Change in control approval is the regulatory consent needed before ownership or control of a licensed financial firm passes to a new party. A license rests partly on the suitability of the owners, so regulators vet new ones before a change of control takes effect. The requirement shapes the timetable of mergers and acquisitions involving regulated firms.
What counts as control is defined by law. Under the model Money Transmission Modernization Act in the United States, a person controls a licensee on holding 25 percent of its voting interests and is presumed to do so at 10 percent, and a buyer of a multi-state money transmitter license holder must seek approval from each state. In the European Union and United Kingdom, acquiring a qualifying holding, generally 10 percent or more, requires prior notice and assessment. The proposed owner and each control person submit information for a fit and proper assessment. Closing without approval can lead to penalties or loss of the license.