SRA approval of a firm's owners 2011 [Archived]

The following Practice Compliance practice note provides comprehensive and up to date legal information covering:

  • SRA approval of a firm's owners 2011 [Archived]
  • Which owners need approval?
  • Definition of owner
  • Material interest
  • Parent undertaking
  • Interest holders
  • Owners v interest holders
  • High-risk individuals
  • Approval process
  • Deemed approval
  • More...

SRA approval of a firm's owners 2011 [Archived]

A firm's owners must be approved by the Solicitors Regulation Authority (SRA). This does not, however, apply to all owners in the everyday sense of the word. The term owner is defined to ensure that:

  1. anyone who holds a small share in a firm (an interest holder) is not automatically required to seek approval

  2. anyone who can significantly control the management or voting rights of the firm is required to seek approval regardless of the size of their share

Which owners need approval?

Definition of owner

An owner is:

  1. any partner in a partnership, including a salaried partner, or

  2. any person who holds a material interest in a firm

Material interest

The term material interest is drafted very widely, to catch all persons who can control or significantly influence a firm.

A person holds a material interest if they:

  1. hold at least 10% of the shares in the firm

  2. can exercise significant influence over the management of the firm by virtue of their shareholding (which could be less than 10%)

  3. can exercise or control at least 10% of the voting power and/or voting rights in the firm, or

  4. can exercise significant influence over the management of the firm by virtue of their ability to control voting rights

This definition should deter sham ownership arrangements.

Parent undertaking

A firm could be owned by another company, ie a

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