SRA Handbook

Interpretation and applications

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Version 1 of the Handbook was published on 16/09/2011. For more information, please click 'History' Above

Part 1: Interpretation and applications

Rule 1: Interpretation

1.1

All italicised terms in these rules are to be interpreted in accordance with Chapter 14 (Interpretation) of the SRA Code of Conduct, unless they are defined in Rule 1.2.

1.2

In these rules:

appellate body

means the body with the power, by virtue of an order under section 80(1) of the LSA, to hear and determine appeals against decisions made by the SRA acting as a licensing authority.

applicant body

means a licensable body or a legal services body which makes an application to the SRA for authorisation in accordance with these rules.

associate

has the meaning given in paragraph 5 to Schedule 13 of the LSA, namely:

(i)

"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 (ii).

(ii)

The persons are-

(A)

the spouse or civil partner of A,

(B)

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

(C)

the trustee of any settlement under which A has a life interest in possession (in Scotland a life interest),

(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) of the LSA), 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.

authorisation

granted to a body under Rule 6 means:

(i)

recognition under section 9 of the AJA, if it is granted to a legal services body; and

(ii)

a licence under Part 5 of the LSA, if it is granted to a licensable body;

and the term "certificate of authorisation" shall be construed accordingly.

authorised activities

means:

(i)

any reserved legal activity in respect of which the body is authorised;

(ii)

any other legal activity;

(iii)

any other activity in respect of which a licensed body is regulated pursuant to Part 5 of the LSA; and

(iv)

any other activity a recognised body carries out in connection with its practice.

authorised person(s)

means a person who is authorised by the SRA or another approved regulator to carry on a legal activity and for the purpose of these rules includes a solicitor, a sole practitioner, an REL, an EEL, an RFL, an authorised body, an authorised non-SRA firm, and a European corporate practice and the terms "authorised individual" and "non-authorised person" shall be construed accordingly.

body

where the context permits includes a sole practitioner and a special body within the meaning of section 106 of the LSA.

BSB

means the Bar Standards Board.

candidate

means a person who is assessed by the SRA for approval as an owner, manager or compliance officer under Part 4.

compliance officer

is a reference to a body's COLP or its COFA.

Court of Protection deputy

includes a deputy who was appointed by the Court of Protection as a receiver under the Mental Health Act 1983 before the commencement date of the Mental Capacity Act 2005, and also includes equivalents in other Establishment Directive states.

date of notification

the date of any notification or notice given under these rules is deemed to be:

(i)

the date on which the communication is delivered to or left at the recipient's address or is sent electronically to the recipient's e-mail or fax address;

(ii)

if the recipient is practising, seven days after the communication has been sent by post or document exchange to the recipient's last notified practising address; or

(iii)

if the recipient is not practising, seven days after the communication has been sent by post or document exchange to the recipient's last notified contact address.

decision period

is the period specified in Rule 5.

disqualified

refers to a person who has been disqualified under section 99 of the LSA by the SRA or by any other approved regulator.

EEL

means exempt European lawyer, namely a member of an Establishment Directive profession:

(i)

registered with the BSB; or

(ii)

based entirely at an office or offices outside England and Wales,

who is not a lawyer of England and Wales (whether entitled to practise as such or not).

European corporate practice

means a lawyers' practice which is a body incorporated in an Establishment Directive state, or a partnership with separate legal identity formed under the law of an Establishment Directive state:

(i)

which has an office in an Establishment Directive state but does not have an office in England and Wales;

(ii)

whose ultimate beneficial owners include at least one individual who is not a lawyer of England and Wales but is, and is entitled to practise as, a lawyer of an Establishment Directive profession; and

(iii)

whose managers include at least one such individual, or at least one body corporate whose managers include at least one such individual.

HOFA

means a Head of Finance and Administration within the meaning of paragraph 13(2) of Schedule 11 to the LSA.

HOLP

means a Head of Legal Practice within the meaning of paragraph 11(2) of Schedule 11 to the LSA.

interest holder

means a person who has an interest or an indirect interest, or holds a material interest, in a body (and "indirect interest" and "interest" have the same meaning as in the LSA), and references to "holds an interest" shall be construed accordingly;

legally qualified

means any of the following:

(i)

a lawyer;

(ii)

a recognised body;

(iii)

an authorised non-SRA firm of which all the managers and interest holders are lawyers save that where another body ("A") is a manager of or has an interest in the firm, non-authorised persons are entitled to exercise, or control the exercise of, less than 10% of the voting rights in A;

(iv)

a European corporate practice of which all the managers and interest holders are lawyers.

and references to a "legally qualified body" shall be construed accordingly.

legal services body

means a body which meets the criteria in Rule 13 (Eligibility criteria and fundamental requirements for recognised bodies) of the SRA Practice Framework Rules.

licensing authority

means an approved regulator which is designated as a licensing authority under Part 1 of Schedule 10 to the LSA, and whose licensing rules have been approved for the purposes of the LSA.

material interest

has the meaning given to it in Schedule 13 to the LSA; and a person holds a "material interest" in a body ("B"), if the person:

(i)

holds at least 10% of the shares in B;

(ii)

is able to exercise significant influence over the management of B by virtue of the person's shareholding in B;

(iii)

holds at least 10% of the shares in a parent undertaking ("P") of B;

(iv)

is able to exercise significant influence over the management of P by virtue of the person's shareholding in P;

(v)

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;

(vi)

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;

(vii)

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; or

(viii)

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;

and for the purpose of this definition, "person" means (a) the person, (b) any of the person's associates, or (c) the person and any of the person's associates taken together, and "parent undertaking" and "voting power" are to be construed in accordance with paragraphs 3 and 5 of Schedule 13 to the LSA.

owner

means any person who holds a material interest in an authorised body, and in the case of a partnership, any partner regardless of whether they hold a material interest in the partnership.

person who lacks capacity under Part 1 of the Mental Capacity Act 2005

references to a person who lacks capacity under Part 1 of the Mental Capacity Act 2005 include a "patient" as defined by section 94 of the Mental Health Act 1983 and a person made the subject of emergency powers under that Act, and equivalents in other Establishment Directive states.

practising address

in relation to an authorised body means an address from which the body provides services consisting of or including the carrying on of activities which it is authorised to carry on.

prescribed

means prescribed by the SRA from time to time.

principal

means a sole practitioner or a partner in a partnership.

professional principles

the professional principles are as set out in section 1(3) of the LSA:

(i)

that authorised persons should act with independence and integrity,

(ii)

that authorised persons should maintain proper standards of work,

(iii)

that authorised persons should act in the best interests of their clients,

(iv)

that persons who exercise before any court a right of audience, or conduct litigation in relation to proceedings in any court, by virtue of being authorised persons should comply with their duty to the court to act with independence in the interests of justice, and

(v)

that the affairs of clients should be kept confidential

and in this definition "authorised persons" has the meaning set out in section 18 of the LSA.

regulatory arrangements

has the meaning given to it by section 21 of the LSA, and includes all rules and regulations of the SRA in relation to the authorisation, practice, conduct, discipline and qualification of persons carrying on legal activities and the accounts rules and indemnification and compensation arrangements in relation to their practice.

regulatory objectives

has the meaning given to it by section 1 of the LSA and includes the objectives of protecting and promoting the public interest, supporting the constitutional principle of the rule of law, improving access to justice, protecting and promoting the interests of consumers, promoting competition in the provision of legal activities by authorised persons, encouraging an independent, strong, diverse and effective legal profession, increasing public understanding of the citizen's legal rights and duties, and promoting and maintaining adherence to the professional principles.

relevant insolvency event

a relevant insolvency event occurs in relation to a body if:

(i)

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;

(ii)

the body enters administration within the meaning of paragraph 1(2)(b) of Schedule B1 to that Act;

(iii)

an administrative receiver within the meaning of section 251 of that Act is appointed;

(iv)

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 members' voluntary winding up into a creditors' voluntary winding up);

(v)

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

(vi)

all of the managers in a body which is unincorporated have been adjudicated bankrupt; or

(vii)

the body is an overseas company or a societas Europaea registered outside England, Wales, Scotland and Northern Ireland and the body is subject to an event in its country of incorporation analogous to an event as set out in paragraphs (i) to (vi) above.

SA

means the Solicitors Act 1974.

shareowner

means:

(i)

a member of a company with a share capital, who owns a share in the body; or

(ii)

a person who is not a member of a company with a share capital, but owns a share in the body, which is held by a member as nominee.

SRA Accounts Rules

means the SRA Accounts Rules 2011.

SRA Code of Conduct

means the SRA Code of Conduct 2011.

SRA Practice Framework Rules

means the SRA Practice Framework Rules 2011.

SRA Practising Regulations

means the SRA Practising Regulations 2011.

the Tribunal

means the Solicitors Disciplinary Tribunal which is an independent statutory tribunal constituted under section 46 of the SA but references to the Tribunal do not include the Tribunal when it is performing any function as an appellate body.

trustee

includes a personal representative (i.e. an executor or an administrator), and "trust" includes the duties of a personal representative.

Guidance notes

(i)

"Owner". Although Rule 1.2 limits the definition of "owner" to anyone holding a material interest, any person who is a partner in a partnership (including salaried partners) is within the definition regardless of the extent of their interest. This reflects paragraph 3(1) of Schedule 13 to the LSA as well as the principles of partnership law.

(ii)

When assessing whether a person is an owner with a "material interest", the calculation of the person's interest takes into account not only that person's interest, but also the interests of any associates. "Associates" is defined for these purposes in accordance with paragraph 5 to Schedule 13 of the LSA and includes relationships where the Act assumes a likelihood of influence such as employer over employee.

Rule 2: Form, timing and fees for applications made under these rules

2.1

All applications under these rules must comprise:

(a)

the prescribed form, correctly completed;

(b)

the fee or fees for the application, as determined from time to time by the SRA Board;

(c)

such additional information, documents and references considered by the SRA to be necessary to enable it to discharge its functions under these rules, as may be specified by the SRA; and

(d)

any additional information and documentation which the SRA may reasonably require.

2.2

It is not necessary to submit all documents, information and payments simultaneously, but an application will only have been made once the SRA has received all of the documentation, information and payments comprising that application.

Guidance notes

(i)

Application forms and guidance notes can be found on the SRA website.

(ii)

All parts of the application form must be fully completed. Where forms are only partially complete or where supporting information or documents are still to be provided, the application will not be deemed to have been made and the decision period in Rule 5.2 will not start to run.

Rule 3: Application information and notification of any change following application

3.1

The applicant body must:

(a)

ensure that all information given in an application under these rules is correct and complete;

(b)

notify the SRA as soon as it becomes aware that any information provided in its application under these rules has changed.

Guidance notes

(i)

During the application process an applicant body must notify the SRA of any changes to details or information provided as part of the application including notifying new information that the applicant body would have been required to supply if it had been known at the time of the application. It is an offence under the LSA (see Schedule 13 paragraphs 10-12) not to inform the SRA if there is any change to:

(a)

the list of non-authorised persons who hold or are expected to hold a material interest in the applicant body, and

(b)

the extent or nature of those interests held or to be held.

(ii)

Authorised bodies are subject to similar notification requirements under Rule 8.7.