6.1 Introduction

(1) This Chapter sets out the prudential reporting requirements for a PRU Investment Firm.

(2) Other than Rules 6.5 and 6.6, this Chapter does not apply to an Externally Regulated PRU Investment Firm.

6.2 Preparing Returns

(1) A PRU Investment Firm, other than an Externally Regulated Investment Firm, must submit quarterly and annual prudential returns to the AFSA using the templates prescribed for this purpose by the AFSA from time to time.

(2) Annual prudential returns of a PRU Investment Firm must contain a certification by the same auditor that is responsible for auditing the PRU Investment Firm's annual financial statements. The certification must relate to the annual prudential returns and each set of unaudited quarterly returns that have been submitted to the AFSA by the PRU Investment Firm in the previous year.

6.3 Signing Returns

(1) A prudential return must be signed by 2 individuals, and in each case:

• (a) one of those individuals must be the individual approved to exercise the Finance Officer Function; and
• (b) the other individual must be either the individual approved to exercise the Senior Executive Officer Function for the PRU Investment Firm or one of the individuals approved to exercise the Director Function for the PRU Investment Firm.

(2) In paragraph (1), Senior Executive Officer Function and Director Function have the same meanings as in GEN.

6.4 Reductions in paid-up share capital and other capital instruments

A PRU Investment Firm, other than an Externally Regulated Investment Firm, must not reduce its paid-up share capital, or repay or redeem any part of any capital instrument the liabilities under which are included in its Capital Resources in accordance with Chapter 3, without the AFSA’s written approval.

6.5 Breaches of PRU(INV)

(1) If a PRU Investment Firm becomes aware, or has reasonable grounds to believe, that it is or may be (or may be about to be) in breach of any of the rules in PRU(INV) that applies to it, it must:

• (a) notify the AFSA in writing about the breach and the relevant circumstances immediately and not later than within 1 Business Day; and
• (b) subject to paragraph (2) below, not make any cash transfers or payments or transfer of liquid assets to its Affiliates or Related Persons, whether by way of dividends or otherwise, without the AFSA’s written permission.

(2) In the case of an Externally Regulated PRU Investment Firm, the restriction in paragraph (1)(b) shall apply only to assets within the control of the AIFC Operation of the Externally Regulated PRU Investment Firm.

Guidance

In dealing with a breach, or possible breach, of this part, the AFSA’s primary concern will be the interests of existing and prospective Clients and potential adverse impact on market participants as well as market stability. The AFSA recognises that there will be circumstances in which a problem may be resolved quickly, for example by support from a parent entity, without jeopardising the interests of Clients and stakeholders. In such circumstances, it will be in the interests of all parties to minimise the disruption to the firm’s business. The AFSA's will normally seek to work cooperatively with the Authorised Firms in such stressed situations to deal with any problems. There will, however, be circumstances in which it is necessary to take regulatory action to avoid exposing market participants, stakeholders and Clients to the potential adverse consequences of the firm’s Failure, and the AFSA will not hesitate to take appropriate action if it considers this necessary.

6.6 Externally Regulated PRU Investment Firms

(1) The AFSA may require an Externally Regulated PRU Investment Firm to give it a copy of any report that the Externally Regulated PRU Investment Firm is required to provide to any other Financial Services Regulator to demonstrate compliance with capital and liquidity requirements.

(2) The AFSA may require an Externally Regulated PRU Investment Firm to provide information to it setting out, in a level of detail satisfactory to the AFSA:

• (a) what financial resources are available to it in respect of its AIFC Operation, including those available to satisfy Rule 2.2.2;
• (b) what liabilities and other financial commitments it is subject to in respect of its AIFC Operation.

(3) If an Externally Regulated PRU Investment Firm breaches (or expects to breach) a prudential requirement set by the Financial Services Regulator in its jurisdiction of incorporation, it must immediately notify the AFSA and must give the AFSA copies of any relevant documents (including all relevant documents submitted to that Financial Services Regulator).