Notices of Amendments: 8th June 2007

96

Legal Services Bill-[ Lords], continued

Bridget Prentice

146

Schedule  13,  page  194,  line  28,  leave out ‘has an interest in’ and insert ‘holds’.

Members’ explanatory statement

This amendment is related to amendment 111. It amends the third test for a material interest by

replacing the test of 10% interest in shares in a parent undertaking with a test of 10% shareholding

in a parent undertaking.

Bridget Prentice

147

Schedule  13,  page  194,  line  31,  leave out ‘interest in shares’ and insert

‘shareholding’.

Members’ explanatory statement

This amendment is related to amendment 111. It amends the fourth test for a material interest by

replacing the test of significant influence by virtue of an interest in shares in a parent undertaking

with a test of significant influence by virtue of a shareholding in a parent undertaking.

Bridget Prentice

148

Schedule  13,  page  194,  line  32,  leave out paragraph (e) and insert—

‘( )	is entitled to exercise, or control the exercise of, voting power in B

which, if it consists of voting rights, constitutes at least 10% of the

voting rights in B,’.

Members’ explanatory statement

This amendment clarifies that any voting power (as defined in paragraph 5(4)) constitutes a ma­

terial interest, unless it is voting rights, in which case 10% of voting rights in a body constitutes a

material interest.

Bridget Prentice

149

Schedule  13,  page  194,  line  35,  leave out ‘voting power in B’ and insert

‘entitlement to exercise, or control the exercise of, voting rights in B’.

Members’ explanatory statement

This amendment clarifies that the significant influence test in sub-paragraph (f) is by virtue of vot­

ing rights. A test for significant influence by virtue of other voting power is unnecessary, since oth­

er voting power is caught by the test in sub-paragraph (e).

Bridget Prentice

150

Schedule  13,  page  194,  line  36,  leave out paragraph (g) and insert—

‘( )	is entitled to exercise, or control the exercise of, voting power in P

which, if it consists of voting rights, constitutes at least 10% of the

voting rights in P,’.

Members’ explanatory statement

This amendment clarifies that any voting power (as defined in paragraph 5(4)) in P constitutes a

material interest, unless it is voting rights, in which case 10% of voting rights in P constitutes a

material interest.

Notices of Amendments: 8th June 2007

97

Legal Services Bill-[ Lords], continued

Bridget Prentice

151

Schedule  13,  page  194,  line  39,  leave out ‘voting power in P’ and insert

‘entitlement to exercise, or control the exercise of, voting rights in P’.

Members’ explanatory statement

This amendment clarifies that the significant influence test in sub-paragraph (h) is by virtue of vot­

ing rights in P. A test for significant influence by virtue of other voting power is unnecessary, since

other voting power is caught by the test in sub-paragraph (g).

Bridget Prentice

152

Schedule  13,  page  195,  line  15,  leave out ‘has an interest in’ and insert ‘holds’.

Members’ explanatory statement

This amendment is related to amendment 111. It amends the first test for a controlled interest by

replacing the interest in shares test with a shareholding test.

Bridget Prentice

153

Schedule  13,  page  195,  line  16,  leave out ‘has an interest in’ and insert ‘holds’.

Members’ explanatory statement

This amendment is related to amendment 111. It amends the second test for a controlled interest

by replacing the test of x% interest in shares in a parent undertaking with a test of x% shareholding

in a parent undertaking.

Bridget Prentice

154

Schedule  13,  page  195,  line  19,  leave out ‘power’ and insert ‘rights’.

Members’ explanatory statement

This amendment clarifies that x% voting rights, not x% voting power, constitutes a controlled in­

terest. Voting power other than voting rights constitutes a material interest (see amendment 148).

There is no power to set a higher percentage of such power which constitutes a controlled interest

because it cannot be quantified.

Bridget Prentice

155

Schedule  13,  page  195,  line  21,  leave out ‘power’ and insert ‘rights’.

Members’ explanatory statement

This amendment clarifies that x% voting rights, not x% voting power, constitutes a controlled in­

terest. Voting power other than voting rights constitutes a material interest (see amendment 150).

There is no power to set a higher percentage of such power which constitutes a controlled interest

because it cannot be quantified.

Bridget Prentice

156

Schedule  13,  page  196,  line  1,  leave out ‘an interest in the shares of’ and insert ‘a

shareholding in’.

Members’ explanatory statement

This amendment is related to amendment 111. It amends the test for whether a person is an asso­

ciate by referring to a shareholding in a body rather than an interest in shares in a body.

Notices of Amendments: 8th June 2007

98

Legal Services Bill-[ Lords], continued

Bridget Prentice

157

Schedule  13,  page  196,  line  20,  after ‘V’, insert ‘(whether or not they are interests

within the meaning of section 72(2A))’.

Members’ explanatory statement

This amendment is related to amendment 111. It clarifies that the reference to interests in S or V

is not to be construed in accordance with the meaning of an interest in a body as set out in section

72(2A) (as inserted by amendment 111).

Mr Jonathan Djanogly

Mr Henry Bellingham

Mr Tobias Ellwood

Simon Hughes

John Hemming

212

Schedule  13,  page  197,  line  11,  at end insert ‘Licensing rules must provide that, in

determining whether the requirements of sub-paragraph 1 are met, the burden of proof

rests on the person who wishes to hold the restricted interest.’.

Members’ explanatory statement

This amendment is designed to make clear that the onus of demonstrating ‘fitness to own’ rests on

the applicant, rather than it being for the licensing authority to demonstrate that a person was not

fit and proper before it could withhold approval.

Bridget Prentice

158

Schedule  13,  page  197,  line  15,  leave out ‘an interest in’ and insert ‘holding’.

Members’ explanatory statement

This amendment is related to amendment 111 and the amendments to the material interest and con­

trolled interest provisions (amendments 144 – 155). It changes an interest in a particular percent­

age of shares to a holding of a particular percentage of shares.

Bridget Prentice

159

Schedule  13,  page  197,  line  18,  leave out ‘power’ and insert ‘rights’.

Members’ explanatory statement

This amendment is related to the amendments to the voting power tests in the material interest and

controlled interest provisions (amendments 148 – 151 and 154 – 155). Only voting rights can con­

stitute a controlled interest so the provision about lesser restricted interests only applies in relation

to voting rights.

Bridget Prentice

160

Schedule  13,  page  197,  line  24,  leave out ‘an interest in’ and insert ‘holding’.

Members’ explanatory statement

This amendment is related to amendment 111 and the amendments to the material interest and con­

trolled interest provisions (amendments 144 – 155). It changes the reference to an interest in a

smaller percentage of shares to a holding of a smaller percentage of shares.

Notices of Amendments: 8th June 2007

99

Legal Services Bill-[ Lords], continued

Bridget Prentice

161

Schedule  13,  page  197,  line  27,  leave out ‘power’ and insert ‘rights’.

Members’ explanatory statement

This amendment is related to the amendments to the voting power tests in the material interest and

controlled interest provisions (amendments 148 – 151 and 154 – 155). Only voting rights can con­

stitute a controlled interest so the provision about lesser restricted interests only applies in relation

to voting rights.

Bridget Prentice

162

Schedule  13,  page  208,  line  29,  leave out ‘an interest in shares in a licensed body’

and insert ‘a shareholding in a licensed body, or in a parent undertaking of a licensed

body,’.

Members’ explanatory statement

This amendment is related to amendment 111. It provides that licensing rules may limit a non-au­

thorised person’s shareholding in a licensed body or parent undertaking, rather than his interest

in shares of a licensed body or parent undertaking.

Bridget Prentice

163

Schedule  13,  page  208,  line  31,  at end insert—

‘(aa)

a non-authorised person may not have an entitlement to exercise, or

control the exercise of, voting rights in a licensable body, or a parent

undertaking of a licensable body, which exceeds a limit specified in

the rules (“the voting limit”);’.

Members’ explanatory statement

This amendment is related to amendment 111 and the clarification between voting rights and vot­

ing power in amendments 148 – 151 and 154 – 155. It provides that licensing rules may limit a

non-authorised person’s percentage of voting rights in a licensed body or parent undertaking.

Bridget Prentice

164

Schedule  13,  page  208,  line  32,  leave out ‘in which non-authorised persons have an

interest’ and insert ‘, or a parent undertaking of a licensed body, held by non-authorised

persons’.

Members’ explanatory statement

This amendment is related to amendment 111. It provides that licensing rules may limit the total

proportion of shares held by non-authorised persons in a licensed body or parent undertaking,

rather than the total proportion of shares in which non-authorised persons have an interest.

Bridget Prentice

165

Schedule  13,  page  208,  line  34,  at end insert—

‘(c)	the total proportion of voting rights in a licensed body, or a parent

undertaking of a licensed body, which non-authorised persons are

entitled to exercise or control the exercise of, may not exceed a limit

specified in the rules.

( )	Rules made under any paragraph of sub-paragraph (1) in relation to a licensed

body and a parent undertaking may specify different limits in relation to the

licensed body and the parent undertaking.’.

Notices of Amendments: 8th June 2007

100

Legal Services Bill-[ Lords], continued

Members’ explanatory statement

This amendment is related to amendments 111, 148 – 151 and 154 – 155. It provides that licensing

rules may limit the total proportion of voting rights by non-authorised persons in licensed bodies

or parent undertakings. It also provides that limits under paragraph 38(1) may differ for licensed

bodies and parent undertakings.

Bridget Prentice

166

Schedule  13,  page  208,  line  35,  leave out from ‘(1)(a)’ to end of line 37 and insert

‘or (aa) may provide that references in those rules to a person, in relation to a person’s

shareholding or entitlement to exercise or control the exercise of voting rights, are to—

(a)	the person,

(b)	any of the person’s associates, or

(c)	the person and any of the person’s associates taken together.’.

Members’ explanatory statement

This amendment is related to amendments 111 and 163, and brings the provision for associates

into line with the provision at paragraph 3(3) and 4(2).

Bridget Prentice

167

Schedule  13,  page  209,  line  2,  after ‘body’, insert ‘, or a parent undertaking of a

licensed body,’.

Members’ explanatory statement

This amendment is related to amendments 162 and 163 and related to amendment 168. Since

amendments 162 and 163 allow for limits to be set in relation to both licensed bodies and parent

undertakings, this amendment adds the reference to parent undertakings.

Bridget Prentice

168

Schedule  13,  page  209,  line  4,  at end insert ‘or (aa) in relation to the body.’.

Members’ explanatory statement

This amendment is related to amendment 163. It provides that paragraph 39 applies not only

where licensing rules have been made under paragraph 38(1)(a), but also paragraph 38(1)(aa).

Bridget Prentice

169

Schedule  13,  page  209,  line  5,  leave out from ‘acquires’ to ‘and’ in line 6 and insert

‘—

(a)	a shareholding in the body which exceeds the share limit, or

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

the body which exceeds the voting limit,

must notify the body (and, if the body is a parent undertaking of a licensed

body, the licensed body)’.

Members’ explanatory statement

This amendment is related to amendments 162, 163 and 168. It provides that the notification obli­

gations apply to non-authorised persons who exceed the share limit or the voting limit, and pro­

vides for when a notice must be given to a licensed body or a parent undertaking and a licensed

body.

Notices of Amendments: 8th June 2007

101

Legal Services Bill-[ Lords], continued

Bridget Prentice

170

Schedule  13,  page  209,  line  21,   leave out ‘licensed body’ and insert ‘body (and, if

the body is a parent undertaking of a licensed body, the licensed body)’.

Members’ explanatory statement

This amendment is related to amendment 169. It follows the addition in that amendment of the ob­

ligation to notify the licensed body where there is an obligation to notify a body that is a parent

undertaking.

Bridget Prentice

171

Schedule  13,  page  209,  line  33,   leave out paragraph 41.

Members’ explanatory statement

This amendment is related to the amendments to the material and controlled interest provisions

(144 - 155) and to this Part that allow for divestiture of share capital in parent undertakings or

other bodies, no matter whether the licensed body in question is a body with share capital.

Bridget Prentice

172

Schedule  13,  page  209,  line  38,   leave out ‘relevant’.

Members’ explanatory statement

This amendment is related to amendment 171, which deleted paragraph 41 and therefore the term

“relevant licensed body”.

Bridget Prentice

173

Schedule  13,  page  210,  line  2,   leave out ‘interest in shares in any body’ and insert

‘shareholding in a body corporate with a share capital’.

Members’ explanatory statement

This amendment is related to amendments to the material interest and controlled interest provi­

sions (amendments 144 – 155). It replaces the reference to interest in shares in any body with

shareholding in any body corporate with a share capital.

Bridget Prentice

174

Schedule  13,  page  210,  line  12,   leave out sub-paragraph (3) and insert—

‘()	In sub-paragraph (1)(b), references to a person’s shareholding are to be read in

accordance with paragraph 3(3) or 4(2) (as the case may be).’.

Members’ explanatory statement

This amendment is related to amendments to the material interest and controlled interest provi­

sions (amendments 144 – 155), and also brings the reference to associates into line with para­

graphs 3(3), 4(2) and also to 38(2) pursuant to amendment 166.

Bridget Prentice

175

Schedule  13,  page  210,  line  15,   after ‘38(1)(a)’, insert ‘or (aa)’.

Members’ explanatory statement

This amendment is related to amendment 163. It provides that the divestiture condition may apply

where licensing rules have been made not only under paragraph 38(1)(a) (share limit), but also

Notices of Amendments: 8th June 2007

102

Legal Services Bill-[ Lords], continued

under paragraph 38(1)(aa) (voting limit).

Bridget Prentice

176

Schedule  13,  page  210,  line  16,   leave out from ‘a’ to end of line 17 and insert

‘licensed body if—

(a)	the person’s shareholding in the body, or a parent undertaking of the

body, exceeds the share limit, and the body or parent undertaking (as

the case may be) is a body corporate with a share capital, or

(b)	the person’s entitlement to exercise or control the exercise of voting

rights in the body, or a parent undertaking of the body, exceeds the

voting limit by virtue of the person holding shares in a body corporate

with a share capital.’.

Members’ explanatory statement

This amendment is related to amendments 162 and 163. It provides that the divestiture condition

is satisfied where the share limit or voting limit has been exceeded in relation to a licensed body

or parent undertaking.

Bridget Prentice

177

Schedule  13,  page  210,  line  18,   leave out from ‘means’ to end of line 19 and

insert—

‘(a)	in a case within sub-paragraph (1)(a), the number of shares by which

the person’s shareholding exceeds the share limit, and

(b)	in a case within sub-paragraph (1)(b), the number of shares held by the

person in excess of the number of shares the person could hold without

the person’s entitlement to exercise, or control the exercise of, voting

rights exceeding the voting limit.’.

Members’ explanatory statement

This amendment is related to amendments 162, 163 and 176. It changes the definition of “excess

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”.

---

Revised 11 June 2007