S.I. No. 439/1998:

THE SOLICITORS ACTS, 1954 TO 1994 (INVESTMENT BUSINESS & INVESTOR COMPENSATION) REGULATIONS, 1998

THE SOLICITORS ACTS, 1954 TO 1994 (INVESTMENT BUSINESS & INVESTOR COMPENSATION) REGULATIONS, 1998

The Law Society of Ireland, in exercise of the powers conferred on them by section 71 of the Solicitors Act, 1954 (as amended by section 69 of the Solicitors (Amendment) Act, 1994 ) and section 30A of the Solicitors (Amendment) Act, 1994 (as inserted by section 46 of the Investor Compensation Act, 1998 ) HEREBY MAKE the following Regulations:--

1. (a) These Regulations may be cited as The Solicitors Acts, 1954 to 1994 (Investment Business and Investor Compensation) Regulations, 1998.

(b) These Regulations shall come into operation on 1st December, 1998.

2. (a)In these Regulations--

"the Act of 1954" means the Solicitors Act, 1954 (No. 36 of 1954);

"the Act of 1960" means the Solicitors (Amendment) Act, 1960 (No. 37 of 1960);

"the Act of 1994" means the Solicitors (Amendment) Act, 1994 (No. 27 of 1994);

"the Act of 1995" means the Investment Intermediaries Act, 1995 (No. 11 of 1995);

"the Act of 1998" means the Investor Compensation Act, 1998 (No. 37 of 1998);

"the Bank" means the Central Bank of Ireland;

"the Company" means The Investor Compensation Company Limited formed and registered pursuant to section 10 of the Act of 1998;

"the Compensation Fund" means the fund maintained by the Society pursuant to sections 21 and 22 of the Act of 1960 (as substituted by sections 29 and 30 of the Act of 1994);

"authorised investment business firm" has the meaning assigned to it in section 2(4) of the Act of 1998;

"certified person" has the meaning assigned to it in section 2 of the Act of 1998;

"he" and other cognate words denoting the masculine include "she" and other cognate words denoting the feminine;

"insurance intermediary" has the meaning assigned to it in section 2 of the Act of 1998;

"investment advice" has the meaning assigned to it in section 2 of the Act of 1995;

"investment business firm" has the meaning assigned to it in section 2 of the Act of 1995;

"investment business services" has the meaning assigned to it in section 2 of the Act of 1998;

"investment firm" has the meaning assigned to it in section 2 of the Act of 1998;

"investment product intermediary" has the meaning assigned to it in section 25 of the Act of 1995;

"legal services" has the meaning assigned to it in section 2 of the Act of 1994, as substituted by section 45 (b) of the Act of 1998;

"Minister" means the Minister for Justice, Equality and Law Reform;

"Regulation" means a regulation in these Regulations;

"restricted activity investment product intermediary" has the meaning assigned to it in section 2 of the Act of 1998;

"the Society" means the Law Society of Ireland.

(b) Other words and phrases in these Regulations shall have the meanings assigned to them by the Solicitors Acts, 1954 to 1994, or by the Act of 1995 or the Act of 1998.

(c) The Interpretation Act, 1937 shall apply for the purpose of the interpretation of these Regulations as it applies for the purpose of the interpretation of an Act of the Oireachtas, except insofar as it may be inconsistent with the Solicitors Acts, 1954 to 1994 or the Act of 1995 or the Act of 1998 or these Regulations.

3. A solicitor, who is not an authorised investment business firm, who applies to the Society for a practising certificate in respect of a practice year commencing after the 31st day of December, 1998, shall, as a condition precedent to being issued by the Society with a practising certificate, undertake to the Society that:

(a) he will only provide investment business services or investment advice to clients incidental to the provision of legal services to such clients,

(b) he will not hold himself out as being an investment business firm, and

(c) in providing investment business services or investment advice to clients in a manner incidental to the provision of legal services to such clients and when acting as an investment product intermediary, he will not hold an appointment in writing other than from--

(i) an investment firm authorised in accordance with Directive 93/22/EEC of 10 May 1993 by a competent authority of another Member State, or an authorised investment business firm (not being a restricted activity investment product intermediary or a certified person), or a member firm within the meaning of the Stock Exchange Act, 1995 , or

(ii) a credit institution authorised in accordance with Directives 77/780/EEC of 12 December, 1977 and 89/646/EEC of 15 December, 1989, or

(iii) a manager of a collective investment undertaking authorised to market units in collective investments to the public

which is situate in the State or the relevant branch of which is situate in the State.

4. A solicitor, who is not an authorised investment business firm, who applies to the Society for a practising certificate in respect of a practice year commencing after the 31st day of December, 1999 and who is or last was the holder of a practising certificate in respect of all or any part of a preceding practice year which commenced after the 31st day of December, 1998 shall, as a condition precedent to being issued by the Society with the practising certificate so applied for, warrant to the Society that he has complied with the undertakings to the Society provided for in clauses (a), (b) and (c) of Regulation 3 during that preceding practice year.

5. A solicitor in respect of whom a practising certificate is in force, who is not an authorised investment business firm, who provides investment business services or investment advice to a client incidental to the provision of legal services within the terms of his undertakings given to the Society pursuant to the requirements of clauses (a), (b) and (c) of Regulation 3 and who receives a fee, commission or other reward therefor other than from that client which is in excess of the amount or value of £75 (seventy-five pounds) shall, as soon as practicable after such receipt, disclose that fact in writing to such client.

6. A solicitor, who is an investment business firm or who is an insurance intermediary in one or more of the circumstances set forth in section 47(1)(a) or (b) of the Act of 1998 and who applies to the Society for a practising certificate in respect of a practice year commencing after the 31st day of December, 1998, shall not be issued with such practising certificate unless the solicitor provides to the Society due evidence in writing of-

(a) (i) having been authorised by the Bank, in accordance with section 10 of the Act of 1995, as an authorised investment business firm, or

(ii) having informed the Bank and the Company that he is an investment firm for the purposes of section 47(1)(b) of the Act of 1998;

(b) payment by him of such contribution to the fund established and maintained pursuant to section 19 of the Act of 1998 as may be required by the Company under section 21 of the Act of 1998;

(c) having in place, valid and irrevocable for at least the duration of the practice year in question, a bond or bank guarantee and a policy of insurance, each acceptable to the Society, by way of providing indemnity against losses that may be suffered by a client in respect of default (whether arising from dishonesty or from breach of contract, negligence or other civil wrong) on the part of the solicitor, or any employee, agent or independent contractor of the solicitor, as shall, in the opinion of the Society (taking into account the maximum amount of compensation for default that would be payable to a client secured by reason of the payment made by the solicitor referred to in clause (b) of this Regulation), be equivalent to the indemnity against losses that would be provided to a client of a solicitor in the provision of legal services by means of-

(i) the Compensation Fund as provided for in accordance with section 21 (as substituted by section 29 of the Act of 1994) of the Act of 1960, and

(ii) the minimum level of cover as provided for in accordance with The Solicitors Acts, 1954 to 1994 (Professional Indemnity Insurance) Regulations, 1995 ( S.I. No. 312 of 1995 ) made by the Society under section 26 of the Act of 1994.

7. (a) Where, in the course of a practice year, a solicitor, in respect of whom a practising certificate is in force, proposes to become an investment business firm or an investment firm in one or more of the circumstances set forth in section 47(1)(a) or (b) of the Act of 1998, the solicitor shall notify the Society in writing of that fact at least seven days before such proposed event and shall, within fourteen days of such notification, comply with the provisions of Regulation 6 as if he was then applying to the Society to be issued with a practising certificate for that practice year.

(b) Where the Society are of opinion that a solicitor to whom clause (a) of this Regulation applies has failed to comply with the requirements of that clause, the Society shall deem such failure as serious and as warranting the making of an application by the Society to the President of the High Court for an order pursuant to section 58 of the Act of 1994.

8. Where an authorised person attends at a place of business of a solicitor pursuant to section 66 of the Act of 1954 (as substituted by section 76 of the Act of 1994), the authorised person may require the solicitor to make available to him such accounting records as the authorised person deems reasonable and appropriate to show that there has been compliance by the solicitor with the requirements of these Regulations.

Dated this fourth day of November, 1998

Signed on behalf of the Law Society of Ireland pursuant to section 79 of the Solicitors Act, 1954 :

LAURENCE K SHIELDS

PRESIDENT OF THE LAW SOCIETY OF IRELAND

I hereby consent, as required by section 30A(1) of the Solicitors (Amendment) Act, 1994 (as inserted by section 46 of the Investor Compensation Act, 1998 ), to the making of the above Regulations.

Dated this 16th day of November, 1998

JOHN O'DONOGHUE, T.D.

MINISTER FOR JUSTICE, EQUALITY AND LAW REFORM

EXPLANATORY NOTE

The principal purpose of the Instrument is to provide that-

• a solicitor, who is not an authorised investment business firm or who does not hold himself out as a provider of investment business services or investment advice, who applies to the Law Society of Ireland for an annual practising certificate will undertake: (a) only to provide investment business services (which include the activities of an insurance intermediary) or investment advice to clients incidental to the provision of legal services to such clients; (b) not to hold himself out as being an investment business firm; and, (c) when providing such incidental services and acting as an investment product intermediary, not to hold an appointment in writing other than from Central Bank of Ireland-authorised financial firms, institutions or persons situate in the State;

• a solicitor, in respect of whom a practising certificate is in force who also chooses to operate as an authorised investment business firm providing investment business services (which includes the activities of an insurance intermediary) or investment advice not incidental to the provision of legal services, or who holds himself out as providing such services or advice, will be required to provide forms of indemnity against losses due to his default, that may be suffered by clients to whom he provides such non-legal services, of an equivalent level to that provided (under the Solicitors Acts, 1954 to 1994) by law to clients who are in receipt of legal services from a solicitor in respect of whom a practising certificate is in force but who is not so operating;

• other incidental matters.