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Legal Services Bill [HL]


Legal Services Bill [HL]
Schedule 13 — Ownership of licensed bodies
Part 5 — Enforcement

201

 

(b)   

if the non-authorised person holds more than one kind of restricted

interest, a restricted interest the person’s holding of which is within

paragraph 42(2).

      (3)  

If the divestiture condition is satisfied by virtue of paragraph 43 the High

Court may, on the application of the licensing authority, order the sale of the

5

excess shares.

      (4)  

If shares are for the time being subject to any restriction under paragraph 45,

the court may order that they are to cease to be subject to that restriction.

      (5)  

If the divestiture condition is satisfied by virtue of paragraph 42(2)(b) or (c),

no order may be made under sub-paragraph (1) or (4)—

10

(a)   

until the end of the period within which an appeal may be made

against the imposition of the conditions or the objection, or

(b)   

if an appeal is made, until the appeal has been determined or

withdrawn.

      (6)  

If an order has been made under sub-paragraph (1) or (3) the court may, on

15

the application of the licensing authority, make such further order relating

to the sale or transfer of the shares as it thinks fit.

      (7)  

If shares are sold in pursuance of an order under this paragraph, the

proceeds of sale, less the costs of sale, must be paid into court for the benefit

of the persons beneficially interested in them.

20

      (8)  

Any such person may apply to the court for the whole or part of the proceeds

to be paid to the person.

Conditions

Enforcement of conditions

47    (1)  

If a person holds a restricted interest in a licensed body in breach of

25

conditions imposed under paragraph 17, 28 or 33, the licensing authority

may make an application to the High Court for an order under this

paragraph.

      (2)  

The licensing authority may not make such an application unless—

(a)   

it has notified the person that it intends to do so if the conditions are

30

not complied with before the end of the relevant period, and

(b)   

the relevant period has expired.

      (3)  

The relevant period is such period (not less than the prescribed period) as

may be specified in the notice.

      (4)  

The High Court may, on the application of the licensing authority, make

35

such order as the court thinks fit to secure compliance with the conditions to

which the person’s holding of the restricted interest is subject.

      (5)  

No order may be made under this paragraph—

(a)   

until the end of the period within which an appeal may be made

against the imposition of the conditions, or

40

(b)   

if an appeal is made, until the appeal has been determined or

withdrawn.

 

 

Legal Services Bill [HL]
Schedule 13 — Ownership of licensed bodies
Part 5 — Enforcement

202

 

Records of decisions

Duty to notify Board of decisions under this Schedule

48    (1)  

The relevant licensing authority must notify the Board where—

(a)   

it has objected under paragraph 19, 31, or 36 to a person’s holding of

a restricted interest, or

5

(b)   

it has imposed conditions under paragraph 17, 28, or 33 on a person’s

holding of a restricted interest.

      (2)  

The notification must state—

(a)   

the reasons for the objection or imposition of conditions, and

(b)   

the kind of restricted interest to which the objection or conditions

10

related.

      (3)  

If the licensing authority takes any action under paragraph 44 in relation to

a person notified to the Board under sub-paragraph (1), it must notify the

Board of that fact.

      (4)  

If there is an appeal to the relevant appellate body against the objection or

15

imposition of conditions, the licensing authority must notify the Board of the

outcome of that appeal (and any subsequent appeal to the High Court).

      (5)  

If the licensing authority has imposed conditions on a person’s holding of a

restricted interest, it must notify the Board of any decision taken by it under

paragraph 35 (variation and cancellation of conditions).

20

      (6)  

The licensing authority must give the person and the licensed body

concerned a copy of any notification it gives the Board under this paragraph.

49    (1)  

A licensing authority must notify the Board where under paragraph 16, 17,

27 or 28 it approves the holding of a restricted interest in a licensed body by

a person included in the list kept by the Board under paragraph 52.

25

      (2)  

The notification must state—

(a)   

if the approval was under paragraph 17 or 28, the conditions to

which the approval was subject, and

(b)   

the reasons for the licensing authority’s decision to approve the

person’s holding of the interest.

30

      (3)  

If the approval was under paragraph 17 or 28 and there is an appeal to the

relevant appellate body against the imposition of conditions, the licensing

authority must notify the Board of the outcome of that appeal (and any

subsequent appeal to the High Court).

      (4)  

If the approval was under paragraph 17 or 28, the licensing authority must

35

notify the Board of any decision taken by it under paragraph 35 (variation

and cancellation of conditions).

      (5)  

The licensing authority must give the person and the licensed body

concerned a copy of any notification it gives the Board under this paragraph.

Power to notify Board where share limit breached

40

50    (1)  

This paragraph applies if the relevant licensing rules make the provision

mentioned in paragraph 38(1)(a).

 

 

Legal Services Bill [HL]
Schedule 13 — Ownership of licensed bodies
Part 5 — Enforcement

203

 

      (2)  

The licensing authority may, if it considers it appropriate to do so in all the

circumstances of the case, notify the Board where any person acquires an

interest in shares which exceeds the share limit in a licensed body licensed

by the licensing authority.

      (3)  

If the licensing authority proposes to make a notification under sub-

5

paragraph (2), it must give the person and the licensed body a warning

notice.

      (4)  

The warning notice must—

(a)   

specify the reasons for the proposed notification, and

(b)   

state that representations may be made to the licensing authority

10

within the prescribed period.

      (5)  

The licensing authority must consider any representations made within the

prescribed period.

      (6)  

If the licensing authority notifies the Board under sub-paragraph (2), it must

give the person concerned and the licensed body a copy of the notification

15

and a notice stating the reasons for the notification.

51    (1)  

The person concerned and the licensed body may before the end of the

prescribed period appeal to the relevant appellate body against the

notification.

      (2)  

The relevant appellate body may—

20

(a)   

dismiss the appeal, or

(b)   

allow the appeal and order the person’s name to be removed from

the list kept by the Board under paragraph 52.

      (3)  

A party to the appeal may before the end of the prescribed period appeal to

the High Court on a point of law arising from the decision of the relevant

25

appellant body, but only with the permission of the High Court.

      (4)  

The High Court may make such order as it thinks fit.

      (5)  

The licensing authority must notify the Board of the outcome of any appeal

under this paragraph, and give the person concerned and the licensed body

a copy of the notification.

30

Board’s list of persons subject to objections and conditions

52    (1)  

The Board must keep a list of the persons in respect of which it receives a

notification under paragraph 48(1) or 50(2).

      (2)  

The list must record—

(a)   

in relation to a person notified to the Board under paragraph 48(1),

35

the information included in the notification by virtue of paragraph

48(2) and any notification under paragraph 48(3), and

(b)   

in relation to any person included in the list, the information

included in any notification relating to that person under paragraph

49.

40

      (3)  

If the Board receives a notification under paragraph 48(4) or (5), 49(3) or (4)

or 51(5) it must make such alterations to the list as it considers appropriate

having regard to the decision of the licensing authority or the outcome of the

appeal (which may include removing a person from the list).

 

 

Legal Services Bill [HL]
Schedule 14 — Licensing authority’s powers of intervention

204

 

      (4)  

The Board must make the list kept by it under this paragraph available to

every licensing authority.

Schedule 14

Section 100

 

Licensing authority’s powers of intervention

Introductory

5

1     (1)  

This Schedule applies—

(a)   

where, in relation to a licensed body and the relevant licensing

authority, one or more of the intervention conditions is satisfied;

(b)   

where a licence granted to a body has expired (and has not been

renewed or replaced by the relevant licensing authority).

10

      (2)  

The intervention conditions are—

(a)   

that the licensing authority is satisfied that one or more of the terms

of the licensed body’s licence have not been complied with;

(b)   

that a person has been appointed receiver or manager of property of

the licensed body;

15

(c)   

that a relevant insolvency event has occurred in relation to the

licensed body;

(d)   

that the licensing authority has reason to suspect dishonesty on the

part of any manager or employee of the licensed body in connection

with—

20

(i)   

that body’s business,

(ii)   

any trust of which that body is or was a trustee,

(iii)   

any trust of which the manager or employee of the body is or

was a trustee in that person’s capacity as such a manager or

employee, or

25

(iv)   

the business of another body in which the manager or

employee is or was a manager or employee, or the practice

(or former practice) of the manager or employee;

(e)   

that the licensing authority is satisfied that there has been undue

delay—

30

(i)   

on the part of the licensed body in connection with any

matter in which it is or was acting for a client or with any trust

of which it is or was a trustee, or

(ii)   

on the part of a person who is or was a manager or employee

of the licensed body in connection with any trust of which

35

that person is or was a trustee in that person’s capacity as

such a manager or employee,

   

and the notice conditions are satisfied;

(f)   

that the licensing authority is satisfied that it is necessary to exercise

the powers conferred by this Schedule (or any of them) in relation to

40

a licensed body to protect—

(i)   

the interests of clients (or former or potential clients) of the

licensed body,

(ii)   

the interests of the beneficiaries of any trust of which the

licensed body is or was a trustee, or

45

 

 

Legal Services Bill [HL]
Schedule 14 — Licensing authority’s powers of intervention

205

 

(iii)   

the interests of the beneficiaries of any trust of which a person

who is or was a manager or employee of the licensed body is

or was a trustee in that person’s capacity as such a manager

or employee.

      (3)  

For the purposes of sub-paragraph (2) a relevant insolvency event occurs in

5

relation to a licensed body if—

(a)   

a resolution for a voluntary winding-up of the body is passed

without a declaration of solvency under section 89 of the Insolvency

Act 1986 (c. 45);

(b)   

the body enters administration within the meaning of paragraph

10

1(2)(b) of Schedule B1 to that Act;

(c)   

an administrative receiver within the meaning of section 251 of that

Act is appointed;

(d)   

a meeting of creditors is held in relation to the body under section 95

of that Act (creditors’ meeting which has the effect of converting a

15

members’ voluntary winding up into a creditors’ voluntary winding

up);

(e)   

an order for the winding up of the body is made.

      (4)  

The notice conditions referred to in sub-paragraph (2)(e) are—

(a)   

that the licensing authority has given the licensed body a notice

20

inviting it to give an explanation within such period (of not less than

8 days) following the giving of the notice as may be specified in it;

(b)   

that the licensed body has failed within that period to give an

explanation which the licensing authority regards as satisfactory;

and

25

(c)   

that the licensing authority gives notice of the failure to the licensed

body and (at the same time or later) notice that this Schedule applies

in its case by virtue of sub-paragraph (2)(e).

      (5)  

Where this Schedule applies in relation to a licensed body by virtue of sub-

paragraph (1)(a) it continues to apply after the body’s licence has been

30

revoked or has otherwise ceased to have effect.

      (6)  

For the purposes of this Schedule “licensed body” includes—

(a)   

a body whose licence is suspended;

(b)   

a body to whom this Schedule continues to apply by virtue of sub-

paragraph (5);

35

(c)   

except in this paragraph, a body whose licence has ceased to have

effect as mentioned in sub-paragraph (1)(b).

Money: prohibition on payment

2     (1)  

The licensing authority may apply to the High Court for an order under sub-

paragraph (2), and the High Court may make the order if it thinks fit.

40

      (2)  

The order is that a person holding money on behalf of the licensed body may

not make any payment of the money, except with the leave of the court.

      (3)  

An order under sub-paragraph (2) may take effect in relation to a person—

(a)   

whether or not the person is named in the order;

(b)   

however the money is held;

45

(c)   

whether the money was received before or after the order was made.

 

 

Legal Services Bill [HL]
Schedule 14 — Licensing authority’s powers of intervention

206

 

      (4)  

But an order under sub-paragraph (2) does not take effect in relation to a

person until the licensing authority—

(a)   

has given the person a copy of the order, and

(b)   

(in the case of a bank or other financial institution) has indicated the

branches at which it believes money to which the order relates is

5

held.

      (5)  

A person is not to be treated as having disobeyed an order under sub-

paragraph (2) by making a payment of money if the court is satisfied that the

person—

(a)   

exercised due diligence to ascertain whether it was money to which

10

the order related, and

(b)   

failed to ascertain that the order related to it.

Money etc: vesting in licensing authority

3     (1)  

The sums of money to which this paragraph applies, and the right to recover

or receive them, vest in the licensing authority if the licensing authority

15

decides that they should do so.

      (2)  

This paragraph applies to all sums of money held by or on behalf of the

licensed body in connection with—

(a)   

its activities as a licensed body,

(b)   

any trust of which it is or was a trustee, or

20

(c)   

any trust of which a person who is or was a manager or employee of

the licensed body is or was a trustee in that person’s capacity as such

a manager or employee.

      (3)  

Sub-paragraph (1) applies whether the sums were received by the person

holding them before or after the licensing authority’s decision.

25

      (4)  

Those sums and that right are held by the licensing authority—

(a)   

on trust to exercise the powers conferred by this Schedule in relation

to them, and

(b)   

subject to that and to rules under paragraph 6, on trust for the

persons beneficially entitled.

30

      (5)  

The licensing authority must give the licensed body, and any other person

in possession of sums of money to which this paragraph applies—

(a)   

a copy of the licensing authority’s decision, and

(b)   

a notice prohibiting the payment out of those sums.

      (6)  

A person to whom a notice under sub-paragraph (5) is given may apply to

35

the High Court for an order directing the licensing authority to withdraw

the notice.

      (7)  

An application under sub-paragraph (6) must be made within 8 days of the

licensing authority giving the person notice under sub-paragraph (5).

      (8)  

The person must give not less than 48 hours notice of any application under

40

sub-paragraph (6)—

(a)   

to the licensing authority, and

(b)   

if the notice under sub-paragraph (5) gives the name of a solicitor

instructed by the licensing authority, to that solicitor.

 

 

Legal Services Bill [HL]
Schedule 14 — Licensing authority’s powers of intervention

207

 

      (9)  

If the court makes the order, it may make any other order it thinks fit with

respect to the matter.

     (10)  

It is an offence for a person to whom a notice has been given under sub-

paragraph (5) to pay out sums of money at a time when such payment is

prohibited by the notice.

5

     (11)  

A person who is guilty of an offence under sub-paragraph (10) is liable on

summary conviction to a fine not exceeding level 3 on the standard scale.

4     (1)  

Any rights to which this paragraph applies shall vest in the licensing

authority if the licensing authority decides that they should do so.

      (2)  

This paragraph applies to any right to recover or receive debts due to the

10

licensed body in connection with its business.

      (3)  

Any sums recovered by the licensing authority by virtue of the exercise of

rights vested under sub-paragraph (1) vest in the licensing authority and are

held by it—

(a)   

on trust to exercise the powers conferred by this Schedule in relation

15

to them, and

(b)   

subject to that and to rules under paragraph 6, on trust for the

persons beneficially entitled.

      (4)  

The licensing authority must give the licensed body, and any other person

who owes a debt to which the order applies a copy of the licensing

20

authority’s decision.

5     (1)  

If the licensing authority takes possession of any sum of money to which

paragraph 3 applies or by virtue of paragraph 4, it must pay it into a special

account in the name of the licensing authority or a person nominated on its

behalf.

25

      (2)  

A person nominated under sub-paragraph (1) holds that sum—

(a)   

on trust to permit the licensing authority to exercise the powers

conferred by this Schedule in relation to it, and

(b)   

subject to that and rules under paragraph 6, on trust for the persons

beneficially entitled.

30

      (3)  

A bank or other financial institution at which a special account is kept is

under no obligation to ascertain whether it is being dealt with properly.

6     (1)  

The licensing authority may make rules governing its treatment of sums

vested in it under paragraph 3 or 4(3).

      (2)  

The rules may, in particular, make provision in respect of cases where the

35

licensing authority is unable to trace the person or persons beneficially

entitled to any sum vested in the licensing authority under paragraph 3 or

4(3) (including provision which requires amounts to be paid into or out of

any fund maintained by the licensing authority in connection with its

compensation arrangements).

40

Money: information

7     (1)  

The licensing authority may apply to the High Court for an order requiring

a person to give the licensing authority—

(a)   

information about any money held by the person on behalf of the

licensed body, and the accounts in which it is held, or

45

 

 

 
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