Public Bill Committee: 19th June 2007

336

Legal Services Bill-[Lords], continued

shares” to reflect the changes made in these provisions.

Bridget Prentice

178

Schedule  13,  page  210,  line  20,   leave out sub-paragraph (3) and insert—

‘()	References in this paragraph to a person’s shareholding (or holding of shares)

or entitlement are to be read in accordance with any applicable licensing rules

made under paragraph 38(2).’.

Members’ explanatory statement

This amendment brings the reference to associates into line with the changes made to paragraph

38(2) pursuant to amendment 166.

Bridget Prentice

179

Schedule  13,  page  210,  line  25,   leave out ‘relevant’.

Members’ explanatory statement

This amendment is related to amendment 171, which deleted the concept of “relevant licensed

body”.

Bridget Prentice

180

Schedule  13,  page  213,  line  20,   at end insert ‘or (aa).’.

Members’ explanatory statement

This amendment is related to amendment 163. It provides that paragraph 50 applies both where

licensing rules have been made under paragraph 38(1)(a) and paragraph 38(1)(aa).

Bridget Prentice

181

Schedule  13,  page  213,  line  22,   leave out from ‘where’ to end of line 24 and insert

‘a non-authorised person acquires—

(a)	a shareholding in a licensed body or parent undertaking of a licensed

body which exceeds the share limit, or

(b)	an entitlement to exercise, or control the exercise of, voting rights in a

licensed body or parent undertaking of a licensed body which exceeds

the voting limit.’.

Members’ explanatory statement

This amendment is related to amendment 163 and 180. It provides that the licensing authority may

notify the Board both where a non-authorised person exceeds the share limit or exceeds the voting

limit.

Bridget Prentice

182

Schedule  13,  page  213,  line  36,   at end insert—

‘( )	If the share limit or voting limit is breached in relation to a parent undertaking of

a licensed body, references in sub-paragraphs (3) and (6) to the licensed body

include the parent undertaking.’.

Members’ explanatory statement

This amendment is related to amendments 162 and 163 and 180 and 181. It provides that the par­

ent undertaking must also be notified in the circumstances set out in the amendment.

Public Bill Committee: 19th June 2007

337

Legal Services Bill-[Lords], continued

Bridget Prentice

183

Schedule  13,  page  214,  line  7,   at end insert—

‘( )	If the share limit or voting limit is breached in relation to a parent undertaking of

a licensed body, references in sub-paragraphs (1) and (5) to the licensed body

include the parent undertaking.’.

Members’ explanatory statement

This amendment is related to amendments 162 and 163 and 180 and 181. It provides that the par­

ent undertaking must also be notified in the circumstances set out in the amendment.

Bridget Prentice

114

Clause  90,  page  51,  line  10,  leave out ‘or has an interest in shares’ and insert ‘or has

an interest or an indirect interest’.

Members’ explanatory statement

This amendment is related to amendment 111, replacing the reference to a non-authorised person

who has an interest in shares with a reference to a non-authorised person who has an interest or

an indirect interest.

Bridget Prentice

184

Schedule  14,  page  214,  line  35,   leave out paragraph (b).

Members’ explanatory statement

This amendment removes licensing authorities' power to intervene where a person is appointed

manager or receiver of a licensed body's property, because insolvency is covered by paragraph

1(2)(c). This is consistent with the Law Society’s powers in relation to recognised bodies, as

amended by Schedule 16 paragraph 113.

Mr Jonathan Djanogly

Mr Henry Bellingham

Mr Tobias Ellwood

296

Clause  104,  page  56,  line  30,  after ‘body’, insert ‘which is not licensed by the Law

Society’.

Members’ explanatory statement

This amendment is intended to reduce any possible ambiguity in this section, to prevent regulatory

conflict and to simplify the regulatory system while maintaining public protection.

Public Bill Committee: 19th June 2007

338

Legal Services Bill-[Lords], continued

Mr Jonathan Djanogly

Mr Henry Bellingham

Mr Tobias Ellwood

297

Clause  104,  page  56,  line  33,  after ‘body’, insert ‘which is not licensed by the

Council for Licensed Conveyancers’.

Members’ explanatory statement

See Members’ explanatory statement to amendment 296.

Bridget Prentice

115

Clause  105,  page  57,  line  5,  leave out ‘a’ and insert ‘an independent’.

Members’ explanatory statement

This amendment is part of a set of amendments that change the Bill’s references to trade unions to

independent trade unions, as defined in amendment 126. This amendment provides that independ­

ent trade unions have the exemption set out in Clause 105(1).

Bridget Prentice

116

Clause  105,  page  57,  line  7,  leave out second ‘a’ and insert ‘an independent’.

Members’ explanatory statement

This amendment is part of a set of amendments that change the Bill’s references to trade unions to

independent trade unions, as defined in amendment 126. This amendment provides that independ­

ent trade unions have the exemption set out in Clause 105(2).

Bridget Prentice

117

Clause  106,  page  57,  line  10,  leave out ‘a’ and insert ‘an independent’.

Members’ explanatory statement

This amendment is part of a set of amendments that change the Bill’s references to trade unions to

independent trade unions, as defined in amendment 126. This amendment provides that independ­

ent trade unions may apply for modifications of licensing rules under Clause 106.

Bridget Prentice

118

Clause  106,  page  57,  line  36,  leave out ‘in shares’ and insert ‘or an indirect

interest’.

Members’ explanatory statement

This amendment is related to amendment 111, replacing the reference to non-authorised persons

who have an interest in shares, with a reference to non-authorised persons who have an interest

Public Bill Committee: 19th June 2007

339

Legal Services Bill-[Lords], continued

or an indirect interest.

Mr David Kidney

Mr Jonathan Djanogly

Mr Henry Bellingham

Mr Tobias Ellwood

271

Clause  108,  page  59,  line  4,  leave out subsection (2) and insert—

‘(2)	The management condition is that—

(a)	the number of managers of the body who are non-authorised persons is

less than 10% of the total number of managers; or

(b)	the managers who are non-authorised persons who provide services

directly or indirectly to clients within their own professional training, are

members of one or more recognised professional bodies.’.

Members’ explanatory statement

This amendment would create a new low risk category; practices where well regulated profession­

als come together providing services within their own areas of expertise. This amendment would

provide for the flexibility which could lead to new structures on a low risk first basis and within a

proportionate regulatory framework.

Mr David Kidney

Mr Jonathan Djanogly

Mr Henry Bellingham

Mr Tobias Ellwood

272

Clause  108,  page  59,  line  6,  leave out subsection (3) and insert—

‘(3)	The ownership condition for B satisfying the management condition set out in

subsection (2) is that—

(a)	the proportion of shares in B in which non-authorised non managers have

an interest is less than 10%, and

(b)	the proportion of the voting power in B which non-authorised non

managers are entitled to exercise, or control the exercise of, is less than

10%, and

(c)	if B has a parent undertaking (“P”)—

(i)	the proportion of shares in P in which non-authorised non-

managers have an interest is less than 10%, and

(ii)	the proportion of the voting power in P which non-authorised

non-managers are entitled to exercise, or control the exercise of,

is less than 10%.

Members’ explanatory statement

See Members’ explanatory statement for amendment 271.

Bridget Prentice

119

Clause  108,  page  59,  line  7,  leave out ‘in which non-authorised persons have an

interest’ and insert ‘held by non-authorised persons’.

Members’ explanatory statement

This amendment is related to amendment 111. It refines the first branch of the ownership condition

Public Bill Committee: 19th June 2007

340

Legal Services Bill-[Lords], continued

for a low risk body, providing that the proportion of shares in B held by non-authorised persons is

less than 10%.

Bridget Prentice

120

Clause  108,  page  59,  line  9,  leave out ‘power’ and insert ‘rights’.

Members’ explanatory statement

This amendment refines the second branch of the ownership condition for a low risk body, provid­

ing that the proportion of voting rights, rather than voting power, in B which non-authorised per­

sons are entitled to exercise, or control the exercise of, is less than 10%.

Bridget Prentice

121

Clause  108,  page  59,  line  12,  leave out ‘in which non-authorised persons have an

interest’ and insert ‘held by non-authorised persons’.

Members’ explanatory statement

This amendment is related to amendment 111. It refines the third branch of the ownership condi­

tion for a low risk body, providing that the proportion of shares held by a non-authorised person

in a parent undertaking of B is less than 10%.

Bridget Prentice

122

Clause  108,  page  59,  line  14,  leave out ‘power’ and insert ‘rights’.

Members’ explanatory statement

This amendment refines the third branch of the ownership condition for a low risk body, providing

that the proportion of voting rights, rather than voting power, in a parent undertaking of B which

non-authorised persons are entitled to exercise, or control the exercise of, is less than 10%.

Mr David Kidney

Mr Jonathan Djanogly

Mr Henry Bellingham

Mr Tobias Ellwood

273

Clause  108,  page  59,  line  16,  at end insert—

‘(3A)

The ownership condition for B satisfying the management condition set out in

paragraph 2(b) is that shares and voting power in B are only held by authorised

persons or members of recognised professional bodies.’.

Members’ explanatory statement

See Members’ explanatory statement for amendment 271.

Mr David Kidney

Mr Jonathan Djanogly

Mr Henry Bellingham

Mr Tobias Ellwood

274

Clause  108,  page  59,  line  19,  at end insert—

‘“recognised professional body” means a body (other than an approved

regulator), incorporated by Royal Charter, which makes provision for—

(a)	testing the competence of those seeking admission to

membership of the body as a condition for such admission; and

Public Bill Committee: 19th June 2007

341

Legal Services Bill-[Lords], continued

(b)	imposing and maintaining professional and ethical standards for

its members, as well as imposing sanctions for non-compliance

with those standards.’.

Members’ explanatory statement

See Members’ explanatory statement for amendment 271.

Bridget Prentice

123

Clause  108,  page  59,  leave out lines 20 to 23.

Members’ explanatory statement

This amendment is related to amendments 120 and 122, which replace the concept of voting power.

A definition of voting power is therefore no longer needed.

Mr David Kidney

Mr Jonathan Djanogly

Mr Henry Bellingham

Mr Tobias Ellwood

275

Clause  108,  page  59,  line  23,  at end add—

‘(5)	For the purposes of subsection (4)—

“member” means a member or member firm as defined by the appropriate

rules of such a body.’.

Members’ explanatory statement

See Members’ explanatory statement for amendment 271.

Bridget Prentice

124

Clause  111,  page  60,  line  21,  leave out ‘in shares’.

Members’ explanatory statement

This amendment is related to amendment 111. It refines the test for whether a body falls under sub-

paragraph (d), by replacing the reference to persons “with an interest in shares” with a reference

to persons “with an interest”.

Bridget Prentice

125

Clause  111,  page  60,  line  24,  leave out sub-paragraph (ii) and insert—

‘(ii)

are bodies in which persons within paragraphs (a) to (c) are

entitled to exercise, or control the exercise of, more than 90% of

the voting rights.’.

Members’ explanatory statement

This amendment is related to amendment 111. It refines the test for whether a body falls under sub-

paragraph (d), providing that where a manager or person with an interest is a body, persons within

(a) – (c) must exercise or control the exercise of more than 90% of voting rights.

Public Bill Committee: 19th June 2007

342

Legal Services Bill-[Lords], continued

John Mann

283

Clause  113,  page  61,  line  35,  at end add—

‘(6)	Nothing in this Part is intended to prevent an application to the Solicitors’

Compensation Fund for redress in respect of a determination by an ombudsman

with which a solicitor respondent is unable or unwilling to comply.’.

Mr Jonathan Djanogly

Mr Henry Bellingham

Mr Tobias Ellwood

300

Schedule  15,  page  222,  line  35,  leave out sub-paragraph (2).

Bridget Prentice

42

Schedule  15,  page  224,  line  29,  at end insert—

‘The terms of appointment of the chairman or any other member may provide

for the Board to pay, or make payments towards the provision of, a pension,

allowance or gratuity to or in respect of that person.

If the Board thinks there are circumstances that make it right for a person

ceasing to hold office as chairman or another member to receive compensation,

the OLC may pay that person such compensation as the Board may

determine.’.

Members’ explanatory statement

This amendment provides that the terms of appointment of the chairman or other ordinary mem­

bers of the OLC may provide for pensions, allowances or gratuities. It also allows the OLC to pay

compensation to the chairman or other ordinary members in certain circumstances.

Bridget Prentice

43

Schedule  15,  page  224,  line  42,  at end insert—

‘The OLC may pay compensation for loss of employment to or in respect of an

ombudsman (or former ombudsman), or a member (or former member) of staff

appointed under paragraph 11.’.

Members’ explanatory statement

This amendment allows the OLC to pay compensation to its ombudsmen or former ombudsmen, or

to its staff appointed under paragraph 11 of Schedule 15 or former staff, for loss of employment

with the OLC.

Simon Hughes

John Hemming

227

Schedule  15,  page  226,  line  15,  leave out paragraphs 21 and 22.

Members’ explanatory statement

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Revised 19 June 2007