Legal Services Act 2007 Explanatory Notes

Legal Services Act 2007

2007 CHAPTER 29

Commentary on Sections

Part 5: Alternative Business Structures

Background

Section 108: “Low risk body”

284. These sections provide that certain types of body are eligible to apply for certain statutory requirements and/or licensing rules to be waived or otherwise modified in relation to them. Modifications are given effect by orders made by licensing authorities. The bodies in question are:

• trade unions – from which section 105 removes the HoLP and HoFA requirements and the ownership provisions in Schedule 13;

• not for profit bodies, defined in section 207 by reference to their charitable or public purpose and prohibitions on distributing income or assets to members;

• community interest companies;

• low-risk bodies – bodies in which levels of non-authorised control falls under a de minimis threshold, defined in section 108 as bodies where fewer than 10% of the managers are non-authorised persons, and the proportion of shares and voting rights held by non-authorised persons in less than 10%; and

• other bodies of types set out in an order made by the Lord Chancellor on the Board’s recommendation.

285. In considering whether modifications are appropriate, the licensing authority must consider the legal activities the body aims to carry on, the people to whom it plans to offer services, any non-authorised persons who part-own or manage the body, and any other factors set out in the authority’s licensing rules, as laid out in section 106(5). Some provisions cannot be modified at all; others cannot be waived but may otherwise be modified. Otherwise, licensing authorities have discretion to modify requirements in licensing rules and the application of Schedule 13 (section 106(3)), and can make whatever modifications are appropriate, whether or not they were what the body asked for (section 106(4)). Section 107 then sets out the circumstances in which a licensing authority can change modifications. Where the licensed body is no longer one to which section 106 applies, the licensing authority must revoke the modification order. Otherwise, it may revoke or modify an order if the licensed body requests it or on its own motion.