Public Bill Committee: 14th June 2007

252

Legal Services Bill [Lords], continued

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.

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.

Public Bill Committee: 14th June 2007

253

Legal Services Bill [Lords], continued

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

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.

Public Bill Committee: 14th June 2007

254

Legal Services Bill [Lords], continued

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”.

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

Public Bill Committee: 14th June 2007

255

Legal Services Bill [Lords], continued

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.

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.

Public Bill Committee: 14th June 2007

256

Legal Services Bill [Lords], continued

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

or an indirect interest.

Public Bill Committee: 14th June 2007

257

Legal Services Bill [Lords], continued

Mr David Kidney

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

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

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%.

Public Bill Committee: 14th June 2007

258

Legal Services Bill [Lords], continued

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

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

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, and which makes provision

for—

(a)	testing the competence of those seeking admission to

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

(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.

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Revised 14 June 2007