Jersey Law | Superseded | Revised Edition - Showing the law at 31 August 2004 - Financial Services (Jersey) Law 1998

A LAW to make provision for the supervision of certain types of financial service business, and generally to provide for purposes connected therewith and incidental thereto[1]

Commencement [see endnotes]

PART 1

PRELIMINARY

Definitions, exemptions and functions

1 General interpretation[2]

(1) In this Law, unless the context otherwise requires –

“address”, in respect of a service provided by a person carrying on trust company business, means an address for the receipt of correspondence or electronic communications (including telephone calls and facsimile communications) or both provided by that person in the course of that business to a third party;

“applicant” has the meaning given in Article 8(1);

“associate”, in relation to a person, means –

(a) the person’s husband, wife, child or stepchild;

(b) the person’s partner;

(d) where the person is a company, any director or employee of the company, any company in the same group as the company, and any director or employee of such a company; and

(e) any person with whom the first mentioned person has an agreement, arrangement or other obligation –

(i) to act together in exercising voting power,

(ii) with respect to the acquisition, holding or disposal of shares or other interests in a company, partnership or other association;

“auditor” means a person qualified under Article 113 of the Companies (Jersey) Law 1991[3] for appointment as auditor of a company under Article 109 of that Law;

“buy” includes to acquire;

“client”, in respect of a registered person, means a person, whether resident on or off Jersey, with or for whom the registered person transacts or has transacted investment business;

“client asset” means property belonging to a client and includes money and investments;

“collective investment fund” has the meaning given to that expression by Article 3 of the Collective Investment Funds (Jersey) Law 1988;[4]

“Commission” means the Jersey Financial Services Commission established by the Financial Services Commission (Jersey) Law 1998;[5]

“Committee” means the Economic Development Committee;[6]

“company” (except for the purposes of paragraph 1 of Schedule 1) means any body corporate incorporated with or without limited liability in any part of the world;

“Court” means the Royal Court;

“director” means a person occupying the position of director, by whatever name called;

“dispose” includes –

(a) in the case of an investment consisting of rights under a contract or other arrangements, to assume the corresponding liabilities under the contract or arrangements;

(b) in the case of any other investment, to issue or create the investment or to grant the rights or interests of which it consists;

“documents” includes accounts, deeds, writings and information recorded in any form and, in relation to information recorded otherwise than in legible form, references to its provision or production include references to providing or producing a copy of the information in legible form;

“express trust” means a trust created by the express declaration of a settlor or a trustee made orally, by instrument in writing or by will;

“financial service advertisement” means an advertisement containing –

(a) an invitation to transact financial service business; or

(b) information which is intended or might reasonably be presumed to be intended to lead directly or indirectly to the transaction of financial service business,

and includes any means of bringing such an invitation or such information to the notice of any person, and a reference to an advertisement shall be construed accordingly;

“financial service business” has, subject to any Order under Article 4, the meaning given to that expression by Article 2(1);

“group” in relation to a company, means that company, any other company which is its holding company or subsidiary and any other company which is a subsidiary of that holding company;

“holding company” has the meaning given to that expression by Article 2 of the Companies (Jersey) Law 1991;[7]

“industrial and provident society” means a society registered or deemed to be registered under the Industrial and Provident Societies Acts 1965 to 75 of the United Kingdom as applied to Jersey by the Industrial and Provident Societies (Channel Islands) Order 1965;[8]

“investment” means, subject to any Order under Article 4, an asset, right or interest that falls within a paragraph of Schedule 1 and that is not excepted by virtue of a further provision contained in that paragraph;

“investment business” has, subject to any Order under Article 4, the meaning given to that expression by Article 2(2);

“partner”, in respect of a partnership, means a partner or an equivalent position in the partnership howsoever called;

“partnership” includes a partnership constituted under the law of a country or territory outside Jersey;

“prescribed” means prescribed by an Order made by the Committee on the recommendation of the Commission;

“principal person” means –

in relation to a person –

(a) being a sole trader, the proprietor;

(b) being a company –

(i) a person who, either alone or with any associate or associates –

(A) directly or indirectly holds 10% or more of the share capital issued by the company,

(B) is entitled to exercise or control the exercise of not less than 10% of the voting power in general meeting of the company or of any other company of which it is a subsidiary, or

(C) has a holding in the company directly or indirectly which makes it possible to exercise significant influence over the management of the company,

(ii) a director,

(iii) a person in accordance with whose directions, whether given directly or indirectly, any director of the company, or director of any other company of which the company is a subsidiary, is accustomed to act (but disregarding advice given in a professional capacity);

(i) a partner,

(ii) where a partner is a company, any person who, in relation to that company, falls within sub-paragraph (b)(i), (ii) or (iii), and

in relation to a person whose registered office and principal place of business is outside Jersey, includes a person who, either alone or jointly with one or more other persons, is responsible for the conduct of the person’s financial service business in Jersey, and

in relation to a person who has become bankrupt, includes a person who has been appointed as liquidator or administrator of the person’s affairs;

“registered person” means a person registered by the Commission under Article 9, and “registered” shall be construed accordingly;

“registration” means registration by the Commission under this Law;

“relevant supervisory authority”, in relation to a country or territory outside Jersey, means an authority discharging in that country or territory supervisory functions corresponding to those of the Commission;

“secretary”, in respect of a service provided by a person carrying on trust company business, means a person occupying the position of, and carrying out the duties of a company secretary, howsoever named;

“sell” includes to dispose;

“shareholder controller” has the meaning given by sub-paragraph (b)(i) of the definition of “principal person”;

“subsidiary” has the meaning given to that expression by Article 2 of the Companies (Jersey) Law 1991;[9]

“trust” has the same meaning as in the Trusts (Jersey) Law 1984;[10]

“trust company business” has, subject to any Order under Article 4, the meaning given to that expression by Article 2(3);

“trust company business assets”, in respect of a registered person, means –

(a) trust property; or

(b) any other assets or property not beneficially owned by the registered person;

“trust property” has the meaning given to that expression by Article 1 of the Trusts (Jersey) Law 1984.

(2) In this Law a note contained in a paragraph of a Schedule forms part of that paragraph.

2 “Financial service business” defined[11]

(1) A person carries on financial service business if by way of business the person carries on investment business or trust company business.

(2) A person carries on investment business if the person –

(a) deals in investments, that is, the person buys, sells, subscribes for or underwrites investments, either as principal or as agent;

(b) undertakes discretionary investment management, that is, the person decides as agent to buy, sell, subscribe for or underwrite investments on behalf of a principal;

(c) gives investment advice, that is, the person gives to persons in their capacity as investors or potential investors advice on the merits of –

(i) the purchase, sale, subscription for or underwriting of a particular investment, or

(ii) the exercise of a right conferred by an investment to acquire, dispose of, underwrite or convert the investment.

(3) A person carries on trust company business if the person carries on a business that involves the provision of company administration services or trustee or fiduciary services and in the course of providing those services the person provides any of the services specified in paragraph (4).

(4) Those services are –

(a) acting as a company or partnership formation agent;

(b) acting as or fulfilling the function of or arranging for another person to act as or fulfil the function of director or alternate director of a company;

(c) acting as or fulfilling the function of or arranging for another person to act as or fulfil the function of a partner of a partnership;

(d) acting or arranging for another person to act as secretary, alternate, assistant or deputy secretary of a company;

(e) providing a registered office or business address for a company or partnership;

(f) providing an accommodation, correspondence or administrative address for a company, a partnership or for any other person;

(g) acting as or fulfilling or arranging for another person to act as or fulfil the function of trustee of an express trust;

(h) acting as or fulfilling or arranging for another person to act as shareholder or unitholder as a nominee for another person.

(5) In this Article a reference to a company, trust or partnership is a reference –

(a) to a company, trust or partnership wherever incorporated or otherwise established; and

(b) to any similar or equivalent structure or arrangement, howsoever named.

(6) For the purposes of this Article a person acts as a company or partnership formation agent if the person arranges for the registration or formation, or the sale, transfer or disposal of companies or partnerships.

3 Exemptions[12]

(1) The activities described in Part 1 of Schedule 2 shall not be treated as investment business for the purposes of this Law, to the extent which is respectively specified for them in that Schedule.

(2) The activities described in Part 2 of Schedule 2 shall not be treated as trust company business for the purposes of this Law, to the extent which is respectively specified for them in that Schedule.

4 Power to vary definitions and exemptions

(1) The Committee may, on the recommendation of the Commission, by Order amend –

(a) the exemptions conferred by –

(i) Article 7(2)(a)(ii), and

(ii) Article 7(2)(b); and

(b) Schedules 1 and 2.

(2) The States may by Regulations amend the definitions and ancillary provisions in Articles 1 and 2.

(3) An Order or Regulations made under this Article may contain different provisions for different classes of person, of business or profession, or of financial service business, or with respect to any provisions of this Law.[13]

(4) An Order or Regulations under this Article may contain such transitional, incidental or supplementary provisions as the Commission or the States, as the case may be, thinks necessary or expedient, and may exclude or modify the effect of the Order or the Regulations, as the case may be, on any other enactment which is expressed to have effect in relation to financial service business within the meaning of this Law.[14]

5 Functions of the Commission

The Commission shall have the powers conferred on it by this Law and the duty generally to supervise the persons registered by it in the exercise of those powers.

6 Limitation of liability

(1) No person or body to whom this Article applies shall be liable in damages for anything done or omitted in the discharge or purported discharge of any functions under this Law or any enactment made, or purportedly made, under this Law unless it is shown that the act or omission was in bad faith.

(2) This Article applies to –

(a) the States;

(b) the Committee, any member of the Committee, or any person who is, or is acting as, an officer, servant or agent of the Committee or performing any duty or exercising any power on behalf of the Committee; and

(c) the Commission, any Commissioner or any person who is, or is acting as, an officer, servant or agent of the Commission or who is a person appointed by the Commission to conduct an investigation under Article 33 or who is performing any duty or exercising any power on behalf of the Commission.

PART 2

REGISTRATION OF FINANCIAL SERVICE BUSINESS[15]

Financial Service Business[16]

7 Prohibition of carrying on unauthorised financial service business[17]

(1) Subject to paragraph (2) –

(a) a person shall not carry on financial service business in or from within Jersey; and

(b) a person being a company incorporated in Jersey shall not carry on such business in any part of the world,

unless the person is for the time being a registered person under this Law, and acting in accordance with the terms of his or her registration.[18]

(2) This Law shall not apply to –

(a) the doing of anything by or on behalf of –

(i) the States, the Viscount, the Judicial Greffier or a Jurat of the Royal Court, or

(ii) subject to such conditions or restrictions as may be prescribed, any other prescribed person or institution;

(b) subject to such conditions or restrictions as may be prescribed, any prescribed transaction.[19]

(3) Any person who holds himself or herself out as carrying on financial service business in or from within Jersey, and any company incorporated in Jersey which holds itself out as carrying on financial service business shall, for the purposes of this Article, be treated as carrying on such business.[20]

(4) A person who contravenes this Article shall be guilty of an offence and liable to imprisonment for a term not exceeding 7 years or a fine, or both.

Registration

8 Application for registration

(1) A person to whom this Law applies who intends to carry on financial service business (referred to in this Law as an “applicant”) shall make an application to the Commission to be registered under Article 9 for the purposes of this Law.[21]

(2) The Committee may, on the recommendation of the Commission, prescribe classes of financial service business in respect of which application may be made.[22]

(3) An application under paragraph (1) shall –

(a) be in such form as the Commission may from time to time determine;

(b) contain or be accompanied by such information and documents as the Commission may require, relating to the applicant and the applicant’s business, to persons who are principal persons in relation to the applicant and verified in such manner as the Commission may require; and

(4) At any time after receiving an application and before determining it the Commission may, at its discretion, by written notice order the applicant or any person who is or is to be a principal person in relation to the applicant to provide such additional information or documents as the Commission reasonably requires for the determination of the application, verified in such manner as the Commission may require, and such requirements may differ as between different applications.

(5) The Commission may by written notice require the applicant or any person who is to be a principal person in relation to the applicant to provide a report by an auditor or accountant, or other qualified person approved by the Commission, on such aspects of any information and documents required by or under paragraph (3) or (4) as the Commission may specify.

(6) An applicant who, while his or her application is awaiting determination by the Commission under Article 9 –

(a) determines to bring about any alteration in; or

(b) becomes aware of any event which may affect in any material respect,

any information or documents supplied by the applicant to the Commission in connection with the application shall forthwith give written notice of that matter to the Commission.

(7) An applicant may, by written notice to the Commission, withdraw the applicant’s application under this Article at any time before it is granted or refused.[23]

(8) Fees payable under this Article shall be paid to the Commission.

9 Registration or refusal of application, or revocation of registration

(1) On an application under Article 8, the Commission may either register a person with or without attaching conditions under Article 10(2) or may refuse to register a person.

(2) Whenever the Commission registers a person it shall issue to that person a registration certificate.

(3) The Commission may refuse to register a person on one or more of the following grounds, namely that –

(a) having regard to the information before the Commission as to the –

(i) integrity, competence, financial standing, structure and organization of the applicant,

(ii) persons employed by or associated with the applicant for the purposes of the applicant’s business or who are principal persons in relation to the applicant,

(iii) description of business which the applicant proposes to carry on,

the Commission is not satisfied that the applicant is a fit and proper person to be registered;

(b) the applicant has at any time and whether or not in relation to the application, in any case where information was required under this Law in any connection –

(i) failed to provide any such information, or

(ii) provided to the Commission information which was untrue or misleading in any material particular;

(c) the applicant has at any time failed to comply with any condition prescribed or attached under Article 10 to a current or previous registration held by the applicant in any material respect;

(d) the applicant or any person employed by or associated with the applicant for the purposes of the applicant’s business has been convicted –

(i) of an offence under this Law, or

(ii) of any offence involving dishonesty;

(e) it appears to the Commission, as a result of information provided in pursuance of requirements of or under Article 8, or information otherwise obtained, that –

(i) in the best interest of persons who may transact investment business with the applicant or, if the applicant intends to carry on trust company business, persons who may enter into agreements for the provision of services to be provided by the applicant when carrying on trust company business or persons who may receive the benefit of services to be provided or arranged by the applicant when carrying on trust company business,

(ii) in order to protect the reputation and integrity of Jersey in financial and commercial matters, or

(iii) in the best economic interests of Jersey,

the applicant should not be registered; or

(f) the Commission has reason to believe that at any time there has been a failure on the part of the applicant to follow a Code of Practice issued under Article 19.[24]

(4) The Commission may revoke a registration under this Law at any time –

(a) at the request of the registered person;

(b) if the registered person has not commenced a financial service business in or from within Jersey within one year of the date of the person’s registration;

(d) if the registered person is a company incorporated in Jersey and ceases to conduct a financial service business;

(e) on one or more of the grounds set out in paragraph (3), which shall apply in such a case with the substitution for references to the applicant of references to a registered person;

(f) if there is a failure to comply with a notice of objection served under Article 13; or

(g) without prejudice to paragraph (7), if the registered person fails to pay any fee prescribed under paragraph (6).[25]

(5) Where, under this Article, the Commission refuses to register a person or revokes a registration it shall give notice in writing to the applicant or registered person concerned.

(6) The Committee may, on the recommendation of the Commission, prescribe fees to be paid by a registered person, and the intervals at which such fees are to be paid.

(7) If a registered person fails to pay any fee prescribed under paragraph (6) there shall be payable by that person a prescribed late payment fee.

(8) Fees payable under this Article shall be paid to the Commission.

10 Conditions of registration

(1) The Committee may, on the recommendation of the Commission –

(a) prescribe conditions which shall apply to registered persons and to the carrying on of financial service business by registered persons; and

(b) in like manner, and from time to time, vary any such condition, or prescribe new conditions,

and such conditions may make different provision for different classes of persons, or for different classes of financial service business.[26]

(2) The Commission may attach conditions to any particular grant of registration under Article 9, and may from time to time vary any such condition or attach new conditions.

(3) Where, under paragraph (2), the Commission attaches a condition to a registration, varies a condition attached to a registration, or attaches a new condition, it shall give notice in writing to the registered person concerned.

(4) If any registered person fails to comply with any condition prescribed under paragraph (1) or attached under paragraph (2), the registered person shall for each such contravention be liable to imprisonment for a term not exceeding 2 years or a fine, or both.

(5) The record of the conviction of any person for an offence under paragraph (4) shall be admissible in any civil proceedings as evidence of the fact of the breach of a condition prescribed or attached under this Article.

(6) Conditions prescribed under paragraph (1) or attached under paragraph (2) may indicate that a Code of Practice issued under Article 19 is to be wholly or partly disregarded for the purposes of Article 19(4).

11 Procedure on refusal or revocation, or new or varied condition

(1) Where the Commission, acting under Article 9, revokes a registration, or, acting under Article 10(2), attaches a new condition to the registration of a particular person or varies any condition so attached, subject to paragraph (4), such revocation, new condition or variation shall not take effect before the expiration of –

(a) a period of one month from the date on which notice in writing was given to the registered person under Article 9(5), or, as the case may be, under Article 10(3);

(b) the date on which any appeal against the revocation, new condition or variation is determined or withdrawn,

whichever is later, unless the registered person requests that it should take effect at an earlier date.

(2) Where the Commission –

(a) acting under Article 9, refuses to register a person or revokes a registration; or

(b) acting under Article 10(2), attaches a condition (or a new condition) to the registration of a particular person or varies any condition so attached,

the applicant or the registered person, as the case may be, may require the Commission to furnish him or her within 14 days with a statement in writing of its reasons for that decision.

(3) Any person aggrieved by such refusal or revocation, or by the conditions attached to the person’s registration, or by any new condition so attached or by any variation of such conditions, may appeal to the Court, either in term or in vacation, within one month from the date on which notice in writing has been given to the person under Article 9(5) or, as the case may be, under Article 10(3) on the ground that the decision of the Commission was unreasonable having regard to all the circumstances of the case.

(4) If, on the application of the Commission, the Court is satisfied that it is desirable –

(a) in the best interests of persons who have transacted or may transact investment business with a registered person; or

(b) if the registered person is carrying on trust company business, in the best interests of persons who –

(i) have entered into or may enter into agreements for the provision of services to be provided by the registered person when carrying on trust company business, or

(ii) have received or may receive the benefit of services to be provided or arranged by the registered person when carrying on trust company business,

that paragraph (1) should not have effect, or should cease to have effect in a particular case, or that the period suggested in paragraph (1)(a) should be increased, the Court may so order.[27]

(5) An order under paragraph (4) may be made without prior notice to and without hearing the registered person concerned.

(6) Where an order is made under paragraph (4) it shall have immediate effect but any person aggrieved by such an order may apply to the Court, either in term time or in vacation, to vary or set aside the order on the ground that the order was unreasonable having regard to all the circumstances of the case.

(7) On an application under this Article, the Court may make such order as it thinks fit.

(8) Nothing in paragraph (1) or (2) derogates from or otherwise affects a condition prescribed under Article 10(1).

12 Commission may apply to Court for appointment of manager in prescribed circumstances[28]

(1) The Committee may, by Order, prescribe circumstances in which the Commission may apply to the Court for the appointment by the Court of a person to manage the affairs of persons in so far as those affairs relate to the carrying on of financial service business.

(2) An Order made under paragraph (1) may contain such incidental or supplementary provisions as the Committee thinks necessary or expedient, and may contain different provisions for different classes of financial service business.

(3) The Court may, on an application made to it by the Commission in circumstances prescribed in an Order made under paragraph (1), appoint, on such terms as it considers to be appropriate, a person to manage the affairs of a person in so far as those affairs relate to the carrying on of financial service business.

PART 3

SUPERVISION OF FINANCIAL SERVICE BUSINESS[29]

Principal persons and shares

13 Objection to principal person and to changes in holdings

(1) Where it appears to the Commission at any time that, on the information before it, and having regard to the matters set out in Article 9(3), a person who is a principal person in relation to a registered person or in respect of whom notice has been given that the person will become such a principal person is not a fit and proper person to be a principal person in relation to a registered person, the Commission shall serve on that person and on the registered person concerned a written notice of objection, directing that the person shall not continue to be, or shall not become, a principal person.

(2) Following receipt of a notice under Article 14(2) or (3) that a person has increased his or her holding, or is about to do so, or that the person is about to reduce or dispose of his or her holding, the Commission may serve on that person and on the registered person concerned a written notice of objection, directing that he or she shall not continue to have such increased holding, or shall not increase, reduce, or dispose of the person’s holding, as the case may be.

(3) A notice of objection served on a person directing that the person shall not continue to be a principal person or shall not continue to have an increased holding shall, subject to paragraph (4), not take effect before the expiration of –

(a) a period of one month from the date of the notification being given to the person;

(b) the date on which an appeal under paragraph (10) against the notification is determined or withdrawn,

whichever is the later, unless the person to whom the notice relates requests that it should take effect at an earlier date.

(4) If, on the application of the Commission the Court is satisfied that it is desirable –

(a) in the best interests of persons who have transacted or may transact investment business with the registered person; or

(b) if the registered person is carrying on trust company business, in the best interests of persons who –

(i) have entered into or may enter into agreements for the provision of services to be provided by the registered person when carrying on trust business, or

(ii) have received or may receive the benefit of services provided or arranged by the registered person when carrying on trust company business,

that paragraph (3) should not have effect, or should cease to have effect in a particular case, or that the period specified in paragraph (3)(a) should be increased, the Court may so order.[30]

(5) An order under paragraph (4) may be made without prior notice to and without hearing the registered person concerned.

(6) Where an order is made under paragraph (4) it shall have immediate effect, but any person aggrieved by such an order may apply to the Court, either in term time or in vacation, to vary or set aside the order on the ground that the order was unreasonable having regard to all the circumstances of the case.

(7) On an application under this Article, the Court may make such order as it thinks fit.

(8) A notice of objection shall –

(a) if served under paragraph (1), and subject to paragraph (9), specify the reasons for which it appears to the Commission that the person in question is not fit and proper;

(b) if served under paragraph (2), and subject to paragraph (9), specify the reasons for such objection;

(c) draw the attention of the person to whom or to whose holding objection is taken and of the registered person to the provisions of Article 9(3) and (4), if appropriate; and

(d) give particulars of the rights of appeal conferred by paragraph (10).

(9) Paragraph (8)(a) and (b) shall not require the Commission to include in its reasons for objection any confidential information the disclosure of which would, in the Commission’s opinion, be prejudicial to a third party.

(10) Any person aggrieved by a notice served on the person under this Article may appeal to the Court, either in term or in vacation, within one month from the date on which such notice was given, on the ground that the decision of the Commission is unreasonable having regard to all the circumstances of the case.[31]

14 Notification of change of principal person and changes in holdings

(1) No person shall become a principal person in relation to a registered person unless he or she has notified the Commission in writing of his or her intention to become such a principal person and the Commission has notified him or her in writing that there is no objection to him or her becoming such a principal person.

(2) No person who is a shareholder controller shall increase, reduce or dispose of his or her holding in the company concerned so that the proportion of the share capital or voting rights held by the person in the company reaches, exceeds or falls below 20%, 33% or 50%, or so that the company becomes the subsidiary of such person or ceases to be such subsidiary, as the case may be, unless the person has notified the Commission in writing of his or her intention to increase, reduce or dispose of such holding, as the case may be, and the Commission has notified the person in writing that there is no objection to the person’s so doing.

(3) Subject to paragraph (5), a registered person shall, before the end of one month beginning with the day on which the registered person becomes aware that any person has become or is about to become, or has ceased to be a principal person in relation to the registered person, or has increased, reduced or disposed of his or her holding, as the case may be, or is about to do so for the purposes of paragraph (2), give written notice to the Commission of that fact.

(4) For the purposes of paragraphs (1) and (3) a person shall be treated as –

(a) becoming a principal person in relation to a registered person if, being a principal person in one or more capacities, he or she becomes a principal person in any additional capacity; and

(b) ceasing to be a principal person in relation to a registered person if, being a principal person in one or more capacities, he or she ceases to be a principal person in one or more such capacities.

(5) The obligations imposed by paragraph (3) shall not apply in any case where a registered person has complied with an equivalent obligation under another enactment under which the Commission exercises a supervisory function or where the Commission by notice in writing waives the obligations, wholly or in part.

(6) A notice under paragraph (1), (2) or (3) that a person has become or is about to become a principal person, or has increased, reduced or disposed of his or her holding or is about to do so, as the case may be, shall include such information regarding the person in question as may be required by the Commission.

(7) A notice under paragraph (2) or (3) that a person has ceased to be a principal person or has reduced or disposed of his or her holding or is about to do so, as the case may be, shall include a statement of the reasons for the change.

(8) Following receipt of a notice under paragraph (1), (2) or (3), the Commission may, by giving written notice, require the person concerned or the registered person to provide such additional information or documents as the Commission may require in order to decide whether to serve a notice of objection under Article 13.

(9) A notice given by the Commission under paragraph (1) or (2) that there is no objection shall lapse if the person concerned does not become a principal person, or the increase, reduction or disposal, as the case may be, does not take place within one year following the giving of the notice by the Commission.

15 Failure to notify change of principal person or changes in holdings

(1) A registered person who fails to give a notice required by Article 14(3) shall be guilty of an offence and liable to imprisonment for a term not exceeding 6 months or a fine, or both.

(2) Any person who –

(a) fails to give a notice required by Article 14(1) or (2) or becomes a principal person, or increases, reduces or disposes of his or her holding before having been served with a notice by the Commission under Article 14(1) or (2), as the case may be; or

(b) becomes or continues to be a principal person or continues to have an increased holding, or increases, reduces or disposes of, his or her holding, as the case may be, following service on the person of a notice of objection under Article 13 in that connection,

shall be guilty of an offence.

(3) A person shall not be guilty of an offence under paragraph (2) if he or she shows that he or she did not know of the acts or circumstances by which he or she became a principal person or whereby his or her holding was increased, reduced or disposed of, as the case may be; but where a person subsequently becomes aware of the relevant acts or circumstances he or she shall be guilty of an offence unless he or she gives the Commission written notice of the fact that he or she has become such a principal person or increased, reduced or disposed of the person’s holding, as the case may be, within 14 days of becoming aware of that fact.

(4) A person guilty of an offence under paragraph (2) or (3) shall be liable to imprisonment for a term not exceeding 2 years or a fine, or both.

16 Powers of Commission and Court in respect of shares

(1) The powers conferred by this Article shall be exercisable where a person has contravened Article 15(2) and –

(a) the registered person concerned is a company; and

(b) the person concerned is a shareholder controller of that company.

(2) The Commission may, by notice in writing served on the person concerned, direct that any specified shares to which this Article applies shall, until further notice, be subject to one or more of the following restrictions –

(a) any transfer of, or agreement to transfer, those shares or, in the case of unissued shares, any transfer of or agreement to transfer the right to be issued with them, shall be void;

(b) no voting rights shall be exercisable in respect of the shares;

(d) except in liquidation, no payment shall be made of any sum due from the registered person on the shares, whether in respect of capital or otherwise.

(3) Subject to paragraph (4), the Court may, on the application of the Commission, order the sale of any specified shares to which this Article applies and, if they are for the time being subject to any restrictions under paragraph (2), that they shall cease to be subject to those restrictions.

(4) No order shall be made under paragraph (3) in a case where a notice of objection was served under Article 13 –

(a) until the end of the period within which an appeal can be brought against the notice of objection; and

(b) if such an appeal is brought, until it has been determined or withdrawn.

(5) Where an order has been made under paragraph (3) the Court may, on the application of the Commission, make such further order relating to the sale or transfer of the shares as it thinks fit.

(6) Where shares are sold in pursuance of an order under this Article the proceeds of sale, less the costs of the sale, shall be paid to the Viscount for the benefit of the persons beneficially interested in them; and any such person may apply to the Court for an order that the whole or part of the proceeds be paid to the person by the Viscount.

(7) This Article applies –

(a) to all shares in the registered person referred to in paragraph (1) held by the person concerned, or by any associate of the person, which were not so held immediately before the person became a principal person, or increased his or her holding, or which were so held immediately before he or she reduced or disposed of his or her holding, as the case may be; and

(b) where the person concerned became a principal person, or increased his or her holding, or reduced, or disposed of his or her holding, as a result of the acquisition or disposal by the person or any associate of the person of shares in another company, to all the shares in that company which are held by the person or any associate of the person and were not so held before he or she became a principal person or increased his or her holding, or which were so held immediately before he or she reduced or disposed of his or her holding.

(8) A copy of the notice served on the person concerned under paragraph (2) shall be served on the registered person referred to in paragraph (1) and on any company referred to in paragraph (7)(b) and, if it relates to shares held by an associate of the principal person concerned, on that associate.

(9) Any person who fails to comply with a notice served on the person under paragraph (2) or an order made under paragraph (3) shall be guilty of an offence and shall be liable on conviction to imprisonment for a term not exceeding 2 years or a fine, or both.

Accounts and Auditors

17 Power to make Orders relating to accounts and auditors

(1) The Committee may, on the recommendation of the Commission, by Order provide for matters relating to the accounting and audit of registered persons.

(2) Without prejudice to the generality of paragraph (1), an Order under paragraph (1) may provide for –

(a) the keeping of accounting records by registered persons;

(b) the duty of registered persons to prepare annual financial statements giving a true and fair view of the registered person’s affairs;

(d) the form and content of auditors’ reports to be obtained by registered persons;

(e) the submission of annual financial statements and auditors’ reports to the Commission and the time limits in which they should be submitted;

(f) the powers and duties of auditors including their right of access to the accounting and other records of registered persons;

(g) the form and content of financial statements.

(3) An Order made under paragraph (1) may make a contravention of any of its provisions an offence for which a person is liable to imprisonment for a term not exceeding 2 years or a fine, or both.

18 Communication by auditors, accountants and others with the Commission

(1) No duty to which –

(a) an auditor, whether appointed by virtue of an Order made pursuant to Article 17 or not, of a registered person; or

(b) a person appointed to make a report under Article 8(5) or 32(4),

may be subject shall be regarded as contravened by reason of his or her communicating in good faith to the Commission, whether or not in response to a request made by it, any information or opinion on a matter to which this Article applies and which is relevant to any function of the Commission under this Law.

(2) In relation to an auditor of a registered person, this Article applies to any matter of which the auditor becomes aware in the auditor’s capacity as auditor and which relates to the business or affairs of the registered person or of any company which is a holding company or subsidiary in relation to it.

(3) In relation to a person to whom paragraph (1)(b) applies, this Article relates to any matter of which the person becomes aware in his or her capacity as the person making the report and which relates to the business or affairs of the registered person, or of any principal person in relation to whom his or her report is made.

(4) The Committee may, on the recommendation of the Commission and after consultation with such bodies as appear to the Commission to represent the interests of persons described in paragraph (1)(a) or (b) and registered persons, make Orders specifying circumstances in which matters to which this Article applies are to be communicated to the Commission, and it shall be the duty of those persons to whom the Orders apply to communicate a matter to the Commission in the circumstances specified in the Orders.

(5) A person to whom an Order made under paragraph (4) applies who fails to comply with that Order is guilty of an offence and liable to imprisonment for a term not exceeding 6 months or a fine, or both.

(6) Orders under this Article may make different provision for different cases.

(7) Paragraphs (1) to (6) shall apply to a person who was an auditor of a registered person or formerly registered person at any time during the period of the person’s registration, as they apply to a person who is currently an auditor of a registered person.

Powers, controls, misleading statements, etc.

19 Codes of Practice

(1) The Commission may, after consultation with such persons or bodies as appear to be representative of the interests concerned –

(a) prepare and issue Codes of Practice for the purpose of establishing sound principles for the conduct of financial service business;

(b) revise any such Code of Practice by revoking, varying, amending or adding to its provisions; and

(c) indicate in any such Code of Practice if and to what extent it is or is not to apply to any class of financial service business or particular financial service business.[32]

(2) The Commission shall cause any Code of Practice issued under this Article to be printed and distributed, and may make such arrangements as it thinks fit for such distribution, including causing copies of the Code of Practice to be put on sale to the public at such price as the Commission considers to be reasonable.

(3) Failure to follow a Code of Practice issued under this Article shall not of itself render any person liable to proceedings of any kind, or invalidate any transaction.

(4) Subject to Article 10(6), in any proceedings under this Law or otherwise, any Code of Practice issued under this Article shall be admissible in evidence if it appears to the court conducting the proceedings to be relevant to any question arising in the proceedings, and shall be taken into account in determining any such question.

(5) A copy, certified in writing on behalf of the Commission to be an accurate copy –

(a) of a Code; or

(b) of any part of such a Code,

shall be admissible in evidence in all legal proceedings as of equal validity with the original and as evidence of any fact stated in it of which direct oral evidence would be admissible.

(6) Where a document purports on its face to be a copy of a Code or part of a Code, certified in accordance with paragraph (5), it shall be unnecessary for the purposes of paragraph (5) to prove the official position or handwriting of the person signing on behalf of the Commission.

20 Client assets

(1) Where a registered person has control of or is otherwise responsible for client assets which he or she is required to safeguard, he or she shall arrange proper protection for them by way of segregation and identification of the assets or otherwise in accordance with the responsibilities he or she has accepted.

(2) Without prejudice to the generality of paragraph (1), the Committee may, on the recommendation of the Commission, prescribe the manner in which any classes of client assets are to be protected.

(3) Orders made under paragraph (2) may provide that certain client assets are held by a registered person on trust.

(4) A person who fails to comply with an Order made under paragraph (2) is guilty of an offence and liable to imprisonment for a term not exceeding 6 months or a fine, or both.

21 Trust company business assets[33]

(1) Where a registered person has control of or is otherwise responsible for trust company business assets which he or she is required to safeguard, he or she shall arrange proper protection for them by way of segregation and identification of the assets or otherwise in accordance with the responsibilities he or she has accepted.

(2) Without prejudice to the generality of paragraph (1), the Committee may, on the recommendation of the Commission, prescribe the manner in which any classes of trust company business assets are to be protected.

(3) A person who fails to comply with an Order made under paragraph (2) is guilty of an offence and liable to imprisonment for a term not exceeding 6 months or a fine, or both.

22 Contracts made by or through unregistered persons

(1) This Article applies to any contract entered into by a person (referred to in this Article as the “provider”) in the course of carrying on investment business which is in contravention of Article 7(1).

(2) Subject to paragraph (4), a contract to which this Article applies shall be unenforceable by the provider against other parties to it; and such other parties shall be entitled to recover any money or other property paid or transferred by them under the contract, together with compensation for any loss sustained by them as a result of having parted with it.

(3) The compensation recoverable under paragraph (2) shall be such as the parties may agree or as the Court may, on the application of either party, determine.

(4) The Court may make an order allowing a contract to which this Article applies to be enforced or money or property paid or transferred under it to be retained if it is satisfied that it is just and equitable to do so, having particular regard to whether the provider was, reasonably, unaware of the contravention.

(5) Subject to any order made by the Court under paragraph (4), where a party elects not to perform a contract which is unenforceable against the party by virtue of paragraph (2), and by virtue of that paragraph recovers the money paid or other property transferred by the party under the contract together with any compensation due under paragraph (2), the party shall repay any money and return any other property previously received by the party under the contract.

(6) Where any property transferred under a contract to which this Article applies has passed to a third party the references to that property in paragraphs (2), (4) and (5) shall be construed as references to its value at the time of its transfer under the contract.

(7) A contravention of a type referred to in paragraph (1) shall not make a contract illegal or invalid otherwise than as is provided in this Article.

23 Power to issue directions

(1) If it appears to the Commission in relation to financial service business that –

(a) any requirements in relation to the registration of a registered person are no longer satisfied;

(b) it is in the best interests of –

(i) persons who may transact investment business with the registered person or of creditors of the registered person, or

(ii) if the registered person is carrying on trust company business, persons who may enter into agreements for the provision of services to be provided by the registered person when carrying on trust company business or persons who may receive the benefit of services to be provided or arranged by the registered person when carrying on trust company business, or, in either case, of creditors of the registered person;

(d) it is in the best economic interests of Jersey; or

(e) any financial service advertisement issued or proposed to be issued by or on behalf of any person is misleading or undesirable,

the Commission may, whenever it deems it necessary, give, by notice in writing, such directions as it may deem appropriate in the circumstances; and any person to whom the notice is given shall obey, comply with and otherwise give effect to any such direction within the time and in the manner stated in the direction.[34]

(2) Without prejudice to the generality of paragraph (1), a direction under this Article may –

(a) require anything to be done or be omitted to be done, or impose any prohibition, restriction or limitation, or any other requirement, and confer powers, with respect to any transaction or other act, or to any assets, or to any other thing whatsoever;

(b) require that any principal person or person having functions in relation to the registered person be removed or removed and replaced by another person acceptable to the Commission;

(c) require a registered person or formerly registered person to cease operations and to wind up its affairs, in accordance with such procedures and directions as may be specified in the direction, which may provide for the appointment of a person to take possession and control of all documents, records, assets and property belonging to or in the possession or control of the registered person or formerly registered person;

(d) prohibit the issue, re-issue or continuance of a particular financial service advertisement or of financial service advertisements of any description; or

(e) require that any particular financial service advertisement or financial service advertisement of any description be modified in a specified manner.[35]

(3) The power to give directions under this Article shall include the power to vary or withdraw any direction, as well as the power to issue further directions.

(4) Where the Commission is satisfied that the circumstances so warrant, it may at any time make public any directions it has given under any of the provisions of this Article.

(5) Any person to whom a direction is given under paragraph (1) may apply to the Commission to have it withdrawn or varied and the Commission shall withdraw or vary the direction in whole or in part if it considers that there are no longer any grounds under paragraph (1)(a) to (e) which justify the direction or part of the direction concerned.

(6) Any person aggrieved by a direction given to the person under paragraph (1), or a refusal to withdraw or vary a direction pursuant to paragraph (5), may appeal to the Court, either in term or in vacation, within one month from the date on which the direction was given or refusal was made on the ground that the decision of the Commission was unreasonable having regard to all the circumstances of the case.

(7) Other than with respect to a direction to wind up a person’s affairs, an appeal made under paragraph (6) shall not suspend the operation of any direction in connection with which the appeal is made.

(8) On an appeal under paragraph (6) the Court may make such order as it thinks fit with respect to the whole or any part of the direction concerned.

(9) Any person who contravenes or fails to comply with any of the provisions of a direction given under this Article shall be guilty of an offence and liable to a term of imprisonment for a term not exceeding 2 years or a fine, or both.

(10) The record of the conviction of any person for an offence under paragraph (9) shall be admissible in any civil proceedings as evidence of the facts constituting the offence.

24 Injunctions and remedial Orders

(1) Where, on the application of the Commission, the Court is satisfied that it is likely that a person will contravene (or continue or repeat a contravention of) –

(a) Article 7(1);

(b) any condition prescribed or attached under Article 10;

(d) any direction given under Article 23; or

(e) any Regulation or Order made under this Law,

the Court may if it thinks fit issue an injunction restraining that person from committing (or, as the case may be, continuing or repeating) the contravention.[36]

(2) Where, on the application of the Commission, the Court is satisfied that any person has committed a contravention of a type referred to in paragraph (1)(a) to (e), and that there are steps which could be taken to remedy the contravention, the Court may make an order requiring that person, or any other person who appears to the Court to have been knowingly concerned, to take such steps as the Court may direct to remedy the contravention.

25 Public statements

(1) The Commission may issue a public statement concerning a person if that person appears to the Commission to have committed a contravention of the type referred to in Article 24(1)(a) to (e) or has failed to comply with a Code of Practice under Article 19.

(2) The Commission may issue a public statement concerning a person who it believes to be carrying on financial service business, whether in Jersey or elsewhere, if it appears to the Commission to be desirable to do so in the interests of the public.[37]

(3) Where a public statement, issued under this Article, concerns a registered person, a formerly registered person or a principal person in relation thereto the Commission shall, at least 7 days prior to the publication of the statement, give written notice to the person concerned of the proposed statement and of the reasons for which it intends to act.

26 Powers of intervention

(1) Where, on the application of the Commission, the Court is satisfied in relation to a registered person that –

(a) the registered person is not, in terms of Article 9(3)(a), a fit and proper person to carry on financial service business which the registered person is purporting to carry on, or is not fit to carry it on to the extent which the registered person is purporting to do; or

(b) the registered person has committed or is likely to commit a contravention of a type referred to in Article 24(1)(a) to (e); and

(c) it is desirable for the protection of persons transacting investment business with the registered person or, if the registered person is carrying on trust company business, persons who have entered into or may enter into agreements for the provision of services to be provided by the registered person when carrying on trust company business or persons who have received or may receive the benefit of services to be provided or arranged by the registered person when carrying on trust company business,

the Court may, as it thinks just, make an order making the registered person’s business subject to such supervision, restraint or conditions, from such time, and for such periods, as the Court may specify, and may also make such ancillary orders as the Court thinks desirable.[38]

(2) If, on an application made under paragraph (1), the Court is satisfied that a person, by entering into any transaction, has contravened Article 7, or entered into any transaction with another party who was induced to enter the transaction as a result of the person’s contravening Article 30, the Court may order that person and any other person who appears to the Court to have been knowingly concerned in the contravention to take such steps as the Court may direct for restoring the parties to the position in which they were before the transaction was entered into.[39]

(3) Without prejudice to the generality of paragraph (1) or (2), an order issued under either of those paragraphs may include a requirement that all assets, or all assets of a specified description which, at any time while the requirement is in force –

(a) where the registered person carries on investment business –

(i) belong to the registered person concerned, or

(ii) belong to persons transacting investment business with the registered person and are held by or to the registered person’s order; or

(b) where the registered person carries on trust company business –

(i) belong to the registered person concerned,

(ii) are held on behalf of persons who have entered into an agreement for the provision of services to be provided by the registered person when carrying on trust company business, or

(iii) are held on behalf of persons who have received or may receive the benefit of services provided or arranged by the registered person when carrying on trust company business,

shall be transferred to and held by a person whose appointment is approved by the Court (in this Article referred to as an “appointed person”).[40]

(4) Where a requirement of a type referred to in paragraph (3) is imposed under this Article, it shall be the duty of the registered person concerned to transfer the assets to the appointed person and to give the appointed person all such other assistance as may be required to enable the appointed person to discharge his or her functions in accordance with the requirement.

(5) Assets held by an appointed person in accordance with a requirement of a type referred to in paragraph (3) shall not be released or dealt with except in accordance with directions given by the Court or in such circumstances as may be specified by it.

(6) An order including a requirement of a type referred to in paragraph (3) may relate to assets outside Jersey.

(7) The provisions of this Article shall be without prejudice to any right of any aggrieved person to bring proceedings directly in respect of any right such person may otherwise have independently of the Commission.

27 Compensation schemes

The States may by Regulations establish in relation to any investment business, or to classes of such business, schemes for compensation in cases where registered persons or formerly registered persons are unable, or are likely to be unable, to satisfy claims in respect of any description of civil liability incurred by them in connection with such business, and the provisions of such schemes may be different for different classes of person or for different classes of such business.

28 False information and failure to supply information

(1) Any person who knowingly or recklessly provides the Commission or any other person entitled to information under this Law with information which is false or misleading in a material particular shall be guilty of an offence if the information is provided –

(a) in purported compliance with a requirement imposed under this Law or any Regulation or Order made thereunder;

(b) otherwise than as mentioned in sub-paragraph (a) but in circumstances in which the person providing the information intends, or could reasonably be expected to know, that the information would be used by the Commission for the purpose of exercising its functions under this Law.

(2) Any person who knowingly or recklessly provides the Commission or any other person with information which is false or misleading in a material particular shall be guilty of an offence if the information is provided in connection with an application for registration under this Law.

(3) A registered person or formerly registered person shall be guilty of an offence if he or she fails to provide the Commission with any information in his or her possession, knowing or having reasonable cause to believe that or being reckless as to whether –

(a) the information is relevant to the exercise by the Commission of its functions under this Law in relation to the registered person or formerly registered person; and

(b) the withholding of the information is likely to result in the Commission being misled as to any matter which is relevant to and of material significance for the exercise of those functions in relation to the registered person or formerly registered person.

(4) Any person who knowingly or recklessly provides any person appointed under Article 33 with information which is false or misleading in a material particular shall be guilty of an offence.

(5) A person guilty of an offence under paragraph (1), (2) or (4) shall be liable to imprisonment for a term not exceeding 5 years or a fine, or both.

(6) A person guilty of an offence under paragraph (3) shall be liable to imprisonment for a term not exceeding 2 years or a fine, or both.

29 Regulations regarding rescission of agreements and withdrawal of offers[41]

The States may by Regulations make provision for enabling a person who has entered, or offered to enter, into an agreement relating to investment business with a registered person to rescind the agreement or withdraw the offer within such period and in such manner as may be provided for in the Regulations, and, in particular, but without prejudice to the generality of the foregoing, may make provision –

(a) for requiring the service of notice with respect to the rights exercisable under the Regulations;

(b) for the restitution of property and the making or recovery of payments where those rights are exercised;

30 Misleading statements and practices

(1) Any person who –

(a) makes a statement, promise or forecast which the person knows to be misleading, false or deceptive, or dishonestly conceals any material facts; or

(b) recklessly makes (dishonestly or otherwise) a statement, promise or forecast which is misleading, false or deceptive,

is guilty of an offence if he or she makes the statement, promise or forecast or conceals the facts for the purpose of inducing, or is reckless as to whether it may induce, another person (whether or not the person to whom the statement, promise or forecast is made or from whom the facts are concealed) –

(i) to enter or offer to enter into, or refrain from entering or offering to enter into, an agreement or arrangement the making of which or performing of which constitutes financial service business or would do so but for Schedule 2; or

(ii) to exercise, or refrain from exercising, any rights conferred by an investment.[42]

(2) Any person who does any act or engages in any course of conduct which creates a false or misleading impression as to the market in or the price or value of any investment is guilty of an offence if the person does so for the purpose of creating that impression and of thereby inducing another person to acquire, dispose of, subscribe for or underwrite that investment or to refrain from doing so or to exercise, or refrain from exercising, any rights conferred by those investments.

(3) In proceedings brought against any person for an offence under paragraph (2) it shall be a defence for the person to prove that he or she reasonably believed that his or her act or conduct would not create an impression that was false or misleading as to the matters mentioned in that paragraph.

(4) A person guilty of an offence under this Article shall be liable to imprisonment for a term not exceeding 10 years or a fine, or both.

31 Control of advertising

(1) The Committee may, on the recommendation of the Commission, make Orders relating to the issue, form and content of financial service advertisements.[43]

(2) Orders made under this Article may make different provision for different cases and, without prejudice to the generality of paragraph (1), may in particular –

(a) prohibit the issue of financial service advertisements of any description (whether by reference to the matters set out in paragraph (b), to the persons by whom they are issued or otherwise);

(b) make provision regarding the presentation, content, accuracy, effect and implications of financial service advertisements, and ancillary matters, and may include provision regarding matters which must be, as well as matters which may not be, included in financial service advertisements;

(c) provide for exemptions from any prohibition or requirement imposed by the Orders, including exemptions by reference to a person’s membership of a class whose membership is determined otherwise than by the Committee or the Commission.[44]

(3) Any registered person who issues or causes to be issued in Jersey or elsewhere and, subject to paragraph (4), any other person who issues or causes to be issued in Jersey, a financial service advertisement –

(a) the issue of which is prohibited by an Order made under this Article;

(b) which does not comply fully with, or contravenes in any material respect, any requirement imposed by such an Order; or

shall be guilty of an offence and liable to imprisonment for a term not exceeding 2 years or a fine, or both.[45]

(4) A person whose business it is to publish or arrange for publication of advertisements shall not be guilty of an offence under this Article if the person proves that he or she received the financial service advertisement in question for publication in the ordinary course of his or her business, that the matters contained in the financial service advertisement were not, wholly or in part, devised or selected by him or her or by any person under his or her direction or control and that the person did not know and had no reason for believing that publication of the financial service advertisement would constitute an offence.[46]

(5) For the purposes of this Article –

(a) a financial service advertisement issued or caused to be issued by any person by way of display or exhibition in a public place shall be treated as issued or caused to be issued by him or her on every day on which he or she causes or permits it to be displayed or exhibited;

(b) where a financial service advertisement invites the transaction of investment business with, or the provision of services provided or arranged by a person carrying on trust company business by a person specified in the advertisement, its issue shall be presumed, unless the contrary is proved, to have been caused by that person.[47]

(6) For the purposes of this Article a financial service advertisement issued outside Jersey shall be treated as issued in Jersey if it is directed to persons in Jersey or is made available to them otherwise than in a newspaper, journal, magazine or other publication published and circulating principally outside Jersey or in a sound or television broadcast transmitted principally for reception outside Jersey.[48]

Information and investigations

32 General power to require provision of information and documents

(1) The Commission may by notice in writing served on a registered person, formerly registered person, or a person who is or was a principal person in relation to the person, or any associate of such a principal person, require the person on whom the notice is served –

(a) to provide to it at such time and place as may be specified in the notice, information and documents of a specified description;

(b) to attend at such place and time as may be specified in the notice and answer questions which the Commission or any duly authorized officer or agent of the Commission reasonably requires the person to answer,

being information, documents or questions relating to –

(i) the financial service business of the registered person or formerly registered person concerned;

(ii) the integrity, competence, financial standing or organisation of that person, of any person who is or was a principal person in relation to the person, and of any associate of such a principal person; or

(iii) the compliance by those persons with this Law and any Regulation, Order or Code of Practice made, or a condition of any grant of registration, or a direction given under this Law,

which the Commission reasonably requires or requires the person to answer for the performance of its functions under this Law.[49]

(2) Where the Commission has reasonable grounds for suspecting that a person is guilty of contravening Article 7(1) or 30, the Commission or any duly authorized officer or agent of the Commission may, by notice in writing served on that person or on any other person appearing to be in possession of the information or documents described in this paragraph, require the person to do any of the following –

(a) to provide to it forthwith or at such time and place as may be specified, information or documents specified in the notice being information or documents which the Commission reasonably requires for the purpose of investigating the suspected contravention;

(3) Any officer or agent of the Commission may, on producing if required evidence of his or her authority, enter, at a reasonable time, any premises occupied by a person on whom a notice has been served under paragraph (1) or (2) or any other premises where information or documents are kept by such person for the purpose of obtaining there the information or documents required by that notice, putting the questions referred to in paragraph (1)(b) or (2)(b) or of exercising the powers conferred by paragraph (6), as the case may be.

(4) A notice under paragraph (1) may require the person concerned to provide to the Commission a report, by an accountant or other person with relevant professional skill nominated or approved by the Commission, on, or on any aspect of, any of the matters mentioned in paragraph (1); and the notice may require such a report to be in such form as it may specify.

(5) Where any person who is required to provide documents under paragraph (2) claims a lien on any such document, the provision shall be without prejudice to the lien.

(6) The power under this Article to require documents to be provided includes power –

(a) if the documents are provided, to retain or take copies of them or extracts from them and to require the person providing them, or any person who appears to be in possession of relevant information, is or has been an officer, shareholder controller or auditor or employee of the registered person or formerly registered person in question, as appropriate, to provide an explanation of them; and

(b) if the documents are not provided, to require the person to whom the requirement was directed to state, to the best of the person’s knowledge and belief, where they are.

(7) Any documents retained under paragraph (6)(a) may be retained –

(a) for a period of one year; or

(b) if within that period proceedings to which the documents are relevant are commenced against any person, until the conclusion of those proceedings.

(8) A person who requires any documents retained under paragraph (6)(a) for the purpose of the person’s business and who requests such documents shall be supplied with copies as soon as practicable.

(9) Any person who without reasonable excuse fails to comply with a requirement imposed on the person under this Article or obstructs a person exercising powers conferred by paragraph (3) shall be guilty of an offence and liable to imprisonment for a term not exceeding 6 months or a fine, or both.

(10) Nothing in this Article shall require the disclosure or production by a person to the Commission or to a person authorized by it of information or documents which he or she would in an action in the Court be entitled to refuse to disclose or produce on the grounds of legal professional privilege in proceedings in the Court except, if he or she is a lawyer, the name and address of his or her client.

(11) A statement made by a person in compliance with a requirement imposed by virtue of this Article may not be used by the prosecution in evidence against the person in any criminal proceedings except proceedings under paragraph (9) or Article 28.

33 Investigations on behalf of the Commission

(1) If it appears to the Commission desirable to do so –

(a) in the interests of persons who have transacted or may transact investment business with a registered person; or

(b) if the registered person is carrying on trust company business, in the interests of persons who have entered into or may enter into, agreements for the provision of services to be provided by the registered person when carrying on trust company business, or in the interests of persons who have received or may receive the benefit of services provided or arranged by the registered person when carrying on trust company business,

the Commission may appoint one or more competent persons to investigate and report to the Commission on –

(i) the nature, conduct or state of such registered person’s financial services business or any particular aspect of it;

(ii) the registered person’s integrity, competence, financial standing or organisation;

(iii) the integrity, competence and financial standing, so far as relevant in the opinion of the Commission, of persons who are principal persons in relation to the registered person, and of associates of such principal persons; or

(iv) the compliance by those persons with this Law and any Regulation, Order or Code of Practice made, or a condition of any grant of registration, or a direction given under this Law.[51]

(2) The Commission shall give written notice of any such appointment to the registered person concerned.

(3) It shall be the duty of every person who is or was at any material time a registered person under investigation under paragraph (1), a principal person in relation to, or officer, employee, banker, auditor or, subject to paragraph (8), legal adviser of such a registered person, and of any person appointed to make a report in respect of the registered person under Article 32(4) and of any other person who appears to be in possession of relevant information –

(a) to provide to the persons appointed under paragraph (1), within such time and at such place as they may require, all documents relating to the registered person or formerly registered person which are in his or her custody or power;

(b) to attend before them at such time and place as they may require and to answer questions which they reasonably require the person to answer for the purposes of the investigation; and

(c) otherwise to give them all assistance in connection with the investigation which the person is reasonably able to give,

and the persons appointed under paragraph (1) may retain or take copies of or extracts from any documents provided to them under sub-paragraph (a).

(4) This Article shall apply in respect of a formerly registered person as it applies to a registered person and to any person who appears to the Commission to be acting or to have acted in contravention of the provisions of Article 7(1) or Article 30 and references in this Article to a “registered person” shall be construed accordingly.[52]

(5) For the purpose of exercising the person’s power under this Article a person appointed under paragraph (1) may enter any premises occupied by a registered person or formerly registered person or a person who is or was a principal person in relation to him or her or any associate of such a principal person being investigated by the person under this Article or any other premises where information is kept by such a person; but he or she shall not do so without prior notice in writing unless he or she has reasonable cause to believe that if such notice were given any documents whose provision might be required under this Article would be removed, tampered with or destroyed.

(6) A person exercising powers by virtue of an appointment under this Article shall, if so required, produce evidence of his or her authority.

(7) Any person who –

(a) without reasonable excuse fails to provide any document which it is his or her duty to provide under paragraph (3);

(b) without reasonable excuse fails to assist or attend before a person appointed under paragraph (1) when required to do so;

(c) without reasonable excuse fails to answer any question which is put to him or her by a person so appointed with respect to a person under investigation; or

(d) obstructs a person in the exercise of the powers conferred by paragraph (5),

shall be guilty of an offence and liable to imprisonment for a term not exceeding 6 months or a fine, or both.

(8) Nothing in this Article shall require the disclosure or production by a person of information or documents which the person would in any action in the Court be entitled to refuse to disclose or produce on the grounds of legal professional privilege in proceedings in the Court except, if he or she is a lawyer, the name and address of his or her client.

(9) Where any person by whom documents are required to be provided under paragraph (3) claims a lien on any such document, the provision shall be without prejudice to the lien.

(10) A person who is convicted on a prosecution instituted following an investigation under this Article may in the same proceedings be ordered to pay the expenses of the investigation to such extent as may be specified by the Court.

(11) For the purposes of paragraph (10) the expenses of the investigation shall include such sums as the Commission may determine in respect of the cost of staff and overheads.

(12) A statement made by a person in compliance with a requirement imposed by virtue of this Article may not be used by the prosecution in evidence against the person in any criminal proceedings except proceedings under paragraph (7) or Article 28.

34 Entry and search of premises

(1) If the Bailiff is satisfied by information on oath that there is reasonable cause to suspect that –

(a) there has been a contravention of a type referred to in Article 32(2) and that either –

(i) a specified person has failed in any respect to comply with a notice served on him or her under that paragraph,

(ii) there are reasonable grounds for suspecting the completeness of any information or documents provided by him or her in response to such a notice, or

(iii) if such a notice were served on a specified person on whom it might be served under that paragraph, it would not be complied with; or documents to which such a notice might relate would be likely to be removed, tampered with or destroyed;

(b) if a notice were served under Article 14(8) or 32(1), it would not be complied with;

(d) a specified person has failed in any respect to comply with a notice served on the person under Article 14(8) or 32(1);

(e) a specified person has not provided complete information or documents in response to a notice served on the person under those paragraphs;

(f) a notice served under Article 13(1) or (2), 16(2) or 23(1) has not been complied with in any respect; or

(g) any officer or agent of the Commission or person appointed under Article 33(1) has been or may be obstructed in exercising a power of entry under Article 32(3) or 33(5), as the case may be,

the Bailiff may grant a warrant under this paragraph.

(2) A warrant under paragraph (1) may authorize any police officer, together with any other person named in the warrant –

(a) to enter any premises specified in the warrant, using such force as is reasonably necessary for the purpose;

(b) to search the premises and obtain information or take possession of any documents appearing to be information or documents of a type referred to in any of the Articles referred to in paragraph (1) or information in relation to matters referred to therein or which otherwise appear to be relevant to the investigation of an offence under this Law, or to take, in relation to any such information or documents, any other steps which may appear to be necessary to preserve them or prevent interference with them;

(c) to take copies of, or extracts from such documents and to require the person who had possession of them, or any person who appears to be in possession of relevant information, is or has been an officer, shareholder controller or auditor or employee of the registered person, or formerly registered person, or other person concerned, as the case may be, to provide an explanation of them;

(d) to require any person named in the warrant to answer questions relevant for determining any matter arising in connection with this Law; and

(e) if the information or documents are not provided, to require any person appearing to be in possession of relevant information, to state, to the best of the person’s knowledge and belief, where they are and how they may be retrieved.

(3) A warrant under paragraph (1) shall continue in force until the end of the period of one month beginning with the date on which it was issued.

(4) Any documents of which possession is taken under paragraph (2) may be retained –

(a) for a period of one year; or

(b) if, within that period proceedings to which the documents are relevant are commenced against any person, until the conclusion of those proceedings.

(5) A person who requires any documents of which possession is taken under paragraph (2) for the purpose of his or her business and who requests such documents shall be supplied with copies as soon as practicable.

(6) Any person who obstructs the exercise of any power conferred by a warrant issued under this Article or fails to comply with a requirement imposed on him or her by virtue of paragraph (2)(c) to (e) shall be guilty of an offence and liable to imprisonment for a term not exceeding 2 years or a fine, or both.

(7) Where any person from whose premises documents are taken under paragraph (2) claims a lien on any such documents, the possession of such documents by the officer or person concerned and by anyone to whom he or she passes them shall be without prejudice to the lien.

(8) Nothing in this Article shall require the disclosure or production by a person of information or documents which the person would in an action in the Court be entitled to refuse to disclose or produce on the grounds of legal professional privilege in proceedings in the Court except, if he or she is a lawyer, the name and address of his or her client.

(9) A statement made by a person in compliance with a requirement imposed by virtue of this Article may not be used by the prosecution in evidence against the person in any criminal proceedings except proceedings under paragraph (6) or Article 28.

35 Obstruction of investigations

(1) A person who knows or suspects that an investigation is being or is likely to be carried out under Article 33 or that information or documents are being or are likely to be required under Article 14 or 32 shall be guilty of an offence if he or she falsifies, conceals, destroys or otherwise disposes of, or causes or permits the falsification, concealment, destruction of or disposal of, information or documents which he or she knows or suspects are or would be relevant to such an investigation or are or would be required unless the person proves that he or she had no intention of concealing facts disclosed by the information or documents from persons carrying out such an investigation or requiring such information or documents.

(2) A person guilty of an offence under this Article shall be liable to imprisonment for a term not exceeding 2 years or a fine, or both.

36 Co-operation with relevant supervisory authority[53]

(1) The following powers may be exercised (by the officer or person specified in the relevant provision) in order to assist a relevant supervisory authority –

(a) the power to refuse or revoke a registration under Article 9(1);

(b) the power to impose, revoke or vary conditions pursuant to Article 10(2);

(d) the powers relating to information and documents under Article 32;

(e) the powers under Article 33;

(f) the powers under Article 34;

(g) communication by the Commission to the relevant supervisory authority of information that is in the possession of the Commission, whether or not as a result of the exercise of any of the above powers.

(2) The Commission shall not exercise the power referred to in paragraph (1)(g) unless satisfied that the relevant supervisory authority will treat the information communicated with appropriate confidentiality and that –

(a) the power is exercised in order to assist the authority in the exercise of its supervisory functions; or

(b) the exercise of the power has been requested by the authority and requested only for the purposes of obtaining assistance for the authority in the exercise of one or more of its supervisory functions.

(3) The other powers referred to in paragraph (1) shall not be exercised by virtue of this Article unless the Commission is satisfied that the exercise has been requested by the relevant supervisory authority and requested only for the purposes of obtaining assistance for the authority in the exercise of one or more of its supervisory functions.

(4) In deciding whether to exercise a power by virtue of this Article, the following factors (among others) may be taken into account –

(a) whether corresponding assistance would be given in that country or territory to the Commission;

(b) whether the case concerns the possible breach of a law, or other requirement, which has no close parallel in Jersey or involves the assertion of a jurisdiction not recognized by Jersey;

(c) the seriousness of the case and its importance in Jersey and whether the assistance could be obtained by other means;

(d) whether it is otherwise appropriate in the public interest to give the assistance.

(5) The exercise of powers by virtue of this Article may be refused unless the relevant supervisory authority undertakes to make such contribution towards the costs of its exercise as the Commission considers appropriate.

(6) For the purposes of this Article –

(a) a reference –

(i) in Article 32(2) or 33(4) to a contravention of Article 7(1) or a contravention of Article 30, or

(ii) in Article 34(1) to a contravention of a type referred to in Article 32(2),

shall include a reference to a contravention (committed at any time, including a time before the enactment of this Law) of a law of a country or territory outside Jersey constituted by an act, or omission, that, if it arose in Jersey, would constitute (at the time when the relevant request referred to in paragraph (3) was received) a contravention of Article 7(1), or a contravention of Article 30, as in force at the latter time; and

(b) a reference in Article 32(7) or 34(4) to proceedings shall include a reference to proceedings outside Jersey.

(7) For the purposes of this Article, a reference (however expressed or implied) in Article 7 or 30 (or in any provision necessary for the interpretation of that Article) to Jersey, or to any class of person, any qualification or any provision, shall be construed, in the application of that Article to a contravention of a law of a country or territory outside Jersey, as a reference to that country or territory, or to an equivalent class of person, qualification or provision, in terms of the law of that country or territory.

(8) The exercise of a power under any provision shall be no less an exercise of that power under that provision because it is exercised by virtue of this Article, and this Law (and any other law that applies when a power is exercised directly under that provision) applies also when that power is exercised by virtue of this Article.

Restrictions on disclosure of information

37 Restricted information

(1) Subject to paragraph (2) and to Article 38, a person who receives information relating to the business or other affairs of any person –

(a) under or for the purposes of this Law; or

(b) directly or indirectly from a person who has so received it,

shall be guilty of an offence and liable to imprisonment for a term not exceeding 2 years or a fine, or both, if he or she discloses the information without the consent of the person to whom it relates and (where sub-paragraph (b) applies) the person from whom it was received.

(2) This Article does not apply to information which at the time of the disclosure is or has already been made available to the public from other sources, or to information in the form of a summary or collection of information so framed as not to enable information relating to any particular person to be ascertained from it.

38 Permitted disclosures

(1) Article 37 does not preclude the disclosure of information –

(a) by the Commission or any person acting on its behalf, to the Viscount;

(b) for the purpose of enabling or assisting the Commission or any person acting on its behalf to discharge their functions under this Law, or any other enactment under which they exercise a supervisory function;

(d) to a person showing whether or not any person is registered under this Law;

(e) with a view to the investigation of a suspected offence, or institution of, or for the purposes of, any criminal proceedings, whether under this Law or not;

(f) in connection with any other proceedings arising out of this Law;

(g) with a view to the institution of, or otherwise for the purposes of, any disciplinary proceedings relating to the exercise of an auditor’s professional duties by an auditor of a registered person or formerly registered person or an accountant or other person nominated or approved for the purposes of Article 8(5) or 32(4) or appointed under Article 33;

(h) by the Commission or any person acting on its behalf to the Attorney General or to a police officer being information obtained under any of Articles 32 to 34 or being information in the possession of the Commission as to any matter in relation to which the powers conferred by those Articles are exercisable, but any information so disclosed may only be disclosed by the Attorney General or a police officer for the purposes of an investigation into a suspected offence or a prosecution in Jersey or, at the discretion of the Attorney General, elsewhere;

(i) to any person or body responsible for a scheme for compensating investors (whether in Jersey or elsewhere) if it appears to the Commission that disclosing the information would enable or assist the recipient of the information or the Commission to discharge its functions but any such disclosure by the Commission may only be made if the recipient of the information has given to the Commission a written undertaking that the information will not be further disclosed without the prior consent of the Commission;

(j) without prejudice to the generality of sub-paragraph (b), by the Commission –

(i) to the auditor of a registered person or formerly registered person if it appears to the Commission that disclosing the information would enable or assist the Commission to discharge the functions mentioned in sub-paragraph (b) or would otherwise be in the interests of persons who have transacted or may transact investment business with a registered person or, in respect of a registered person carrying on trust company business, in the interests of persons who –

(A) have entered into or may enter into agreements for the provision of services to be provided by the registered person when carrying on trust company business, or

(B) have received or may receive the benefit of services provided or arranged by the registered person when carrying on trust company business,

(ii) if, in order to enable or assist the Commission properly to discharge any of its functions under this Law, the Commission considers it necessary to seek advice from any qualified person on any matter requiring the exercise of professional skill and the disclosure appears to the Commission to be necessary to ensure that the qualified person concerned is properly informed with respect to the matters on which the person’s advice is sought;

(k) by the Commission or any person acting on its behalf to an inspector appointed under Article 33, under Article 15 of the Company Securities (Insider Dealing) (Jersey) Law 1988,[54] under Article 128 of the Companies (Jersey) Law 1991[55] or under any other enactment under which they exercise a supervisory function. [56]

(2) No information shall be disclosed under paragraph (1)(c) or (i), or Article 36(1)(g) unless the Commission or any person acting on its behalf is satisfied that the authority, person or body concerned complies with or will comply with any conditions to which the Commission or person acting on its behalf may, in their discretion, subject such disclosure.

39 Information supplied to Commission by relevant overseas authority

Articles 37 and 38 apply also to information supplied to the Commission for the purposes of its functions under this Law by a relevant supervisory authority in a country or territory outside Jersey.

PART 4

SUPPLEMENTARY

40 Service of notices

(1) No notice required by this Law to be given to the Commission shall be regarded as so given until it is received.

(2) Subject to paragraph (1), any notice or other document required or authorized by or under this Law to be given to the Commission may be given by facsimile, electronic transmission or by any similar means which produce a document containing the text of the communication in legible form or is capable of doing so.

(3) Any notice, direction or other document required or authorized by or under this Law to be given to or served on any person other than the Commission may be given or served on the person in question –

(a) by delivering it to the person;

(b) by leaving it at the person’s proper address;

(d) by sending it to the person at that address by facsimile, electronic transmission or other similar means which produce a document containing the text of the communication in legible form or is capable of doing so.

(4) Any such notice, direction or other document may –

(a) in the case of a company incorporated in Jersey, be served by being delivered to its registered office;

(b) in the case of a partnership, company incorporated outside Jersey or unincorporated association, be given to or served on a person who is a principal person in relation to it, or on the secretary or other similar officer of the partnership, company or association or any person who purports to act in any such capacity, by whatever name called, or on the person having the control or management of the partnership business, as the case may be, or by being served on the person or delivered to the person’s registered or administrative office.

(5) For the purposes of this Article and of Article 7 of the Interpretation (Jersey) Law 1954[57] in its application to this Article, the proper address of any person to or on whom a document is to be given or served by post shall be the person’s last known address, except that –

(a) in the case of a company or its secretary, clerk or other similar officer or person referred to in paragraph (4)(a), it shall be the address of the registered or principal office of the company in Jersey; and

(b) in the case of a partnership, or a person who is a principal person in relation to a partnership, it shall be that of its principal office in Jersey.

(6) If the person to or on whom any document referred to in paragraph (3) is to be given or served has notified the Commission of an address within Jersey other than the person’s proper address within the meaning of paragraph (5), as the one at which the person or someone on the person’s behalf will accept documents of the same description as that document, that address shall also be treated for the purposes of this Article and Article 7 of the