Why an authorisation is refused

Ground (a): the management body as a risk in itself

This is the broadest of the four and the one least reducible to a checklist. It is not about whether individuals are qualified. That is ground (b). It asks whether the body, as constituted, threatens effective, sound and prudent management, business continuity, the adequate consideration of clients' interests, or market integrity, or exposes the firm to serious money laundering or terrorist financing risk.

A board of individually impeccable people can still fail this. A structure where every material decision routes through one person, where the compliance function reports to the person it is meant to constrain, or where nobody has an identifiable mandate for a whole area of risk, is a finding about the body rather than about its members.

Ground (b): individual suitability

This imports the Article 68(1) criteria directly: sufficiently good repute, appropriate knowledge, skills and experience both individually and collectively, and demonstrable capacity to commit sufficient time. The last of those is the one that catches people, because it is where a director holding eight other mandates has a problem that no amount of seniority fixes.

"Collectively" is doing real work in that phrase as well. A management body can satisfy it person by person and still fail as a group, if the combined competence leaves an obvious gap, such as no one with operational technology experience in a firm whose whole risk profile is operational, for instance.

Ground (c): qualifying holders

The repute test in Article 68(2) applies to direct and indirect holders of qualifying holdings. That word is what turns a shareholding diagram into a genuine piece of work: the chain has to be traced through to the natural persons at the end of it, wherever they sit.

Article 68(3) adds a step short of refusal. Where a qualifying holder's influence is likely to be prejudicial to sound and prudent management, the authority may act rather than refuse, including by suspending the voting rights attached to the holding.

Ground (d): failing, or likely to fail, any requirement

The catch-all, and note the tense. It is not limited to what is wrong on the day of assessment; it reaches what is likely to go wrong. A capital position that satisfies Article 67 today but will not once the hiring plan in the programme of operations lands is a present ground for refusal, because the assessment is permitted to read the applicant's own projections against it.

The separate close-links bar

This one sits outside the 63(10) list and is worth reading on its own. It is not about wrongdoing. Where third-country law governing a person with close links to the applicant, or the difficulty of enforcing it: would prevent the authority from supervising effectively, authorisation must be refused. A blameless parent company in a jurisdiction that will not cooperate with a European supervisor is a structural bar, and the remedy is structural too.

Refusals are reported

Authorities inform ESMA of refusals as well as grants. A refused application is not a private matter between the applicant and one regulator, which is worth knowing before treating a speculative filing as a cheap way to test the water.