CISI Corporate Finance Regulation Flashcards

Vocabulary flashcards covering key regulatory frameworks, company law provisions, takeover rules, and equity market standards based on the CISI Corporate Finance Regulation study manual.

Financial Services and Markets Act 2000 (FSMA)

The primary UK legislation that established a statutory regulatory framework for financial services, originally replacing self-regulatory organisations with the Financial Services Authority (FSA) and introducing the general prohibition under Section 19.

Financial Policy Committee (FPC)

An official committee of the Bank of England responsible for macroprudential regulation and for taking action to remove or reduce systemic risks to the UK financial system.

Financial Conduct Authority (FCA)

The UK regulatory body responsible for regulating conduct across all financial services firms, ensuring market integrity, consumer protection, and effective competition, as well as prudential regulation for non-PRA firms.

Prudential Regulation Authority (PRA)

The UK prudential regulator, operating as part of the Bank of England through the Prudential Regulation Committee (PRC), responsible for promoting the safety and soundness of banks, building societies, credit unions, insurers, and major investment firms.

General Prohibition

The statutory rule under Section 19 of FSMA stating that no person may carry on a regulated activity in the UK unless they are an authorised person or an exempt person.

Regulated Activity

An activity specified under Section 22 of FSMA and the Regulated Activities Order (RAO) 2001 that involves specified activities carried on by way of business in relation to specified investments.

Designated Investment Business (DIB)

A subset of regulated activities under FSMA relating to securities and derivatives, excluding commercial banking, lending, and general insurance activities.

Appointed Representative

An individual or business entity that is exempt from requiring direct FCA authorisation because an authorised firm (the principal) accepts written responsibility for its regulated activities.

Principles for Businesses (PRIN)

A set of $12$ high-level principles established in the FCA Handbook that authorised firms must observe when conducting business.

Consumer Duty

FCA Principle $12$ requiring in-scope firms to act to deliver good outcomes for retail customers across products and services, price and value, consumer understanding, and consumer support.

Senior Managers and Certification Regime (SM&CR)

The UK accountability framework comprising the Senior Managers Regime, the Certification Regime, and Conduct Rules designed to ensure individual accountability in financial firms.

Inducements

Fees, commissions, or non-monetary benefits provided or received in connection with designated investment business that must not impair a firm's duty to act in its client's best interests.

Financial Promotion

An invitation or inducement to engage in investment activity that is communicated in the course of business under Section 21 of FSMA.

Recognised Investment Exchange (RIE)

An investment exchange situated in the UK that is recognised and supervised by the FCA under Section 290 of FSMA, exempting it from requiring Part 4A permission.

Multilateral Trading Facility (MTF)

A non-discretionary multilateral trading system operated by an investment firm or market operator that brings together multiple third-party buying and selling interests in financial instruments.

Organised Trading Facility (OTF)

A multilateral trading system (other than a regulated market or MTF) for non-equity instruments in which the operator exercises discretion over order execution.

Protected Forward-Looking Statements (PFLS)

Disclosures in a prospectus regarding future financial or operational performance or sustainability goals that are subject to a fraud or recklessness liability standard.

Scheme of Arrangement

A statutory procedure under Part 26 or Part 26A of the Companies Act 2006 allowing a company to make a compromise or arrangement with its shareholders or creditors to restructure.

Squeeze-Out

The statutory right under Section 979 of the Companies Act 2006 allowing a bidder who has acquired $90\%$ of the offer shares and voting rights to compulsorily acquire remaining minority shares.

Sell-Out

The statutory right under Section 983 of the Companies Act 2006 allowing minority shareholders to compel a bidder holding at least $90\%$ of target shares to buy them out.

Pre-emption Rights

The statutory right under Section 561 of the Companies Act 2006 requiring a public company issuing new equity shares for cash to offer them first to existing shareholders pro rata to their existing holdings.

Takeover Panel (PTM)

An independent regulatory body charged with issuing and administering the City Code on Takeovers and Mergers and supervising takeover transactions in the UK.

City Code on Takeovers and Mergers

A set of General Principles and detailed rules designed to ensure fair treatment of offeree company shareholders during takeover bids.

Mandatory Offer

A required cash offer under Rule 9 of the Takeover Code triggered when a person or concert party acquires interests carrying $30\%$ or more of an offeree's voting rights.

Nominated Adviser (Nomad)

A corporate finance firm approved by the London Stock Exchange to assess the appropriateness of a company for admission to AIM and guide its ongoing compliance with AIM Rules.

AIM Market

An exchange-regulated SME Growth Market operated by the London Stock Exchange designed for smaller, growing companies.

UK Stewardship Code

A voluntary code published by the Financial Reporting Council setting standards for the responsible allocation, management, and oversight of capital by institutional investors and service providers.

Wates Corporate Governance Principles

A corporate governance framework consisting of six principles designed to help large private companies meet legal reporting requirements and demonstrate good practice.