The Investment Recommendation (Media) Regulations 2005

Disclosure of interests etc

6.—(1) Subject to paragraph (6), a person producing an investment recommendation must disclose, in the recommendation itself, all relationships and circumstances that may reasonably be expected to impair the objectivity of that recommendation, in particular, where he has–

(a)a significant financial interest in one or more of the financial instruments which are the subject of the investment recommendation, or

(b)a significant conflict of interest with respect to an issuer of a financial instrument to which the investment recommendation (directly or indirectly) relates.

(2) For the purposes of paragraph (1)(a), a “significant” financial interest includes—

(a)in relation to a legal person, a holding exceeding 5% of the total issued share capital in the issuer of the shares in question, and

(b)in relation to a natural person, a holding exceeding £3000 of the total issued share capital in the issuer of the shares in question.

(3) Where the person producing the investment recommendation is a legal person—

(a)the significant financial interests and the significant conflicts of interest that it must disclose under paragraph (1) include any such interests or interest that it (or any connected legal person) has that are—

(i)accessible, or reasonably expected to be accessible, to the persons involved in the preparation of the recommendation, or

(ii)that are known to persons who, although not involved in the preparation of the recommendation, had, or could reasonably be expected to have, access to the recommendation prior to its being disseminated to customers or to the public; and

(b)the requirement of disclosure of significant financial interests and of significant conflicts of interest under paragraph (1) applies also to any person who (whether under a contract of employment or otherwise) works for the person producing the investment recommendation and who was directly involved in preparing that recommendation.

(4) The reference in paragraph (3)(a) to a legal person being “connected” to the person (“A”) producing the investment recommendation, means—

(a)a parent undertaking of A;

(b)a subsidiary undertaking of A;

(c)a subsidiary undertaking of the parent undertaking of A;

(d)a parent undertaking of a subsidiary undertaking of A; or

(e)an undertaking in which A or an undertaking mentioned in sub-paragraph (a), (b), (c) or (d) has a participating interest.

(5) In paragraph (4)—

• “parent undertaking” in sub-paragraphs (a), (c) and (d) has the same meaning as in Part 7 of the Companies Act 1985(1) (or Part 8 of the Companies (Northern Ireland) Order 1986(2)); and includes an individual who would be a parent undertaking for the purposes of those provisions if he were an undertaking (and “subsidiary undertaking” is to be read accordingly).

• “subsidiary undertaking” in sub-paragraphs (b), (c) and (d) has the same meaning as in Part 7 of the Companies Act 1985 (or Part 8 of the Companies (Northern Ireland) Order 1986); and includes, in relation to a body incorporated in or formed under the law of any EEA State other than the United Kingdom, an undertaking which is a subsidiary undertaking within the meaning of any rule of law in that State for the purposes of the Seventh Company Law Directive(3) (and “parent undertaking” is to be read accordingly); and

• “participating interest” in sub-paragraph (e) has the same meaning as in Part 7 of the Companies Act 1985 (or Part 8 of the Companies (Northern Ireland) Order 1986); and includes an interest held by an individual which would be a participating interest for the purposes of these provisions if he were taken to be an undertaking.

(6) A person producing an investment recommendation may, if he considers that the disclosure required under paragraph (1) would be disproportionate in relation to the length of that recommendation, comply with the requirements of that paragraph —

(a)by including in the recommendation itself a clear and prominent reference to the place where the disclosure can be directly and easily accessed by the public (such as an appropriate internet site of his from which a direct internet link can be made to such disclosures), or

(b)where he produces two or more recommendations which appear together, by including in one of the recommendations a single clear and prominent reference to the place where the disclosures required for all the recommendations can be directly and easily accessed by the public.