2.1 2.1 Our approach to authorisation
This chapter outlines our approach when assessing if an applicant or registrant can become:(a) an Authorised Firm;(b) a Recognised Body;(c) a Representative Office;(d) an Approved Person; or(e) a Principal Representative.
Before submitting an application, an applicant or registrant should contact our Authorisation Team at email@example.com.
Prohibition and by way of business
The FSMR impose a prohibition on all persons who carry on an activity regulated by us in the ADGM "by way of business" unless the person is an Authorised Firm, Recognised Body or an Exempt Person.
Whether or not an activity is carried on by way of business is a question of fact that takes account several factors, including:(a) how often the activity is conducted;(b) whether there is a commercial element involved;(c) the size and proportion of non-regulated activities carried on by the same person; and(d) the nature, context and circumstances of the activity that is carried on.
Whether someone is carrying on his or her own business
Another aspect of the prohibition is that an employee will not breach the prohibition by carrying on an activity on behalf of his employer, as in such cases it is the employer who is carrying on that activity. The employee is simply carrying on the employer's business. This principle potentially also applies to agents and others who assist another to carry on that other's business.
General Prohibition and by way of business
The regulations impose a general prohibition on all persons who carry on a Regulated Activity in the ADGM "by way of business" unless the person is a firm, Recognised Body or an exempt person.
Whether or not an activity is carried on by way of business is a question of fact that takes account of several factors. These include:(a) the degree to which the activity is conducted with continuity, regularity and systemically;(b) the existence of a commercial element;(c) the scale proportion and impact which the activity bears to other activities carried on by the same Person but which are not regulated; and(d) the nature, context and circumstances of the particular activity that is carried on.
Regulated Activities and the need for a Financial Service Permission
Schedule 1 to the Financial Services and Markets Regulations contains a complete list of Regulated Activities. When determining whether an applicant will require a Financial Services Permission to engage in a specific Regulated Activity, the applicant should first, determine that such Regulated Activity will be carried on in or from the ADGM 'by way of business' as described in 2.1.6 and 2.1.7. If they are then the applicant will need to consider whether any of the applicable exclusions apply either (i) specified following the description of the relevant Regulated Activity or (ii) amongst the general exclusions contained in Chapter 18 of Schedule 1.
Combinations of Regulated Activities
Generally, we will rely upon the applicant's written application and discussions when considering which Regulated Activities should be included in any Financial Service Permission granted to the applicant. The Regulator will only include a Regulated Activity within a Financial Service Permission when it reasonably believes such Regulated Activity is required for the applicant to conduct its business. Applicants should consider each Regulated Activity as a distinct activity with a distinct Financial Service Permission.
While no Regulated Activity will require the Regulator to include a second Regulated Activity within the Financial Service Permission to enable the applicant to engage in the original Regulated Activity, certain Regulated Activities may be combined with other Regulated Activities. For example, where an applicant may be arranging transactions which arise from advice given to a client. This would be acceptable, provided (i) the applicant has requested both Regulated Activities to be included in its Financial Service Permission, (ii) the applicant satisfies the relevant criteria necessary to engage in both Regulated Activities and (iii) no conflicts arise as a consequence of the conduct of both Regulated Activities by a single person (see 2.1.10).
Conflicts between Regulated Activities
By their nature, certain combinations of Regulated Activities may be difficult for a single applicant to undertake without risk of a material conflict of interest. In such circumstances the Regulator will not grant a Financial Service Permission to engage in both Regulated Activities without being satisfied that both activities may be undertaken independently in a manner which addresses potential conflicting duties between clients or conflicts between the interests of the applicant and its clients.
The Regulator does not provide an exhaustive list of potential conflicting duties and interests and expects that each applicant will have reviewed the scope of those Regulated Activities it wishes to engage in, in order to identify and take steps to mitigate potential conflicts.