SRA Handbook

Compliance with practice requirements

Version 21 of the Handbook was published on 06/12/2018. For more information, please click 'History' Above

Part 4: Compliance with practice requirements

Rule 19: Compliance with practice requirements

19.1

An authorised body and its managers and employees must at all times ensure that they act in accordance with the requirements of the SRA's regulatory arrangements as they apply to them.

19.2

A solicitor, REL or RFL who is a member or shareowner of an authorised body which is a company must not cause, instigate or connive at any breach of the requirements imposed under the SRA's regulatory arrangements by the authorised body or any of its managers or employees.

19.3

An employee of an authorised body must not cause, instigate or connive at any breach of any requirements imposed under the SRA's regulatory arrangements.

19.4

The partners in an authorised body which is a partnership are responsible not only as managers but also, jointly and severally, as the authorised body.

Rule 20: [Deleted]

Rule 21: Waivers

21.1

Subject to provisions relating to any statutory obligations or the SRA's regulatory arrangements affecting its ability to waive any requirements, the SRA Board shall have power to waive in writing the provisions of these rules for a particular purpose or purposes expressed in such waiver, and to attach conditions to or revoke such waiver, at its own discretion.

Guidance note

(i)

An applicant for a waiver must satisfy the SRA that the circumstances are sufficiently exceptional to justify a departure from the requirements of the rule in question, bearing in mind its purpose. Applications should be made to the Professional Ethics Guidance Team.

Rule 22: Transitional provisions and grace period

22.1

[Deleted]

22.2

Unless the context otherwise requires, references in these rules to:

(a)

these rules, or a provision of these rules; and

(b)

the SRA Code of Conduct, rules, regulations or regulatory arrangements, or a provision of the same,

include a reference to the equivalent rules, regulations or provisions previously in force.

22.3

A body that has, at the time these rules come into force, been recognised by the SRA under section 9 AJA and that does not comply with Rule 13.1(b) above shall continue to be treated as a legal services body for the purposes of these rules and the SRA's regulatory arrangements until:

(a)

such time as it ceases to comply with the management and control requirements set out in Rule 22.4 below; or

(b)

the end of the transitional period under Part 2 of Schedule 5 to the LSA, or such earlier time as the body may elect,

at which time it shall be a licensed body for the purposes of these rules and the SRA's regulatory arrangements.

22.4

The management and control requirements referred to in Rule 22.3 above are:

(a)

At least 75% of the body's managers must be:

(i)

individuals who are, and are entitled to practise as, lawyers of England and Wales, lawyers of Establishment Directive professions or RFLs; or

(ii)

bodies corporate which are legally qualified bodies;

although a legally qualified body cannot be a director of a body which is a company;

(b)

Individuals who are, and are entitled to practise as, lawyers of England and Wales, lawyers of Establishment Directive professions or RFLs must make up at least 75% of the ultimate beneficial ownership of the body; and

(c)

Individuals who are, and are entitled to practise as, lawyers of England and Wales, lawyers of Establishment Directive professions or RFLs, and/or legally qualified bodies, must:

(i)

exercise or control the exercise of at least 75% of the voting rights in the body; and

(ii)

if the body is a company with shares, hold (as registered members of the company) at least 75% of the shares.

(d)

Subject to Rule 13.1(b) above, every interest holder of the recognised body, and every person who exercises or controls the exercise of any voting rights in the body, must be:

(i)

an individual who is, and is entitled to practise as, a lawyer of England and Wales, a lawyer of an Establishment Directive profession or an RFL;

(ii)

a legally qualified body; or

(iii)

an individual who is approved under regulation 3 of the SRA Recognised Bodies Regulations 2009, regulation 5 of the SRA Recognised Bodies Regulations 2011 or Part 4 of the SRA Authorisation Rules and, subject to (e) below, is a manager of the body.

(e)

An individual who is not entitled under (d)(i) above may be an interest holder of a recognised body without being a manager of the body if:

(i)

the recognised body is a company which is wholly or partly owned by a partnership or LLP which is a legally qualified body;

(ii)

the individual is approved under regulation 3 of the SRA Recognised Bodies Regulations 2009, regulation 5 of the SRA Recognised Bodies Regulations 2011 or Part 4 of the SRA Authorisation Rules and is a manager of the partnership or LLP; and

(iii)

the individual is precluded under the partnership agreement or members' agreement from exercising or authorising any vote in relation to the company.

For the purposes of Rule 22.4 and for the purposes of section 9A(6)(h) and (6C) of the AJA "legally qualified body" means a body which would meet the services requirement in Rule 13.2 and is:

(A)

a recognised body;

(B)

an authorised non-SRA firm of which individuals who are, and are entitled to practise as, lawyers of England and Wales, lawyers of Establishment Directive professions or RFLs make up at least 75% of the ultimate beneficial ownership; or

(C)

a European corporate practice which is a lawyers' practice and 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;

(III)

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

(IV)

75% of whose ultimate beneficial ownership is in the hands of individuals who are, and are entitled to practise as, lawyers of Establishment Directive professions, lawyers of England and Wales, and/or RFLs; and

(V)

75% of whose managers comprise such individuals, and/or bodies corporate 75% of whose managers comprise such individuals.

22.5

[Deleted]

22.6

[Deleted]

22.7

[Deleted]