Alpha Brokers Ltd plans to set up a subsidiary company to provide auctioneering services. BEFORE it establishes the subsidiary, Alpha must first:

• A. Notify in writing
• B. Separate authorisation of the subsidiary from the Central Bank
• C. Seek Central Bank approval for the directors of the proposed subsidiary
• D. Submit a revised business plan

Answer: (A)

Before a financial services firm creates a subsidiary to provide a new activity, the regulator must be informed in writing. This formal notice gives the Central Bank visibility into the structural change and allows it to assess how the move affects the parent’s licensing scope, capital adequacy, governance, and risk controls. It sets the regulatory process in motion and signals that the firm intends to operate the subsidiary within the regulatory framework; authorization for the subsidiary or any additional approvals typically follow this notification, not precede it. The other steps—gaining separate authorization for the subsidiary, obtaining directors’ approvals, or submitting a revised business plan—are part of the broader approval process but aren’t the initial pre-establishment action.