Public Bill Committee: 14th June 2007

245

Legal Services Bill [Lords], continued

under those rules an entitlement to exercise, or control the exercise of,

voting rights in the licensed body or a parent undertaking of the

licensed body which exceeds the voting limit,’.

Members’ explanatory statement

This amendment is related to amendment 163. It provides that where rules are made under the pro­

vision inserted by that amendment setting a voting limit, and that limit is breached, the licensing

authority may suspend or revoke the licensed body’s licence.

Bridget Prentice

136

Schedule  11,  page  190,  line  1,  leave out ‘in which non-authorised persons have an

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

persons’.

Members’ explanatory statement

This amendment is related to amendment 164 and reflects the changes made to paragraph 38(1)(b)

of Schedule 13 by that amendment.

Bridget Prentice

137

Schedule  11,  page  190,  line  2,  at end insert—

‘( )	if the relevant licensing rules make the provision mentioned in

paragraph 38(1)(c) of that Schedule, the total proportion of voting

rights in the licensed body or a parent undertaking of the licensed body

which non-authorised persons are entitled to exercise, or control the

exercise of, exceeds the limit specified in the rules.’.

Members’ explanatory statement

This amendment is related to amendment 165. It provides that where rules are made under the pro­

vision inserted by that amendment setting a limit on the total proportion of voting rights, and that

limit is breached, the licensing authority may suspend or revoke the licensed body’s licence.

Bridget Prentice

138

Schedule  12,  page  191,  line  24,  leave out ‘a’ and insert ‘an independent’.

Members’ explanatory statement

This amendment is part of a set of amendments that change references to trade unions to independ­

ent trade unions, as defined in amendment 126. This amendment provides that the third ground

(see paragraph 1(5)) for an application for a licence to the Board applies in relation to independ­

ent trade unions.

Bridget Prentice

139

Schedule  12,  page  193,  line  24,  leave out ‘in shares’.

Members’ explanatory statement

This amendment is related to amendment 111, which replaces the concept of “interest in shares”

with “interest”.

Public Bill Committee: 14th June 2007

246

Legal Services Bill [Lords], continued

Bridget Prentice

140

Schedule  12,  page  193,  line  26,  leave out ‘in shares’.

Members’ explanatory statement

This amendment is related to amendment 111, which replaces the concept of “interest in shares”

with “interest”.

Bridget Prentice

141

Schedule  12,  page  193,  line  29,  leave out ‘in shares’.

Members’ explanatory statement

This amendment is related to amendment 111, which replaces the concept of “interest in shares”

with “interest”.

Bridget Prentice

142

Schedule  12,  page  193,  line  31,  leave out ‘in shares’.

Members’ explanatory statement

This amendment is related to amendment 111, which replaces the concept of “interest in shares”

with “interest”.

Bridget Prentice

143

Schedule  12,  page  193,  line  32,  at end insert—

‘( )	the kinds of non-authorised persons who have an indirect interest in

the licensable body.’.

Members’ explanatory statement

This amendment is related to amendment 111, which introduces the concept of non-authorised per­

sons with an “indirect interest”.

Bridget Prentice

113

Clause  85,  page  49,  line  39,  leave out ‘persons having an interest in shares,’ and

insert ‘non-authorised persons having an interest or an indirect interest,’.

Members’ explanatory statement

This amendment is related to the replacement in amendment 111 of the “interest in shares” test.

It also clarifies that it is only non-authorised persons who have an “interest” or “indirect interest”

(or a material interest) against whom obligations under subsection (4) may be imposed.

Public Bill Committee: 14th June 2007

247

Legal Services Bill [Lords], continued

Bridget Prentice

144

Schedule  13,  page  194,  line  25,  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 material interest by re­

placing the 10% interest in shares test with a 10% shareholding test.

Bridget Prentice

145

Schedule  13,  page  194,  line  27,  leave out ‘interest in shares’ and insert

‘shareholding’.

Members’ explanatory statement

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

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

influence by virtue of a shareholding.

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.

Public Bill Committee: 14th June 2007

248

Legal Services Bill [Lords], continued

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.

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.

Public Bill Committee: 14th June 2007

249

Legal Services Bill [Lords], continued

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.

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.

Public Bill Committee: 14th June 2007

250

Legal Services Bill [Lords], continued

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.

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

Public Bill Committee: 14th June 2007

251

Legal Services Bill [Lords], continued

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.’.

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).

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Revised 14 June 2007