Paragraph 7

United Kingdom

(1)

This paragraph explains what is meant in paragraph 6(1)(b) by a firm being “controlled by qualified persons”.

(2)

In this paragraph references to a person being qualified are—

F1(a)

in relation to an individual, to that individual's—

(i)

holding an appropriate qualification, or

(ii)

being a third country auditor and meeting the requirements of paragraph 6(1)(aa)(ii) or 6(1A);

(b)

in relation to a firm, to its—

(i)

being eligible for appointment as a statutory auditor, F2...

(ii)

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3)

A firm is to 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 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 upon 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)

Paragraphs 5 to 11 of Schedule 7 to this Act (rights to be taken into account and attribution of rights) apply for the purposes of this paragraph.

Annotations

Textual amendments

F1: Sch. 10 para. 7(2)(a) substituted (31.12.2020) by S.I. 2019/177, regs. 2, 29(a) (as substituted by The Companies and Statutory Auditors etc. (Consequential Amendments) (EU Exit) Regulations 2020 (S.I. 2020/523), regs. 1(2), 14(f)); 2020 c. 1, Sch. 5 para. 1(1)
F2: Sch. 10 para. 7(2)(b)(ii) and word omitted (31.12.2020) by virtue of S.I. 2019/177, regs. 2, 29(b) (as substituted by The Companies and Statutory Auditors etc. (Consequential Amendments) (EU Exit) Regulations 2020 (S.I. 2020/523), regs. 1(2), 14(f)); 2020 c. 1, Sch. 5 para. 1(1); and (E.W.) (1.1.2021) by virtue of The Local Audit (England and Wales) (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/504), regs. 1(3), 2

Notes on Schedule 10

Modifications

C1: Sch. 10 applied (with modifications) (4.4.2014 for specified purposes, 16.12.2014 in so far as not already in force) by Local Audit and Accountability Act 2014 (c. 2), s. 49(1), Sch. 5 para. 28 (with Sch. 13 para. 11); S.I. 2014/900, art. 2(j); S.I. 2014/3319, art. 2(e) (as amended (E.W.) (31.12.2020) by The Local Audit (England and Wales) (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/504), regs. 1(2), 6(1) (with reg. 6(2)(3)); 2020 c. 1, Sch. 5 para. 1(1); and (1.12.2023) by The Recognition of Professional Qualifications and Implementation of International Recognition Agreements (Amendment) Regulations 2023 (S.I. 2023/1286), reg. 1, Sch. 3 para. 91(4))