# Companies Act 2006, Paragraph 7

Extent: E+W+S+N.I.

(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—
(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, ...
(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.

---
Source: https://www.legislation.gov.uk/ukpga/2006/46/schedule/10/paragraph/7 (the official version)
Page: https://openlegislation.uk/companies-act-2006/schedule-10/paragraph-7
Contains public sector information licensed under the Open Government Licence v3.0. Source: legislation.gov.uk, The National Archives.