Legal Services Act 2007 Schedule 13

Authorised persons are persons authorised by a statutory supervisory authority (a regulatory authority authorised under the LSA) to carry out one or more reserved legal activities. It consists mainly of lawyers from England and Wales licensed to practise as such, registered European lawyers and regulated law firms. Please note that since 1 January 2021, only a defined group of Swiss lawyers can be registered as a European lawyer. This guide is intended to help you understand our approach to determining whether a person`s interest in a licensed entity requires notice and approval from us in accordance with Schedule 13 of the Legal Services Act, 2007 (COA). These guidelines are intended to facilitate understanding of our approach in this area and should not be considered or construed as legal advice. Authorized entities, those applying for a licence and those dealing with such entities should ensure that they comply with their legal obligations under Schedule 13, as failure to comply with the requirements of the ICA could result in a criminal offence. We have also recently issued guidelines and directives issued by the LSB in accordance with the provisions of the Legal Services Act 2007. The “associate test” is intended to address the scenario in which two unauthorized persons may act together to influence or control an accredited body. In these circumstances, the LSA requires a joint assessment of the interests of these persons. Rule 9.1 of the Company Licensing Rules requires that any holder of an authorized organization be approved by us. Unlike voting rights, the ICA does not require that a certain percentage of the voting rights be exercised or controlled by the individual for the interest to be meaningful. However, consistent with the spirit and intent of the ICA, we will generally value voting rights at a similar threshold of 10%.

Under the ICA, we must authorize any unauthorized person to have a substantial interest in a licensed facility. What we mean by “material interest” is explained in more detail later in this guide. Traditionally, people think of shares as shares issued by a company. However, the ICA applies a much broader definition, so that the same assessment of substantial interest can be applied, for example, to partnerships and limited liability companies (LLPs). Updated March 8, 2021 (Date of first publication: 7. March 2014) For example, in a corporation, a shareholder or partner entitled to 10% of the proceeds from the sale of the assets of the business if the business is liquidated would be a significant shareholder. We define an owner as a partner in a partnership (as defined in our glossary) or any person who has a substantial interest in the partnership. Material interest is defined as meaning the same as in Annex 13, and we describe it in more detail below. The definitions of “authorized persons” and “unauthorized persons” are technical in nature. The terms “lawyer” and “non-lawyer” are often used for simplicity. However, caution should be exercised as lawyers or law firms located outside the UK generally do not fall under the definition of `authorised persons`. To assess who has a substantial interest and therefore needs approval, you should consider the following: For any corporation without assigned shares, the determination of shareholders can generally be determined on the basis of the articles or LLP agreement (or an equivalent agreement).

However, this can be determined by law. For example, section 24(1) of the Partnership Act 1890 provides that, unless otherwise agreed, shareholders have equal rights to participate in the capital and profits of a company and to contribute equally to losses. This means that in a partnership where there is no agreement and there are 10 or fewer partners, all partners are important stakeholders. Where two or more unauthorised associated persons hold shares, voting rights or voting rights in the same organisation, their interests shall be assessed jointly. Where the combined interest is important, they are all important stakeholders. Paragraph 3 of Annex 13 sets out the criteria for assessing when an interest becomes material and therefore requires our approval. Unauthorized persons include all persons (including legal persons) who do not belong to the following persons: As a general rule, voting rights exist in companies, while voting rights generally apply in other types of bodies (partnerships, LLPs, associations, etc.). However, voting rights may apply in companies where, for example, general meetings are not held and where the power to determine the general policy of the body rests with the directors themselves. Therefore, any reference to a reportable, limited or material interest under our rules and procedures means the same thing. For simplicity, we use the terms “material interest holder” only when referring to the relevant provisions of the LSA, or “owner” in accordance with our own rules and regulations. If you wish to apply for approval, please visit our Business Authorization page where you will find all the required application forms as well as details of deadlines.

These guidelines are not part of our standards and regulations. However, we can take it into account in the exercise of our regulatory functions. The LSA does not define what is meant by the direction of the overall policy. We believe this includes instructions regarding: Institutions without capital could be financed by a combination of bank loans and retained earnings. In such cases, a member or member entitled to share 10% or more of profits or contribute 10% or more of losses would be a significant shareholder. “Significant influence” on the management of an organization is not defined, but is associated with some form of equity participation or voting rights. Since boards operate in many different corporate structures, testing provides a variety of methods for calculating when interest becomes significant in different types of companies and structures. The ICA provides that, according to Schedule 13, “voting rights” applies to a body that does not hold general meetings at which matters are decided by the exercise of voting rights.

In such cases, the right to vote means, according to the statutes of the organ, the right to determine the overall policy of the organ or to amend the provisions of its statutes. While only unauthorized persons require approval under the ICA, our own rules require that anyone with a substantial interest in an authorized entity have our permission. In all cases, we will look at the evidence of how the business is run in practice and what human rights are in the organization`s constitution. In all cases, an application for a permit must be made and the permit granted before a person becomes the owner. However, for unlicensed owners of licensed entities, there are additional legal requirements, such as: for example, if an unlicensed husband and wife each hold 5% of the shares of a corporation, they must be valued together and each would be considered to have a significant interest.