§ Mr. Austin MitchellTo ask the Secretary of State for Trade and Industry if he will list the steps his Department has taken to protect investors in the unlisted securities market since June 1987.
§ Mr. Redwood[holding answer 29 March 1990]: Throughout the period since June 1987, the issue of shares other than those to be included on the official list of the stock exchange has been regulated under part III of the Companies Act 1985. Shares may be offered only by public limited companies, and there must be a prospectus which complies with the requirements set out in schedule 3 of the Act.
The stock exchange, of which the unlisted securities market is part, has been a recognised investment exchange (RIE) within the terms of the Financial Services Act 1986 since the main provisions of that Act came into force in April 1988. Prior to this, the stock exchange was a recognised stock exchange under the terms of the Prevention of Fraud (Investments) Act 1958. Responsibility for RIEs has been transferred to the Securities and Investments Board, including ensuring their compliance with schedule 4 to the 1986 Act, which sets out the safeguards for investors which RIEs must provide.
Since April 1988, those carrying on investment business in the United Kingdom, including advising and dealing or arranging deals in securities for them, have had to be authorised or exempt under the terms of the Financial Services Act.