[Home] [Databases] [World Law] [Multidatabase Search] [Help] [Feedback]
	Statutes of Northern Ireland
You are here: BAILII >> Databases >> Statutes of Northern Ireland >> URL: http://www.bailii.org/nie/legis/num_act/pofai1940522.txt

[New search] [Help]

PREVENTION OF FRAUD (INVESTMENTS) ACT (NORTHERN IRELAND) 1940

PREVENTION OF FRAUD (INVESTMENTS) ACT (NORTHERN IRELAND) 1940 - LONG
TITLE

An Act to provide for regulating the business of dealing in
securities; to restrict the registration of societies under the
Industrial and Provident Societies Act, 1893, and confer on the
registrar of building societies further powers in relation to such
societies; to make general provision for preventing fraud in
connection with dealings in investments; and to provide for purposes
connected with the matters aforesaid.{1}
[28th May 1940]
Provisions for Regulating the Business of Dealing in
SecuritiesLicensing of dealers in securities.

PREVENTION OF FRAUD (INVESTMENTS) ACT (NORTHERN IRELAND) 1940 - SECT
1

1.(1) Subject to the provisions of the next following section, no
person shall, on or after such day as the Ministry of Commerce (in
this Act referred to as "the Ministry") may by order appoint

(a)carry on or purport to carry on the business of dealing in
securities except under the authority of a principal's licence, that
is to say, a licence under this Act authorising him to carry on
the business of dealing in securities, or

(b)in the capacity of a servant or agent of any person carrying on
or purporting to carry on that business, deal or purport to deal
in securities except under the authority of a representative's
licence, that is to say, a licence under this Act authorising him
to deal in securities as a servant or agent of any holder of a
principal's licence for the time being in force.

(2) Any person who contravenes this section shall be liable, on
conviction on indictment, to imprisonment for a term not exceeding
two years or to a fine not exceeding five hundred pounds or to
both such imprisonment and such fine or, on summary conviction, to
imprisonment for a term not exceeding six months or to a fine not
exceeding one hundred pounds or to both such imprisonment and such
fine.

(3) Proceedings for an offence under this section shall not be
instituted except by, or with the consent of, the Ministry or the
Attorney General for Northern Ireland:

Proviso rep. by 1975 c.59 s.14(5) sch.6 Pt.II

PREVENTION OF FRAUD (INVESTMENTS) ACT (NORTHERN IRELAND) 1940 - SECT
2
Saving for certain transactions.

2.(1) The restrictions imposed by section one of this Act in
relation to dealing in securities shall not apply to the doing of
anything by, or on behalf of

(a)a member of any recognised stock exchange or recognised
association of dealers in securities, or

(b)the Bank of England, any licensed bank, any statutory corporation
or municipal corporation, any exempted dealer or any industrial and
provident society or building society, or

(c)any person acting in the capacity of manager or trustee under an
authorised unit trust scheme.

(2) For the purpose of determining whether or not a person has
contravened any of the restrictions imposed by section one of this
Act, no account shall be taken of his having done any of the
following things (whether as a principal or as an agent), that is
to say:

(a)effecting transactions with, or through the agency of

(i)such a person as is mentioned in paragraph (a), paragraph (b) or
paragraph (c) of the preceding sub-section, or a person acting on
behalf of such a person as is so mentioned, or

(ii)the holder of a licence,

[(b)issuing any prospectus to which

(i)section thirty-eight of the Companies Act (Northern Ireland), 1960,
applies or would apply if not excluded by paragraph (b) of
sub-section (7) of that section or by section thirty-nine of that
Act, or

(ii)section three hundred and sixty-five of that Act applies or
would apply if not excluded by paragraph (b) of sub-section (8) of
that section or by section three hundred and sixty-six of that Act,

(c)issuing any document relating to securities of a corporation (not
being a registered company) incorporated under the law of some part
of the United Kingdom, being a document which

(i)would, if the corporation were a registered company be a
prospectus to which section thirty-eight of the Companies Act
(Northern Ireland), 1960, applies or would apply if not excluded by
paragraph (b) of sub-section (7) of that section or by section
thirty-nine of that Act, and

(ii)contains all the matters and is issued with the consents which,
by virtue of sections three hundred and sixty-five and three hundred
and sixty-seven of that Act it would have to contain and be issued
with if the corporation were a company incorporated outside the
United Kingdom and the document were a prospectus issued by that
company, and

(d)issuing any form of application for shares in, or debentures of,
a corporation together with

(i)a prospectus which complies with the requirement of section
thirty-eight of the Companies Act (Northern Ireland), 1960, or is
not required to comply therewith because excluded by paragraph (b)
of sub-section (7) of that section or by section thirty-nine of
that Act or complies with the requirements of Part XI of that Act
and is not issued in contravention of section three hundred and
sixty-seven of that Act, or

(ii)in the case of a corporation (not being a registered company)
incorporated under the law of some part of the United Kingdom, a
document containing all the matters and issued with the consents
mentioned in sub-paragraph (ii) of paragraph (c) of this sub-section]

Nothing in this sub-section shall be construed as authorising any
person to hold himself out as carrying on the business of dealing
in securities.

PREVENTION OF FRAUD (INVESTMENTS) ACT (NORTHERN IRELAND) 1940 - SECT
3
Applications for, and grant and extent of, licences.

3.(1) Subject to the following provisions of this Act, the Ministry

(a)upon an application in that behalf made by any person in the
prescribed manner, and on payment of the prescribed fee, shall grant
to that person a principal's licence, and

(b)upon an application made by any person in the prescribed manner
and on payment of the prescribed fee, shall grant to that person a
representative's licence.

(2) A licence shall, unless in the meantime it is revoked, be
valid for the period of one year beginning with the day specified
in the licence as the day on which it takes effect, and no
longer.

(3) A principal's licence shall specify the name of the person
thereby authorised to carry on the business of dealing in
securities, and shall not authorise him to carry on that business
under any name other than that specified in the licence as his
name:

Provided that, if the Ministry thinks fit, such a licence may, at
the request of the applicant for the licence, be framed so as to
authorise the holder thereof to carry on the said business, either
alone or jointly with any other person being the holder of a
principal's licence, under such name or style as the applicant may
specify in his application.

PREVENTION OF FRAUD (INVESTMENTS) ACT (NORTHERN IRELAND) 1940 - SECT
4
Deposits or guarantees required in connection with applications for
principals' licences.

4.(1) Subject to the provisions of this section, the Ministry shall
not grant a principal's licence unless the sum of five hundred
pounds has been, and remains, deposited by the applicant for the
licence with the Accountant General of the Supreme Court of Northern
Ireland.

(2) Where any sum has been deposited under this section, then

(a)in the event of the depositor becoming bankrupt, the amount of
the deposit shall be paid to the assignee or trustee in bankruptcy;
or

(b)if, in a case where the depositor is a corporation, the
corporation is ordered to be wound up by, or under the supervision
of, the court, the amount of the deposit shall be repaid to the
corporation;

Subs.(3) rep. by 1978 c.23 s.122(2) sch.7

(4) Upon any application for a principal's licence the Ministry may
dispense with the necessity of making a deposit under this section
in relation to the application

(a)if there is given to the Ministry by a person approved by it
an undertaking in the prescribed form that, in consideration of the
Ministry granting such a licence upon that application, the person
giving the undertaking will, upon the occurrence of the following
event at any time before a further principal's licence is granted
to the holder of the licence referred to in the undertaking, that
is to say, the holder becoming bankrupt or, in a case where the
holder is a corporation, the corporation being ordered to be wound
up by, or under the supervision, of the court, pay the sum of
five hundred pounds to the official assignee or trustee in
bankruptcy or to the corporation, as the case may be; or

(b)if the Ministry is satisfied that the applicant has at all times
since the beginning of the year nineteen hundred and thirty-nine
been carrying on in Northern Ireland the business of dealing in
securities, and that it would cause him undue hardship to make a
deposit under this section.

(5) In the event in which, by virtue of an undertaking given under
the last preceding sub-section, any sum becomes payable to the
official assignee or trustee in bankruptcy or to a corporation, the
official assignee or trustee or the corporation, as the case may
be, shall have the power and duty to recover that sum from the
person by whom it is payable; but if, in a case where any sum is
paid in pursuance of such an undertaking, it is found upon the
administration in bankruptcy or the winding-up that the assets of
the bankrupt or the corporation exceed the amount required to meet
his or its debts and liabilities (including the costs and expenses
of the administration or winding-up), the amount of the excess or
the amount of the sum so paid, whichever is the less, shall be
repaid by the trustee or corporation to, or to the personal
representative of, the person by whom the undertaking was given.

(6) In this section the expression "official assignee" includes the
assignee (if any) chosen by the creditors to act with the official
assignee.

PREVENTION OF FRAUD (INVESTMENTS) ACT (NORTHERN IRELAND) 1940 - SECT
5
Refusal and revocation of licences.

5. Subject to the provisions of this section, the Ministry may
refuse to grant an application for a licence or, where a licence
has been granted, may revoke the licence, if

(1)the applicant or the holder of the licence has not, on the
occasion of the application or, as the case may be, at any
prescribed time during the currency of the licence, furnished to the
Ministry such information relating to him, and to any circumstances
likely to affect his method of conducting business, as may be
prescribed, being information verified in such manner, whether by
statutory declaration or otherwise, as the Ministry may require, or

(2)it appears to the Ministry that

(a)by reason of the applicant or the holder of the licence, or any
person employed by, or associated with, the applicant or holder for
the purposes of his business

(i)having been convicted within His Majesty's dominions of an offence
his conviction for which necessarily involved a finding that he
acted fraudulently or dishonestly, or

(ii)having been convicted of an offence under this Act, or

<(iii)having committed a breach of any rules made by the Ministry under this Act for regulating the conduct of business by holders of licences, or

(b)by reason of any other circumstances whatsoever which either are
likely to lead to the improper conduct of business by, or reflect
discredit upon the method of conducting business of, the applicant
or holder or any person so employed by or associated with him as
aforesaid,

the applicant or holder is not, or, as the case may be, is no
longer, a fit and proper person to hold a licence;

Representations by applicant or holder of licence.

PREVENTION OF FRAUD (INVESTMENTS) ACT (NORTHERN IRELAND) 1940 - SECT
6

6.(1) Where the Ministry proposes, in pursuance of paragraph (2) of
the last preceding section, either to refuse to grant an application
for a licence or to revoke a licence, the Ministry shall serve on
the applicant or the holder of the licence (as the case may be) a
written notice of its proposal, specifying the particular matter upon
the consideration of which its decision would be based, and inviting
that person to make to the Ministry, within the period of one
month from the date of the service of the notice, any
representations which he desires to make with respect to the matter.

(2) The Ministry shall not make a decision in any such matter
until after the expiration of the said period, and, before deciding
to refuse to grant an application for a licence or to revoke a
licence, the Ministry shall take into consideration any
representations made by the applicant or holder of the licence as
aforesaid, and, if he so requests, afford to him an opportunity of
being heard by the Ministry within the said period.

(3) Where the Ministry decides to refuse to grant an application
for a licence or to revoke a licence, the Ministry shall serve on
the applicant or the holder of the licence (as the case may be) a
written notice of such refusal or revocation; and any person
aggrieved by the refusal to grant his application for a licence or
by the revocation of his licence may, within three months from the
date on which the notice of refusal or revocation was served on
him, appeal to the High Court against the refusal or revocation,
and on any such appeal the High Court may give such directions in
the matter as it thinks proper.

PREVENTION OF FRAUD (INVESTMENTS) ACT (NORTHERN IRELAND) 1940 - SECT
7
Rules of Ministry of Commerce with respect to conduct of business
of licensed dealers.

7.(1) The Ministry may make rules for regulating the conduct of
business by holders of licences, and in particular, but without
prejudice to the generality of the preceding provisions of this
sub-section, such rules may make provision for all or any of the
following matters, that is to say:

(a)for determining the class of persons in relation to whom, and
the manner and circumstances in which, any holder of a licence may
deal in securities;

(b)for prescribing forms of contracts which may be used in making
contracts under the authority of a licence, and directing that where
any contract is made under the authority of a licence otherwise
than in the appropriate form prescribed by the rules, the holder of
the licence shall, for the purposes of the preceding provisions of
this Act relating to the refusal and revocation of licences, be
deemed to have committed a breach of the rules;

(c)for prescribing the books, accounts and other documents which must
be kept by the holder of a principal's licence in relation to any
dealing in securities under the authority of such a licence;

(d)for requiring the holder of a principal's licence to produce, for
inspection by, or by an agent of, the person with whom he has
made any agreement by way of a dealing in securities under the
authority of such a licence as aforesaid, such contract notes and
vouchers as may be prescribed by the rules, and to furnish to that
person, on demand and on payment of the prescribed fee, copies of
entries in books kept by the holder which relate to the
transaction;

(2) A person shall not be guilty of an offence by reason only of
a breach of rules made under this section.

(3) Whenever the Ministry proposes to make any rules under this
section, it shall cause to be published, in such manner as it
thinks best adapted for informing persons affected, notice of the
intention of the Ministry to make the rules, specifying the place
where a draft of the rules may be inspected and copies thereof
obtained, and the price at which such copies will be supplied, and
the time within which written objections and representations with
respect to the draft rules may be made to the Ministry, and the
Ministry shall, before making the rules, consider any such objections
and representations made to it within the said time, and may make
the rules with or without modification of the terms of the draft.

PREVENTION OF FRAUD (INVESTMENTS) ACT (NORTHERN IRELAND) 1940 - SECT
8
Information to be furnished to Ministry by holders of licences.

8.(1) The holder of any principal's licence shall forthwith notify
in writing to the Ministry any change which, while the licence is
in force, may occur in the address in Northern Ireland at which he
carries on the business of dealing in securities, and, upon ceasing
to carry on that business in Northern Ireland, shall forthwith
notify that fact in writing to the Ministry.

(2) If, at any time while a principal's licence granted to a
corporation is in force, any person becomes a director of the
corporation, the corporation shall forthwith notify in writing to the
Ministry the name and address of that person and also his
nationality or the fact that he has no nationality.

(3) If, at any time while a representative's licence is in force,
the holder of the licence leaves or enters the service of or
becomes or ceases to be an agent of any person, he shall forthwith
notify the name and address of that person in writing to the
Ministry.

(4) If any person fails to comply with any of the provisions of
this section, he shall be liable on summary conviction to a fine
not exceeding fifty pounds.

PREVENTION OF FRAUD (INVESTMENTS) ACT (NORTHERN IRELAND) 1940 - SECT
9
Publication of names of holders of principals' licences.

9. The Ministry shall cause to be published, at such times and in
such manner as it thinks proper, the names and addresses of all
holders of principals' licences for the time being in force, and
also

(a)in relation to any holder of a principal's licence who is not a
corporation, his nationality or the fact that he has no nationality,
or

(b)in relation to any holder of a principal's licence who is a
corporation, the country under the law of which the corporation is
incorporated,

S.10 rep. by 1969 c.24 (NI) s.103(2) sch.6. S.11 rep. by 1964 c.15
(NI) s.83(3) sch.6

Penalty for fraudulently inducing persons to invest money.

PREVENTION OF FRAUD (INVESTMENTS) ACT (NORTHERN IRELAND) 1940 - SECT
12

12.(1) Any person who, by any statement, promise or forecast which
he knows to be misleading, false or deceptive, or by any dishonest
concealment of material facts, or by the reckless making
[(dishonestly or otherwise)] of any statement, promise or forecast
which is misleading, false or deceptive, induces or attempts to
induce another person

(a)to enter into, or offer to enter into

(i)any agreement, for, or with a view to, acquiring, disposing of,
subscribing for or underwriting securities..., or

(ii)any agreement the purpose or pretended purpose of which is to
secure a profit to any of the parties from the yield of securities
or by reference to fluctuations in the value of securities, or

[(b)to take part or offer to take part in any arrangements with
respect to property other than securities, being arrangements the
purpose or effect, or pretended purpose or effect, of which is to
enable persons taking part in the arrangements (whether by becoming
owners of the property or any part of the property or otherwise)
to participate in or receive profits or income alleged to arise or
to be likely to arise from the acquisition, holding, management or
disposal of such property, or sums to be paid or alleged to be
likely to be paid out of such profits or income], or

(c)to enter into or offer to enter into an agreement the purpose
or pretended purpose of which is to secure a profit to any of the
parties by reference to fluctuations in the value of any property
other than securities,

(2) Any person guilty of conspiracy to commit an offence under the
preceding sub-section shall be punishable as if he had committed
such an offence.

PREVENTION OF FRAUD (INVESTMENTS) ACT (NORTHERN IRELAND) 1940 - SECT
13
Restriction on distribution of circulars relating to investments.

13.(1) Subject to the provisions of this section, no person shall,
on or after the appointed day

(a)distribute or cause to be distributed any documents which, to his
knowledge, are circulars containing

(i)any invitation to persons to do any of the acts mentioned in
paragraphs (a) to (c) of sub-section (1) of the last preceding
section, or

(ii)any information calculated to lead directly or indirectly to the
doing of any of those acts by the recipient of the information, or

(b)have in his possession for the purpose of distribution any
documents which, to his knowledge, are such circulars as aforesaid,
being documents of such a nature as to show that the object or
principal object of distributing them would be to communicate such
an invitation or such information as aforesaid.

(2) The preceding sub-section shall not apply

[(a)in relation to any distribution of a prospectus to which section
thirty-eight of the Companies Act (Northern Ireland), 1960, applies
or would apply if not excluded by paragraph (b) of sub-section (7)
of that section or by section thirty-nine of that Act or section
three hundred and sixty-five of that Act applies or would apply if
not excluded by paragraph (b) of sub-section (8) of that section or
by section three hundred and sixty-six of that Act or in relation
to any distribution of a document relating to securities of a
corporation (not being a registered company) incorporated under the
law of some part of the United Kingdom, being a document which

(i)would, if the corporation were a registered company, be a
prospectus to which the said section thirty-eight applies or would
apply if not excluded as aforesaid, and

(ii)contains all the matters and is issued with the consents which,
by virtue of sections three hundred and sixty-five and three hundred
and sixty-seven of that Act it would have to contain and be issued
with if the corporation were a company incorporated outside the
United Kingdom and the document were a prospectus issued by that
company, or

(b)in relation to any issue of a form of application for shares
in, or debentures of, a corporation, together with

(i)a prospectus which complies with the requirements of section
thirty-eight of the Companies Act (Northern Ireland), 1960, or is
not required to comply therewith because excluded by paragraph (b)
of sub-section (7) of that section or by section thirty-nine of
that Act, or complies with the requirements of Part XI of that Act
and is not issued in contravention of section three hundred and
sixty-seven of that Act, or

(ii)in the case of a corporation (not being a registered company)
incorporated under the law of some part of the United Kingdom, a
document containing all the matters and issued with the consents
mentioned in sub-paragraph (ii) of paragraph (a) of this sub-section,

or in connection with a bona fide invitation to a person to enter
into an underwriting agreement with respect to the shares or
debentures, or]

(c)in relation to any distribution of documents which is required or
authorised by or under any Act other than this Act or by or under
any enactment of the Parliament of the United Kingdom,

(3) This section shall not prohibit the distribution or possession
of any document by reason only

(a)that it contains an invitation or information

(i)made or given with respect to any securities by or on behalf of
a member of any recognised stock exchange or recognised association
of dealers in securities or by or on behalf of the holder of a
principal's licence, or

(ii)made or given with respect to any securities by or on behalf
of the Bank of England, any licensed bank or any exempted dealer,
or

<(iii)made or given by or on behalf of a corporation to holders of securities of or to persons employed by, or to creditors of, that corporation or any other corporation which, in relation to the first mentioned corporation, is [a subsidiary company as defined by section one hundred and forty-eight of the Companies Act (Northern Ireland), 1960], with respect to securities of the first-mentioned corporation or of any such other corporation as aforesaid, or

<(iv)made or given by on behalf of the manager under an authorised unit trust scheme with respect to any securities created in pursuance of that scheme, or

(v)made or given by or on behalf of the Government of any part of
His Majesty's dominions or the Government of any foreign state, or
by or on behalf of any statutory corporation or municipal
corporation, with respect to securities of that Government or
corporation, or

<(vi)made or given by or on behalf of any industrial and provident society or building society with respect to shares of the society, or loans or deposits which may be made to or with the society, or

<(vii)made or given to beneficiaries under a trust by or on behalf of a person acting in the capacity of a trustee of that trust, or

(viii)made or given with respect to any securities in connection
only with a sale or proposed sale of those securities by auction,
or

(b)that it contains an invitation or information which a person
whose ordinary business or part of whose ordinary business it is to
buy and sell any property other than securities (whether as a
principal or as an agent) may make or give in the course of the
business of buying and selling such property:

Provided that nothing in paragraph (a) of this sub-section shall
authorise the doing of anything in respect of securities created in
pursuance of any unit trust scheme which is not an authorised unit
trust scheme; and nothing in paragraph (b) of this sub-section shall
authorise any person to do anything in pursuance of, or for the
purpose of, [any such arrangements as are mentioned in paragraph (b)
of sub-section (1) of the last preceding section].

(4) Documents shall not, for the purposes of this section, be
deemed not to be circulars by reason only that they are in the
form of a newspaper, journal, magazine or other periodical
publication; but a person shall not be taken to contravene this
section by reason only that he distributes, or causes to be
distributed, to purchasers thereof, or has in his possession for the
purpose of distribution to purchasers thereof, copies of any
newspaper, journal, magazine or other periodical publication.

(5) A person shall not be taken to contravene this section by
reason only that he distributes documents to persons whose business
involves the acquisition and disposal, or the holding, of securities
(whether as a principal or as an agent), or causes documents to be
distributed to such persons, or has documents in his possession for
the purpose of distribution to such persons.

(6) Any person who contravenes this section shall be liable, on
conviction on indictment, to imprisonment for a term not exceeding
two years or to a fine not exceeding five hundred pounds or to
both such imprisonment and such fine or, on summary conviction, to
imprisonment for a term not exceeding six months or to a fine not
exceeding one hundred pounds or to both such imprisonment and such
fine.

(7) Proceedings for an offence under this section shall not be
instituted except by, or with the consent of, the Ministry or the
Attorney General for Northern Ireland:

Proviso rep. by 1975 c.59 s.14(5) sch.6 Pt.II

(8) If a justice of the peace is satisfied by information on oath
that there is reasonable ground for suspecting that, at any such
premises as may be specified in the information, a person has any
documents in his possession in contravention of this section, the
justice may grant a warrant under his hand empowering any constable
to enter the premises, if necessary by force, at any time or times
within one month from the date of the warrant, and to search for,
and seize and remove, any documents found therein which he has
reasonable ground for believing to be in the possession of a person
in contravention of this section.

(9) Any document seized under this section may be retained for a
period of one month or, if within that period there are commenced
any proceedings for an offence under this section to which the
document is relevant, until the conclusion of those proceedings.

(10) Where any person is convicted of an offence under this
section, the court dealing with the case may make an order
authorising the destruction, or the disposal in any other specified
manner, of any documents produced to the court which are shown to
its satisfaction to be documents in respect of which the offence
was committed:

Provided that an order under this sub-section shall not authorise
the destruction of a document, or the disposal of a document in
any other manner, until the conclusion of the proceedings in the
matter of which the order is made.

(11) Subject to the provisions of the last two preceding
sub-sections, the Police (Property) Act, 1897, (which makes provision
with respect to the disposal of property in the possession of the
police) shall apply to property which has come into the possession
of the police in consequence of a seizure under this section, as
it applies to property which has come into the possession of the
police in the circumstances mentioned in that Act.

Stock exchanges and associations of dealers in securities.

PREVENTION OF FRAUD (INVESTMENTS) ACT (NORTHERN IRELAND) 1940 - SECT
14

14.(1) The Ministry may by order declare any body of persons
carrying on in the United Kingdom the business of dealing in
securities to be a recognised stock exchange or recognised
association of dealers in securities for the purposes of this Act.

(2) Any order under this section may be varied or revoked by a
subsequent order of the Ministry; but an order by virtue of which
any body ceases to be a recognised stock exchange or a recognised
association of dealers in securities shall not take effect until the
expiration of the period of three months beginning with the day on
which the order is made.

(3) It shall be a condition of any order under this section that
the recognised stock exchange or recognised association of dealers in
securities to which the order relates shall furnish to the Ministry,
so often as may be prescribed (which shall be not less often than
once a year) a list showing with respect to each person who, at
the date on which the list is furnished, is a member of the stock
exchange or of the association, as the case may be, his name and
business address and the style under which he carries on business,
and if the member is a corporation, the name of each of the
directors thereof.

(4) It shall be a condition of any order under this section that
the recognised stock exchange or recognised association of dealers in
securities to which the order relates shall, whenever required by
the Ministry so to do, furnish to the Ministry, with respect to
any specified member of the stock exchange or association, as the
case may be, a list of the persons who are for the time being
authorised by that member to deal in securities on his behalf.

PREVENTION OF FRAUD (INVESTMENTS) ACT (NORTHERN IRELAND) 1940 - SECT
15
Exemption of certain dealers.

15.(1) The Ministry may by order declare any person to be an
exempted dealer for the purposes of this Act, subject to the
following conditions being fulfilled so long as the order is in
force, that is to say:

(a)the main business of that person must consist of one or more of
the following activities:

(i)carrying on some business, other than the business of dealing in
securities, and

(ii)dealing in securities in one or more of the ways mentioned in
the next following sub-section; and

(b)the greater part of any business of dealing in securities done
by him in Northern Ireland otherwise than in one of the ways
referred to in sub-paragraph (ii) of paragraph (a) of this
sub-section must be effected with, or through the agency of, one or
more of the following persons, that is to say:

(i)a member of any recognised stock exchange or recognised
association of dealers in securities,

(ii)the Bank of England, any licensed bank, a statutory corporation,
a municipal corporation or an exempted dealer,

<(iii)a person acting in the capacity of manager or trustee under an authorised unit trust scheme,

<(iv)a person acting on behalf of such a person as is mentioned in sub-paragraph (i), sub-paragraph (ii) or sub-paragraph (iii) of this paragraph, and

(v)the holder of a licence,

(b)or effected, with the consent of the Ministry, through the agency
of a member of a stock exchange other than a recognised stock
exchange.

(2) The ways of dealing in securities referred to in sub-paragraph
(ii) of paragraph (a) of the preceding sub-section are as follows,
that is to say:

(a)issuing any document which is, or is to be deemed to be, a
prospectus within the meaning of the Companies Act (Northern
Ireland), 1932;

(b)making or offering to make with any person an agreement for, or
with a view to, the underwriting of securities;

(c)making any invitation to persons to subscribe for securities or
to purchase securities on the first sale thereof;

(d)making any invitation to persons to subscribe for, or purchase,
securities of the Government of any part of His Majesty's dominions
or the Government of any foreign state, or securities of any
statutory corporation or municipal corporation;

(e)effecting any transaction with a person whose business involves
the acquisition and disposal or the holding of securities, being a
transaction with that person as a principal:

Provided that a person shall not, by reason only of his having
made such an invitation as is mentioned in paragraph (c) of this
sub-section, be taken to have dealt in securities in one of the
ways referred to in sub-paragraph (ii) of paragraph (a) of the
preceding sub-section, if permission to deal in such securities as
were the subject of the invitation has not been granted by the
Stock Exchange, London, within the period of three months beginning
with the date on which the invitation was made, or within such
longer period (if any) beginning with that date as the Ministry
thinks fit.

(3) If, with respect to any exempted dealer, the Ministry considers
that the order declaring him to be an exempted dealer ought to be
revoked on either of the following grounds, that is to say:

(a)that the conditions subject to which the order was made have not
been fulfilled in his case, or

(b)that the circumstances relevant to the making of the order have
materially changed since the making thereof,

(4) The Ministry shall cause to be published, at such times and in
such manner as it thinks proper, the names and addresses of all
persons who are for the time being exempted dealers, so, however,
that the said information shall be published not less often than
once a year.

PREVENTION OF FRAUD (INVESTMENTS) ACT (NORTHERN IRELAND) 1940 - SECT
16
Authorised unit trust schemes.

16.(1) The Ministry may by order declare to be an authorised unit
trust scheme for the purposes of this Act any unit trust scheme in
relation to which the Ministry is satisfied that the following
conditions are fulfilled, that is to say:

(a)that each of the persons who are respectively the manager and
the trustee under the scheme is a corporation incorporated [under
the law of, or of some part of, the United Kingdom or any other
State which is a member of the European Economic Community], and
having a place of business in Northern Ireland at which notices and
other documents are received on behalf of the corporation, and

(b)that the scheme is such that the effective control over the
affairs of the corporation which is the manager under the scheme is
and will be exercised independently of the corporation which is the
trustee under the scheme, and

(c)that the scheme is such as to secure that any trust created in
pursuance of the scheme is expressed in a deed providing, to the
satisfaction of the Ministry, for the matters specified in the
Schedule to this Act, and

(d)as respects the corporation being the trustee either

(i)that the corporation has a capital (in stock or shares) for the
time being issued of not less than five hundred thousand pounds, of
which an amount of not less than two hundred and fifty thousand
pounds has been paid up, and that the assets of the corporation
are sufficient to meet its liabilities (including liabilities) in
respect of the repayment of its capital), or

(ii)that more than four-fifths of the said capital of the
corporation is held by another corporation being a corporation in
relation to which the conditions as to capital and assets specified
in sub-paragraph (i) of this paragraph are fulfilled:

Provided that, if with respect to any trust the Ministry is
satisfied that, by reason of the special circumstances of the trust,
the fulfilment in relation thereto of the condition specified in
paragraph (c) of this sub-section is impracticable, the Ministry may
dispense with the fulfilment of that condition in relation to that
trust so far as it appears to the Ministry that it can properly
do so without prejudicing the interests of the beneficiaries.

(2) If, with respect to any authorised unit trust scheme, the
Ministry considers that the order declaring the scheme to be an
authorised unit trust scheme ought to be revoked on either of the
following grounds, that is to say:

(a)that the conditions specified in paragraphs (a) to (d) of the
preceding sub-section are no longer fulfilled in the case of that
scheme, or

(b)that the circumstances relevant to the making of an order have
materially changed since the making thereof,

(3) The terms of any trust created before the commencement of this
Act in pursuance of a unit trust scheme may, notwithstanding
anything in any deed, be varied or supplemented by a deed made
between the trustee and the manager under the scheme, and containing
such provisions as may be certified by the Ministry to be necessary
for the purpose of securing that the condition mentioned in
paragraph (c) of sub-section (1) of this section is fulfilled in
relation to that scheme.

(4) The Ministry shall, not less often than once a year, cause
particulars of every unit trust scheme which is for the time being
an authorised unit trust scheme, to be published in such manner as
the Ministry thinks proper.

Offences and prosecutions.

PREVENTION OF FRAUD (INVESTMENTS) ACT (NORTHERN IRELAND) 1940 - SECT
17

17.(1) Any person who, in furnishing any information for any of the
purposes of this Act or rules or regulations made thereunder, makes
any statement which, to his knowledge, is false in a material
particular, shall be liable, on conviction on indictment, to
imprisonment for a term not exceeding two years or to a fine not
exceeding two hundred pounds or to both such imprisonment and such
fine or, on summary conviction, to imprisonment for a term not
exceeding three months or to a fine not exceeding one hundred
pounds or to both such imprisonment and such fine.

(2) Where any offence under this Act committed by a corporation is
proved to have been committed with the consent or connivance of any
director, manager, secretary or other officer of the corporation, he,
as well as the corporation, shall be deemed to be guilty of that
offence and shall be liable to be proceeded against and punished
accordingly.

(3) Any proceedings which, by virtue of this Act, may be taken
against a person under the Summary Jurisdiction Acts (Northern
Ireland) may be taken before the court having jurisdiction in the
place where that person is for the time being.

PREVENTION OF FRAUD (INVESTMENTS) ACT (NORTHERN IRELAND) 1940 - SECT
18
Service of notices.

18. Any notice to be served under this Act on any person may be
served by post and a letter containing the notice shall be deemed
to be properly addressed if it is addressed to that person at his
last known residence or last known place of business in Northern
Ireland.

PREVENTION OF FRAUD (INVESTMENTS) ACT (NORTHERN IRELAND) 1940 - SECT
19
Rules and regulations.

19.(1) The Ministry may make regulations for prescribing anything
which by this Act is required or authorised to be prescribed.

(2) All rules and regulations made under this Act by the Ministry
shall, so soon as may be after they are made, be laid before each
House of Parliament. If either House of Parliament, within the
statutory period next after any rule or regulation made as aforesaid
has been laid before such House, resolves that the rule or
regulation shall be annulled, the rule or regulation shall, after
the date of the resolution, be void, but without prejudice to the
validity of anything previously done thereunder or to the making of
a new rule or regulation.

PREVENTION OF FRAUD (INVESTMENTS) ACT (NORTHERN IRELAND) 1940 - SECT
20
Appropriation of fees.

20. . . . all fees received by the Ministry by virtue of this
Act shall be paid into the Exchequer.

S.21 rep. by SLR (NI) 1952

Interpretation.

PREVENTION OF FRAUD (INVESTMENTS) ACT (NORTHERN IRELAND) 1940 - SECT
22

22.(1) In this Act, unless the context otherwise requires, the
following expressions have the meanings hereby assigned to them, that
is to say:

"Appointed day" means the day appointed by the Ministry for the
purposes of section one of this Act;

"Authorised unit trust scheme" means any unit trust scheme declared
by an order of the Ministry for the time being in force to be an
authorised unit trust scheme for the purposes of this Act;

"Building society" means a society registered or deemed to be
registered in Northern Ireland under the Building Societies Acts
(Northern Ireland), 1874 to 1940, and any such unincorporated society
as is mentioned in section seven of the Building Societies Act,
1874, and includes, except for the purposes of section eleven of
this Act, a society which is registered in Great Britain under the
Building Societies Acts, 1874 to 1939, and any such unincorporated
society as aforesaid whose chief office or principal place of
business is in Great Britain;

"Corporation" means any body corporate, incorporated whether in
Northern Ireland or elsewhere;

"Court" means, in relation to any industrial and provident society,
the court having jurisdiction to wind up the society;

"Dealing in securities" means doing any of the following things
(whether as a principal or as an agent), that is to say, making
or offering to make with any person, or inducing or attempting to
induce any person to enter into or offer to enter into

(a)any agreement for, or with a view to acquiring, disposing of,
subscribing for or underwriting securities or lending or depositing
money to or with any industrial and provident society or building
society, or

(b)any agreement the purpose or pretended purpose of which is to
secure a profit to any of the parties from the yield of securities
or by reference to fluctuations in the value of securities,

and "deal in securities" shall be construed accordingly;

"Debentures" means any debentures, debenture stock or bonds of a
corporation, whether constituting a charge on the assets of the
corporation or not;

"Exempted dealer" means any person declared by an order of the
Ministry for the time being in force to be an exempted dealer for
the purposes of this Act;

"Industrial and provident society" means a society registered or
deemed to be registered in Northern Ireland under the Industrial and
Provident Societies Act, 1893, and includes, except for the purposes
of section ten of this Act, a society which is registered in Great
Britain under that Act;

"Licence" means a licence under this Act;

"Licensed bank" means a bank specified in the Schedule to the
Finance (No. 2) Act (Northern Ireland), 1928;

"Municipal corporation" means the body corporate constituted by the
incorporation of the inhabitants of a borough;

"Prescribed" means prescribed by regulations of the Ministry;

"Principal's licence" means a licence authorising the holder thereof
to carry on the business of dealing in securities;

"Prospectus" has the same meaning as in the Companies Act (Northern
Ireland), 1932;

"Recognised association of dealers in securities" means a body of
persons declared by an order of the Ministry for the time being in
force to be a recognised association of dealers in securities for
the purposes of this Act;

"Recognised stock exchange" means a body of persons declared by an
order of the Ministry for the time being in force to be a
recognised stock exchange for the purposes of this Act;

"Registered company" means a company formed and registered under the
Companies Act (Northern Ireland), 1932, or formed and registered or
deemed to have been registered under the Companies (Consolidation)
Act, 1908, the Companies Act, 1862, or the Joint Stock Companies
Acts as defined by section three hundred and thirty-five of the
Companies Act (Northern Ireland), 1932 but does not include a
company registered under any of the said enactments in Great Britain
or in Eire;

"Representative's licence" means a licence authorising the holder
thereof to deal in securities as a servant of any holder of a
principal's licence for the time being in force;

"Securities" means

(a)shares or debentures, or rights or interests (described whether as
units or otherwise) in any shares or debentures, or

(b)securities of the Government of any part of His Majesty's
dominions or the Government of any foreign state, or

(c)rights (whether actual or contingent) in respect of money lent
to, or deposited with, any industrial and provident society or
building society,

and includes rights or interests (described whether as units or
otherwise) which may be acquired under any unit trust scheme under
which all property for the time being subject to any trust created
in pursuance of the scheme consists of such securities as are
mentioned in paragraph (a), paragraph (b), or paragraph (c) of this
definition;

"Shares" means shares in the share capital of a corporation or
stock of a corporation, or shares in such an unincorporated building
society as is before mentioned in this sub-section;

"Statutory corporation" means

(a)a corporation incorporated by an Act of the Irish Parliment, the
Parliament of the United Kingdom or the Parliament of Northern
Ireland, or

(b)any other corporation, being a corporation to which functions in
respect of the carrying on of an undertaking are entrusted by such
an Act or by an order made under, or confirmed by, such an Act;

but, save as is provided in paragraph (b) of this definition, does
not include any company within the meaning of the Companies Act
(Northern Ireland), 1932, or of any corresponding enactment in force
in Great Britain;

"Statutory period" means . . .

definition in 1954 c.33 (NI) s.41(2) substituted by 1979 NI 12
art.10

"The Ministry" has the meaning assigned to that expression by
section one of this Act;

"Unit trust scheme" means any arrangements made for the purpose, or
having the effect, of providing facilities for the participation by
persons, as beneficiaries under a trust, in profits or income
arising from the acquisition, holding, management or disposal of
securities or any other property whatsoever.

(2) Any reference in this Act to the holder of a licence shall,
in relation to a principal's licence, be construed as a reference
to the person named in the licence as being thereby authorised to
carry on the business of dealing in securities, and, in relation to
a representative's licence, be construed as a reference to the
person named in the licence as being thereby authorised to deal in
securities as a servant of any holder of a principal's licence.

(3) Any reference in this Act to a manager under a unit trust
scheme or to a trustee under such a scheme shall be construed as
a reference to the person in whom are vested the powers of
management relating to property for the time being subject to any
trust created in pursuance of the scheme or, as the case may be,
to the person in whom such property is or may be vested in
accordance with the terms of the trust.

(4) Any reference in this Act to a servant of, or to a person
employed by, any person shall, in relation to a corporation, be
construed as including a reference to any director or officer of
the corporation; and any reference in this Act to leaving or
entering the service of a person shall be construed accordingly.

(5) For the purposes of this Act, a person shall be deemed to be
a director of a corporation if he occupies in relation thereto the
position of a director, by whatever name called, or is a person in
accordance with whose directions or instructions the directors of the
corporation or any of them act:

Provided that a person shall not, by reason only that the directors
of a corporation act on advice given by him in a professional
capacity, be taken to be a person in accordance with whose
directions or instructions those directors act.

Subs.(6) rep. by 1954 c.33 (NI) s.48(1) sch.

PREVENTION OF FRAUD (INVESTMENTS) ACT (NORTHERN IRELAND) 1940 - SECT
23
Short title.

23. This Act may be cited as the Prevention of Fraud (Investments)
Act (Northern Ireland), 1940.1. For determining the manner in which
the sale price of units and the yield therefrom are to be
respectively calculated.

2. For regulating the mode of execution and the issue of unit
certificates, and, in particular, for securing that no unit
certificate shall be executed or issued in respect of rights or
interests in any property until steps have been taken, to the
satisfaction of the trustee, to secure that the property will be
vested in him.

3. For securing that any advertisement, circular or other document
containing any statement with respect to the sale price of units or
the yield therefrom, or containing any invitation to buy units,
shall not be issued by or on behalf of the manager until the
trustee has had a reasonable opportunity of considering the terms of
the document, and shall not be so issued if, within a reasonable
time after the document first comes under his consideration, he
notifies his disapproval of the terms thereof in writing to the
manager.

4. For the establishment of a fund to be applied in defraying the
expenses of the administration of the trust and for regulating the
application of that fund.

5. For the audit, and the circulation to holders of units, of
accounts relating to the trust (including accounts of the manager in
relation to the trust and statements of his remuneration in
connection therewith).

6. For requiring the manager (subject to any provisions as to
appeal contained in the deed) to retire from the trust if the
trustee certifies that it is in the interest of the beneficiaries
under the trust that he should do so.

In this Schedule the expression "units" means securities (described
whether as units or otherwise) which may be created in pursuance of
the unit trust scheme, and the expression "unit certificates" means
certificates of the acquisition of such securities.