Legal Services Bill [HL]

House of Commons

Session 2006 - 07
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Other Bills before Parliament

Legal Services Bill [HL]

Legal Services Bill [HL]
Schedule 13 — Ownership of licensed bodies
Part 3 — Approval of restricted interests after licence is issued
201

      (5)
If the licensing authority objects to the investor’s holding of the notified
interest, it must notify the investor and the applicant of its objection as soon
as reasonably practicable.
      (6)
The notice must—
(a)
specify the reasons for the objection, and
5
(b)
explain the effect of Part 5 of this Schedule.
20    (1)
The investor and the applicant may before the end of the prescribed period
appeal to the relevant appellate body against the objection.
      (2)
The relevant appellate body may dismiss the appeal, or allow the appeal
and—
10
(a)
order the licensing authority to approve the investor’s holding of the
notified interest without conditions, or subject to such conditions as
may be specified in the order, or
(b)
remit the matter to the licensing authority.
      (3)
A party to the appeal may before the end of the prescribed period appeal to
15
the High Court on a point of law arising from the decision of the relevant
appellate body, but only with the permission of the High Court.
      (4)
The High Court may make such order as it thinks fit.
      (5)
If the investor’s holding of the notified interest is subject to conditions as a
result of an order made on an appeal under this paragraph, for the purposes
20
of this Schedule the conditions are to be treated as having been imposed
under paragraph 17.
Part 3
Approval of restricted interests after licence is issued
Powers of licensing authority in relation to change of interests
25
Continuing notification requirements
21    (1)
This paragraph applies where a non-authorised person (“the investor”)—
(a)
proposes to take a step which would result in the investor acquiring
a restricted interest in a licensed body (or, if the investor already has
one or more kinds of restricted interest, acquiring an additional kind
30
of restricted interest), or
(b)
acquires such an interest in a licensed body without taking such a
step.
      (2)
In a case within sub-paragraph (1)(a) the investor must notify the licensed
body and the relevant licensing authority of the proposal.
35
      (3)
In a case within sub-paragraph (1)(b) the investor must notify the licensed
body and the relevant licensing authority of the acquisition within such
period, after the investor becomes aware of it, as may be specified by order
made by the Lord Chancellor on the recommendation of the Board.
      (4)
In this Part of this Schedule—
40
(a)
references to “the investor” are to be construed in accordance with
this paragraph, and

Legal Services Bill [HL]
Schedule 13 — Ownership of licensed bodies
Part 3 — Approval of restricted interests after licence is issued
202

(b)
references to a notifiable interest are to the restricted interest which
the investor will have as a result of the step the investor proposes to
take (or has as a result of the acquisition which has taken place).
Offences in connection with paragraph 21
22    (1)
It is an offence for a person to fail to comply with a requirement imposed
5
by—
(a)
paragraph 21(2), or
(b)
paragraph 21(3).
      (2)
A person who is guilty of an offence under sub-paragraph (1) is liable on
summary conviction to a fine not exceeding level 5 on the standard scale.
10
      (3)
It is a defence for a person charged with an offence under sub-paragraph
(1)(a) to show that at the time of the alleged offence the person had no
knowledge of the facts by virtue of which the duty to notify arose.
23    (1)
This paragraph applies if a person under the duty to notify imposed by
paragraph 21(2)—
15
(a)
had no knowledge of the facts by virtue of which that duty arose, but
(b)
subsequently becomes aware of those facts.
      (2)
The person must give the licensed body and the licensing authority the
required notification within such period, after the person becomes so aware,
as may be specified by order made by the Lord Chancellor on the
20
recommendation of the Board.
      (3)
A person who fails to comply with the duty to notify imposed by sub-
paragraph (2) is guilty of an offence.
      (4)
A person who is guilty of an offence under sub-paragraph (3) is liable on
summary conviction to a fine not exceeding level 5 on the standard scale.
25
24    (1)
It is an offence for a non-authorised person, who under paragraph 21(2) is
required to notify the licensed body and the relevant licensing authority of
a proposal to take a step, to take the step, unless the relevant licensing
authority has approved the investor’s holding of the notifiable interest
under paragraph 27 or 28.
30
      (2)
If paragraph 22(3) applies, the reference in sub-paragraph (1) to paragraph
21(2) is to be read as a reference to paragraph 23(2).
      (3)
A person who is guilty of an offence under sub-paragraph (1) is liable—
(a)
on summary conviction, to a fine not exceeding the statutory
maximum, and
35
(b)
on conviction on indictment, to a term of imprisonment not
exceeding 2 years or a fine (or both).
Duty of licensing authority following notification etc.
25    (1)
The relevant licensing authority must—
(a)
following receipt of a notification under paragraph 21(2) or (3) or
40
23(2), or
(b)
if the licensing authority becomes aware that an investor has failed
to comply with a notification requirement imposed by paragraph
21(2) or (3) or 23(2),

Legal Services Bill [HL]
Schedule 13 — Ownership of licensed bodies
Part 3 — Approval of restricted interests after licence is issued
203


determine which of the steps in sub-paragraph (3) to take.
      (2)
The licensing authority must make the determination within such period as
may be prescribed.
      (3)
The steps are—
(a)
to approve the investor’s holding of the notifiable interest
5
unconditionally under paragraph 27,
(b)
to warn the investor under paragraph 28(3) that it proposes to
approve the investor’s holding of the notifiable interest subject to
conditions,
(c)
to approve under paragraph 28(4) the investor’s holding of the
10
notifiable interest subject to conditions,
(d)
to warn the investor under paragraph 31(2) that it proposes to object
to the investor’s holding of the notifiable interest, or
(e)
to object under paragraph 31(3) to the investor’s holding of the
notifiable interest.
15
Licensing authority’s power to require information
26    (1)
A licensing authority may require the investor to provide it with such
documents and information as it may require.
      (2)
It is an offence for a person who is required to provide information or
documents under sub-paragraph (1) knowingly to provide false or
20
misleading information or documents.
      (3)
A person who is guilty of an offence under sub-paragraph (2) is liable—
(a)
on summary conviction, to a fine not exceeding the statutory
maximum, and
(b)
on conviction on indictment, to a term of imprisonment not
25
exceeding 2 years or a fine (or both).
Unconditional approval of notifiable interest
27    (1)
If the licensing authority is satisfied that the approval requirements are met
in relation to the investor’s holding of the notifiable interest, it must approve
the investor’s holding of that interest without conditions.
30
      (2)
If the licensing authority approves the investor’s holding of the notifiable
interest without conditions, it must notify the investor and the licensed body
of its approval as soon as reasonably practicable.
Conditional approval of notifiable interest
28    (1)
If the licensing authority is not satisfied that the approval requirements are
35
met in relation to the investor’s holding of the notifiable interest, it may
approve the investor’s holding of that interest subject to conditions.
      (2)
It may do so only if it considers that, if the conditions are complied with, it
will be appropriate for the investor to hold the notifiable interest without the
approval requirements being met.
40
      (3)
If the licensing authority proposes to approve the investor’s holding of the
notifiable interest subject to conditions it must give the investor and the
licensed body a warning notice.

Legal Services Bill [HL]
Schedule 13 — Ownership of licensed bodies
Part 3 — Approval of restricted interests after licence is issued
204

      (4)
But the licensing authority may approve the investor’s holding of the
notifiable interest subject to conditions without giving a warning notice if it
considers it necessary or desirable to do so for the purpose of protecting any
of the regulatory objectives.
      (5)
The warning notice must—
5
(a)
specify the nature of the conditions proposed and the reasons for
their imposition, and
(b)
state that representations may be made to the licensing authority
within the prescribed period.
      (6)
The licensing authority must consider any representations made within the
10
prescribed period.
      (7)
If the licensing authority approves the investor’s holding of the notifiable
interest subject to conditions, it must notify the investor and the licensed
body of its approval as soon as reasonably practicable.
      (8)
The notice must—
15
(a)
specify the reasons for the imposition of the conditions and (if the
investor already holds the notifiable interest) the time from which
they have effect, and
(b)
explain the effect of Part 5 of this Schedule.
29    (1)
The investor and the licensed body may before the end of the prescribed
20
period appeal to the relevant appellate body against the imposition of any
or all the conditions.
      (2)
The relevant appellate body may dismiss the appeal, or allow the appeal
and—
(a)
order the licensing authority to approve the investor’s holding of the
25
notifiable interest without conditions, or subject to such conditions
as may be specified in the order, or
(b)
remit the matter to the licensing authority.
      (3)
A party to the appeal may before the end of the prescribed period appeal to
the High Court on a point of law arising from the decision of the relevant
30
appellate body, but only with the permission of the High Court.
      (4)
The High Court may make such order as it thinks fit.
      (5)
If the investor’s holding of the notifiable interest is subject to conditions as a
result of an order made on an appeal under this paragraph, for the purposes
of this Schedule the conditions are to be treated as having been imposed
35
under paragraph 28.
Duration of unconditional or conditional approval
30
In a case within paragraph 21(1)(a), the licensing authority’s approval under
paragraph 27 or 28 remains effective only if the investor acquires the
notifiable interest—
40
(a)
before the end of such period as may be specified in the notice under
paragraph 27(2) or 28(7), or
(b)
if no such period is specified, before the end of the period of one year
beginning with the date of that notice.

Legal Services Bill [HL]
Schedule 13 — Ownership of licensed bodies
Part 3 — Approval of restricted interests after licence is issued
205

Objection to acquisition of notifiable interest
31    (1)
If the licensing authority is not satisfied that the approval requirements are
met in relation to the investor’s holding of the notifiable interest, it may
object to the investor’s holding of that interest.
      (2)
If the licensing authority proposes to object to the investor’s holding of the
5
notifiable interest, it must give the investor and the licensed body a warning
notice.
      (3)
But the licensing authority may object to the investor’s holding of the
notifiable interest without giving a warning notice if it considers it necessary
or desirable to do so for the purpose of protecting any of the regulatory
10
objectives.
      (4)
The warning notice must—
(a)
specify the reasons for the proposed objection, and
(b)
state that representations may be made to the licensing authority
within the prescribed period.
15
      (5)
The licensing authority must consider any representations made within the
prescribed period.
      (6)
If the licensing authority objects to the investor’s holding of the notifiable
interest, it must notify the investor and the licensed body of its objection as
soon as reasonably practicable.
20
      (7)
The notice must—
(a)
specify the reasons for the objection, and
(b)
explain the effect of Part 5 of this Schedule.
32    (1)
The investor and the licensed body may before the end of the prescribed
period appeal to the relevant appellate body against the objection.
25
      (2)
The relevant appellate body may dismiss the appeal, or allow the appeal
and—
(a)
order the licensing authority to approve the investor’s holding of the
notifiable interest without conditions, or subject to such conditions
as may be specified in the order, or
30
(b)
remit the matter to the licensing authority.
      (3)
A party to the appeal may before the end of the prescribed period appeal to
the High Court on a point of law arising from the decision of the relevant
appellant body, but only with the permission of the High Court.
      (4)
The High Court may make such order as it thinks fit.
35
      (5)
If the investor’s holding of the notifiable interest is subject to conditions as a
result of an order made on an appeal under this paragraph, for the purposes
of this Schedule the conditions are to be treated as having been imposed
under paragraph 28.

Legal Services Bill [HL]
Schedule 13 — Ownership of licensed bodies
Part 3 — Approval of restricted interests after licence is issued
206

Powers of licensing authority where no change of interests
Imposition of conditions (or further conditions) on existing restricted interest
33    (1)
The relevant licensing authority may impose conditions (or further
conditions) on a person’s holding of a restricted interest in a licensed body
(or a restricted interest of a particular kind) if—
5
(a)
it is not satisfied that the approval requirements are met in relation
to the person’s holding of that interest, or
(b)
it is satisfied that a condition imposed under paragraph 17 or 28 or
this paragraph on the person’s holding of that interest has not been,
or is not being, complied with.
10
      (2)
The licensing authority may act under sub-paragraph (1) only—
(a)
if it considers that, if the conditions are complied with, it will be
appropriate for the investor to hold the restricted interest without the
approval requirements being met, and
(b)
before the end of such period (beginning with the time when the
15
licensing authority becomes aware of the matters in question) as may
be prescribed.
      (3)
If the licensing authority proposes to impose conditions (or further
conditions) on the person’s holding of the restricted interest, it must give the
person and the licensed body a warning notice.
20
      (4)
But the licensing authority may impose conditions (or further conditions) on
the person’s holding of the restricted interest without giving a warning
notice if it considers it necessary or desirable to do so for the purpose of
protecting any of the regulatory objectives.
      (5)
The warning notice must—
25
(a)
specify the nature of the conditions proposed and the reasons for
their imposition, and
(b)
state that representations may be made to the licensing authority
within the prescribed period.
      (6)
The licensing authority must consider any representations made within the
30
prescribed period.
      (7)
If the licensing authority imposes conditions (or further conditions) on the
person’s holding of the restricted interest, it must notify the person and the
licensed body as soon as reasonably practicable.
      (8)
The notice must—
35
(a)
specify the reasons for the imposition of the conditions, and the time
from which they are to take effect, and
(b)
explain the effect of Part 5 of this Schedule.
34    (1)
The person and the licensed body may before the end of the prescribed
period appeal to the relevant appellate body against any or all of the
40
conditions (or further conditions).
      (2)
The relevant appellate body may dismiss the appeal, or allow the appeal
and—
(a)
modify or quash the conditions imposed by the licensing authority
under paragraph 33, or
45

Legal Services Bill [HL]
Schedule 13 — Ownership of licensed bodies
Part 3 — Approval of restricted interests after licence is issued
207

(b)
remit the matter to the licensing authority.
      (3)
A party to the appeal may before the end of the prescribed period appeal to
the High Court on a point of law arising from the decision of the relevant
appellate body, but only with the permission of the High Court.
      (4)
The High Court may make such order as it thinks fit.
5
      (5)
If the person’s holding of the restricted interest is subject to any conditions
as a result of an order made on an appeal under this paragraph, for the
purposes of this Schedule those conditions are to be treated as having been
imposed under paragraph 33.
Variation and cancellation of conditions
10
35    (1)
A person whose holding of a restricted interest in a licensed body is subject
to a condition imposed under paragraph 17, 28 or 33 may apply to the
relevant licensing authority—
(a)
for the condition to be varied, or
(b)
for the condition to be cancelled.
15
      (2)
The licensing authority may, on its own initiative, cancel a condition
imposed under one of those paragraphs.
      (3)
If the licensing authority varies or cancels a condition under this paragraph,
it must notify the person and the licensed body as soon as reasonably
practicable.
20
Objection to existing restricted interest
36    (1)
The relevant licensing authority may object to a person’s holding of a
restricted interest in a licensed body (or a restricted interest of a particular
kind) if—
(a)
it is not satisfied that the approval requirements are met in relation
25
to the person’s holding of that interest, or
(b)
it is satisfied that a condition imposed under paragraph 17, 28 or 33
on the person’s holding of the interest has not been, or is not being,
complied with.
      (2)
The licensing authority may act under sub-paragraph (1) only before the end
30
of such period (beginning with the time when the licensing authority
becomes aware of the matters in question) as may be prescribed.
      (3)
If the licensing authority proposes to object to a person’s holding of the
restricted interest, it must give the person and the licensed body a warning
notice.
35
      (4)
But the licensing authority may object to the person’s holding of the
restricted interest without giving a warning notice if it considers it necessary
or desirable to do so for the purpose of protecting any of the regulatory
objectives.
      (5)
The warning notice must—
40
(a)
specify the reasons for the proposed objection, and
(b)
state that representations may be made to the licensing authority
within the prescribed period.