Form FA1b - Change of legal entity (CLE) guidance notes. November 2018

Transcription

1 Form FA1b - Change of legal entity (CLE) guidance notes November 2018

2 Contents 1. Introduction Getting started Material changes Non-material changes Help with your application The form Section 1 Basic application details Section 2 Registration and address details Section 3 - Financial management Section 4 Services and insurance Section 5 People Section 6 - Trainees Section 7 Declaration Where to send the form FA1b Guidance v 4.0 Page 2 of 8

3 1. Introduction This form is to apply for authorisation of a new entity in order to change the legal entity through which your firm operates. For example a partnership becoming a limited company. The new entity will require new authorisation but, as it will be continuing an existing practice, it can be dealt with under our change of legal entity (CLE) process. A CLE application will be subject to a more straightforward approval process. For your application to be treated as a CLE application, you must meet the following criteria: only the legal identity can be changing with no other material changes to the existing management, ownership or structure; the new entity must be wholly succeeding to the existing firm; and the existing body must cease to exist when the new one commences trade and you will need to agree to us revoking the authorisation of the old entity once the new one takes over. This form should not be used for a new LLP or limited company replacing an entity with the same legal status. 2. Getting started 2.1. Material changes A material change is one which requires us to investigate risk issues, suitability and/or may otherwise affect the operation of the firm. Examples of material changes include: a split of the firm with two or more new entities each partially succeeding to the existing entity; new managers and/or owners in the new entity who are not deemed approved; key individuals in the existing entity not continuing their role in the new entity. Key individuals may include the only person qualified to supervise, the COLP, the COFA, a sole lawyer manager or a sole non-lawyer manager / owner; an existing partnership or other entity with more than one manager wishing to become a Recognised Sole Practice (RSP); FA1b Guidance v 4.0 Page 3 of 8

4 a complete management change (e.g. a partnership wishes to move to a limited company entity but none of the partners will continue as directors in the new firm); where the existing entity and new entity are both LLPs or both limited companies; other regulatory changes taking place at the same time (e.g. a recognised body partnership wishing to become a licensed body limited company; a licensed body partnership wishing to become a licensed body limited company operating under the new multi-disciplinary practice model); or where the firm is approved to take trainees but the training principal will not continue in the new structure. The firm may, however, still use the CLE process if they go through the change of training principal process first Non-material changes A non-material change is one which does not have any substantive impact on the ownership, management, or operation of a firm, and does not have the potential to destabilise or increase the risk of the firm. Example of non-material changes include: the addition of multiple deemed approved managers (the definition of 'deemed approved' can be found below); or the departure of non-key individuals (key individuals are identified above). 3. Help with your application Pre-application questions If you have queries in advance of submitting your notification, authorisation@sra.org.uk or call us on Professional Ethics guidance I will not always be clear whether an organisation will require authorisation, or which persons require approval. Professional Ethics team help with these queries along with guidance on the SRA Handbook. Professional Ethics can be contacted at professional.ethics@sra.org.uk or on FA1b Guidance v 4.0 Page 4 of 8

5 4. The form 4.1. Section 1 Basic application details This section is to capture initial information about the type of application you are making. When entering the start date for providing legal services, note that you cannot start trading until the new entity has been granted authorisation. The firm contact is the person you are giving us permission to discuss all aspects of the application with and notify of our final decision. Fees For a recognised body or recognised sole practice (RSP) that is eligible to apply under our CLE process, there is a fixed application fee of 200. This fee will also be applied for licensed body CLE applications where they are as straightforward as their recognised body/rsp counterparts. However, we reserve the right to charge the full licensed body application fee where the complexity of the application warrants it. The full licensed body application fee, where required, will be calculated as follows: An initial payment of 2,000 which includes a contribution towards the initial costs of the appellate body, which will be the Solicitors Disciplinary Tribunal; A payment of 150 in relation to each candidate who needs to be approved as an authorised role holder; Where the SRA's costs in considering the application exceed the amounts specified above, any additional costs will be charged at a day rate of 600; Where it is necessary for the SRA to seek external assistance, the full cost of that assistance will be charged to the applicant; We do not anticipate any application appropriately made under the CLE process should require a fee in excess of the 200 CLE fee but, in the event it is necessary, you will be informed of any additional charge before the application is substantively progressed. FA1b Guidance v 4.0 Page 5 of 8

6 Due to different charging provisions for different entities, Recognised Body and RSP applicants should pay their 200 fee as part of the application process. Licensed body applicants will be invoiced once the application is assigned to an officer. Payment should be made by the applicant immediately upon receipt of the invoice Section 2 Registration and address details We need the registration details of the applicant if it is a corporate body. We will use the details of branch offices for the existing firm to create the records for the new entity. You should make sure that all branch offices and addresses are correct and amend them, as necessary, through the existing organisation's mysra account before making your application Section 3 - Financial management This section asks about client money and turnover. Applicants should provide accurate and up-to-date information Section 4 Services and insurance The SRA Indemnity Insurance Rules apply to all authorised bodies. It is a requirement under the SRA Handbook 2011 for all persons who are practising to have qualifying insurance. The list of participating is on our website. We will not grant authorisation to the applicant if it does not have indemnity insurance. We expect applicants to provide evidence of cover at the point of approval. If the policy has not been issued yet, we would expect applicants to provide a copy of the quote from the participating insurer. Financial services activities If you have previously told us about the financial services your firm provides, we will transfer this information to the new entity, including your Insurance Distribution Officer if applicable. If you haven t told us, or you will be changing or adding new services, you need to fill in an FA8 form and send it with your application. You can find the form and guidance on our website. Money laundering If your firm carries out services that are subject to the money laundering regulations, you need to fill in and send an FA10 form with this application, even if we have already approved the existing firm and its officers, to carry out such activities. FA1b Guidance v 4.0 Page 6 of 8

7 You can find more information about money laundering and how to apply on our website Section 5 People In this section, applicants will need to provide information regarding all role holders in the firm and any managers of body corporate managers. All managers, owners and compliance officers (collectively referred to as authorised role holders) of the applicant will need approval from the SRA. However, managers and owners of an applicant will be deemed approved if they meet the criteria set out in Rule 13.2 of the SRA Authorisation Rules Any owner or manager who does not meet the deeming criteria but has already received approval in their post or role in the existing firm, will require approval in the new legal entity but we will rely on your declaration at Section 7 in relation to their suitability and their consent to their post/role in the new entity. Qualified to supervise To comply with Rule 12 of the Practice Framework Rules, the firm must have at least one lawyer manager qualified to supervise. The requirements are set out in Rule 12.2 of the Practice Framework Rules. You may have more than one manager who is qualified to supervise but, for our records, we only require one name. Giving the details of one manager who is qualified to supervise does not impose additional responsibilities on that individual. If the manager qualified to supervise is not a solicitor (e.g. he or she is a licensed conveyancer) you will need to provide evidence that the manager has been entitled to practise as a lawyer for at least 36 months within the last ten years. This may be, for example, by providing certified copies of their practising certificates (if appropriate) or a letter from their regulator confirming the position Section 6 - Trainees Complete this section if the existing firm is authorised to take trainees. To transfer this authorisation to the new entity, your training principal must remain the same as in and still qualify to hold that role in the new entity. If you need to change your training principal, this should be done in advance of making the CLE application. Transfer of authorisation can only take place where we are satisfied the new entity is a like for like change of entity only from an existing firm. We will not transfer an authorisation from limited company to limited company or LLP to LLP Section 7 Declaration Authorised individual manager FA1b Guidance v 4.0 Page 7 of 8

8 The firm s authorised individual manager must be an individual manager, who is authorised by the firm and its managers, to make declarations on its behalf. In a sole practitioner firm, the authorised individual manager must be the solicitor or REL sole practitioner. 5. Where to send the form Please return the form by to authorisation@sra.org.uk FA1b Guidance v 4.0 Page 8 of 8