Recognising a specified investment: company shares v land and goods (RAO art 76)
Monique Delacroix is the executor of her late father's estate in England and has instructed Ravensworth Hale, an SRA-authorised firm, to help administer it. The estate includes: a freehold house in Kent; a classic car; a painting by a minor Victorian artist; a long leasehold flat in Brighton; and 2,000 ordinary shares in a company listed on the London Stock Exchange. Monique asks which of these assets could bring the firm's work within the financial services regime if the firm arranged its sale.
Which asset is a specified investment for the purposes of the Financial Services and Markets Act 2000?
Choose one answer to see the reasoning.
Worked answer
Correct answer E: The listed company shares.
THE RULE TO REMEMBER
Shares in the share capital of any body corporate are specified investments (RAO 2001 art 76); land and ordinary goods are not.
Recognising a specified investment: company shares v land and goods (RAO art 76)
A regulated activity under FSMA 2000 is a specified activity carried on by way of business in relation to a specified investment. The specified investments are listed in Part 3 of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001. Article 76 specifies shares or stock in the share capital of any body corporate, wherever incorporated. The listed company shares are therefore a specified investment, so arranging their sale could be a regulated activity, unless an exclusion or the Part 20 exemption for professional firms applies. Land, whether freehold or leasehold, and goods such as cars and paintings are not specified investments, so arranging their sale for the estate does not engage the financial services regime in that way.
Why A is wrong: Freehold land is not a specified investment, so selling the house is not a regulated activity on that basis.
Why B is wrong: Goods such as a car are not specified investments.
Why C is wrong: A painting is a chattel, not a specified investment.
Why D is wrong: A leasehold interest in land is not a specified investment.
A little more practice done.
Related questions
Introducing a client to an independent financial adviser: the introducing exclusion (RAO art 33)
Which of the following best describes whether Rupert's introduction is a regulated activity?
Breach of the general prohibition: agreement unenforceable against the client (FSMA s.26)
Which of the following best describes the civil consequences of the agreement with Elena?
Commission and the Part 20 exemption: accounting to the client (FSMA 2000 s.327(3))
What must the firm do with the commission if it is to continue to rely on the exemption for professional firms?
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