In order to assess whether your firm will meet the updated Eligibility Criteria, you should consider these steps as soon as possible:

1. Firstly, you should review and check the accuracy of the information you hold about the number and percentage of holders of your firm’s voting rights who are ‘qualified persons’. Guidance on who is a qualified person is included within the Audit Regulations. (This may include someone who holds a non-UK qualification.)
   
   A majority of a firm’s voting rights must be held by such persons.
   
   
2. Identify from your firm’s constitution: what matters, if any are decided by a supermajority of persons with voting rights and what matters are decided by a simple majority.
   
   If a firm has matters that specify a higher than simple majority, then qualified persons must hold the supermajority if the voting matter relates to a change to your firm’s constitution or it directs the overall policy of your firm.
   
   
3. Consider whether each voting matter is a constitutional change or directs the overall policy of your firm.
   
   We expect firms will need to critically assess all matters that require a supermajority approval, to determine if they relate to constitutional changes or changes to the direction of the firm’s overall policy.
   
   Constitutional changes
   
   Whether matters amount to altering the constitution of a firm is a binary question. They either do or they do not, and it should be straightforward to tell in most cases. Not all alterations of a firm’s constitution involve matters of great consequence. For example, changes to a firm’s name or an update to terminology or references are constitutional changes.
   
   Any matter that alters a firm’s constitution must be decided by a majority of qualified persons.
   
   Specifically, where alterations to your firm’s constitution need to be decided by a supermajority of persons with voting rights, then this supermajority must be comprised of qualified persons.
   
   Policy changes
   
   Whether matters amount to directing the overall policy of the firm is much more judgemental than constitutional changes and will depend on an analysis of the facts in each case. The ability to direct a firm’s overall policy involves the power to take significant decisions. Significance need not always be measured by the number or range of the decisions taken.
   
   Where a firm concludes that a matter does direct its overall policy, and such a matter requires the approval of a supermajority of persons with voting rights, then this supermajority must be comprised of qualified persons.
   
   
4. Where a firm’s affairs are managed by a board of directors, committee or other management body, the same considerations apply. If certain decisions require approval by a supermajority of members of the management body, this supermajority needs to be made up of qualified persons.

To be clear, where your firm’s constitution requires that certain decisions are approved by a supermajority, this does not need to change.

Rather, where such a requirement is in place, it must be correctly met, ie, where decisions amount to directing the overall policy of your firm or altering its constitution, you need to ensure that there is a supermajority of eligible individuals who are making these decisions.