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Qualified major stake entity over which the bank has no effective control

Banking Regulations

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—(1) Where a qualified major stake entity falls within the definition of “affiliated entity” of a bank under regulation 12(1)(a), (b), (c) or (e) but not regulation 12(1)(d), and the Authority is satisfied that —(a)the entity is not under the effective control of the bank; and(b)the bank is not exposed to any material risk by virtue of —(i)that entity’s beneficial interest in the share capital, accumulated funds or contributed capital of other entities;(ii)that entity’s control of voting power in other entities; or(iii)that entity’s interest in other entities,the Authority may, by notice in writing to the bank, declare that any shares held by that entity in the bank or any holding company of the bank, shall be excluded for the purpose of determining whether there is a contravention of regulation 16(1), (2), (3) or (4) and in such event, the exclusion shall take effect from the date specified in the declaration until such time as the declaration is revoked.(2) The Authority may upon making a declaration under paragraph (1) and from time to time, impose such conditions as the Authority considers appropriate and if any of the conditions are not complied with at any time, the Authority may revoke the declaration by notice in writing to the bank.(2A) The Authority may vary or revoke any condition imposed under paragraph (2).(3) Without prejudice to paragraph (2), the Authority may, by notice in writing to a bank, revoke a declaration made under paragraph (1) if the Authority is satisfied that —(a)the entity has come under the effective control of the bank; or(b)the bank has become exposed to material risk by virtue of —(i)that entity’s beneficial interest in the share capital, accumulated funds or contributed capital of other entities;(ii)that entity’s control of voting power in other entities; or(iii)that entity’s interest in other entities,and in such event, any shares held by that entity in the bank or any holding company of the bank shall, with effect from the date specified in the notice of revocation, be included for the purpose of determining whether there is a contravention of regulation 16(1), (2), (3) or (4).(4) Without prejudice to paragraph (3), a declaration under paragraph (1) shall automatically be revoked if and when the entity falls within the definition of “affiliated entity” under regulation 12(1)(d), whether or not the entity continues to fall within the definition of “affiliated entity” under regulation 12(1)(a), (b), (c) or (e).

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