PRU-EPRS 1.18 Instructional Guidelines

An Authorised Firm in Categories 2, 3A, 3B, 3C or 4 is drawn attention to the PIB section 3.7 which explains the calculation of Expenditure Based Capital Minimum. A thorough understanding of this section is a must for completing this form accurately.

Item No. Item Instructional Guidelines
B500_1100 Total expenses This figure should correspond to Form B30, sum of item nos. B300_1200, B300_2200, B300_3700, B300_3800 and B300_3900.
Deductions from total expenses (refer PIB Rule 3.7.3).

Note that the deductions should be entered as positive amounts. EPRS is configured to deduct the amount in the relevant calculations.
Item No. Item Instructional Guidelines
B500_1200 Staff bonuses All staff bonuses paid during the year except to the extent that they are non-discretionary.
B500_1300 Employees' and directors shares in profits All employees' and directors shares in profits except to the extent that they are non-discretionary.
B500_1400 Other appropriations of profits All such appropriations except to the extent that they are automatic. As per PIB Rule 3.7.3(2), a management charge should not be treated as an appropriation of profits.
B500_1500 Shared commissions payable Those commissions that would no longer be payable if business were to cease.
B500_1900 Fees, brokerage and other charges An Authorised Firm may exclude fees, brokerage and other charges paid to clearing houses, exchanges and intermediate brokers for the purposes of executing, registering or clearing transactions.
B500_2000 Foreign exchange losses Losses arising from the translation of foreign currency balances may be excluded.
B500_2100 Contributions to charities The contribution that would no longer be paid if business were to cease.
B500_2200 Prepayments Any expenses for which pre-payments or advances have already been made to the respective claimant (e.g. pre-paid rent, pre-paid communication charges etc.). Deduct only to the extent it pertains to total expenses included in B500_1100.
B500_100T Total expenditure This line item need not be completed manually, it is calculated by EPRS.

Total Expenditure = B500_1100 minus the sum of items in B500_1200 to B500_2200.
B500_3000 Fraction applied The applicable fractions depending on the nature of an Authorised Firm's activities are set out in PIB Rule 3.7.2.
B500_300T Expenditure based capital minimum (based on actual expenses) This is automaticallycalculated by EPRS as follows:

B500_100T multiplied by 4 to annualise in the case of quarterly returns or by 1 in the case of annual returns and then applying the fraction in cell B500_3000 on the annualised amount.
B500_4000 Expenditure based capital minimum (as notified to the firm) In this cell input the Expenditure Based Capital Minimum amount calculated as per the provisions of PIB section 3.7.

In particular, note that the amount in this cell should not be arrived at by applying the fraction in B500_3000 to the total expenses in cell B500_100T.

This cell should not be left blank as this is linked to one of the validations in EPRS (refer to the validation page).
B500_5000 Total of liquid assets in accordance with PIB Rule 3.5.3 In this cell, enter the amount of liquid assets held in accordance with PIB Rule 3.5.3.

An Authorised Firm in Category 3B, 3C and 4 to which Expenditure Based Capital Minimum section applies should, at all times, maintain an amount which exceeds its Expenditure Based Capital Minimum in the form of liquid assets (PIB Rule 3.5.3).

PIB Rule 3.5.3 (2) and (3) describe what constitutes liquid assets.
B500_6000 Liquid assets - EBCM (should be positive). This is calculated by EPRS. In accordance with PIB Rule 3.5.3, for an Authorised Firm in Category 3B, 3C and 4, the amount of liquid assets held should not be less than its Expenditure Based Capital Minimum (as notified to the firm) in line item B500_4000.
Derived from GM5/2007 (Made 16th December 2007). [VER1/12-07]
[Amended] [VER2/04-13]