The Licensed Legal Services (Interests in Licensed Providers) (Scotland) Regulations 2012

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.