Legalize / United Kingdom / Public General Act

Legal Services Act 2007

Type Public General Act

Publication 2007-10-30

Last updated 2025-01-01

State In force

Department Statute Law Database

Source legislation.gov.uk

articles Not indexed

Reform history JSON API

(1) The Board must give the Lord Chief Justice—

(a) a copy of any advice duly given under paragraphs 4 to 6, and

(b) a notice specifying a period within which advice under this paragraph must be given.

(2) The Lord Chief Justice must then give such advice as the Lord Chief Justice thinks fit in respect of the proposed recommendation.

(3) In deciding what advice to give, the Lord Chief Justice must, in particular, have regard to the likely impact on the courts in England and Wales of making an order under section 45 in accordance with the proposed recommendation.

Information obtained by consultees

8

A person (“the consultee”) to whom a copy of the warning notice is given under paragraph 3(1) may, for the purposes of giving advice under paragraphs 4 to 7, request the approved regulator or any other person to provide the consultee with such additional information as may be specified by the consultee.

Representations by the approved regulator etc

9

(1) The Board must—

(a) give the approved regulator a copy of any advice duly given under paragraphs 4 to 7, and

(b) publish that advice together with any written representations duly made by the approved regulator under paragraph 2 and the report (if any) prepared under that paragraph.

(2) The approved regulator and any body within sub-paragraph (3) may make to the Board—

(a) written representations, and

(b) if authorised to do so by the Board, oral representations,

about the advice.

(3) A body is within this sub-paragraph if it represents persons authorised by the approved regulator to carry on activities which are reserved legal activities.

(4) The Board may allow any other person to make written or oral representations about the advice.

(5) The Board may make rules governing the making to the Board of written or oral representations.

(6) Representations under this paragraph must be made within—

(a) the period of 28 days beginning with the day on which the representations and advice are published under sub-paragraph (1)(b), or

(b) such longer period as the Board may specify in a particular case.

(7) Where oral representations are made, the Board must prepare a report of those representations.

(8) Before preparing that report, the Board must—

(a) give each person who made oral representations a reasonable opportunity to comment on a draft of the report of those representations, and

(b) have regard to any comments duly made.

(9) The Board must, as soon as reasonably practicable after the end of the period within which representations under this paragraph may be made, publish any written representations duly made and the report (if any) prepared under sub-paragraph (7).

Publication of advice etc

10

(1) Nothing in paragraph 9 operates—

(a) to prevent a person who gives advice under paragraphs 4 to 7 from publishing that advice, or

(b) to prevent a person who makes representations under paragraph 2 or 9 from publishing those representations.

(2) A person (“the publisher”) publishing any such material (whether under paragraph 9 or otherwise) must, so far as practicable, exclude any matter which relates to the private affairs of a particular individual the publication of which, in the opinion of the publisher, would or might seriously and prejudicially affect the interests of that individual.

Decision by the Board

11

(1) After considering—

(a) any advice duly given under paragraphs 4 to 7,

(b) any representations duly made under paragraph 2 or 9, and

the Board must decide whether to make the proposed recommendation.

(2) The Board must give notice of its decision (“the decision notice”) to the approved regulator and to the Lord Chancellor.

(3) If the Board decides to make the proposed recommendation, the decision notice must—

(a) contain the recommendation, and

(b) state why the Board is satisfied of the matters mentioned in section 45(5)(a) and (b).

(4) The Board must publish the decision notice.

SCHEDULE 10

Part 1 — Designation of approved regulators by order

Application to the Board

1

(1) This paragraph applies where a body wishes to become a licensing authority in relation to one or more activities which constitute one or more reserved legal activities.

(2) The body may apply to the Board for the Board—

(a) to recommend that an order be made by the Lord Chancellor designating the applicant as a licensing authority in relation to the reserved legal activity or activities in question, and

(b) to approve what the applicant proposes as its licensing rules if such an order is made (“the proposed licensing rules”).

(3) But the body may make an application under this paragraph in relation to a reserved legal activity only if—

(a) it is a relevant approved regulator in relation to the activity, or

(b) it has made an application under Part 2 of Schedule 4 (designation of approved regulators) for the Board to recommend that an order be made by the Lord Chancellor designating the body as an approved regulator in relation to the activity.

(4) An application under this paragraph must be made in such form and manner as the Board may specify in rules and must be accompanied by—

(a) a statement of the reserved legal activity or activities to which it relates,

(b) details of the applicant's proposed licensing rules,

(c) such explanatory material as the applicant considers is likely to be needed for the purposes of this Part of this Schedule, and

(d) the prescribed fee.

(5) The prescribed fee is the fee specified in, or determined in accordance with, rules made by the Board with the consent of the Lord Chancellor.

(6) An applicant may, at any time, withdraw the application by giving notice to that effect to the Board.

Dismissal of application

2

(1) The Board may refuse to consider, or to continue its consideration of, an application.

(2) The Board must make rules about the procedures and criteria that it will apply when determining whether to refuse to consider, or to continue its consideration of, an application under sub-paragraph (1).

(3) Where the Board decides to refuse to consider, or to continue its consideration of, an application it must give the applicant notice of that decision and of its reasons for it.

(4) The Board must publish a notice given under sub-paragraph (3).

Board’s duty to seek advice

3

(1) The Board must give each of the persons listed in sub-paragraph (2)—

(a) a copy of the application and accompanying material, and

(b) a notice specifying a period within which any advice given under paragraphs 4 to 6 must be given.

(2) Those persons are—

(a) the CMA ,

(b) the Consumer Panel,

(d) such other persons as the Board considers it reasonable to consult regarding the application.

(3) In this Part of this Schedule, in relation to an application, “selected consultee” means a person within sub-paragraph (2)(d).

Advice of Office of Fair Trading

4

(1) The CMA must give the Board such advice as the CMA thinks fit regarding whether the application should be granted.

(2) In deciding what advice to give, the CMA must, in particular, have regard to whether making an order under paragraph 15 in accordance with the recommendation applied for would (or would be likely to) prevent, restrict or distort competition within the market for reserved legal services to any significant extent.

Advice of the Consumer Panel

5

(1) The Consumer Panel must give the Board such advice as the Consumer Panel thinks fit regarding whether the application should be granted.

(2) In deciding what advice to give, the Consumer Panel must, in particular, have regard to the likely impact on consumers of the making of an order under paragraph 15 in accordance with the recommendation applied for.

Advice of selected consultees

6

A selected consultee may give the Board such advice as the selected consultee thinks fit in respect of the application.

Advice of the Lord Chief Justice

7

(1) The Board must give the Lord Chief Justice—

(a) a copy of any advice duly given under paragraphs 4 to 6, and

(b) a notice specifying a period within which any advice under this paragraph must be given.

(2) The Lord Chief Justice must then give such advice to the Board as the Lord Chief Justice thinks fit regarding whether the application should be granted.

(3) In deciding what advice to give, the Lord Chief Justice must, in particular, have regard to the likely impact on the courts in England and Wales of the making of an order under paragraph 15 in accordance with the recommendation applied for.

Information obtained by consultees

8

A person (“the consultee”) to whom a copy of the application is given under paragraph 3(1) may, for the purposes of giving advice under paragraphs 4 to 7, request the applicant or any other person to provide the consultee with such additional information as may be specified by the consultee.

Representations by applicant

9

(1) The Board must give the applicant a copy of any advice duly given under paragraphs 4 to 7.

(2) The applicant may make to the Board—

(a) written representations, and

(b) if the Board authorises it to do so, oral representations,

about the advice.

(3) The Board must make rules governing the making of oral and written representations.

(4) Representations under this paragraph must be made within—

(a) the period of 28 days beginning with the day on which the copy of the advice is given to the applicant, or

(b) such longer period as the Board may specify in a particular case.

(5) Where oral representations are made, the Board must prepare a report of those representations.

(6) Before preparing that report, the Board must—

(a) give the applicant a reasonable opportunity to comment on a draft of the report, and

(b) have regard to any comments duly made.

Publication of advice and representations etc

10

(1) The Board must, as soon as practicable after the end of the period within which representations under paragraph 9 may be made, publish—

(a) any advice duly given under paragraphs 4 to 7,

(b) any written representations duly made under paragraph 9 and the report (if any) prepared under that paragraph.

(2) Nothing in sub-paragraph (1) operates—

(a) to prevent a person who gives advice under paragraphs 4 to 7 from publishing that advice, or

(b) to prevent a person who makes representations under paragraph 9 from publishing those representations.

(3) A person (“the publisher”) publishing any such material (whether under sub-paragraph (1) or otherwise) must, so far as practicable, exclude any matter which relates to the private affairs of a particular individual the publication of which, in the opinion of the publisher, would or might seriously and prejudicially affect the interests of that individual.

Rules governing decisions by the Board

11

(1) The Board must make rules specifying how it will determine applications.

(2) Rules under sub-paragraph (1) must, in particular, provide that the Board may grant an application in relation to a particular reserved legal activity only if it is satisfied—

(a) that the applicant's proposed licensing rules in relation to the activity comply with the requirements of section 83;

(b) that, if an order were to be made under paragraph 15 designating the body in relation to the activity, there would be a body with power to hear and determine appeals which, under this Part or the applicant's proposed licensing rules, may be made against decisions of the applicant;

(c) that, if an order were to be made under paragraph 15 designating the body in relation to the activity, the applicant would have appropriate internal governance arrangements in place at the time the order takes effect;

(d) that, if an order were made under paragraph 15 designating the body in relation to the activity, the applicant would be competent, and have sufficient resources, to perform the role of licensing authority in relation to the activity at the time the order takes effect.

(3) The rules made for the purposes of sub-paragraph (2)(c) must in particular require the Board to be satisfied—

(a) that the exercise of the applicant's regulatory functions would not be prejudiced by any of its representative functions, and

(b) that decisions relating to the exercise of its regulatory functions would so far as reasonably practicable be taken independently from decisions relating to the exercise of its representative functions.

Determination of applications

12

(1) After considering—

(a) the application and accompanying material,

(b) any other information provided by the applicant,

(d) any representations duly made under paragraph 9, and

(e) any other information which the Board considers relevant to the application,

the Board must decide whether to grant the application.

(2) Where the application relates to more than one reserved legal activity, the Board may grant the application in relation to all or any of them.

(3) The Board must give notice of its decision to the applicant (“the decision notice”).

(4) Where the Board decides to refuse the application (in whole or in part), the decision notice must specify the reasons for that decision.

(5) The Board must publish the decision notice.

13

(1) Where an application is made under this Part, the Board must give the decision notice under paragraph 12 within the decision period.

(2) The “decision period” is the period of 12 months beginning with the day on which the application is made to the Board.

(3) The Board may, before the end of the decision period, issue a notice extending that period by a period specified in the notice.

(4) More than one notice may be issued under sub-paragraph (3), but the decision period must not exceed 16 months.

(5) The Board may issue a notice under sub-paragraph (3) only after it has—

(a) consulted the CMA , the Consumer Panel and the Lord Chief Justice, and

(b) obtained the Lord Chancellor's consent to the extension.

(6) A notice under sub-paragraph (3) must state the Board's reasons for extending the decision period.

(7) The Board must publish any notice issued under sub-paragraph (3).

Effect of grant of application

14

(1) This paragraph applies where an application is granted in relation to a reserved legal activity or activities.

(2) The Board must recommend to the Lord Chancellor that an order be made designating the applicant as a licensing authority in relation to the reserved legal activity or activities in question.

(3) The Board must publish any recommendation made under sub-paragraph (2).

(4) The Board must make available to the Lord Chancellor—

(a) any advice duly given under paragraphs 4 to 7,

(b) any written representations duly made under paragraph 9 and the report (if any) prepared under that paragraph, and

Lord Chancellor’s decision to make an order

15

(1) Where a recommendation is made to the Lord Chancellor under paragraph 14, the Lord Chancellor may—

(a) make an order in accordance with the recommendation, or

(b) refuse to make such an order.

(2) Where the recommendation relates to more than one reserved legal activity, the Lord Chancellor may make an order under sub-paragraph (1)(a) in relation to all or any of them.

(3) But if the application, in relation to a particular reserved legal activity, was made in reliance on paragraph 1(3)(b), the Lord Chancellor must not make an order in relation to that activity unless the Lord Chancellor has made an order under Part 2 of Schedule 4 designating the body as an approved regulator in relation to that activity.

(4) The Lord Chancellor must—

(a) decide whether to make an order under this paragraph, and

(b) give notice of that decision (“the decision notice”) to the applicant,

within the period of 90 days beginning with the day on which the recommendation was made.

(5) If the Lord Chancellor decides not to make an order in accordance with the whole or part of the recommendation, the decision notice must state the reasons for the decision.

(6) The Lord Chancellor must publish the decision notice.

Approval of licensing rules

16

(1) Where an order is made by the Lord Chancellor under paragraph 15, the applicant's proposed licensing rules are at the same time treated as having been approved by the Board.

(2) But where the order relates to one or more (but not all) of the reserved legal activities to which the application related, sub-paragraph (1) has effect as if the reference to the applicant's proposed licensing rules were a reference to those rules excluding any provision made in respect of any activities excluded from the order.

(3) Sub-paragraph (1) is without prejudice to the Board's power to give directions under section 32 (powers to direct an approved regulator to take steps in certain circumstances, including steps to amend its regulatory arrangements).

Part 2 — Cancellation of designation by order

Introductory

17

This Part of this Schedule applies where the Board considers that it may be appropriate for it to make a recommendation under section 76(5).

Notification of the licensing authority

18

(1) The Board must give the licensing authority a notice (“a warning notice”) accompanied by a draft of the proposed recommendation.

(2) The warning notice must—

(a) state that the Board proposes to make a recommendation under subsection (5) of section 76 in the form of the accompanying draft, and

(b) state the reasons why the Board is satisfied of the matters mentioned in paragraphs (a) and (b) of that subsection.

(3) The Board must publish a copy of the warning notice.

(4) The licensing authority may make to the Board—

(a) written representations, and

(b) if the Board authorises it to do so, oral representations,

about the proposed recommendation.

(5) The Board must make rules governing the making of oral and written representations.

(6) Representations under this paragraph must be made within—

(a) the period of 28 days beginning with the day on which the warning notice is given to the licensing authority, or

(b) such longer period as the Board may specify in a particular case.

(7) The Board must consider any representations duly made by the licensing authority.

(8) Where oral representations are duly made, the Board must prepare a report of those representations.

(9) Before preparing that report, the Board must—

(a) give the licensing authority a reasonable opportunity to comment on a draft of the report, and

(b) have regard to any comments duly made.

Board’s duty to seek advice

19

(1) After complying with paragraph 18, the Board must give each of the persons listed in sub-paragraph (2)—

(a) a copy of the warning notice and the accompanying draft,

(b) a copy of any written representations duly made by the licensing authority under paragraph 18 and a copy of the report (if any) prepared under that paragraph, and

(2) Those persons are—

(a) the CMA ,

(b) the Consumer Panel,

(d) such other persons as the Board considers it reasonable to consult in respect of the proposed recommendation.

(3) In this Part of this Schedule, in relation to a proposed recommendation, “selected consultee” means a person within sub-paragraph (2)(d).

Advice of Office of Fair Trading

20

(1) The CMA must give the Board such advice as it thinks fit regarding whether the proposed recommendation should be made.

(2) In deciding what advice to give, the CMA must, in particular, have regard to whether making an order under section 76 in accordance with the proposed recommendation would (or would be likely to) prevent, restrict or distort competition within the market for reserved legal services to any significant extent.

Advice of the Consumer Panel

21

(1) The Consumer Panel must give the Board such advice as it thinks fit regarding whether the proposed recommendation should be made.

(2) In deciding what advice to give, the Consumer Panel must, in particular, have regard to the likely impact on consumers of making an order under section 76 in accordance with the proposed recommendation.

Advice of selected consultees

22

A selected consultee may give the Board such advice as the selected consultee thinks fit in respect of the proposed recommendation.

Advice of the Lord Chief Justice

23

(1) The Board must give the Lord Chief Justice—

(a) a copy of any advice duly given under paragraphs 20 to 22, and

(b) a notice specifying a period within which advice under this paragraph must be given.

(2) The Lord Chief Justice must then give such advice as the Lord Chief Justice thinks fit in respect of the proposed recommendation.

(3) In deciding what advice to give, the Lord Chief Justice must, in particular, have regard to the likely impact on the courts in England and Wales of making an order under section 76 in accordance with the proposed recommendation.

Information obtained by consultees

24

A person (“the consultee”) to whom a copy of the warning notice is given under paragraph 19(1) may, for the purposes of giving advice under paragraphs 20 to 23, request the licensing authority or any other person to provide the consultee with such additional information as may be specified by the consultee.

Representations by the approved regulator etc

25

(1) The Board must—

(a) give the licensing authority a copy of any advice duly given under paragraphs 20 to 23, and

(b) publish that advice together with any written representations duly made by the licensing authority under paragraph 18 and the report (if any) prepared under that paragraph.

(2) The licensing authority and any body within sub-paragraph (3) may make to the Board—

(a) written representations, and

(b) if authorised to do so by the Board, oral representations,

about the advice.

(3) A body is within this sub-paragraph if it represents licensed bodies authorised by the licensing authority to carry on activities which are reserved legal activities.

(4) The Board may allow any other person to make written or oral representations about the advice.

(5) The Board may make rules governing the making to the Board of written or oral representations.

(6) Representations under this paragraph must be made within—

(a) the period of 28 days beginning with the day on which the representations and advice are published under sub-paragraph (1)(b), or

(b) such longer period as the Board may specify in a particular case.

(7) Where oral representations are made, the Board must prepare a report of those representations.

(8) Before preparing that report, the Board must—

(a) give each person who made oral representations a reasonable opportunity to comment on a draft of the report of those representations, and

(b) have regard to any comments duly made.

(9) The Board must, as soon as reasonably practicable after the end of the period within which representations under this paragraph may be made, publish any written representations duly made and the report (if any) prepared under sub-paragraph (7).

Publication of advice etc

26

(1) Nothing in paragraph 25 operates—

(a) to prevent a person who gives advice under paragraphs 20 to 23 from publishing that advice, or

(b) to prevent a person who makes representations under paragraph 18 or 25 from publishing those representations.

(2) A person (“the publisher”) publishing any such material (whether under paragraph 25 or otherwise) must, so far as practicable, exclude any matter which relates to the private affairs of a particular individual the publication of which, in the opinion of the publisher, would or might seriously and prejudicially affect the interests of that individual.

Decision by the Board

27

(1) After considering—

(a) any advice duly given under paragraphs 20 to 23,

(b) any representations duly made under paragraph 18 or 25, and

the Board must decide whether to make the proposed recommendation.

(2) The Board must give notice of its decision (“the decision notice”) to the licensing authority and to the Lord Chancellor.

(3) If the Board decides to make the proposed recommendation, the decision notice must—

(a) contain the recommendation, and

(b) state why the Board is satisfied of the matters mentioned in section 76(5)(a) and (b).

(4) The Board must publish the decision notice.

SCHEDULE 11

Part 1 — Licensing procedure

Applications for licences

1

(1) Licensing rules must make provision about the form and manner in which applications for licences are to be made, and the fee (if any) which is to accompany an application.

(2) They may make provision about—

(a) the information which applications must contain, and

(b) the documents which must accompany applications.

Determination of applications

2

(1) Licensing rules must make the following provision about the determination of applications for licences.

(2) Before the end of the decision period the licensing authority must—

(a) decide the application,

(b) notify the applicant of its decision, and

(3) The decision period is the period of 6 months beginning with the day on which the application is made to the licensing authority in accordance with its licensing rules.

(4) The licensing authority may, on one or more occasions, give the applicant a notice (an “extension notice”) extending the decision period by a period specified in the notice.

(5) But—

(a) an extension notice may only be given before the time when the decision period would end, but for the extension notice, and

(b) the total decision period must not exceed 9 months.

(6) An extension notice must set out the reasons for the extension.

Review of determination

3

Licensing rules must make provision for review by the licensing authority of—

(a) a decision to refuse an application for a licence;

(b) if a licence is granted, the terms of the licence.

Period of licence and renewal

4

(1) The licensing rules may make provision—

(a) limiting the period for which any licence is (subject to the provision of this Part of this Schedule and of the licensing rules) to remain in force;

(b) about the renewal of licences, including provision about the form and manner in which an application for the renewal is to be made, and the fee (if any) which is to accompany an application.

(2) The licensing rules may make provision about—

(a) the information which applications for renewal must contain, and

(b) the documents which must accompany applications.

(3) Licensing rules must provide that a licence issued to a licensed body by the licensing authority ceases to have effect if the licensed body is issued with a licence by another licensing authority.

Continuity of licences

5

(1) Licensing rules may make provision about the effect, on a licence issued to a partnership or other unincorporated body (“the existing body”), of any change in the membership of the existing body.

(2) The provision which may be made includes provision for the existing body's licence to be transferred where the existing body ceases to exist and another body succeeds to the whole or substantially the whole of its business.

Modification of licences

6

(1) Licensing rules must make provision about the form and manner in which applications are to be made for modification of the terms of a licence under section 86, and the fee (if any) which is to accompany the application.

(2) They may make provision as to the circumstances in which the licensing authority may modify the terms of a licence under section 86 without an application being made.

(3) They must make provision for review by the licensing authority of—

(a) a decision to refuse an application for modification of the terms of a licence;

(b) if the licensing authority makes licensing rules under sub-paragraph (2), a decision under those rules to modify the terms of a licence.

Modifications under section 106 or 107

7

(1) Licensing rules must make provision about the form and manner in which applications are to be made under section 106 or 107, and the fee (if any) which is to accompany the application.

(2) They may make provision as to the matters to which the licensing authority must have regard in determining whether to make an order under section 106, or to revoke or modify such an order.

(3) They must make provision for review by the licensing authority of—

(a) a decision to refuse an application under those sections;

(b) the terms of any order made under section 106 or any decision under section 107.

8

(1) Licensing rules must make the following provision in relation to licensed bodies to which section 106 applies (“special bodies”), and in relation to which an order under section 106 has been made.

(2) If a special body becomes a special body of a different kind, it must notify the licensing authority of that fact before the end of the relevant period.

(3) If a special body ceases to be a special body, it must notify the licensing authority of that fact before the end of the relevant period.

(4) The relevant period is the period of 30 days (or such longer period as may be specified in licensing rules) beginning with the day on which the body first became a special body of a different kind, or ceased to be a special body.

(5) Licensing rules may make provision requiring a special body to provide the licensing authority with such information relevant to the matters mentioned in section 106(5) as may be specified in the licensing rules.

Part 2 — Structural requirements

Management

9

(1) Licensing rules must require a licensed body to comply with the following requirement at all times.

(2) At least one of the licensed body's managers must be a person (other than a licensed body) who is an authorised person in relation to a licensed activity.

(3) No manager of the licensed body may be a person who under this Part of this Act is disqualified from acting as a manager of a licensed body.

10

(1) Licensing rules may make further provision as to—

(a) the managers of licensed bodies, and

(b) the arrangements for the management by them of the licensed body and its activities.

(2) They must not require all the managers of a licensed body to be authorised persons in relation to a reserved legal activity.

Head of Legal Practice

11

(1) Licensing rules must include the following requirements.

(2) A licensed body must at all times have an individual—

(a) who is designated as Head of Legal Practice, and

(b) whose designation is approved by the licensing authority.

(3) A designation of an individual as Head of Legal Practice has effect only while the individual—

(a) consents to the designation,

(b) is an authorised person in relation to one or more of the licensed activities, and

(4) The licensing authority may approve a person's designation only if it is satisfied that the person is a fit and proper person to carry out the duties imposed by section 91 in relation to that body.

(5) The licensing authority may approve a person's designation in the course of determining an application for a licence under section 84.

(6) If the licensing authority is satisfied that the person designated as a licensed body's Head of Legal Practice has breached a duty imposed by section 91, it may withdraw its approval of that person's designation.

12

(1) Licensing rules must make provision—

(a) about the procedures and criteria that will be applied by the licensing authority when determining under paragraph 11(4) whether an individual is a fit and proper person;

(b) for a review by the licensing authority of a determination under that paragraph that an individual is not a fit and proper person;

(c) about the procedures and criteria that will be applied by the licensing authority in determining under paragraph 11(6) whether to withdraw its approval;

(d) for a review by the licensing authority of a determination under that paragraph to withdraw its approval;

(e) about the procedure which is to apply where a licensed body ceases to comply with the requirement imposed by virtue of paragraph 11(2).

(2) Rules made in accordance with sub-paragraph (1)(e) may in particular provide that the requirement imposed by virtue of paragraph 11(2) is suspended until such time as may be specified by the licensing authority if the licensed body complies with such other requirements as may be specified in the rules.

Head of Finance and Administration

13

(1) Licensing rules must include the following requirements.

(2) A licensed body must at all times have an individual—

(a) who is designated as Head of Finance and Administration, and

(b) whose designation is approved by the licensing authority.

(3) A designation of an individual as Head of Finance and Administration has effect only while the individual—

(a) consents to the designation, and

(b) is not under this Part of this Act disqualified from acting as Head of Finance and Administration of a licensed body.

(4) The licensing authority may approve a person's designation only if it is satisfied that the person is a fit and proper person to carry out the duties imposed by section 92 in relation to that body.

(5) The licensing authority may approve a person's designation in the course of determining an application for a licence under section 84.

(6) If the licensing authority is satisfied that the person designated as a licensed body's Head of Finance and Administration has breached a duty imposed by section 92, it may withdraw its approval of that person's designation.

14

(1) Licensing rules must make provision—

(a) about the procedures and criteria that will be applied by the licensing authority when determining under paragraph 13(4) whether an individual is a fit and proper person;

(b) for a review by the licensing authority of a determination under that paragraph that an individual is not a fit and proper person;

(c) about the procedures and criteria that will be applied by the licensing authority in determining under paragraph 13(6) whether to withdraw its approval;

(d) for a review by the licensing authority of a determination under that paragraph to withdraw its approval;

(e) about the procedure which is to apply where a licensed body ceases to comply with the requirement imposed by virtue of paragraph 13(2).

(2) The rules made in accordance with sub-paragraph (1)(e) may in particular provide that the requirement imposed by virtue of sub-paragraph 13(2) is suspended until such time as may be specified by the licensing authority if the licensed body complies with such other requirements as may be specified in the rules.

Part 3 — Practice requirements

Practising address

15

(1) Licensing rules must require a licensed body, other than one to which sub-paragraph (3) applies, at all times to have a practising address in England and Wales.

(2) For this purpose “practising address”, in relation to a licensed body, means an address from which the body provides services which consist of or include the carrying on of reserved legal activities.

(3) This sub-paragraph applies to a licensed body—

(a) which is a company or limited liability partnership, and

(b) the registered office of which is situated in England and Wales (or in Wales).

Licensed activities

16

Licensing rules must provide that a licensed body may carry on a licensed activity only through a person who is entitled to carry on the activity.

Compliance with regulatory arrangements etc

17

(1) Licensing rules must include the following provision.

(2) A licensed body must at all times have suitable arrangements in place to ensure that—

(a) it, and its managers and employees, comply with the duties imposed by section 176, and

(b) it, and any person to whom sub-paragraph (3) applies, maintain the professional principles set out in section 1(3).

(3) This sub-paragraph applies to any manager or employee of the licensed body who is an authorised person in relation to an activity which is a reserved legal activity.

(4) A licensed body must at all times have suitable arrangements in place to ensure that non-authorised persons subject to the duty imposed by section 90 in relation to the licensed body comply with that duty.

(5) Licensing rules may make provision as to the arrangements which are suitable for the purposes of rules made under sub-paragraphs (2) and (4).

Disqualified employees

18

(1) Licensing rules must include the following requirement.

(2) A licensed body may not employ a person who under this Part of this Act is disqualified from being an employee of a licensed body.

Indemnification arrangements and compensation arrangements

19

(1) For the purpose of giving effect to indemnification arrangements and compensation arrangements, licensing rules may—

(a) authorise or require the licensing authority to establish and maintain a fund or funds;

(b) authorise or require the licensing authority to take out and maintain insurance with authorised insurers;

(c) require licensed bodies or licensed bodies of any specific description to take out and maintain insurance with authorised insurers.

(2) In this paragraph “authorised insurer” has the same meaning as in section 64.

Accounts

20

(1) The licensing rules must make provision as to the treatment of money within sub-paragraph (2), and the keeping of accounts in respect of such money.

(2) The money referred to in sub-paragraph (1) is money (including money held on trust) which is received, held or dealt with by the licensed body, its managers and employees for clients or other persons.

Part 4 — Regulation

Fees

21

(1) The licensing rules must require licensed bodies to pay periodical fees to the licensing authority.

(2) The rules may provide for the payment of different fees by different descriptions of licensed body.

Financial penalties

22

The licensing rules must make provision as to—

(a) the acts and omissions in respect of which the licensing authority may impose a penalty under section 95, and

(b) the criteria and procedure to be applied by the licensing authority in determining whether to impose a penalty under that section, and the amount of any penalty.

Disqualifications

23

(1) Licensing rules must make provision as to the criteria and procedure to be applied by the licensing authority in determining whether a person should be disqualified under section 99.

(2) Licensing rules must make provision—

(a) for a review by the licensing authority of a determination by the licensing authority that a person should be disqualified;

(b) as to the criteria and procedure to be applied by the licensing authority in determining whether a person's disqualification should cease to be in force;

(c) requiring the licensing authority to notify the Board of any determination by the licensing authority that a person should be disqualified, of the results of any review of that determination, and of any decision by the licensing authority that a person's disqualification should cease to be in force.

Suspension or revocation of licence under section 101

24

(1) Licensing rules must make the following provision.

(2) The licensing authority may suspend or revoke a licensed body's licence under section 101 in the following cases.

(3) The first case is that the licensed body becomes a body which is not a licensable body.

(4) The second case is that the licensed body fails to comply with licensing rules made under paragraph 16 (carrying on of licensed activities).

(5) The third case is that—

(a) a non-authorised person holds a restricted interest in the licensed body—

(i) as a result of the person taking a step in circumstances where that constitutes an offence under paragraph 24(1) of Schedule 13 (whether or not the person is charged with or convicted of an offence under that paragraph),

(ii) in breach of conditions imposed under paragraph 17, 28, or 33 of that Schedule, or

(iii) the person's holding of which is subject to an objection by the licensing authority under paragraph 31 or 36 of that Schedule,

(b) if the relevant licensing rules make the provision mentioned in paragraph 38(1)(a) of that Schedule, a non-authorised person has under those rules a shareholding in the licensed body, or a parent undertaking of the licensed body, which exceeds the share limit,

(c) if the relevant licensing rules make the provision mentioned in paragraph 38(1)(b) of that Schedule, a non-authorised person has 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,

(d) if the relevant licensing rules make the provision mentioned in paragraph 38(1)(c) of that Schedule, the total proportion of shares in the licensed body or a parent undertaking of the licensed body held by non-authorised persons exceeds the limit specified in the rules, or

(e) if the relevant licensing rules make the provision mentioned in paragraph 38(1)(d) 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.

(6) The fourth case is that a non-authorised person subject to the duty in section 90 in relation to the licensed body fails to comply with that duty.

(7) The fifth case is that the licensed body, or a manager or employee of the licensed body, fails to comply with the duties imposed by section 176.

(8) The sixth case is that—

(a) the licensed body fails to comply with licensing rules made under paragraph 9(3) or 18 (prohibition on disqualified managers and employees), and

(b) the manager or employee concerned was disqualified as a result of breach of a duty within section 99(4)(c) or (d).

(9) The seventh case is that the licensed body is unable to comply with licensing rules made under—

(a) paragraph 11 (requirement for Head of Legal Practice), or

(b) paragraph 13 (requirement for Head of Finance and Administration).

(10) Before suspending or revoking a licence in accordance with sub-paragraph (2), the licensing authority must give the licensed body notice of its intention.

(11) The licensing authority may not suspend or revoke the licence before the end of the period of 28 days beginning with the day on which the notice is given to the licensed body (or any longer period specified in the notice).

25

Licensing rules may make provision about other circumstances in which the licensing authority may exercise its power under section 101 to suspend or revoke a licence.

26

(1) Licensing rules must make provision about the criteria and procedure the licensing authority will apply in deciding whether to suspend or revoke a licence, or to end the suspension of a licence, under section 101.

(2) They must make provision for a review by the licensing authority of a decision by the licensing authority to suspend or revoke a licence.

SCHEDULE 12

Application to Board

1

(1) A licensable body may apply to the Board for a decision that the body is entitled to make an application for a licence to the Board acting in its capacity as a licensing authority.

(2) An application under sub-paragraph (1) may be made only on one of the grounds specified in this paragraph.

(3) The first ground is that—

(a) there is no competent licensing authority, and

(b) there is no potentially competent licensing authority.

(4) The second ground is that—

(a) each competent licensing authority has determined that it does not have suitable regulatory arrangements,

(b) if one or more competent licensing authorities have made an application to the Board under Part 3 of Schedule 4 for the approval of alterations of their regulatory arrangements, each of those authorities has determined that it will not have suitable regulatory arrangements if the application is granted, and

(c) each potentially competent licensing authority has determined that it will not have suitable regulatory arrangements if it becomes a competent licensing authority.

(5) The third ground applies only in relation to a licensable body within sub-paragraph (6), and is that—

(a) the body has made an application for a licence to each competent licensing authority which has suitable regulatory arrangements, and

(b) no such licensing authority is prepared to grant the body a licence on terms which are appropriate to that body, having regard to the matters in section 106(5)(a) to (c) and any other matter specified in rules made by the Board for the purposes of this sub-paragraph.

(6) The licensable bodies within this sub-paragraph are—

(a) a not for profit body;

(b) a community interest company;

(d) if an order under section 106(1)(e) so provides in relation to a description of body prescribed under that section, a body of that description.

Board’s decision on an application under paragraph 1

2

(1) On an application under paragraph 1 the Board must, before the end of the decision period, decide whether the licensable body is entitled to make an application for a licence to the Board acting in its capacity as a licensing authority.

(2) The decision period is—

(a) in relation to an application on the first ground, the period of 14 days beginning with the day on which the application is made,

(b) in relation to an application on the second ground, the period of 28 days beginning with the day on which the application is made, and

(c) in relation to an application on the third ground, the period of 60 days beginning with the day on which the application is made.

(3) The Board must give a notice to the licensable body—

(a) stating its decision, and

(b) giving reasons for its decision.

(4) The Board must make rules providing for a review of any decision made by it under this paragraph.

(5) The rules may in particular provide that if the Board decides to grant the application, the Board may review that decision if the ground on which the application was granted ceases to be made out before the Board (in its capacity as a licensing authority) determines any application for a licence made by the licensable body.

Licensing authority’s duty to make relevant determinations

3

(1) A licensable body may apply to each competent licensing authority for—

(a) a determination as to whether the authority has suitable regulatory arrangements;

(b) a statement as to whether the authority has made an application as mentioned in paragraph 1(4)(b) and if it has, a determination as to whether, if the application is granted, the authority will have suitable regulatory arrangements.

(2) A licensable body may apply to each potentially competent licensing authority for a determination as to whether it will have suitable regulatory arrangements in place if it becomes a competent licensing authority.

(3) A competent (or potentially competent) licensing authority to which a licensable body makes an application under sub-paragraph (1) or (2) may require the licensable body to provide it with such information in relation to the licensable body as it may specify.

(4) The authority may specify only information which it reasonably requires for the purpose of making the determination applied for.

(5) A competent (or potentially competent) licensing authority to which an application is made under sub-paragraph (1) or (2) must make the determination before the end of—

(a) the decision period, or

(b) if it requires the licensable body to provide it with information under sub-paragraph (3), the period of 28 days beginning with the day on which the information is provided.

(6) The decision period, in relation to an application under sub-paragraph (1) or (2), is the period of 28 days beginning with the day on which the application is made.

“The Board”

4

In this Schedule references to the Board, unless otherwise stated, are to the Board acting otherwise than in its capacity as a licensing authority or an approved regulator.

“Competent licensing authority”

5

“Competent licensing authority”, in relation to a licensable body, means an approved regulator designated as a licensing authority in relation to each reserved legal activity which the licensable body proposes to carry on.

“Potentially competent licensing authority”

6

(1) “Potentially competent licensing authority”, in relation to a licensable body, means an approved regulator—

(a) which has made an application to the Board under Part 1 of Schedule 10 for a recommendation that the Lord Chancellor make a relevant designation order, and whose application has not been determined, or

(b) in respect of which the Board has made such a recommendation, but in respect of which no relevant designation order (or decision not to make such an order) has been made by the Lord Chancellor.

(2) A relevant designation order is an order—

(a) designating the approved regulator as a licensing authority in respect of one or more reserved legal activities, and

(b) the effect of which will be that the approved regulator becomes a competent licensing authority in relation to the licensable body.

“Suitable regulatory arrangements”

7

(1) “Suitable regulatory arrangements”, in relation to a licensable body and a competent licensing authority, means regulatory arrangements which are suitable in relation to the licensable body, having regard to—

(a) the composition of the licensable body, including in particular the matters in sub-paragraph (2);

(b) the services the licensable body proposes to provide;

(c) if the licensable body proposes to carry on non-reserved activities, any regulation to which the carrying on of such activities is subject;

(d) the persons to whom the licensable body proposes to provide services.

(2) The matters are—

(a) the kinds of authorised persons who are managers of, or have an interest in, the licensable body,

(b) the proportion of persons who are managers of, or have an interest in, the licensable body who are authorised persons or authorised persons of a particular kind,

(d) the proportion of persons who are managers of, or have an interest in, the licensable body who are non-authorised persons or non-authorised persons of a particular kind, and

(e) the kinds of non-authorised persons who have an indirect interest in the licensable body.

(3) In sub-paragraph (2)—

(a) “authorised person” means a person who is an authorised person in relation to any activity which is a reserved legal activity, and

(b) authorised persons are of different kinds if they are authorised to carry on such activities by different approved regulators.

SCHEDULE 13

Part 1 — Introductory

Restricted interests subject to approval

1

(1) The holding by a non-authorised person of a restricted interest in a licensed body is subject to the approval of the relevant licensing authority in accordance with the provisions of this Schedule.

(2) In relation to a licensed body which is a partnership, for the purposes of section 34 of the Partnership Act 1890 (c. 39) (dissolution by illegality) the holding by a non-authorised person of a restricted interest in the body without the approval of the relevant licensing authority does not make it unlawful for the business of the partnership to be carried on, or for the partners to carry it on in partnership.

Restricted interest

2

(1) “Restricted interest” means each of the following—

(a) a material interest;

(b) if licensing rules are made by the relevant licensing authority under sub-paragraph (2), a controlled interest.

(2) Licensing rules may specify that a controlled interest is a restricted interest for the purposes of this Schedule.

Material interest

3

(1) For the purposes of this Part of this Act, a person holds a material interest in a body (“B”) if the person—

(a) holds at least 10% of the shares in B,

(b) is able to exercise significant influence over the management of B by virtue of the person's shareholding in B,

(d) is able to exercise significant influence over the management of P by virtue of the person's shareholding in P,

(e) 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,

(f) is able to exercise significant influence over the management of B by virtue of the person's entitlement to exercise, or control the exercise of, voting rights in B,

(g) 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,

(h) is able to exercise significant influence over the management of P by virtue of the person's entitlement to exercise, or control the exercise of, voting rights in P.

(2) Licensing rules made by the relevant licensing authority may provide—

(a) that the references in sub-paragraph (1) to 10% are to have effect as references to such lesser percentage as may be specified in the rules;

(b) that in relation to a partnership, for the purposes of this Part a person has a material interest in the partnership if he is a partner (whether or not the person has a material interest by virtue of sub-paragraph (1)).

(3) For the purposes of sub-paragraph (1) “the person” means—

(a) the person,

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

(4) For the purposes of this Schedule, material interests held by virtue of different paragraphs of sub-paragraph (1) are restricted interests of different kinds.

Controlled interest

4

(1) For the purposes of this Schedule, a person holds a controlled interest in a body (“B”) if the person—

(a) holds at least x% of the shares in B,

(b) holds at least x% of the shares in a parent undertaking (“P”) of B,

(d) is entitled to exercise, or control the exercise of, at least x% of the voting rights in P.

(2) For the purposes of sub-paragraph (1) “the person” means—

(a) the person,

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

(3) In sub-paragraph (1), “x” means such percentage as may be specified in licensing rules made by the relevant licensing authority under paragraph 2(2).

(4) Licensing rules made under paragraph 2(2) may specify more than one percentage.

(5) Any percentage specified by licensing rules made under paragraph 2(2) must be greater than—

(a) 10%, or

(b) if the relevant licensing authority makes licensing rules under paragraph 3(2)(a), the percentage specified in those rules.

(6) For the purposes of this Schedule—

(a) controlled interests held by virtue of different paragraphs of sub-paragraph (1) are restricted interests of different kinds;

(b) if licensing rules made under paragraph 2(2) specify more than one percentage, controlled interests held by virtue of each of those percentages are restricted interests of different kinds.

Associates, parent undertakings and voting power

5

(1) For the purposes of this Schedule “associate”, in relation to a person (“A”) and—

(a) a shareholding in a body (“S”), or

(b) an entitlement to exercise or control the exercise of voting power in a body (“V”),

means a person listed in sub-paragraph (2).

(2) The persons are—

(a) the spouse or civil partner of A,

(b) a child or stepchild of A (if under 18),

(d) an undertaking of which A is a director,

(e) an employee of A,

(f) a partner of A (except, where S or V is a partnership in which A is a partner, another partner in S or V),

(g) if A is an undertaking—

(i) a director of A,

(ii) a subsidiary undertaking of A, or

(iii) a director or employee of such a subsidiary undertaking,

(h) if A has with any other person an agreement or arrangement with respect to the acquisition, holding or disposal of shares or other interests in S or V (whether or not they are interests within the meaning of section 72(3)), that other person, or

(i) if A has with any other person an agreement or arrangement under which they undertake to act together in exercising their voting power in relation to S or V, that person.

(3) In sub-paragraph (2)(c), “settlement” means any disposition or arrangement under which property is held on trust (or subject to a comparable obligation).

(4) For the purposes of this Schedule—

“parent undertaking” and “subsidiary undertaking” have the same meaning as in the Financial Services and Markets Act 2000 (c. 8) (see section 420 of that Act);

“voting power”, in relation to a body which does not have general meetings at which matters are decided by the exercise of voting rights, means the right under the constitution of the body to direct the overall policy of the body or alter the terms of its constitution.

The approval requirements

6

(1) For the purposes of this Schedule, the approval requirements are met in relation to a person's holding of a restricted interest if—

(a) the person's holding of that interest does not compromise the regulatory objectives,

(b) the person's holding of that interest does not compromise compliance with the duties imposed by section 176 by the licensed body or persons to whom sub-paragraph (2) applies, and

(2) This sub-paragraph applies to any employee or manager of the licensed body who is an authorised person in relation to an activity which is a reserved legal activity.

(3) In determining whether it is satisfied of the matters mentioned in sub-paragraph (1)(a) to (c), the licensing authority must in particular have regard to—

(a) the person's probity and financial position,

(b) whether the person is disqualified as mentioned in section 100(1), or included in the list kept by the Board under paragraph 51,

(d) any other matter which may be specified in licensing rules.

(4) Licensing rules must make provision about the procedures that will be applied by the licensing authority when determining whether it is satisfied of the matters mentioned in sub-paragraph (1)(a) to (c).

Approval of multiple restricted interests

7

(1) This paragraph applies if a person (“P”) holds a kind of restricted interest in a body (“B”) by virtue of—

(a) holding a particular percentage of the shares in B or a parent undertaking of B, or

(b) an entitlement to exercise, or control the exercise of, a particular percentage of the voting rights in B or a parent undertaking of B.

(2) If the relevant licensing authority approves P's holding of that interest, it is to be treated as also approving P's holding of any lesser restricted interest in B held by P.

(3) A lesser restricted interest is a kind of restricted interest held by P by virtue of—

(a) holding a smaller percentage of the shares mentioned in sub-paragraph (1)(a), or

(b) an entitlement to exercise, or control the exercise of, a smaller percentage of the voting rights mentioned in sub-paragraph (1)(b).

Board’s power to prescribe rules

8

In this Schedule “prescribed” means prescribed by rules made by the Board for the purposes of this Schedule.

Lord Chancellor’s power to modify

9

The Lord Chancellor may, on the recommendation of the Board, by order modify—

(a) paragraph 3 (material interest);

(b) paragraphs 4(2), 5, 6(3)(c), 38(3), 41(3) and 42(3) (associates).

Part 2 — Approval of restricted interests on application for licence

Requirement to identify non-authorised persons

10

(1) Where a body applies to a licensing authority for a licence, it must identify in its application—

(a) any non-authorised person who holds a restricted interest in the body, or whom the body expects to hold such an interest when the licence is issued, and

(b) the kind of restricted interest held, or expected to be held, by that person.

(2) If, before the licence is issued, there is any change in—

(a) the identity of the non-authorised persons within sub-paragraph (1)(a), or

(b) the kind of restricted interest held, or expected to be held, by a person identified to the licensing authority under that sub-paragraph,

the applicant must inform the relevant licensing authority within such period as may be specified by order made by the Lord Chancellor on the recommendation of the Board.

11

(1) It is an offence for a person to fail to comply with a requirement imposed on the person by paragraph 10.

(2) A person who is guilty of an offence under sub-paragraph (1) is liable on summary conviction to a fine not exceeding level 5 on the standard scale.

(3) It is a defence for a person charged with an offence under sub-paragraph (1) to show that at the time of the alleged offence the person had no knowledge of the facts by virtue of which the duty to notify arose.

12

(1) This paragraph applies if a person under a duty to notify imposed by paragraph 10—

(a) had no knowledge of the facts by virtue of which that duty arose, but

(b) subsequently becomes aware of those facts.

(2) The person must give the licensing authority the required notification within such period, after the person becomes so aware, as may be specified by order made by the Lord Chancellor on the recommendation of the Board.

(3) A person who fails to comply with the duty to notify imposed by sub-paragraph (2) is guilty of an offence.

(4) A person who is guilty of an offence under sub-paragraph (3) is liable on summary conviction to a fine not exceeding level 5 on the standard scale.

Requirement to notify non-authorised persons

13

(1) Where an applicant for a licence identifies a non-authorised person to a licensing authority in accordance with paragraph 10 or 12, it must give that person a notice—

(a) stating that it has applied for a licence and identified the person to the licensing authority in accordance with paragraph 10 or 12, and

(b) explaining the effect of paragraph 14.

(2) It is an offence for a person to fail to comply with a requirement imposed on it by sub-paragraph (1).

(3) A person who is guilty of an offence under sub-paragraph (2) is liable on summary conviction to a fine not exceeding level 5 on the standard scale.

Licensing authority’s power to require information

14

(1) A licensing authority may require a non-authorised person identified to it in accordance with paragraph 10 or 12 to provide it with such documents and information as it may require.

(2) It is an offence for a person who is required to provide information or documents under sub-paragraph (1) knowingly to provide false or misleading information or documents.

(3) A person who is guilty of an offence under sub-paragraph (2) is liable—

(a) on summary conviction, to a fine not exceeding the statutory maximum, and

(b) on conviction on indictment, to a term of imprisonment not exceeding 2 years or a fine (or both).

Licence may not be granted unless non-authorised persons approved

15

(1) This paragraph applies where an applicant for a licence (“the applicant”) gives the licensing authority notification under paragraph 10 or 12 in relation to one or more non-authorised persons.

(2) The licensing authority may not grant the application for a licence unless, in relation to each non-authorised person in respect of which notification is given (“the investor”), it approves the investor's holding of the restricted interest to which the notification relates (“the notified interest”).

(3) Sub-paragraph (2) does not apply in relation to a non-authorised person who does not hold the notified interest when the licence is issued.

(4) In this Part of this Schedule, “the applicant”, “the investor” and “the notified interest” are to be construed in accordance with this paragraph.

Unconditional approval of notified interest

16

(1) If the licensing authority is satisfied that the approval requirements are met in relation to the investor's holding of the notified interest, it must approve the investor's holding of that interest without conditions.

(2) If the licensing authority approves the investor's holding of the notified interest without conditions, it must notify the investor and the applicant of its approval as soon as reasonably practicable.

Conditional approval of notified interest

17

(1) If the licensing authority is not satisfied that the approval requirements are met in relation to the investor's holding of the notified interest, it may approve the investor's holding of the notified interest subject to conditions.

(2) It may do so only if it considers that, if the conditions are complied with, it will be appropriate for the investor to hold the notified interest without the approval requirements being met.

(3) If the licensing authority proposes to approve the investor's holding of the notified interest subject to conditions it must give the investor and the applicant a warning notice.

(4) The warning notice must—

(a) specify the nature of the conditions proposed and the reasons for their imposition, and

(b) state that representations may be made to the licensing authority within the prescribed period.

(5) The licensing authority must consider any representations made within the prescribed period.

(6) If the licensing authority approves the investor's holding of the notified interest subject to conditions, it must notify the investor and the applicant of its approval as soon as reasonably practicable.

(7) The notice must—

(a) specify the reasons for the imposition of the conditions, and

(b) explain the effect of Part 5 of this Schedule.

18

(1) The investor and the applicant may before the end of the prescribed period appeal to the relevant appellate body against the imposition of any or all of the conditions.

(2) The relevant appellate body may dismiss the appeal, or allow the appeal and—

(a) order the licensing authority to approve the investor's holding of the notified interest without conditions, or subject to such conditions as may be specified in the order, or

(b) remit the matter to the licensing authority.

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

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

(5) If the investor's holding of the notified interest is subject to conditions as a result of an order made on an appeal under this paragraph, for the purposes of this Schedule the conditions are to be treated as having been imposed under paragraph 17.

Objection to notified interest

19

(1) If the licensing authority is not satisfied that the approval requirements are met in relation to the investor's holding of the notified interest, it may object to the investor's holding of that interest.

(2) If the licensing authority proposes to object to the investor's holding of the notified interest, it must give the investor and the applicant a warning notice.

(3) The warning notice must—

(a) specify the reasons for the proposed objection, and

(b) state that representations may be made to the licensing authority within the prescribed period.

(4) The licensing authority must consider any representations made within the prescribed period.

(5) If the licensing authority objects to the investor's holding of the notified interest, it must notify the investor and the applicant of its objection as soon as reasonably practicable.

(6) The notice must—

(a) specify the reasons for the objection, and

(b) explain the effect of Part 5 of this Schedule.

20

(1) The investor and the applicant may before the end of the prescribed period appeal to the relevant appellate body against the objection.

(2) The relevant appellate body may dismiss the appeal, or allow the appeal and—

(a) order the licensing authority to approve the investor's holding of the notified interest without conditions, or subject to such conditions as may be specified in the order, or

(b) remit the matter to the licensing authority.

(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 appellate body, but only with the permission of the High Court.

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

(5) If the investor's holding of the notified interest is subject to conditions as a result of an order made on an appeal under this paragraph, for the purposes of this Schedule the conditions are to be treated as having been imposed under paragraph 17.

Part 3 — Approval of restricted interests after licence is issued

Powers of licensing authority in relation to change of interests

Continuing notification requirements

21

(1) This paragraph applies where a non-authorised person (“the investor”)—

(a) proposes to take a step which would result in the investor acquiring a restricted interest in a licensed body (or, if the investor already has one or more kinds of restricted interest, acquiring an additional kind of restricted interest), or

(b) acquires such an interest in a licensed body without taking such a step.

(2) In a case within sub-paragraph (1)(a) the investor must notify the licensed body and the relevant licensing authority of the proposal.

(3) In a case within sub-paragraph (1)(b) the investor must notify the licensed body and the relevant licensing authority of the acquisition within such period, after the investor becomes aware of it, as may be specified by order made by the Lord Chancellor on the recommendation of the Board.

(4) In this Part of this Schedule—

(a) references to “the investor” are to be construed in accordance with this paragraph, and

(b) references to a notifiable interest are to the restricted interest which the investor will have as a result of the step the investor proposes to take (or has as a result of the acquisition which has taken place).

Offences in connection with paragraph 21

22

(1) It is an offence for a person to fail to comply with a requirement imposed by—

(a) paragraph 21(2), or

(b) paragraph 21(3).

(2) A person who is guilty of an offence under sub-paragraph (1) is liable on summary conviction to a fine not exceeding level 5 on the standard scale.

(3) It is a defence for a person charged with an offence under sub-paragraph (1)(a) to show that at the time of the alleged offence the person had no knowledge of the facts by virtue of which the duty to notify arose.

23

(1) This paragraph applies if a person under the duty to notify imposed by paragraph 21(2)—

(a) had no knowledge of the facts by virtue of which that duty arose, but

(b) subsequently becomes aware of those facts.

(2) The person must give the licensed body and the licensing authority the required notification within such period, after the person becomes so aware, as may be specified by order made by the Lord Chancellor on the recommendation of the Board.

(3) A person who fails to comply with the duty to notify imposed by sub-paragraph (2) is guilty of an offence.

(4) A person who is guilty of an offence under sub-paragraph (3) is liable on summary conviction to a fine not exceeding level 5 on the standard scale.

24

(1) It is an offence for a non-authorised person, who under paragraph 21(2) is required to notify the licensed body and the relevant licensing authority of a proposal to take a step, to take the step, unless the relevant licensing authority has approved the investor's holding of the notifiable interest under paragraph 27 or 28.

(2) If paragraph 22(3) applies, the reference in sub-paragraph (1) to paragraph 21(2) is to be read as a reference to paragraph 23(2).

(3) A person who is guilty of an offence under sub-paragraph (1) is liable—

(a) on summary conviction, to a fine not exceeding the statutory maximum, and

(b) on conviction on indictment, to a term of imprisonment not exceeding 2 years or a fine (or both).

Duty of licensing authority following notification etc.

25

(1) The relevant licensing authority must—

(a) following receipt of a notification under paragraph 21(2) or (3) or 23(2), or

(b) if the licensing authority becomes aware that an investor has failed to comply with a notification requirement imposed by paragraph 21(2) or (3) or 23(2),

determine which of the steps in sub-paragraph (3) to take.

(2) The licensing authority must make the determination within such period as may be prescribed.

(3) The steps are—

(a) to approve the investor's holding of the notifiable interest unconditionally under paragraph 27,

(b) to warn the investor under paragraph 28(3) that it proposes to approve the investor's holding of the notifiable interest subject to conditions,

(d) to warn the investor under paragraph 31(2) that it proposes to object to the investor's holding of the notifiable interest, or

(e) to object under paragraph 31(3) to the investor's holding of the notifiable interest.

Licensing authority’s power to require information

26

(1) A licensing authority may require the investor to provide it with such documents and information as it may require.

(2) It is an offence for a person who is required to provide information or documents under sub-paragraph (1) knowingly to provide false or misleading information or documents.

(3) A person who is guilty of an offence under sub-paragraph (2) is liable—

(a) on summary conviction, to a fine not exceeding the statutory maximum, and

(b) on conviction on indictment, to a term of imprisonment not exceeding 2 years or a fine (or both).

Unconditional approval of notifiable interest

27

(1) If the licensing authority is satisfied that the approval requirements are met in relation to the investor's holding of the notifiable interest, it must approve the investor's holding of that interest without conditions.

(2) If the licensing authority approves the investor's holding of the notifiable interest without conditions, it must notify the investor and the licensed body of its approval as soon as reasonably practicable.

Conditional approval of notifiable interest

28

(1) If the licensing authority is not satisfied that the approval requirements are met in relation to the investor's holding of the notifiable interest, it may approve the investor's holding of that interest subject to conditions.

(2) It may do so only if it considers that, if the conditions are complied with, it will be appropriate for the investor to hold the notifiable interest without the approval requirements being met.

(3) If the licensing authority proposes to approve the investor's holding of the notifiable interest subject to conditions it must give the investor and the licensed body a warning notice.

(4) But the licensing authority may approve the investor's holding of the notifiable interest subject to conditions without giving a warning notice if it considers it necessary or desirable to do so for the purpose of protecting any of the regulatory objectives.

(5) The warning notice must—

(a) specify the nature of the conditions proposed and the reasons for their imposition, and

(b) state that representations may be made to the licensing authority within the prescribed period.

(6) The licensing authority must consider any representations made within the prescribed period.

(7) If the licensing authority approves the investor's holding of the notifiable interest subject to conditions, it must notify the investor and the licensed body of its approval as soon as reasonably practicable.

(8) The notice must—

(a) specify the reasons for the imposition of the conditions and (if the investor already holds the notifiable interest) the time from which they have effect, and

(b) explain the effect of Part 5 of this Schedule.

29

(1) The investor and the licensed body may before the end of the prescribed period appeal to the relevant appellate body against the imposition of any or all the conditions.

(2) The relevant appellate body may dismiss the appeal, or allow the appeal and—

(a) order the licensing authority to approve the investor's holding of the notifiable interest without conditions, or subject to such conditions as may be specified in the order, or

(b) remit the matter to the licensing authority.

(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 appellate body, but only with the permission of the High Court.

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

(5) If the investor's holding of the notifiable interest is subject to conditions as a result of an order made on an appeal under this paragraph, for the purposes of this Schedule the conditions are to be treated as having been imposed under paragraph 28.

Duration of unconditional or conditional approval

30

In a case within paragraph 21(1)(a), the licensing authority's approval under paragraph 27 or 28 remains effective only if the investor acquires the notifiable interest—

(a) before the end of such period as may be specified in the notice under paragraph 27(2) or 28(7), or

(b) if no such period is specified, before the end of the period of one year beginning with the date of that notice.

Objection to acquisition of notifiable interest

31

(1) If the licensing authority is not satisfied that the approval requirements are met in relation to the investor's holding of the notifiable interest, it may object to the investor's holding of that interest.

(2) If the licensing authority proposes to object to the investor's holding of the notifiable interest, it must give the investor and the licensed body a warning notice.

(3) But the licensing authority may object to the investor's holding of the notifiable interest without giving a warning notice if it considers it necessary or desirable to do so for the purpose of protecting any of the regulatory objectives.

(4) The warning notice must—

(a) specify the reasons for the proposed objection, and

(b) state that representations may be made to the licensing authority within the prescribed period.

(5) The licensing authority must consider any representations made within the prescribed period.

(6) If the licensing authority objects to the investor's holding of the notifiable interest, it must notify the investor and the licensed body of its objection as soon as reasonably practicable.

(7) The notice must—

(a) specify the reasons for the objection, and

(b) explain the effect of Part 5 of this Schedule.

32

(1) The investor and the licensed body may before the end of the prescribed period appeal to the relevant appellate body against the objection.

(2) The relevant appellate body may dismiss the appeal, or allow the appeal and—

(a) order the licensing authority to approve the investor's holding of the notifiable interest without conditions, or subject to such conditions as may be specified in the order, or

(b) remit the matter to the licensing authority.

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

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

(5) If the investor's holding of the notifiable interest is subject to conditions as a result of an order made on an appeal under this paragraph, for the purposes of this Schedule the conditions are to be treated as having been imposed under paragraph 28.

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