Central banks
Section 251: Financial assistance to building societies
556.This section provides HM Treasury with power to make amendments to the Building Societies Act, 1986 and certain consequential amendments with regard to the provision of financial assistance to building societies.
557.Subsection (1) provides a power to modify the Building Societies Act 1986 and that the financial assistance under the section may be provided by HM Treasury, the Bank of England, and other central banks (including the European Central Bank).
558.This section concerns the facilitation of those listed in subsection (1) to provide liquidity assistance to building societies where necessary.
559.The Building Societies Act 1986 (c.53) includes various provisions that deal with the ability of building societies to grant floating charges and other provisions which impose limits on what building societies can lend and how they fund themselves.
560.Section 11 of the Banking (Special Provisions) Act 2008 (c.2) makes similar provision to this section, but in relation to financial assistance provided by the Bank of England, the new provisions applies in addition to the Treasury and other central banks (including the ECB) and removes the reference to financial assistance provided for the purpose of maintaining financial stability, which in the context of a provision which removes restrictions where there is a public interest in providing financial assistance to building societies may be too narrow.
561.Subsection (2) sets out the purpose of the modifications of the 1986 Act, which is to modify provisions which would be capable of preventing, impeding or affecting the provision of financial assistance under the section. The subsection sets out examples of the matters which may be modified in the 1986 Act, which include provisions about establishment, constitution or powers, restrictions on raising funds or borrowing, provision about security and the application of insolvency law and other legislation concerning companies to building societies.
562.Subsection (3) provides that the order may disapply or modify the provisions referred to in subsection (2). The provisions can be by way of textual amendment or modification of the effect of a provision. An order to modify the Building Societies Act 1986 under this section is subject to the affirmative resolution procedure.
563.Subsection (7) provides that the Treasury may, by order, make further provision to modify or disapply the prohibition on floating charges in section 9B of the Building Societies Act 1986 beyond provision in relation to the institutions listed in subsection (1), if the Treasury think it is likely to help building societies to use, give effect to or take advantage of financial assistance offered by one of the institutions listed in subsection (1).
Section 252: Registration of charges
564.This section disapplies the requirements in Part 25 of the Companies Act, 2006, that institutions must register certain charges that they enter into at Companies House and in a public register at their office. The section provides that the requirements do not apply to charges granted in favour of the Bank of England, other central banks or the European Central Bank. This is because registration could otherwise lead to early disclosure of liquidity support.
565.Subsection (2) provides that the reference to Part 25 of the Companies Act 2006 also covers related provisions in the 2006 Act with reference to the registration requirements placed upon overseas companies in relation to certain charges. The reference to the 2006 Act is also treated as including reference to the corresponding provisions of the Companies Act 1985, which will remain in force generally until 1st October 2009. Further, the subsection provides that this section is also treated as referring to the corresponding provisions of companies law in Northern Ireland which remain generally in force until 1st October 2009.
Section 253: Registration of charges: Scotland
566.This section is consequential to section 252 above, and provides that the disapplication of Part 25 of the Companies Act (and related provisions) as provided for in section 252, shall also apply to the Bankruptcy and Diligence (Scotland) Act 2007 (the 2007 Act) which introduces a registration scheme for Scottish floating charges. This section therefore disapplies certain provisions of the 2007 Act, where these provisions would restrict the efficacy of section 252 above and for the same reasons as Part 25 of the Companies Act 2006 is disapplied.
567.Subsection (2) amends the 2007 Act such that, where floating charges covered by the Act are to be granted to a central bank, they are considered to have been created when the document creating the charge is executed. This alters the standard provisions with regard to the 2007 Act which stipulates that floating charges subject to the 2007 Act are created only when registered on the Scottish Register of Floating Charges. This provision will continue to apply except for cases where the charge is in favour of a ‘central institution’, that is, the Bank of England or another central bank (as defined in subsection (7)).
568.Subsections (3) to (6) further amend the 2007 Act in such a way as to ensure that floating charges issued in favour of a central institution are not required to be registered, by disapplying the appropriate provisions of that Act.
