Schedule 10, Part 2, paragraph 7

This paragraph explains what is meant in paragraph 6(1)(b) by a firm being “controlled by qualified persons”. In this paragraph references to a person being qualified are— in relation to an individual, to that individual's— holding an appropriate qualification, or being a third country auditor and meeting the requirements of paragraph 6(1)(aa)(ii) or 6(1A); in relation to a firm, to its— being eligible for appointment as a statutory auditor, ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A firm is to be treated as controlled by qualified persons if, and only if— a majority of the members of the firm are qualified persons, and 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. A majority of the members of a firm means— 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; 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. A majority of the members of the management body of a firm means— 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; 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. 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.

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Source: legislation.gov.uk · retrieved 2026-09-04