Investment Intermediaries Act, 1995

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Asset and liability ratios and structures of authorised investment business firms.

18.—(1) A supervisory authority may impose a requirement on an authorised investment business firm to keep at all times a proportion of its assets in the form of liquid assets so as to enable the authorised investment business firm to meet its liabilities as they arise.

(2) An authorised investment business firm may keep liquid assets in addition to those required for the purpose of complying with subsection (1) of this section.

(3) For the purposes of complying with the requirements of a supervisory authority under subsection (1) of this section, an authorised investment business firm shall have regard to the range and scale of its business and that of any relevant associated undertaking or related undertaking and the composition and character of its assets and liabilities and those of any such undertaking.

(4) A supervisory authority may from time to time impose a requirement on an authorised investment business firm to maintain—

(a) a specified ratio, or

(b) a ratio which does not exceed a specified ratio, or

(c) a ratio which is not less than a specified ratio,

between its assets and its liabilities and the specified ratio may be expressed as a percentage of the assets or liabilities concerned.

(5) A requirement of a supervisory authority under this section may be expressed to apply to all or any of the following, namely—

(a) all authorised investment business firms,

(b) authorised investment business firms of a specified category or specified categories,

(c) the total assets or total liabilities of the authorised investment business firm or authorised investment business firms concerned,

(d) specified assets or assets of a specified kind,

(e) specified liabilities or liabilities of a specified kind,

(f) a specified time or times,

(g) during a specified period or periods,

and shall have effect in accordance with the specified terms of the requirement.

(6) A requirement under this section which is in force may be revoked by a supervisory authority or may be amended by a subsequent requirement under the relevant subsection.

(7) A supervisory authority may from time to time specify, as respects an authorised investment business firm, requirements as to the composition of its assets and requirements as to the composition of its liabilities.

(8) In determining, for the purposes of this section, the assets and liabilities of an authorised investment business firm with which another undertaking is associated or related, there shall be attributed to the authorised investment business firm, in a manner acceptable to or as may be specified by a supervisory authority, the whole or part of the assets and liabilities of whatever description of the associated undertaking or related undertaking.

(9) Any requirements imposed under this section by a supervisory authority acting as a competent authority may include requirements imposed for the purposes of applying Council Directive 93/6/EEC of 15 March, 1993(1) , or other relevant European Community Directives, to the authorised investment business firm.

(10) In this section—

(a) “specified” means specified by a supervisory authority under this section;

(b) “liabilities” include such contingent liabilities as may be specified by a supervisory authority from time to time for the purposes of this section;

(c) “liquid assets” means assets specified as such for the purposes of this section by a supervisory authority.

⁽¹⁾ O.J. No. L.141 11/6/93.