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Independence from substantial shareholder

Securities and Futures (Corporate Governance of Approved Exchanges, Approved Clearing Houses, Licensed Trade Repositories and Approved Holding Companies) Regulations 2024

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—(1) In these Regulations, subject to regulation 5, a director of a regulated institution is considered to be independent from a substantial shareholder of the regulated institution if he or she is not a substantial shareholder and is not connected to that substantial shareholder.(2) Without limiting paragraph (1) but subject to regulation 5, a director is connected to a substantial shareholder if he or she is —(a)in the case where the substantial shareholder is an individual —(i)a member of the immediate family of the substantial shareholder;(ii)employed by the substantial shareholder;(iii)employed by an associated corporation of the substantial shareholder;(iv)an executive director of an associated corporation of the substantial shareholder;(v)a non‑executive director of an associated corporation of the substantial shareholder;(vi)a partner of a firm or a limited liability partnership of which the substantial shareholder is also a partner; or(vii)accustomed or under an obligation, whether formal or informal, to act in accordance with the directions, instructions or wishes of the substantial shareholder; or(b)in the case where the substantial shareholder is a corporation —(i)employed by the substantial shareholder;(ii)employed by a subsidiary or an associated corporation of the substantial shareholder;(iii)a director of the substantial shareholder;(iv)an executive director of a subsidiary or an associated corporation of the substantial shareholder;(v)a non‑executive director of a subsidiary or an associated corporation of the substantial shareholder;(vi)a partner of a firm or a limited liability partnership of which the substantial shareholder is also a partner; or(vii)accustomed or under an obligation, whether formal or informal, to act in accordance with the directions, instructions or wishes of the substantial shareholder.(3) Despite paragraph (2)(b)(iii), in a case where the regulated institution is the sole subsidiary of an approved holding company and the approved holding company does not carry on any business other than the holding of the regulated institution, a director of the regulated institution who is also a director of the approved holding company is not connected to the approved holding company by reason only that he or she is also a director of the approved holding company, if the director —(a)is not a substantial shareholder of the regulated institution or the approved holding company; and(b)is not connected to a substantial shareholder of the regulated institution or the approved holding company.

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