Change of corporate control
Under Section 102 of the Gambling Act 2005 (opens in a new tab), a change of corporate control takes place when a person (or other legal entity) either directly or indirectly:
- owns 10% or more of the shares
- is entitled to 10% or more of the rights to profits/dividends
- has 10% or more of the voting power
- is able to exercise significant influence over the management of an existing licensed operator.
See Section 422 of Financial Services and Markets Act 2000 (FSMA) (opens in a new tab) for the full definition of controller.
In summary, it is when there is a new "controller" of the company. For example, if a major investor joins the company or a new significant member joins a partnership.
- 10% or more of the shares in a licensed operator or in parent company of a licensed operator
- 10% or more of the voting power in a licensed operator or a parent company of a licensed operator
- shares or voting power in a licensed operator or a parent company of a licensed operator as a result of which the person is able to exercise significant influence over the management of a licensed operator.
The holding of shares or voting power by a person in the licensed operator includes any shares or voting power held by another person if they and the other person are acting together:
- in relation to a licensee with share capital, allotted shares
- in relation to a licensee with capital but no share capital, rights to share in the capital.
In relation to licensee without capital, interests:
- conferring any rights to share in the profits of the licensee; or liability to contribute to the losses of the licensee
- giving rise to an obligation to contribute to the debts or expenses of the licensee in the event of its winding up (in a licensee with neither share capital nor capital).
Voting power is defined by section 422(5) FSMA20000
(a) it includes in relation to a person (H):
i. voting power held by a third party with whom H has concluded an agreement, which obliges H and the third party to adopt, by concerted exercise of the voting power they hold, a lasting common policy towards the management of the undertaking in question.
ii. voting power held by a third party under an agreement concluded with H providing for the temporary transfer for consideration of the voting power in question.
iii. voting power attaching to shares which are lodged as collateral with H, provided that H controls the voting power and declares an intention to exercise it.
iv. voting power attaching to shares in which H has a life interest.
v. voting power which is held, or may be exercised within the meaning of subparagraphs (i) to (iv), by a F2 controlled undertaking of H.
vi. voting power attaching to shares deposited with H which H has discretion to exercise in the absence of specific instructions from the shareholders.
vii. voting power held in the name of a third party on behalf of H.
viii. voting power which H may exercise as a proxy where H has discretion about the exercise of the voting power in the absence of specific instructions from the shareholders.
(b) in relation to an undertaking which does not have general meetings at which matters are decided by the exercise of voting rights, means the right under the constitution of the undertaking to direct the overall policy of the undertaking or alter the terms of its constitution.
If you have any questions as to whether a change of control has taken place, you should seek independent legal advice.
Notify the Commission of a change of corporate control
Last updated: 29 April 2021
Show updates to this content
No changes to show.