Legal Profession Citation, commencement and interpretation 1 1 These Regulations may be cited as the Licensed Legal Services (Interests in Licensed Providers) (Scotland) Regulations 2012 and come into force on 2nd July 2012. 2 In these Regulations— “the Act” means the Legal Services (Scotland) Act 2010. Majority interests in licensed providers 2 1 For the purposes of section 49(1) of the Act (majority ownership), the qualifying investors in an entity are regarded as having at least a 51% stake in the total ownership or control of that entity only if, taken together, they— a are entitled to exercise, and control the exercise of, 51% or more of the voting or equivalent rights in the entity; b would be entitled to receive, if all of the income of the entity were to be distributed among the members, 51% or more of the amount so distributed; and c would be entitled to receive, if all of the assets of the entity were to be distributed among the members (for example, on the winding-up or dissolution of the entity), 51% or more of the amount so distributed. 2 In the operation of paragraph (1)— a any rights that a person has as a loan creditor are to be disregarded; and b the references to “members” are to be construed as— i in relation to a company, the holders of shares in the company; ii in relation to a limited liability partnership, the members; iii in relation to a partnership, the partners; and iv in relation to any other body or association, the members of that body or association. Interests of investors in licensed providers 3 1 For the purposes of the definition of “investor” in section 67(6) of the Act (more about investors), a person has ownership or control of the licensed provider or a material interest in it if the person— a is entitled to exercise, or control the exercise of, any voting or equivalent rights in the licensed provider; b would be entitled to receive, if all of the income of the licensed provider were to be distributed among the members, any share of the amount so distributed; or c would be entitled to receive, if all of the assets of the licensed provider were to be distributed among the members (for example, on the winding-up or dissolution of the licensed provider), any share of the amount so distributed. 2 In the operation of paragraph (1)— a any rights that a person has as a loan creditor are to be disregarded; and b the references to “members” are to be construed as— i in relation to a company, the holders of shares in the company; ii in relation to a limited liability partnership, the members; iii in relation to a partnership, the partners; and iv in relation to any other body or association, the members of that body or association. Interests in non-solicitor investors which are bodies 4 1 For the purposes of section 64(4) of the Act (factors as to fitness), a person may be regarded as having ownership or control of the body or a material interest in it if— a the person— i is entitled to exercise, or control the exercise of, any voting or equivalent rights in the body; ii would be entitled to receive, if all of the income of the body were to be distributed among the members, any share of the amount so distributed; or iii would be entitled to receive, if all of the assets of the body were to be distributed among the members (for example, on the winding-up or dissolution of the entity), any share of the amount so distributed; or b the person has ownership or control of another body or a material interest in it (determined in accordance with the same principles set out in sub-paragraph (a)) which has ownership or control of the body or a material interest in it (determined in accordance with the same principles set out in sub-paragraph (a)). 2 Paragraph 1(b) may continue to operate until no further bodies are determined to have ownership or control of the body or a material interest in it. 3 In the operation of paragraph (1)— a any rights that a person has as a loan creditor are to be disregarded; and b the references to “members” are to be construed as— i in relation to a company, the holders of shares in the company; ii in relation to a limited liability partnership, the members; iii in relation to a partnership, the partners; and iv in relation to any other body or association, the members of that body or association. Interests of exemptible investors in licensed providers 5 1 For the purposes of section 63(4) of the Act (exemption from fitness test), an investor has less than a 10% stake in the total ownership or control of the licensed provider only if the investor, and all associates of the investor, taken together— a are entitled to exercise, or control the exercise of, less than 10% of the voting or equivalent rights in the licensed provider; b would be entitled to receive, if all of the income of the licensed provider were to be distributed among the members, less than 10% of the amount so distributed; and c would be entitled to receive, if all of the assets of the licensed provider were to be distributed among the members (for example, on the winding-up or dissolution of the entity), less than 10% of the amount so distributed. 2 Where, for the purposes of section 63 of the Act, the licensing rules of an approved regulator specify a threshold below 10%, in paragraph (1), all of the references to 10% are to be construed as references to the specified threshold. 3 In the operation of paragraph (1)— a any rights that a person has as a loan creditor are to be disregarded; and b the references to “members” are to be construed as— i in relation to a company, the holders of shares in the company; ii in relation to a limited liability partnership, the members; iii in relation to a partnership, the partners; and iv in relation to any other body or association, the members of that body or association. Associates 6 1 For the purposes of regulation 5, a person mentioned in paragraphs (2) or (3) is an associate of an investor. 2 In relation to an individual, the persons are— a the spouse or civil partner of the individual; b a child or stepchild, if under 18, of the individual; c the trustee of any settlement under which the individual has a life interest (in England and Wales a life interest in possession); and d any entity of which the individual is a member and any subsidiary undertaking of that entity. 3 In relation to an entity, the persons are— a any member of the entity; and b any parent undertaking or subsidiary undertaking of that entity. 4 In paragraphs (2) and (3)— a the references to “member” are to be construed as— i in relation to a company, a holder of shares in the company; ii in relation to a limited liability partnership, a member; iii in relation to a partnership, a partner; and iv in relation to any other body or association, a member of that body or association; b “parent undertaking” and “subsidiary undertaking” have the meanings given to them in the Financial Services and Markets Act 2000 ; and c “settlement” means any disposition or arrangement under which property is held on trust or subject to an equivalent obligation. R CUNNINGHAM Authorised to sign by the Scottish Ministers St Andrew’s House, Edinburgh 17th May 2012