The SRA has recently announced that practices will be able to nominate their COLPs and COFAs from 31 May 2012. The SRA will be contacting practices before this date to provide further advice and information on the process, and practices will have until 31 July 2012 to complete and return their nomination forms.
We are told that the forms will be short, and will include a declaration from both the practice and the new officers that they understand their responsibilities, have suitable arrangements in place, and are suitably qualified to undertake the roles. There will be a number of questions regarding a nominee’s suitability, and although we are not told what these might be, we suspect they will include things like work history, professional interests, criminal offences, financial behaviour and any regulatory history.
The SRA will then take a risk-based approach to assessing the nominations. All COLP and COFA nomination forms will be checked, but with varying levels of intensity. In addition, the SRA will contact a subset of practices to check the approaches they have taken. This subset will generally comprise riskier and more complex practices, although there will be some random sampling.
The SRA has always maintained that it intends to confirm successful nominations by 31 October 2012, and this is still the case. However, in its Q&A section on its website, the SRA has, for the first time, suggested that it “may need to amend the 31 October date” to give themselves more time to complete their checks. Also, we have heard rumours that this could in fact be delayed to 1 January 2013, although there is nothing on the SRA website to confirm this. When you consider that there are over 11,000 practices and an ever-increasing number of corporate partners, all required to appoint two compliance officers, this is perhaps not surprising.
Changes to the Recognition Process
In the last few weeks the SRA has revised many of its application forms for initial recognition of new practices, including the RB1 form for a new partnership, RB2 for a new LLP and RB3 for a new limited company.
The new forms include new sections for nominating the COLP and COFA, and have been expanded to deal with any managers (partner, LLP member, director or corporate partner) that are either non-SRA authorised or are considered “non-deemed” individuals or authorised bodies.
As a result, the forms are significantly longer than we have been used to. For example, the RB2 form for a new LLP used to be 15 pages long, but is now 94 pages long. Once you have included additional pages for separate COLPs and COFAs, extra partners and employees, the completed form is likely to be much longer than this. A partnership with four partners and five qualified solicitor employees looking to convert to an LLP could be looking at 122 pages!
Of even greater significance is the fact that the SRA has announced that its recognition process is going take much longer from now on. Whereas previously you were looking at about six weeks for a new LLP to be recognised, the SRA expects 95% of their decisions to be made within 12 to 16 weeks, although under the Authorisation Rules, they are allowed up to six months.
Uncertainty over timings is going to make a big difference to practices looking to restructure, and could impact on mergers and takeovers too.
If you have any questions about any of the issues discussed above, or of the wider changes to regulations in general, then please call one of us in the Legal Team or email us at: firstname.lastname@example.org. We are always happy to help.