SOLICITORS (SCOTLAND) (INCORPORATED PRACTICES) PRACTICE RULES 2001
Rules dated 25 May 2001, made by the Council of the Law Society of Scotland under section 34(1) of the Solicitors (Scotland) Act 1980 and approved by the Lord President of the Court of Session in terms of section 34(3) of the said Act.
1. Citation and Commencement
(1) These rules may be cited as the Solicitors (Scotland) (Incorporated Practices) Practice Rules 2001.
(2) These rules shall come into operation on 1 July 2001.
2. Definitions
(1) In these rules, unless the context otherwise requires:-
"the Act" means the Solicitors (Scotland) Act 1980;
"the 1986 Act" means the Company Directors Disqualification Act 1986 and shall include that Act as applied to limited liability partnerships ( LLP );
"company" shall have the meaning given in section 735 of the Companies Act 1985;
"the Council" means the Council of the Society;
"incorporated practice" means a body corporate recognised by the Council in terms of section 34(1A) of the Act and these rules as being suitable to undertake the provision of professional services such as are provided by solicitors;
"limited liability partnership" means a body corporate incorporated under the Limited Liability Partnerships Act 2000;
"registrar of companies" means the registrar or other officer performing under the Companies Act 1985 the duty of registration of companies or of registration of limited liability partnerships, as the case may be;
"the Secretary" means the Secretary of the Society and includes any person authorised by the Council to act on his behalf;
"the Society" means the Law Society of Scotland established under the Act; and
"solicitor" means any person enrolled as a solicitor in pursuance of the Act and who holds a practising certificate under the Act free of conditions imposed in terms of section 15, section 24C or other sections of the Act, or any regulations made thereunder or by the Scottish Solicitors Discipline Tribunal; and shall include a firm of solicitors and an association of solicitors and also includes a registered foreign lawyer.
(2) The Interpretation Act 1978 applies to the interpretation of these rules as it applies to the interpretation of an Act of Parliament.
(3) The headings to these rules do not form part of these rules.
3. Permission
Subject to the provisions of these rules, a solicitor or an incorporated practice may trade as a body corporate in terms of section 34(1A) of the Act provided:-
(a) any such body corporate has been recognised by the Council as an incorporated practice;
(b) the control of any such body corporate is exclusively by solicitors or other incorporated practices;
(c) the membership of any such body corporate is restricted to solicitors or other incorporated practices; and
t(d) he registered office of any such body corporate is situated in Scotland.
4. Application
Any person wishing to form an incorporated practice shall, at least three months prior to the anticipated date of commencement of business as such incorporated practice, submit to the Council:-
(a) in all cases-
(i) the names, designations and business addresses of all solicitors who will be members of the incorporated practice;
(ii) the names, and addresses of the registered offices, of all incorporated practices which will be members of the incorporated practice;
(iii) the proposed name, and address of the registered office, of the incorporated practice; (iv) a completed form of application for recognition as an incorporated practice in terms of the schedule to these rules; and
(v) the fee ( £400 for 2007) to be prescribed from time to time by the Council in connection with such application;
(b) in the case of an incorporated practice which is to be a company-
(i) the names, designations and business addresses of all solicitors or incorporated practices who will be directors of the incorporated practice; and
(ii) a draft of the memorandum and articles of association of the incorporated practice;
(c) in the case of an incorporated practice which is to be a limited liability partnership, a draft of the incorporation document of the incorporated practice; and
(d) in the case of an incorporated practice to be incorporated with limited liability, an irrevocable undertaking to the Council by each of the solicitors and incorporated practices who will be members of the incorporated practice that he or it or they will jointly and severally along with the other members of the incorporated practice reimburse to the Society grants paid out of the Scottish Solicitors' Guarantee Fund in terms of section 43 of the Act to a person who has suffered pecuniary loss by reason of dishonesty on the part of the incorporated practice or any member, director, manager, secretary or other employee thereof and that to any extent to which the Society shall have been unable to recover the amount of said grants from the incorporated practice or any liquidator or administrator thereof.
5. (1) Memorandum and Articles of Association
The memorandum and articles of association of an incorporated practice which is a company shall contain provisions which show that it complies and will continue to comply with these rules (as in force from time to time) including, without prejudice to the foregoing generality, provisions to the following effect:-
(a)that no person shall be appointed or re-appointed or act as a director unless he is a member of the incorporated practice duly qualified within the meaning of sub-paragraph (d) hereof;
(b) that no person other than a person duly qualified to act as a director may be appointed as an alternate director;
(c) that a director or alternate director shall vacate office if he ceases to be a member of the company or to be qualified to act as a director;
(d) that no person shall be capable of being a member of the incorporated practice or (subject to sub-paragraph (f) hereof) enjoy any of the rights of members unless he or it is a solicitor or an incorporated practice;
(e) that (subject to sub-paragraph (f) hereof) any member who ceases to be a solicitor or incorporated practice shall forthwith transfer his or its shares or other interest in the incorporated practice to another solicitor or incorporated practice, or otherwise cease to be a member of the incorporated practice;
(f) that, in the case of an incorporated practice which has a share capital, the executor of a deceased member of the incorporated practice shall have no voting rights in respect of his membership of the incorporated practice; and
(g) that, in the case of an incorporated practice limited by guarantee, membership shall cease on death.
(2) The memorandum and articles of association of an incorporated practice which is a company shall contain provisions to anticipate and to deal with the situation where for whatever reason there is no longer a solicitor, or other validly constituted incorporated practice, exercising the day to day management and control of the incorporated practice. Without prejudice to the foregoing, the memorandum and articles shall contain specific provisions for:-
(a) the operation in the situation aforesaid of all client accounts in the name of the incorporated practice; and
(b) suitable arrangements in the situation aforesaid for making available to its clients or to some other solicitor or incorporated practice instructed by its clients or itself:-
(i) all deeds, wills, securities, papers, books of account, records, vouchers and other documents in its possession or control which are held on behalf of its clients or which relate to any trust of which it is sole trustee or co-trustee only with one or more of its employees; and
(ii) all sums of money due from it or held by it on behalf of its clients or subject to any trust as aforesaid.
(3) The memorandum and articles of association of an incorporated practice which is a company shall be only in terms previously approved by the Council, following submission of a draft thereof in terms of rule 4(b)(ii), and thereafter no such incorporated practice shall alter its memorandum and articles without the prior consent of the Council.
(4) The Council may charge a fee in respect of its examination and, if thought fit, its approval of the memorandum and articles of association of an incorporated practice which is a company or any alteration thereof and such fee shall be in addition to the fee referred to in rule 4(a)(v).
6. Undertaking to Council
Every solicitor who and every incorporated practice which becomes a member of an incorporated practice which is incorporated with limited liability shall grant an undertaking to the Council on the same terms as the undertaking described in rule 4(d).
7. Ongoing Provisions
(1) The members and directors of an incorporated practice which is a company shall ensure that the conditions of its memorandum and articles of association are given effect to at all times and without delay.
(2) The Council may at any time require an incorporated practice which is a company to demonstrate that the requirements of rule 5 are being complied with.
(3) Incorporated practices shall notify the Council, within fourteen days of such change, of:-
(a) any change in the address of the registered office of the incorporated practice; and
(b) any change in the members or directors of an incorporated practice.
(4) Incorporated practices shall send to the Secretary a copy of all documents which require to be filed with the registrar of companies or the Accountant in Bankruptcy contemporaneously with the despatch of such documents to the registrar of companies or the Accountant in Bankruptcy.
(5) Incorporated practices shall send to the Secretary a copy of all certificates issued by the registrar of companies forthwith upon receipt thereof by the incorporated practice.
(6) No person shall be a member of an incorporated practice unless he is a solicitor or an incorporated practice.
(7) No person who is not a member of an incorporated practice shall enjoy any of the rights of membership except (subject to rule 5(1)(f)) an executor of a deceased member of the incorporated practice qua executor of that member.
(8) Where a member of an incorporated practice dies or for any other reason ceases to hold a current practising certificate or, as the case may be, has its certificate of recognition revoked under rule 10 hereof the incorporated practice shall immediately take the necessary steps, whether in terms of its memorandum or articles of association or otherwise, to ensure compliance with paragraphs (6) and (7) of this rule.
(9) No person shall be appointed or shall act as a director of an incorporated practice which is a company unless he is a member thereof.
(10) Every incorporated practice to which these rules apply shall require to be insured against such classes of professional liability as are indemnified by the Master Policy (as referred to in the Solicitors (Scotland) Professional Indemnity Insurance Rules 1995) and the Council shall prescribe from time to time the limits of indemnity and self-insured amounts applicable to incorporated practices and may prescribe different limits for different incorporated practices or classes of incorporated practices.
(11) The Council shall maintain a list containing the names and places of business of all incorporated practices, which list shall be open for inspection at the office of the Society during the office hours by any person without payment of any fee.
8. (1) Company Directors Disqualification Act 1986
In the event that a disqualification order under the 1986 Act is made against a person who is a member or a director of an incorporated practice, whether in respect of his conduct in relation to any incorporated practice of which he is a member or director, or otherwise, that person shall, forthwith upon such order being made, notify the Council and shall supply a copy of the order to the Council.
(2) Subject to paragraph (3) of this rule, the consent of the Council shall be required:-
(a) for any such person as is referred to in paragraph (1) of this rule to become or remain a member or director of an incorporated practice; and
(b) for any other person against whom a disqualification order under the 1986 Act has been made to become a member or director of an incorporated practice.
(3) The consent of the Council shall not be required pursuant to paragraph (2) of this rule if, and to the extent that, the court has given its consent to any such person as is specified in paragraph (2) of this rule becoming or remaining a director of an incorporated practice which is a company or a member of an incorporated practice which is a limited liability partnership.
(4) Any person who requires the consent of the Council pursuant to paragraph (2) of this rule shall provide all reasonable co-operation with any request from the Council for information and documentation regarding the circumstances of the relevant disqualification order.
(5) In giving or refusing its consent pursuant to paragraph (2) of this rule, the Council shall have regard to the facts and circumstances surrounding the making of the relevant disqualification order and to the terms thereof, to the interests of the public in relation to the profession of solicitor and to the effect of any refusal of consent on the person concerned and on any incorporated practice of which he may be a member or director. Any consent may be given subject to such conditions as the Council considers it appropriate to impose.
(6) In the event, and to the extent, that the Council shall refuse a consent pursuant to paragraph (2)(a) of this rule or shall give such a consent subject to conditions which require the person to whom it is given to cease to be a member and/or a director of an incorporated practice which is a company and/or a member of an incorporated practice which is a limited liability partnership, the person affected shall immediately cease to be such a member and/or director and/or member of such incorporated practice.
(7) For the avoidance of doubt, any person against whom a disqualification order under the 1986 Act is made which prohibits that person from being a director of an incorporated practice which is a company or from being a member of an incorporated practice which is a limited liability partnership shall immediately cease to be such a director or member and shall not seek to apply for the consent of the Council in respect of that particular disqualification pursuant to paragraph (2) of this rule.
(8) In paragraphs (1), (2) and (5) of this rule, references to the term "member" in connection with an incorporated practice shall include reference both to membership of an incorporated practice which is a company and to membership of an incorporated practice which is a limited liability partnership.
9. (1) Recognition
The Council shall consider every application made to it in terms of these rules, and, if the Council is satisfied by the applicant(s) that a body corporate has complied in all respects with the requirements of these rules, the Council shall issue to the applicant(s) a certificate recognising the proposed body corporate as an incorporated practice which certificate shall state:-
(a) the name and registered number of the incorporated practice;
(b) whether the incorporated practice will carry on business with liability which is unlimited or limited by guarantee or limited by share capital or as a limited liability partnership; and
(c) the date of the certificate of recognition.
(2) The certificate of recognition or a true copy of it shall at all times be displayed at every place of business of the incorporated practice.
(3) An incorporated practice which proposes to re-register as unlimited under section 49 or as limited under section 51 of the Companies Act 1985 shall, before applying for re-registration under section 49 or passing a resolution under section 51, submit to the Council an application to be allowed to re-register accordingly. Such application shall be in the form mutatis mutandis required by rule 4 for the recognition of an incorporated practice in the form proposed after re-registration. If the Council is satisfied by the applying incorporated practice that it has complied in all respects with the requirements of these rules, the Council shall issue to the applying incorporated practice a certificate entitling it to apply for or to resolve to be re-registered as aforesaid and containing the information specified in paragraph (1) of this rule. The incorporated practice shall not apply for or resolve to be re-registered as aforesaid until such certificate has been issued and shall so apply or resolve within one month of the date of such certificate. The certificate of authorisation for re-registration or a true copy of it shall at all times be displayed at every place of business of the incorporated practice along with the certificate of recognition.
10. Revocation of Certificate of Recognition
A certificate of recognition of an incorporated practice may be revoked by the Council if:-
(a) recognition of the incorporated practice was granted by the Council by reason of error or fraud; or
(b) an incorporated practice goes into liquidation (other than members' voluntary liquidation approved by the Council for the purpose of amalgamation or reconstruction) or if a provisional liquidator, receiver or judicial factor is appointed to such incorporated practice or if an administrator within the meaning of the Insolvency Act 1986 is appointed to such incorporated practice or if such incorporated practice enters into a voluntary arrangement under Part I of the Insolvency Act 1986, or if such incorporated practice is struck off the register of companies or the register of limited liability partnerships; or
(c) control of an incorporated practice ceases for any reason, however temporarily, to be exclusively by solicitors or other incorporated practices; or
(d) any solicitor who is a director or member of the incorporated practice has been excluded in terms of section 31 of the Legal Aid (Scotland) Act 1986 or any statutory re-enactment thereof; or
(e) such incorporated practice has failed to comply with any of the provisions of these rules.
11. Other Practice Rules
All rules made under the Act shall apply in all respects mutatis mutandis to incorporated practices.
12. Power of Waiver
The Council shall have power to waive any of the provisions of these rules in any particular circumstances or case.
13. Revocation of previous Rules and Saving Provision
The Solicitors (Scotland) (Incorporated Practices) Practice Rules 1997 are hereby revoked, but such revocation shall not affect the validity of any application made, certificate granted or other thing done under the said rules and such application, certificate or thing shall have effect as if it were made, granted or done under these rules.
