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The FCA does not need the court’s permission to start enforcement action for breach of the listing rules and market abuse against an insolvent company

Financial Conduct Authority v Carillion Plc [2021] EWHC 2871 (Ch) decides that since enforcement action is not a legal proceeding, the FCA does not need the permission of an insolvency court to proceed against a firm in liquidation.

Section 130(2) of the Insolvency Act reads: “When a winding-up order has been made or a provisional liquidator has been appointed, no action or proceeding shall be proceeded with or commenced against the company or its property, except by leave of the court and subject to such terms as the court may impose”.

Enforcement action under sections 91 (for breach of the listing rules) or 123 (market abuse) is not an action or proceeding for this purpose. Since only the recipient of enforcement action – here the liquidator – can refer a case to the Upper Tribunal from the regulator’s regulatory decisions committee (RDC), there is no need for anyone to obtain the court’s permission for such a referral. By making such a referral, the liquidator will obviously be consenting to the proceedings.

#financialservices #financialconductauthority #insolvency #Insolvencyact #listing rules #marketabuse

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