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| Clause 47, page 25, line 27, leave out subsection (5) and insert— |
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| | ‘(5) | If the order which the Board intends to make differs from the draft published |
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| | under subsection (2) in a way which in the opinion of the Board is material, the |
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| | Board must, before making the order, publish the draft order along with a |
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| | statement detailing the changes made and the reasons for those changes.’. |
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| Clause 49, page 27, line 1, leave out subsection (3) and insert— |
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| | ‘( ) | In preparing a statement of policy, the Board must have regard to the principle |
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| | that its principal role is the oversight of approved regulators. |
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| | ( ) | The statement of policy prepared under subsection (1) must— |
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| | (a) | take account of the desirability of resolving informally matters which |
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| | arise between the Board and an approved regulator, and |
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| | (b) | specify how, in exercising the functions mentioned in that subsection, the |
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| | Board will comply with the requirements of section 3(3) (regulatory |
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| | activities to be proportionate, consistent and targeted only at cases in |
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| | which action is needed, etc).’.
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| | Members’ explanatory statement
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| | This amendment replaces Clause 49(3), inserted by amendment in the House of Lords, with new |
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| | subsections setting out the matters that the Board must have regard to when preparing policy state |
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| | ments pursuant to Clause 49(1) and (2) and imposing requirements as to the content of statements |
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| Clause 51, page 28, line 4, at end insert— |
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| | ‘(2A) | Practising fee income shall be kept separate from the other assets of a regulator.’. |
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| Clause 54, page 30, line 21, at end insert— |
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| | ‘(1A) | An approved regulator must consider any request made by an external regulatory |
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| | body for the approved regulator to reconsider any provision made by its |
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| | regulatory arrangements on the grounds that the provision either— |
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| | (a) | conflicts with a requirement of a regulatory provision made by the |
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| | external regulatory body, or |
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| | (b) | unnecessarily duplicates any regulatory provision made by that external |
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| | Members’ explanatory statement
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| | This amendment would bring parity between the different forms of conflict an approved regulator |
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| | might face - either with external regulators or with approved regulators. |
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| Clause 54, page 30, line 27, at end insert— |
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| | ‘(2A) | An external regulatory body may make an application to an approved regulator |
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| | under this section if it considers that the arrangements of the approved |
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| | (a) | frustrate the exercise of the external regulatory body’s requirements, or |
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| | (b) | conflict with the external regulatory body’s regulatory requirements, or |
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| | (c) | give rise to unnecessary duplication of regulatory requirements for the |
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| | subjects of the external regulatory body. |
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| | (2B) | For the purposes of subsection (2A)(c) above, “subjects” means any individuals |
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| | or entities subject to the regulatory powers and jurisdication of the external |
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| | (2C) | Where an application is made to an approved regulator under this section, the |
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| | (a) | determine whether such regulatory conflict exists with the external |
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| | regulatory body’s requirements and, where it so determines, take such |
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| | steps as are reasonably practicable to address the regulatory conflict |
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| | outlined by the external regulatory body, or, |
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| | (b) | in the absence of satisfactory resolution and where provisions for the |
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| | resolution of external regulatory conflict provide, make an application to |
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| | the Board under subsection (4).’. |
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| Clause 55, page 31, line 6, at end insert— |
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| | ‘(d) | shall give a reason and explanation for such notice.’. |
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| Clause 56, page 31, line 31, at end add— |
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| | ‘(4) | Without prejudice to subsection (2) the Board may, in exceptional circumstances |
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| | and as a temporary measure, issue an order requiring the approved regulator to |
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| | comply with the notice or with such directions as would have been contained in |
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| | the order had a successful application been made.’.
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| | Members’ explanatory statement
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| | This amendment provides for occasions on which the Board’s power of enforcement proves inad |
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| | equate, including when it is clear that the failure by an approved regulator to comply with a notice |
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| | of direction will result in continued adverse impacts on consumers. |
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| Clause 63, page 35, line 4, at end insert ‘and, in either case, no other approved |
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| regulator is suitable and willing to regulate the activity in question.’.
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| | Members’ explanatory statement
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| | To ensure that the Legal Services Board directly regulates the legal services only as a last resort, |
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| | where there is no other approved regulator which could regulate the activity in question. |
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| Clause 71, page 41, line 8, at end insert ‘, provided that a body is not a “licensable |
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| body” if the only managers who are non-authorised persons are individuals who do not |
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| directly provide any services to consumers.’. |
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| | Members’ explanatory statement
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| | To ensure that a law firm or LLP will not become an ABS solely because it wishes to appoint as |
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| | managers non-lawyer professionals. This will apply only if these appointees only provide services |
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| | to their firms internally and do not directly provide services to clients of the firm. |
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| Clause 71, page 41, line 8, at end add— |
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| | ‘(3) | Without prejudice to the powers vested in the board by this Part of this Act, the |
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| | Board must seek to ensure that, as far as is practicable, licenses to permit |
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| | alternative business structures for the provision of legal services are issued on an |
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| | incremental basis, in order to reduce the risk of a disruption of the market for legal |
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| | Members’ explanatory statement
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| | This amendment will enable the Legal Services Board to manage the process via which new busi |
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| | ness structures emerge into the legal services market. |
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| Clause 72, page 41, line 10, leave out subsections (1) and (2) and insert— |
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| | ‘(1) | A body (“B”) is a licensable body if a non-authorised person— |
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| | (a) | is a manager of B, or |
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| | (b) | has an interest in B. |
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| | (2) | A body (“B”) is also a licensable body if— |
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| | (a) | another body (“A”) is a manager of B, or has an interest in B, and |
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| | (b) | non-authorised persons are entitled to exercise, or control the exercise of, |
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| | at least 10% of the voting rights in A. |
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| | (2A) | For the purposes of this Act, a person has an interest in a body if— |
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| | (a) | the person holds shares in the body, or |
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| | (b) | the person is entitled to exercise, or control the exercise of, voting rights |
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| | (2B) | A body may be licensable by virtue of both subsection (1) and subsection (2). |
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| | (2C) | For the purposes of this Act, a non-authorised person has an indirect interest in a |
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| | licensable body if the body is licensable by virtue of subsection (2) and the non- |
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| | authorised person is entitled to exercise, or control the exercise of, voting rights |
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| | Members’ explanatory statement
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| | This amendment refines the definition of “licensable body”, by replacing the “interest in shares” |
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| | test with an “interest” test (sub-paragraph (1)(b)) and the test in subsection (2). Subsection (2A) |
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| | defines “interest”, and subsection (2C) defines non-authorised persons with an “indirect interest” |
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| | in a body licensable because of subsection (2). |
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| Clause 72, page 41, line 10, leave out subsection (1) and insert— |
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| | ‘(1) | For the purposes of this Act, a body is a “licensable body” if— |
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| | (a) | at least one manager of the body is an individual who is a non-authorised |
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| | person who provides services directly or indirectly to clients; or |
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| | (b) | more than 25 per cent. of the managers of the body are individuals who |
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| | are not authorised persons regardless of whether they provide services |
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| | directly or indirectly to clients; or |
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| | (c) | at least one person who has an interest in shares in the body is a non- |
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| | authorised person and is not a manager of that body.’.
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| Clause 72, page 41, line 13, at end insert— |
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| | ‘(1A) | A body is not a licensable body if it is regulated under section 9(A) of the |
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| | Administration of Justice Act 1985.’.
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| | Members’ explanatory statement
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| | This purpose of this amendment is to enable Legal Disciplinary Practices to be regulated under |
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| | the Law Society’s ordinary regulatory regime providing at least three-quarters of their members |
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| | are lawyers, they do not have external ownership and, any non-lawyer partners or members do not |
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| | provide services direct to clients. |
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| Clause 72, page 41, line 26, at end insert ‘, and references to the holding of shares, |
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| or to a shareholding, are to be construed accordingly.’. |
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| | Members’ explanatory statement
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| | This amendment provides that references to the holding of shares or to a shareholding are to be |
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| | construed in accordance with the definition of “shares” in section 72(3). |
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| Clause 83, page 48, line 24, leave out paragraph (e).
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| | Members’ explanatory statement
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| | This amendment reverses one made in the House of Lords requiring licensing rules to contain pro |
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| | vision for specific attention to be paid to the likely effect on access to justice of each application |
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| | by a body to be licensed under Part 5 of the Bill. |
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| Schedule 11, page 183, line 8, at end insert— |
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| | ‘( ) | Licensing rules may provide for fees to cover the whole cost to the licensing |
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| | authority of dealing with the application, whether the application is granted or |
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| | Members’ explanatory statement
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| | The amendment is intended to make it clear that licensing rules can put the whole cost of dealing |
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| | with an application on the individual applicant, rather than leaving part to be borne by the licens |
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| | ing authority itself (and hence by other firms regulated by that licensing authority). |
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| Schedule 11, page 189, line 43, leave out ‘an interest in shares in the body’ and |
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| insert ‘a shareholding in the licensed body, or a parent undertaking of the licensed body,’. |
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| | Members’ explanatory statement
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| | This amendment is related to amendment 162 and reflects the changes made to paragraph 38(1)(a) |
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| | of Schedule 13 by that amendment. |
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| Schedule 11, page 189, line 44, at end insert— |
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| | ‘( ) | if the relevant licensing rules make the provision mentioned in |
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| | paragraph 38(1)(aa) of that Schedule, a non-authorised person has |
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| | under those rules an entitlement to exercise, or control the exercise of, |
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| | voting rights in the licensed body or a parent undertaking of the |
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| | licensed body which exceeds the voting limit,’. |
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| | Members’ explanatory statement
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| | This amendment is related to amendment 163. It provides that where rules are made under the pro |
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| | vision inserted by that amendment setting a voting limit, and that limit is breached, the licensing |
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| | authority may suspend or revoke the licensed body’s licence. |
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| Schedule 11, page 190, line 1, leave out ‘in which non-authorised persons have an |
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| interest’ and insert ‘or a parent undertaking of the licensed body held by non-authorised |
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| | Members’ explanatory statement
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| | This amendment is related to amendment 164 and reflects the changes made to paragraph 38(1)(b) |
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| | of Schedule 13 by that amendment. |
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| Schedule 11, page 190, line 2, at end insert— |
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| | ‘( ) | if the relevant licensing rules make the provision mentioned in |
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| | paragraph 38(1)(c) of that Schedule, the total proportion of voting |
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| | rights in the licensed body or a parent undertaking of the licensed body |
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| | which non-authorised persons are entitled to exercise, or control the |
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| | exercise of, exceeds the limit specified in the rules.’. |
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| | Members’ explanatory statement
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| | This amendment is related to amendment 165. It provides that where rules are made under the pro |
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| | vision inserted by that amendment setting a limit on the total proportion of voting rights, and that |
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| | limit is breached, the licensing authority may suspend or revoke the licensed body’s licence. |
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| Schedule 12, page 191, line 24, leave out ‘a’ and insert ‘an independent’. |
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| | Members’ explanatory statement
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| | This amendment is part of a set of amendments that change references to trade unions to independ |
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| | ent trade unions, as defined in amendment 126. This amendment provides that the third ground |
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| | (see paragraph 1(5)) for an application for a licence to the Board applies in relation to independ |
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| Schedule 12, page 193, line 24, leave out ‘in shares’. |
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| | Members’ explanatory statement
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| | This amendment is related to amendment 111, which replaces the concept of “interest in shares” |
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| Schedule 12, page 193, line 26, leave out ‘in shares’. |
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| | Members’ explanatory statement
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| | This amendment is related to amendment 111, which replaces the concept of “interest in shares” |
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| Schedule 12, page 193, line 29, leave out ‘in shares’. |
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| | Members’ explanatory statement
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| | This amendment is related to amendment 111, which replaces the concept of “interest in shares” |
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| Schedule 12, page 193, line 31, leave out ‘in shares’. |
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| | Members’ explanatory statement
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| | This amendment is related to amendment 111, which replaces the concept of “interest in shares” |
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| Schedule 12, page 193, line 32, at end insert— |
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| | ‘( ) | the kinds of non-authorised persons who have an indirect interest in |
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| | Members’ explanatory statement
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| | This amendment is related to amendment 111, which introduces the concept of non-authorised per |
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| | sons with an “indirect interest”. |
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| Clause 85, page 49, line 39, leave out ‘persons having an interest in shares,’ and |
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| insert ‘non-authorised persons having an interest or an indirect interest,’. |
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| | Members’ explanatory statement
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| | This amendment is related to the replacement in amendment 111 of the “interest in shares” test. |
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| | It also clarifies that it is only non-authorised persons who have an “interest” or “indirect interest” |
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