UT (Tax & Chancery) UT-2022-0000150 - [2024] UKUT 00254 (TCC)

Meanwhile, in 2015 Mr Kalaris had founded Saranac. In July 2016, Saranac applied to the Authority for Mr Kalaris to be authorised to perform the CF1 Director and CF3 Chief Executive functions, and for him to be approved to hold more than 10% of its voting rights (and so be a “controller” of the firm as defined by FSMA s 181). On 8 April 2016, the Authority said it was minded to refuse that application, and it was withdrawn.

Saranac then restructured its share capital, introducing a new class of shares held only by Mr Kalaris, which were restricted to less than 10% of the votes. As a result, Mr Kalaris held 39% of Saranac’s shares by capital value, but only 9.99% of the votes.

Saranac made a further application for authorisation in 2016, but did not apply for Mr Kalaris to perform a controlled function. On 3 May 2017, the Authority granted authorisation to Saranac on condition that the Chair, Mr Robert Elliott, attested on an ongoing monthly basis that Mr Kalaris did not have, and did not exercise, significant influence over Saranac. That condition was removed in March 2020 following Mr Kalaris’s acquittal in the criminal trial. In the period before Saranac was authorised, Mr Kalaris invested over £20m in the business.

On 28 July 2020 Saranac certified Mr Kalaris as fit and proper to act as a client adviser under a contract of employment. On 21 September 2020, Saranac made the Application to the Authority for Mr Kalaris to be approved to perform the Chief Executive and Executive Director functions. On 17 November 2022, the Authority issued the Decision Notice refusing the Application, on the grounds that it was not satisfied Mr Kalaris was a fit and proper person to perform those functions. On 9 December 2022, Saranac referred the Decision Notice to the Tribunal.