The Carbon Dioxide Transport and Storage (Financing of Costs of Offshore Decommissioning) Regulations 2026

8 Submission of holding arrangement proposal

(1) As soon as reasonably practicable following the date on which a section 7 licence was granted, a section 7 licensee must submit a proposal for a legal mechanism to establish and hold the offshore decommissioning fund that must be established pursuant to regulation 4 (“holding arrangement”), to the Secretary of State for approval. (2) A holding arrangement proposal under paragraph (1) must include the following information, unless the Secretary of State notifies otherwise under paragraph (9)— (a) the draft documents demonstrating the legal and beneficial ownership arrangements for the proposed offshore decommissioning fund, including the name of the person who will have legal ownership of the fund (“fund holder”) and any relevant information concerning the matters in paragraphs (3) to (5), (b) the name of the person who will be responsible for the day-to-day management of the offshore decommissioning fund and the keeping of approved holding arrangement information (“fund administrator”), (c) if the proposal is to use an existing offshore decommissioning fund established under these Regulations, the value of that fund and an explanation of how the fund estimate and infrastructure estimates for that fund will be affected by the new proposal, (d) an explanation of how any other activities of the fund holder (if applicable) will be managed so as to ensure the offshore decommissioning fund can meet the requirements of these Regulations, (e) the intended date by which the offshore decommissioning fund will be set up in accordance with the proposal (unless the proposal is to use an existing offshore decommissioning fund established under these Regulations), (f) the estimated costs of establishing and running the offshore decommissioning fund, (g) where applicable, contractual documents relating to investment arrangements proposed on behalf of the offshore decommissioning fund, (h) an explanation of why the proposed holding arrangement is considered to be more suitable than other potential arrangements, (i) an explanation of how the requirements of paragraph (6) will be met before, during and after the fund operational period, (j) an explanation of how the fund holder will ensure an orderly winding up of the offshore decommissioning fund, including in circumstances where early closure is required under regulation 30, (k) temporary emergency measures to ensure the offshore decommissioning fund will continue to be managed effectively, in the event of circumstances such as mentioned in regulation 11(9), (l) arrangements to ensure the offshore decommissioning fund will be protected in the event of the insolvency or dissolution of the fund holder, or that there are protections to ensure the likelihood of such an event is remote, (m) details of at least one deposit taker in which it is proposed that monthly contributions, or other payments received, may be held, and that meets the requirements of paragraph (7), and (n) any other information necessary to demonstrate compliance with the criteria in paragraph (6). (3) The fund holder must— (a) be established and located in the United Kingdom, (b) if incorporated, be incorporated in the United Kingdom, (c) be a fit and proper person, having regard to the matters in paragraph (5), and (d) be subject to duties, obligations or restrictions that form part of the arrangements pursuant to paragraph (2)(l). (4) The fund administrator must be a fit and proper person, having regard to the matters in paragraph (5). (5) The Secretary of State must take account of the following matters when assessing whether a fund holder or fund administrator is fit and proper to act in those capacities— (a) proceedings or arrangements against such a person, under insolvency laws anywhere in the world, (b) a prohibition or disqualification that at any time has prevented such a person from acting as a trustee, or a director, (c) criminal convictions that are not spent within the meaning of the laws of any part of the United Kingdom dealing with rehabilitation of offenders, and (d) evidence of relevant knowledge, skills and experience to act in the capacity of fund holder or fund administrator, as applicable. (6) A holding arrangement must enable an offshore decommissioning fund to comply with the following criteria— (a) it must be managed in the United Kingdom, be subject to the laws of a part of the United Kingdom and be subject to the jurisdiction of the courts in a part of the United Kingdom, (b) its only and continuous purposes must be to— (i) accrue sufficient security for decommissioning costs in respect of the covered offshore infrastructure, (ii) enable accountable persons to comply with their decommissioning obligations or duties, by making payments for the purpose of meeting the costs of decommissioning actions, as authorised under these Regulations, (c) it must exist separately and operate independently from the section 7 licensee, from other relevant persons holding a section 29 notice in respect of covered offshore infrastructure, and from a person connected with the section 7 licensee or those relevant persons, except as provided for in sub-paragraph (g), (d) it must be constituted so that the fund assets do not form part of the insolvent estate of a person mentioned in sub-paragraph (c), in the event of the insolvency of such a person, (e) it must be constituted so as to act in accordance with the requirements of these Regulations, (f) the fund assets must be managed in accordance with regulation 17 and an approved funding and investment strategy, (g) accountable persons must have standing to enforce the duties and obligations of the fund holder and fund administrator, (h) the fund holder, fund administrator, third party investment manager or a person employed by the offshore decommissioning fund, may not be a person mentioned in sub-paragraph (c), (i) the governance arrangements must demonstrate that the offshore decommissioning fund will be independently, competently and properly managed on a continuous basis in accordance with best practice, and (j) the form of and management arrangements for the offshore decommissioning fund must demonstrate value for money. (7) A deposit taker that is to be used for money deposited for the purposes of an offshore decommissioning fund must be— (a) a bank within the meaning given by section 2 of the Banking Act 2009, (b) the Bank of England, or (c) the National Savings Bank, within the meaning given by section 1 of the National Savings Bank Act 1971. (8) In this regulation, a person (“A”) is connected with a relevant person, if A is— (a) an associate of that relevant person, as determined by section 435 of the Insolvency Act 1986 or Article 4 of the Insolvency (Northern Ireland) Order 1989, or (b) the relevant person is a company and A is connected to the relevant person as determined by section 249 of the Insolvency Act 1986 or Article 7 of the Insolvency (Northern Ireland) Order 1989. (9) Where a person makes an application to the Secretary of State for approval of a holding arrangement proposal under this regulation or of changes to a holding arrangement under regulations 11 or 12, without providing all information specified in paragraph (2)— (a) that person may explain in writing how the Secretary of State may be satisfied under regulation 9, without that information being provided and necessary, and (b) the Secretary of State may notify the person in writing whether the Secretary of State agrees to consider the application for approval without the information.