In his recent Global Regulatory Developments Journal article, Goodwin partner Andrew Henderson explains that the Financial Conduct Authority (FCA) has now published Policy Statement 25/14, “Definition of capital for FCA investment firms,” setting out final rules simplifying the capital rules for investment firms, which includes the eligibility for inclusion of shares as common equity tier 1 (CET1) regulatory capital. For founders and investors, especially in early-stage investment firms, the final rules will not allow the CET1-eligible investor shares to rank ahead of the founder/employee shares in the event of a firm’s liquidation. They will, however, allow the investors to have the founder/employees share equally the risk of the firm’s failure. This will help align the share eligibility rules for investment firms with those of, for example, mortgage lenders or other types of firms in the fintech sector. The changes in the final rules are also included in the proposed FCA regime for crypto firms. This is good news for investors. The final rules are due to come into effect on 1 April 2026.
Read the full analysis: “United Kingdom’s Financial Conduct Authority’s Final Capital Rules: Good News for Founders and Investors” (The Global Regulatory Developments Journal)
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