# Companies Act 1989, Paragraph 5

Extent: E+W+S

(1) The following provisions explain what is meant in paragraph 4(1)(b)(ii) by a firm being “controlled by qualified persons”.
(2) For this purpose references to a person being qualified are, in relation to an individual, to his holding an appropriate qualification, and in relation to a firm, to its being eligible for appointment as a company auditor.
(3) A firm shall be treated as controlled by qualified persons if, and only if—
(a) a majority of the members of the firm are qualified persons, and
(b) where the firm’s affairs are managed by a board of directors, committee or other management body, a majority of the members of that body are qualified persons or, if the body consists of two persons only, at least one of them is a qualified person.
(4) A majority of the members of a firm means—
(a) where under the firm’s constitution matters are decided apon by the exercise of voting rights, members holding a majority of the rights to vote on all, or substantially all, matters;
(b) in any other case, members having such rights under the constitution of the firm as enable them to direct its overall policy or alter its constitution.
(5) A majority of the members of the management body of a firm means—
(a) where matters are decided at meetings of the management body by the exercise of voting rights, members holding a majority of the rights to vote on all, or substantially all, matters at such meetings;
(b) in any other case, members having such rights under the constitution of the firm as enable them to direct its overall policy or alter its constitution.
(6) The provisions of paragraphs 5 to 11 of Schedule 10A to the Companies Act 1985 (rights to be taken into account and attribution of rights) apply for the purposes of this paragraph.

---
Source: https://www.legislation.gov.uk/ukpga/1989/40/schedule/11/paragraph/5 (the official version)
Page: https://openlegislation.uk/companies-act-1989/schedule-11/paragraph-5
Contains public sector information licensed under the Open Government Licence v3.0. Source: legislation.gov.uk, The National Archives.