Before establishing a subsidiary that will provide auctioneering services, what must Alpha Brokers Ltd do first?

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

Answer: (C)

The step being tested is the regulator’s requirement to be informed in writing before creating a new subsidiary that will engage in regulated activities. Informing the Central Bank in writing is the initial action so the authority can be aware of the plan, assess how the new entity fits within the existing regulatory framework, and begin considering any implications for capital, governance, and risk management. After this notification, the firm would typically address any subsequent regulatory steps—such as formal authorisation, director suitability, or detailed business plan review—if required by the rules. The other actions (seeking authorisation for the subsidiary, obtaining approval for directors, or submitting a revised business plan) generally come later in the process and are not the first step.