If your firm is looking to act as a sponsor, there are several steps to complete as part of the application process. Read more about the application process and what happens after approval.
Criteria for approval
A firm wishing to act as a sponsor must obtain our approval. The approval criteria are set out in UK Listing Rules sourcebook (UKLR) 24.4.5R[1]. An applicant must:
- be an authorised person or a member of a designated professional body
- be competent to provide sponsor services in accordance with UKLR 24
- have appropriate systems and controls in place to carry out its role as a sponsor in accordance with UKLR 24
Making an initial application
If you think you meet the criteria for approval as a sponsor, and wish to discuss this further, please contact the Primary Market Specialist Supervision team by emailing us at [email protected].
Once we receive your email we will contact you to discuss your application and are likely to ask for further information including:
- The name of the legal entity that would apply to be a sponsor and summary details of its legal structure and ownership.
- A chart showing the organisational structure of the firm, including the individuals comprising the sponsor team.
- The firm’s business model, with an indication of the nature and number of sponsor transactions you expect to undertake each year.
- The composition and experience of your proposed sponsor team and how the team meets our competence requirements set out in UKLR 24.4.12R – UKLR 24.4.20G. In considering whether a sponsor applicant meets this requirement, the FCA may consider a variety of factors, including the relevant experience of your proposed sponsor team and whether any of these individuals have had either i) material involvement in the provision of sponsor services that have required the submission of a sponsor declaration within the previous five years (UKLR 24.4.12R(1)(a)) or ii) the provision of relevant corporate finance advisory services within the previous five years (UKLR 24.4.12R(1)(b)).
- Details of your proposed Key Contacts as per UKLR 24.4.12R(2)(c).
- Your firm’s compliance arrangements, which should demonstrate that you have in place appropriate systems and controls in the areas set out in UKLR 24.4.21R.
- A brief summary of any information that may subsequently be disclosed (in a formal application) pursuant to UKLR 24.4.2R(2).
Applicants may find it helpful to refer to our two technical notes we have issued which give guidance on the competence requirements set out under UKLR 24.4.12R – UKLR 24.4.20G (see Technical Note 715 on our knowledge base[2]) and UKLR 24.4.12R(2)(b) (see Technical Note 714 on our knowledge base[2]).
The formal application process
Once we receive your submission, we will give you our initial assessment of whether your application is likely to meet the sponsor approval criteria. If our initial assessment is positive, we will then invite you to submit a formal application.
If you want to proceed to apply, you must complete and submit a sponsor application form[3] and send a non-refundable payment for the application fees[4] as required by FEES 3 Annex 12[5].
As part of the approval process, we are likely to request additional information to support the application. In addition, our Primary Market Specialist Supervision team staff will carry out a review which is likely to look at your systems and controls and recent transaction files. We will also conduct interviews with senior management. The review will focus on how the firm is likely to perform the sponsor role and the experience, skillset and expertise of your proposed sponsor staff. We will seek to satisfy ourselves that the applicant, if approved, is likely to meet our requirements.
As the application process is iterative, it may take several months to complete. This can include the firm making a number of written submissions to us or having calls and meetings with us. During this time, as a result of the close contact we maintain, we build up a clearer picture of the firm so as to satisfy ourselves that the firm meets our requirements. We therefore recommend that you contact us at an early stage to discuss the likely timescale.
Once your application is approved
The sponsor regime is governed by UKLR 24 which imposes a number of positive duties on sponsors. Approved sponsors must comply with the criteria for approval as a sponsor on an ongoing basis (UKLR 24.4.10R) and must notify the FCA in a number of situations (UKLR 24.2.10R and UKLR 24.5.12R). For further information on sponsor notifications see Technical Note 711 on our knowledge base[3].
Restrictions, limitations and suspensions of sponsor services
Sponsors can be approved with a limitation or restriction both at the time of a sponsor’s approval (UKLR 24.4.7R) or at any time thereafter (UKLR 24.5.4R).
The ability to restrict or limit sponsor services adds flexibility to the sponsor regime by allowing us to approve a new applicant or maintain a sponsor’s approval where previously it might not have met the sponsor approval criteria under (UKLR 24.4.5R).
For example, where we consider that a new applicant or sponsor does not have the relevant experience or appropriate systems and controls to provide the complete range of sponsor services it wishes to undertake, rather than refusing a sponsor application or seeking a sponsor’s cancellation, we can limit or restrict the scope of sponsor services that it provides. In this way, we ensure that the sponsor can provide services to issuers only in the areas where the sponsor is competent.
Where a sponsor is unable to meet the sponsor approval criteria, it may request a cancellation of its approval.
Where a sponsor considers that the inability to meet the criteria is temporary and given the irrevocable nature of a cancellation and the associated administrative and financial costs of re-applying for approval, it may prefer to request a suspension of its approval instead. This may provide the sponsor with the necessary time to take remedial action to ensure that it can comply with the sponsor approval criteria in the future.
For further information about this see Technical Note 712 on our knowledge base[7].
Sponsor application in the event of a change of legal entity
Where there is a change of control of the sponsor or any restructuring of the sponsor’s group that will result in sponsor services being provided by a different legal entity, but where there will be no change in either the employees or the systems and controls, an abridged approval process will be undertaken.
Typically, it will not be necessary for us to conduct an onsite visit, but the new applicant will be required to give us certain assurances that there is no change in either its sponsor employees or systems and controls. The sponsor should submit a cancellation request in relation to the relevant entity pursuant to UKLR 24.5.20R. The entity that is then intended to provide the sponsor services should apply for approval as a sponsor pursuant to UKLR 24.4.2R before it provides any sponsor services.
It is important that there is no period of time whereby a live sponsor transaction is without an approved sponsor and therefore, the cancellation and approval process must be managed by the sponsor in order to ensure this does not occur.
Where a sponsor is contemplating a restructuring which may result in the transfer of the sponsor approval to a new group legal entity, it should contact us at an early stage in order for us to provide guidance and obtain the relevant assurances in a timely fashion.
