SRA Handbook

Approval of an individual as suitable to be a manager

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Regulation 5: Approval of an individual as suitable to be a manager

5.1

An individual who is not a lawyer of England and Wales, an REL, an RFL or an EEL must be approved by the SRA under this regulation in order to be:

(a)

a manager or owner of a recognised body; or

(b)

a manager of a body corporate which is a manager of a recognised body.

5.2

The following are not eligible for approval under this regulation:

(a)

a member (practising or non-practising) of any profession coming within the meaning of lawyer of England and Wales (including a solicitor);

(b)

an REL;

(c)

an RFL;

(d)

an EEL; and

(e)

a member (practising or non-practising) of any profession eligible for approval by the SRA under paragraph 2(2) of Schedule 14 to the Courts and Legal Services Act 1990;

except that an individual who is not a solicitor or a practising member of any profession of lawyers, but is a non-practising barrister or a non-practising member of another profession of lawyers, and who is prevented by his or her professional rules or training regulations from changing status so as to be able to practise through the recognised body as a practising lawyer, may apply for approval under this regulation.

5.3

The SRA has a discretion to reject an application under regulation 5 if it is not satisfied that the individual concerned is suitable to be involved in the provision of legal services, and to exercise influence over the conduct of the recognised body concerned because:

(a)

the applicant, the individual concerned or any recognised body, licensed body or authorised non-SRA firm in which that individual has previously been a manager, or owner, compliance officer or employee, has been:

(i)

reprimanded, made the subject of disciplinary sanction or made the subject of an order under section 43 of the SA, ordered to pay costs or made the subject of a recommendation to the Society or the SRA to consider imposing a condition by the Tribunal, or struck off or suspended by the court;

(ii)

(made the subject of an order under section 43 of the SA, by the Society or the SRA or rebuked or fined by the SRA under section 44D of the SA, or paragraph 14B of Schedule 2 to the AJA;

(iii)

intervened in by the SRA (or previously by the Society) or by any other approved regulator;

(iv)

notified in writing by the SRA (or previously by the Society) that it does not regard as satisfactory an explanation given at the SRA's (or the Society's) request; or

(v)

made the subject of disciplinary sanction by, or refused registration with or authorisation by, another approved regulator, professional or regulatory tribunal, or regulatory authority, whether in England and Wales or elsewhere,

in respect of a matter involving the individual concerned;

(b)

the individual concerned:

(i)

has been committed to prison in civil or criminal proceedings;

(ii)

has been disqualified from being a company director;

(iii)

has been removed from the office of charity trustee or trustee for a charity by an order within the terms of section 72(1)(d) of the Charities Act 1993;

(iv)

is an undischarged bankrupt;

(v)

has been adjudged bankrupt and discharged;

(vi)

has entered into an individual voluntary arrangement or a partnership voluntary arrangement under the Insolvency Act 1986;

(vii)

has been a manager of a recognised body or licensed body which has entered into a voluntary arrangement under the Insolvency Act 1986;

(viii)

has been a director of a company or a member of an LLP which has been the subject of a winding up order, an administration order or administrative receivership; or has entered into a voluntary arrangement under the Insolvency Act 1986; or has been otherwise wound up or put into administration in circumstances of insolvency;

(ix)

lacks capacity (within the meaning of the Mental Capacity Act 2005) and powers under sections 15 to 20 or section 48 of that Act are exercisable in relation to that individual;

(x)

is the subject of outstanding judgments involving the payment of money;

(xi)

is currently charged with an indictable offence, or has been convicted of an indictable offence or any offence under the SA, the Financial Services and Markets Act 2000, the Immigration and Asylum Act 1999 or the Compensation Act 2006;

(xii)

has been the subject of an order under section 43 of the SA;

(xiii)

has been disqualified from acting as a HOLP or a HOFA or from being a manager of, or being employed by, a licensed body or an authorised non-SRA firm;

(xiv)

has been the subject of an equivalent circumstance in another jurisdiction to those listed in (i) to (xiii); or

(xv)

has been involved in other conduct which calls into question his or her honesty, integrity or respect for law;

(c)

the applicant or the individual concerned fails to disclose, refuses to disclose or seeks to conceal any matter within (a) or (b) above in relation to the application.

5.4

Application for approval

(a)

The application for approval must be made by the recognised body or prospective recognised body concerned and may be made:

(i)

when applying for initial recognition; or

(ii)

at any time after recognition has been granted.

(b)

It is for the applicant body to demonstrate that the individual concerned meets the criteria for approval.

(c)

The applicant body must:

(i)

co-operate, and secure the co-operation of the individual concerned, to assist the SRA to obtain all information and documentation the SRA requires in order to determine the application;

(ii)

obtain all other information and documentation in relation to that individual which the prescribed form requires the body to obtain and keep; and

(iii)

keep all information and documentation under (ii) above for a period of not less than six years after the individual concerned has ceased to be a manager of the body.

(d)

The individual concerned must confirm in the application that the information supplied about him or her is correct and complete.

5.5

Approval

(a)

Approval takes effect from the date of the decision unless otherwise stated.

(b)

The SRA's decision to approve or refuse approval must be notified in writing to the applicant body and, separately, to the individual concerned.

(c)

If the applicant body is a recognised body it must not allow the individual concerned to become a manager until it has received written notice that the individual has been approved.

(d)

Approval continues until:

(i)

it is withdrawn; or

(ii)

two years have elapsed during which the individual has not been a manager of a recognised body;

whichever is the sooner.

5.6

The SRA may at any time require the production of information or documentation from:

(a)

an approved individual;

(b)

a recognised body in which an approved individual is a manager; or

(c)

the body which originally obtained approval for that individual and holds information and documentation under 5.4(c)(iii) above;

in order to satisfy the SRA that the individual met the criteria for approval or continues to meet the criteria for approval.

5.7

Withdrawal of approval

(a)

The SRA may decide to withdraw approval if it is not satisfied that an approved individual met the criteria for approval or continues to meet the criteria for approval or if information or documentation is not promptly supplied in response to a request made under regulation 5.6.

(b)

Subject to (c) below, withdrawal of approval takes effect on expiry of the notice period under regulation 8.2(b) or on such later date as may be stated in the notice.

(c)

If an appeal is made before the withdrawal of approval takes effect, the withdrawal of approval is suspended pending determination or discontinuance of the appeal, unless in the opinion of the SRA the proceedings on that appeal have been unduly protracted by the appellant or are unlikely to be successful.

5.8

Where withdrawal of approval relates to a director of a company, the SRA may set separate dates for that individual ceasing to be a director and disposing of his or her shares.

Guidance note

(i)

The approval process under regulation 5 will cease when recognised bodies are transitioned to be regulated under the SRA Authorisation Rules. Non-lawyers who are managers of recognised bodies at that time will be deemed approved as managers for the purpose of rule 8.6 of the SRA Authorisation Rules. The regulation 5 approval of non-lawyers who are not managers at that time will lapse. A fresh approval will need to be applied for under the SRA Authorisation Rules.