Commission in writing within 7 days of any suspension or revocation of its overseas approval by the relevant competent authority; failure is an offence.
• An authorised operator must deliver a copy of any rules or guidance it issues, or any amendment, addition or revocation of them, to the Commission within 7 days of the issue or change.
• An authorised operator must comply with any directions given by the Commission to secure compliance with the Regulations or the Schedule requirements.
• An approved or recognised operator must commence operating a computerised settlement system within 12 months of approval/recognition taking effect, or risk suspension/revocation.
• An operator must not cease operating a computerised settlement system for a continuous period exceeding six months without risking suspension or revocation.
• Where an operator's authorisation is suspended, revoked or withdrawn, it must inform the Commission and other participants without delay of measures being taken to discharge its liabilities and obligations.
• Operators' rules and practices must ensure reconciliation of CSS records with issuers' registers, procedures for error correction, and provisions for orderly termination of disruptive members or users.
• Issuers participating in a CSS must maintain and update registers of securities in accordance with entries made through the system and notify the operator of relevant matters.

Applies to

operators of computerised settlement systems (approved and recognised), issuers of securities (companies and other persons issuing securities), members and users of computerised settlement systems, settlement banks (where payment arrangements are involved)

Deadlines

• within 7 days beginning on the date of the suspension or revocation: Recognised operator must inform the Commission in writing that its overseas approval has been suspended or revoked.
• within 7 days beginning on the date of the issue or change: Authorised operator must deliver a copy of newly issued or amended rules/guidance to the Commission.
• within 12 months after the date from which the approval or recognition took effect: Operator must commence operating a computerised settlement system or risk suspension/revocation.
• continuous period exceeding six months: Ceasing operation of a computerised settlement system for longer than this is grounds for suspension or revocation.
• 30th November, 2009 (stated coming into operation date, partially garbled in source text): Date the Regulations come into operation.