Building Societies Act 1986

Section 77.

SCHEDULE 11 U.K. F1 Auditors: Appointment, Tenure...

Textual Amendments

F1 Words in Sch. 11 heading omitted (6.4.2008) by virtue of The Companies Act 2006 (Consequential Amendments etc) Order 2008 (S.I. 2008/948), art. 2(2), Sch. 1 para. 14(a), Sch. 2 (with arts. 6, 11, 12)

Modifications etc. (not altering text)

C1 Sch. 11 excluded by S.I. 1986/2168, art. 12(a)

Appointment U.K.

1 (1) The [F2 first auditor] of a building society may be appointed by the directors at any time before the first general meeting of the building society following the end of the society’s first financial year [F3 and an auditor] so appointed shall hold office until the conclusion of that meeting. U.K.

(2) If the directors fail to exercise their powers under sub-paragraph (1) above those powers may be exercised by the building society in general meeting.

Textual Amendments

F2 Words in Sch. 11 para. 1(1) substituted (29.6.2008) by The Building Societies Act 1986 (Accounts, Audit and EEA State Amendments) Order 2008 (S.I. 2008/1519), art. 1(2), Sch. 2 para. 8(a)(i)

F3 Words in Sch. 11 para. 1(1) substituted (29.6.2008) by The Building Societies Act 1986 (Accounts, Audit and EEA State Amendments) Order 2008 (S.I. 2008/1519), art. 1(2), Sch. 2 para. 8(a)(ii)

2 U.K. The directors, or the building society in general meeting, may fill any casual vacancy in the office of auditor; but while any such vacancy continues, the surviving or continuing auditor or auditors (if any) may act.

3 (1) If at any annual general meeting of a building society no [F4 auditor is] appointed or re-appointed, the [F5 appropriate authority] may appoint a person to fill the vacancy; and the society shall, within one week of the power of the [F5 appropriate authority] becoming exercisable, [F6 give notice to the FCA and, if the society is a PRA-authorised person, to the PRA] of that fact. U.K.

(2) If a building society fails to give the notice required by sub-paragraph (1) above the society shall be liable on summary conviction—

(a) to a fine not exceeding level 3 on the standard scale, and

(b) in the case of a continuing offence, to an additional fine not exceeding £40 for every day during which the offence continuesX;

and so shall any officer who is also guilty of the offence.

Textual Amendments

F4 Words in Sch. 11 para. 3(1) substituted (29.6.2008) by The Building Societies Act 1986 (Accounts, Audit and EEA State Amendments) Order 2008 (S.I. 2008/1519), art. 1(2), Sch. 2 para. 8(b)

F5 Words in Sch. 11 para. 3(1) substituted (1.4.2013) by The Financial Services Act 2012 (Mutual Societies) Order 2013 (S.I. 2013/496), art. 1(1), Sch. 8 para. 55(2)(a) (with Sch. 12)

F6 Words in Sch. 11 para. 3(1) substituted (1.4.2013) by The Financial Services Act 2012 (Mutual Societies) Order 2013 (S.I. 2013/496), art. 1(1), Sch. 8 para. 55(2)(b) (with Sch. 12)

[F7 3A (1) Any term in a contract which, in relation to the conduct of an audit of a building society, has the effect of restricting the general meeting of the building society's choice of auditor to certain categories or lists of auditors has no effect. U.K.

(2) If a third party attempts to impose a contractual clause of the kind mentioned in sub-paragraph (1), or to improperly influence the decision of a general meeting of the building society on the selection of an auditor, the directors of the building society must inform the competent authority without delay.

Textual Amendments

F7 Sch. 11 paras. 3A-3C inserted (17.6.2016) by The Statutory Auditors and Third Country Auditors Regulations 2016 (S.I. 2016/649), reg. 1(1)(a), Sch. 4 para. 8(a) (with reg. 1(6))

3B (1) This paragraph applies to the appointment of an auditor or auditors under section 77, where the building society has an audit committee. U.K.

(2) Before an appointment to which this paragraph applies is made—

(a) the audit committee of the building society must make a recommendation to the directors in connection with the appointment, and

(b) the directors must propose an auditor or auditors for appointment, including the following information in the proposal—

(i) the recommendation made by the audit committee in connection with the appointment, or

(ii) if the directors' proposal departs from the preference of the audit committee, the reasons for not following the recommendation.

(3) Before the audit committee makes a recommendation or the directors make a proposal under sub-paragraph (2), the committee or directors must carry out a selection procedure in accordance with Article 16(3) of the Audit Regulation.

(4) The audit committee must in its recommendation—

(a) identify its first and second choice candidates for appointment,

(b) give reasons for the choices so identified,

(c) state that—

(i) the recommendation is free from influence by a third party, and

(ii) no contractual term of the kind mentioned in paragraph 3A has been imposed on the building society.

(5) Sub-paragraphs (3) and (4) do not apply in relation to a recommendation or proposal for appointment of an auditor or auditors for a financial year (“the relevant financial year”)—

(a) if the relevant financial year begins during a transitional period mentioned in sub-paragraph (6); or

(b) if—

(i) a selection procedure mentioned in sub-paragraph (7) has been carried out in respect of the appointment of the auditor or auditors in relation to a financial year beginning less than ten years before the first day of the relevant financial year; and

(ii) the auditor or auditors were appointed for the financial year before the relevant financial year.

(6) The transitional periods are—

(a) in the case of an auditor who was first appointed for a financial year beginning before 17th June 1994 and who continues to hold office on 17th June 2016, the period which begins on 17th June 2016 and ends on the day before the first day of the first financial year of the building society that begins on or after 17th June 2020;

(b) in the case of an auditor who was first appointed for a financial year beginning on or after 17th June 1994 and before 17th June 2003 and who continues to hold office on 17th June 2016, the period which begins on 17th June 2016 and ends on the day before the first day of the first financial year of the building society that begins on or after 17th June 2023.

(7) The selection procedures are—

(a) a selection procedure which is in accordance with sub-paragraphs (3) and (4);

(b) a selection procedure which substantially meets the requirements of Article 16(2) to (5) of the Audit Regulation, having regard to the circumstances at the time (including whether the building society had an audit committee), which was carried out in relation to a financial year which began before 17th June 2016.

Textual Amendments

F7 Sch. 11 paras. 3A-3C inserted (17.6.2016) by The Statutory Auditors and Third Country Auditors Regulations 2016 (S.I. 2016/649), reg. 1(1)(a), Sch. 4 para. 8(a) (with reg. 1(6))

3C (1) This paragraph applies to the appointment of an auditor or auditors under section 77, where the building society does not have an audit committee. U.K.

(2) Before an appointment to which this paragraph applies is made the directors must propose an auditor or auditors for appointment.

(3) Before the directors make a proposal under sub-paragraph (2), they must carry out a selection procedure in accordance with Article 16(3) of the Audit Regulation.

(4) Sub-paragraph (3) does not apply in relation to a proposal for appointment of an auditor or auditors for a financial year (“the relevant financial year”)—

(a) if the relevant financial year begins during a transitional period mentioned in sub-paragraph (5); or

(b) if—

(i) a selection procedure mentioned in sub-paragraph (6) has been carried out in respect of the appointment of the auditor or auditors in relation to a financial year beginning less than ten years before the first day of the relevant financial year; and

(ii) the auditor or auditors were appointed for the financial year before the relevant financial year.

(5) The transitional periods are—

(a) in the case of an auditor who was first appointed in respect of a financial year beginning before 17th June 1994 and who continues to hold office on 17th June 2016, the period which begins on 17th June 2016 and ends on the day before the first day of the first financial year of the building society that begins on or after 17th June 2020;

(b) in the case of an auditor who was first appointed in respect of a financial year beginning on or after 17th June 1994 and before 17th June 2003 and who continues to hold office on 17th June 2016, the period which begins on 17th June 2016 and ends on the day before the first day of the first financial year of the building society that begins on or after 17th June 2023.

(6) The selection procedures are—

(a) a selection procedure which is in accordance with sub-paragraph (4);

(b) a selection procedure which substantially meets the requirements of Article 16(2) to (5) of the Audit Regulation, having regard to the circumstances at the time (including whether the company had an audit committee), which was carried out in relation to a financial year which began before 17th June 2016.]

Textual Amendments

F7 Sch. 11 paras. 3A-3C inserted (17.6.2016) by The Statutory Auditors and Third Country Auditors Regulations 2016 (S.I. 2016/649), reg. 1(1)(a), Sch. 4 para. 8(a) (with reg. 1(6))

4 (1) A resolution at a general meeting of a building society— U.K.

(a) appointing as auditor a person other than a retiring auditor; or

(b) filling a casual vacancy in the office of auditor; or

(c) reappointing as auditor a retiring auditor who was appointed by the directors to fill a casual vacancy; or

(d) removing an auditor before the expiration of his term of office,

shall not be effective unless notice of the intention to move it has been given to the society not less than twenty-eight days before the meeting at which it is moved.

(2) A building society shall give to its members notice of any such resolution at the same time and in the same manner as it gives notice of the meeting, or, if that is not practicable, shall give them notice of the resolution, not less than twenty-one days before the meeting, either by advertisement in a newspaper having an appropriate circulation or in any other way allowed by the rules of the society.

(3) On receipt of notice of such an intended resolution as is mentioned above the society shall forthwith send a copy of it—

(a) to the person proposed to be appointed or removed, as the cae may be;

(b) in a case within sub-paragraph (1)(a), to the retiring auditor; and

(c) where, in a case within sub-paragraph (1)(b) or (c), the casual vacancy was caused by the resignation of an auditor, to the auditor who resigned.

(4) Where notice is given of such a resolution as is mentioned in sub-paragraphs (1)(a) or (d) and the retiring auditor, or (as the case may be) the auditor proposed to be removed, makes with respect to the intended resolution representations, in writing to the society (not exceeding a reasonable length) and requests their notification to the members, the society shall (unless the representations are received by it too late to do so)—

(a) in any notice of the resolution given to members, state the fact of the representations having been made, and

(b) send a copy of the representations to every member to whom notice of the meeting is or has been sent.

(5) if a copy of such representations is not sent out as required by sub-paragraph (4) above because it was received too late or because of the society’s default, the auditor may (without prejudice to his right to be heard orally) require that the representations shall be read out at the meeting.

(6) The building society or any person claiming to be aggrieved may, within fourteen days of the receipt by the society of any representations made to it under sub-paragraph (4) above, apply in accordance with sub-paragraph (7) or (8) below to—

(a) the High Court, or

(b) the [F8 appropriate authority] ,

for an order that copies of the representations need not or, as the case may be, shall not be sent out nor the representations read out at the meeting.

(7) An application under this sub-paragraph is an application to the High Court on the ground that the auditor is abusing the rights conferred by sub-paragraph (4) above to secure needless publicity for defamatory matter, and if the court is satisfied that the auditor is so abusing those rights it may by order direct that copies of the representations need not be sent out nor the representations read out at the meeting; and the court may further order the society’s costs on the application to be paid in whole or in part by the auditor notwithstanding that he is not a party to the application.

(8) An application under this sub-paragraph is an application to the [F9 appropriate authority] on the ground that the sending out of copies of or the reading out at the meeting of the representations would be likely to diminish substantially the confidence in the society of investing members of the public and if the [F9 appropriate authority] is satisfied that the sending out of copies of the representations or the reading of them would have that effect it shall by order direct that copies of the representations shall not be sent out nor the representations read at the meeting.

(9) The building society shall—

(a) if the High Court makes an order under sub-paragraph (7) above or the [F10 appropriate authority] makes an order under sub-paragraph (8) above, send within fourteen days of the decision a statement setting out the effect of the order to the persons mentioned in sub-paragraph (4)(b) above; and

(b) if not, either send a copy of the written representations made under sub-paragraph (4) above to those persons or cause the representations to be read out at the meeting.

[F11 (9A) Sub-paragraphs (9B) and (9C) apply where—

(a) a copy of representations is required to be sent under sub-paragraph (4)(b) or (9)(b); or

(b) a statement is required to be sent under sub-paragraph (9)(a).

(9B) Where a copy of representations or a statement is required to be sent to a member—

(a) it may be sent to him electronically only if it is sent to an electronic address notified by the member for the purpose; but

(b) the requirement to send it shall also be treated as satisfied if the conditions set out in sub-paragraph (9C) are satisfied.

(9C) The conditions of this sub-paragraph are satisfied in the case of a copy of representations or a statement if—

(a) the society and the member have agreed that information that is required to be sent to him may instead be accessed by him on a web site;

(b) the agreement applies to the representations or statement in question;

(c) the member is notifiedF12 ... of—

(i) the publication of the copy of the representations or the statement on a web site,

(ii) the address of that web site,

(iii) the place on that web site where the representations or statement may be accessed, and how it may be accessed,

and where the notification concerns the publication of a statement required to be sent by sub-paragraph (9)(a), the member is notified within the period specified in that paragraph; and

(d) the copy of the representations or the statement is published continuously on that web site throughout the period beginning with the date on which notification is given in accordance with paragraph (c) and ending with the conclusion of the meeting.]

(10) If default is made in complying with sub-paragraph (4) or (9) above the building society shall be liable—

(a) on conviction on indictment to a fine; or

(b) on summary confiction to a fine not exceeding the statutory maximum and, in the case of a continuing offence, to a fine not exceeding [F13 one tenth of the statutory maximum] [F13 one-tenth of the greater of £5,000 or the amount corresponding to level 4 on the standard scale for summary offences] for every day during which the offence continues;

and so shall any officer who is also guilty of the offence.

[F14 (10A) Where, in a case in which sub-paragraph (9A)(b) is relied on for compliance with a requirement of sub-paragraph (4) or (9)—

(a) a copy of representations or a statement is published on a web site for a part, but not all, of the period mentioned in sub-paragraph (9C)(d), but

(b) the failure to publish it throughout that period is wholly attributable to circumstances which it would not be reasonable to have expected the society to prevent or avoid,

no offence is committed under sub-paragraph (10) by reason of that failure.]

Textual Amendments

F8 Words in Sch. 11 para. 4(6)(b) substituted (1.4.2013) by The Financial Services Act 2012 (Mutual Societies) Order 2013 (S.I. 2013/496), art. 1(1), Sch. 8 para. 55(3) (with Sch. 12)

F9 Words in Sch. 11 para. 4(8) substituted (1.4.2013) by The Financial Services Act 2012 (Mutual Societies) Order 2013 (S.I. 2013/496), art. 1(1), Sch. 8 para. 55(3) (with Sch. 12)

F10 Words in Sch. 11 para. 4(9) substituted (1.4.2013) by The Financial Services Act 2012 (Mutual Societies) Order 2013 (S.I. 2013/496), art. 1(1), Sch. 8 para. 55(3) (with Sch. 12)

F11 Sch. 11 para. 4(9A)-(9C) inserted (20.3.2003) by The Building Societies Act 1986 (Electronic Communications) Order 2003 (S.I. 2003/404), arts. 1(1), 22(2)

F12 Words in Sch. 11 para. 4(9C)(c) omitted (18.2.2014) by virtue of Financial Services (Banking Reform) Act 2013 (c. 33), s. 148(2), Sch. 9 para. 14(2)

F13 Words in Sch. 11 para. 4(10)(b) substituted (E.W.) (12.3.2015) by The Legal Aid, Sentencing and Punishment of Offenders Act 2012 (Fines on Summary Conviction) Regulations 2015 (S.I. 2015/664), reg. 1(1), Sch. 3 para. 4(a) (with reg. 5(1))

F14 Sch. 11 para. 4(10A) inserted (20.3.2003) by The Building Societies Act 1986 (Electronic Communications) Order 2003 (S.I. 2003/404), arts. 1(1), 22(3)

Qualification and disqualification of auditors U.K.

F15 5 U.K. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F15 Sch. 11 para. 5 repealed (6.4.2008) by The Companies Act 2006 (Consequential Amendments etc) Order 2008 (S.I. 2008/948), art. 2(2), Sch. 2 (with arts. 6, 11, 12)

[F16 Tenure U.K.

Textual Amendments

F16 Sch. 11 paras. 5A, 5B and heading inserted (17.6.2016) by The Statutory Auditors and Third Country Auditors Regulations 2016 (S.I. 2016/649), reg. 1(1)(a), Sch. 4 para. 8(b) (with reg. 1(6))

5A (1) The terms of appointment of an auditor or auditors are subject to the requirement that the auditor or auditors cease to hold office at the conclusion of the annual general meeting in respect of the first complete financial year that follows the expiry of the maximum engagement period. U.K.

(2) In this paragraph—

• “the maximum engagement period” means, subject to sub-paragraph (3) and paragraph 5B (which makes transitional provision in relation to auditors appointed before 17th June 2016), whichever of the following periods is longest—

  (a)

  the period of ten years beginning with the first day of the first financial year in respect of which the auditor was appointed,

  (b)

  the period of twenty years beginning with the first day of the first financial year in respect of which the auditor was appointed, if the selection requirements are satisfied for at least one financial year which begins every ten years in that period, or

  (c)

  such other period of no more than twenty years beginning with the first day of the first financial year in respect of which the auditor was appointed and ending on the last day of the relevant ten year period;

• “the relevant ten year period” means the period of ten years beginning with the first day of the last financial year—

  (a)

  which begins within ten years of the first day of the first financial year in respect of which the auditor was appointed, and

  (b)

  in respect of which the auditor was reappointed following the carrying out of a selection procedure in accordance with the selection requirements; and

• “the selection requirements” means—

  (a)

  the requirements of paragraph 3B(3) and (4) if the building society has an audit committee, or

  (b)

  the requirements of paragraph 3C(3) if the building society does not have an audit committee.

(3) The maximum engagement period may be extended by a period of up to two years with the approval of the competent authority, provided that—

(a) in a case where the period within paragraph (a) of the definition of “the maximum engagement period” is being extended, the appointment of the auditor for the first complete financial year following the end of that period is made following the carrying out of a selection procedure in accordance with the selection requirements; and

(b) in all cases, the competent authority is satisfied that exceptional circumstances exist.

(4) An auditor is ineligible for appointment as auditor if—

(a) within the four years preceding the start of the financial year to which that appointment relates the auditor has ceased by virtue of sub-paragraph (1) to hold office as auditor of that building society, or

(b) the auditor is a member of the same network as an auditor who within the four years preceding the start of the financial year to which that appointment relates has ceased by virtue of that sub-paragraph to hold office as auditor of that building society.

(5) In this paragraph, “network” means an association of persons other than a firm co-operating in audit work by way of—

(a) profit-sharing;

(b) cost-sharing;

(c) common ownership, control or management;

(d) common quality control policies and procedures;

(e) common business strategy; or

(f) use of a common name.

Maximum engagement period: transitional arrangements U.K.

5B (1) In the case of an auditor who was first appointed in respect of a financial year beginning before 17th June 1994 and who continues to hold office on 17th June 2016, “the maximum engagement period” means the period ending on the day before the first day of the first financial year of the building society that begins on or after 17th June 2020.

(2) In the case of an auditor who was first appointed in respect of a financial year beginning on or after 17th June 1994 and before 17th June 2003 and who continues to hold office on 17th June 2016, “the maximum engagement period” means the period ending on the day before the first day of the first financial year of the building society that begins on or after 17th June 2023.

(3) In the case of an auditor who was first appointed in respect of a financial year beginning on or after 17th June 2003 and before 17th June 2016 and who continues to hold office on 17th June 2016, “the maximum engagement period” means whichever of the following periods is longest—

(a) the period ending on whichever is the later of—

(i) the day before the first day of the first financial year of the building society that begins on or after 17th June 2016;

(ii) the last day of the period of ten years beginning with the first day of the first financial year of the building society in respect of which the auditor was appointed.

(b) the period of twenty years beginning with the first day of the first financial year in respect of which the auditor was appointed, if the selection requirements are satisfied for at least one financial year which begins every ten years in the period beginning on 17th June 2007, or

(c) such other period of no more than twenty years beginning with the first day of the first financial year in respect of which the auditor was appointed and ending on the last day of the relevant ten year period.

(4) In this paragraph—

• “the relevant ten year period” means the period of ten years beginning with the first day of the last financial year—

  (a)

  which begins either within ten years of the first day of the first financial year in respect of which the auditor was appointed or if later, on or before 16th June 2017, and

  (b)

  in respect of which the auditor was reappointed following the carrying out of a selection procedure in accordance with the selection requirements;

• “the selection requirements” means—

  (a)

  in relation to a financial year beginning on or after 17th June 2016—

  (i)

  the requirements of paragraph 3B(3) and (4) if the building society has an audit committee, or

  (ii)

  the requirements of paragraph 3C(3) if the building society does not have an audit committee,

  (b)

  in relation to a financial year beginning before 17th June 2016, the requirement that the building society carries out a tender process which substantially meets the requirements of Article 16(2) to (5) of the Audit Regulation, having regard to the circumstances at the time (including whether the building society had an audit committee).

(5) The maximum engagement period may be extended by a period of up to two years with the approval of the competent authority, provided that—

(a) in a case where the period under sub-paragraph (3)(a) is being extended, the appointment of the auditor for the first complete financial year following the end of that period is made following the carrying out of a selection procedure in accordance with the selection requirements; and

(b) in all cases, the competent authority is satisfied that exceptional circumstances exist.]

Removal of auditors U.K.

6 (1) A building society may by resolution in general meeting remove an auditor before the expiration of his term of office, notwithstanding anything in any agreement between it and him. U.K.

(2) Where a resolution removing an auditor is passed at a general meeting of a building society, the society shall within 14 days give notice of that fact to the [F17 FCA and, if the society is a PRA-authorised person, the PRA] .

(3) If a building society fails to give the notice required by s ub-paragraph (2) above the society shall be liable on summary conviction to a fine not exceeding level 3 on the standard scale and, in the case of a continuing offence, to an additional fine not exceeding £40 for every day during which the offence continues and so shall every officer who is also guilty of the offence.

(4) Nothing in this paragraph is to be taken as depriving a person removed under it of compensation or damages that may be payable to him in respect of the termination of his appointment as auditor.

[F18 (5) An auditor may not be removed from office before the expiration of that auditor's term of office except—

(a) by resolution under this paragraph, or

(b) in accordance with paragraph 6ZA.]

Textual Amendments

F17 Words in Sch. 11 para. 6(2) substituted (1.4.2013) by The Financial Services Act 2012 (Mutual Societies) Order 2013 (S.I. 2013/496), art. 1(1), Sch. 8 para. 55(4) (with Sch. 12)

F18 Sch. 11 para. 6(5) inserted (17.6.2016) by The Statutory Auditors and Third Country Auditors Regulations 2016 (S.I. 2016/649), reg. 1(1)(a), Sch. 4 para. 8(c) (with reg. 1(6))

Application to court to remove auditor from office U.K.

[F19 6ZA (1) The competent authority may apply to the High Court for an order removing an auditor of a building society from office if the authority considers that there are proper grounds for removing the auditor from office.

(2) The members of a building society may apply to the High Court for an order removing an auditor of the building society from office if the applicant or applicants consider that there are proper grounds for removing the auditor from office.

(3) If the court is satisfied, on hearing an application under sub-paragraph (1), that there are proper grounds for removing the auditor from office, it may make an order removing the auditor from office.

(4) If the court is satisfied, on hearing an application under sub-paragraph (2), that—

(a) the applicants represent in total—

(i) not less than 5% of the voting rights of all the members having a right to vote at a general meeting of the building society, or

(ii) not less than 5% in nominal value of the amount standing to the credit of shares in a building society as shown by the latest balance sheet, and

(b) there are proper grounds for removing the auditor from office,

the court may make an order removing the auditor from office.

(5) For the purposes of this paragraph, divergence of opinions on accounting treatments or audit procedures are not to be taken to be proper grounds for removing an auditor from office.]

Textual Amendments

F19 Sch. 11 para. 6ZA inserted (17.6.2016) by The Statutory Auditors and Third Country Auditors Regulations 2016 (S.I. 2016/649), reg. 1(1)(a), Sch. 4 para. 8(d) (with reg. 1(6))

[F20 Removal of auditor on improper grounds U.K.

Textual Amendments

F20 Sch. 11 para. 6A and cross-heading inserted (29.6.2008) by The Building Societies Act 1986 (Accounts, Audit and EEA State Amendments) Order 2008 (S.I. 2008/1519), arts. 1(2), 6(1)

6A. (1) Where an auditor of a building society is removed from office [F21 , other than by order of the High Court made under paragraph 6ZA,] an application may be made to the High Court under this paragraph. U.K.

(2) The persons who may make such an application are—

(a) any member of the society who was also a member at the time of the removal;

[F22 (b) the FCA; and

(c) if the society is a PRA-authorised person, the PRA.]

(3) If the court is satisfied that the removal was—

(a) on grounds of divergence of opinion on accounting treatments or audit procedures, or

(b) on any other improper grounds,

it may make such order as it thinks fit for giving relief in respect of the removal.

(4) The court may, in particular—

(a) declare that any resolution of the society removing an auditor, or appointing a new auditor in his place, is void;

(b) require the directors of the society to re-appoint the auditor until the next general meeting of the society;

(c) give directions as to the conduct of the society’s affairs in the future.]

Textual Amendments

F21 Words in Sch. 11 para. 6A(1) inserted (17.6.2016) by The Statutory Auditors and Third Country Auditors Regulations 2016 (S.I. 2016/649), reg. 1(1)(a), Sch. 4 para. 8(e) (with reg. 1(6))

F22 Sch. 11 para. 6A(2)(b)(c) substituted for Sch. 11 para. 6A(2)(b) (1.4.2013) by The Financial Services Act 2012 (Mutual Societies) Order 2013 (S.I. 2013/496), art. 1(1), Sch. 8 para. 55(5) (with Sch. 12)

Resignation of auditors U.K.

7 (1) An auditor of a building society may resign his office by depositing a notice to that effect at the principal office of the society; and any such notice operates to bring his term of office to an end on the date on which the notice is deposited, or on such later date as may be specified in it. U.K.

(2) An auditor’s notice of resignation shall not be effective unless it contains either—

(a) a statement to the effect that there are no circumstances connected with his resignation which he considers should be brought to the notice of the members of, or depositors with, the society, or

(b) a statement of any such circumstances as are mentioned above.

(3) Where a notice under this paragraph is deposited at the principal office of a building society it shall within fourteen days send a copy of that notice—

(a) to the [F23 FCA and, if the society is a PRA-authorised person, the PRA] , and

(b) if the notice contains a statement under sub-paragraph (2)(b) above, to every person who under section 76(8) is entitled to receive a copy of the summary financial statement.

(4) The building society or any person claiming to be aggrieved may, within fourteen days of the receipt by the society of a notice containing a statement under sub-paragraph (2)(b), apply in accordance with sub-paragraph (5) or (6) below to—

(a) the High Court; or

(b) the [F24 appropriate authority] ,

for an order that copies of the notice need not or, as the case may be, shall not be sent out.

(5) An application under this sub-paragraph is an application to the High Court on the ground that the auditor is using the notice to secure needless publicity for defamatory matter, and if the court is satisfied that the auditor is using the notice for that purpose it may by order direct that copies of it need not be sent out; and the court may further order the society’s costs on the application to be paid in whole or in part by the auditor, notwithstanding that he is not a party to the application.

(6) An application under this sub-paragraph is an application to the [F25 appropriate authority] on the ground that the sending out of the notice would be likely to diminish substantially the confidence in the society of investing members of the public; and if the [F25 appropriate authority] is satisfied that the sending out of the notice would be likely to have that effect it shall by order direct that copies of it shall not be sent out.

(7) The building society shall, within fourteen days of the decision of the High Court or of the [F26 appropriate authority] , send to the persons mentioned in sub-paragraph (3)—

(a) if the court makes an order under sub-paragraph (5) above or the [F26 appropriate authority] makes an order under sub-paragraph (6), a statement setting out the effect of the order; and

(b) if not, a copy of the notice containing the statement under sub-paragraph (2)(b).

[F27 (7A) Sub-paragraphs (7B) and (7C) apply where—

(a) the reference to a notice containing a statement under sub-paragraph (2)(b) is required to be sent to a person under sub-paragraph (3)(b) or sub-paragraph (7)(b); or

(b) a statement is required to be sent under sub-paragraph (7)(a).

(7B) Where a notice or a statement is required to be sent to a person, the notice or statement may be sent to him electronically only if—

(a) in a case where a person mentioned in sub-paragraph (3)(b) has notified the society of an electronic address for the purpose of this paragraph, it is sent to that address; or

(b) in a case where no electronic address has been notified for the purpose of this paragraph, it is sent to an electronic address notified by him for the purpose of subsection (8B) of section 76 (electronic address for the reception of summary financial statement for members and depositors).

(7C) The requirement to send a notice or a statement shall also be treated as satisfied if—

(a) the society and a person mentioned in sub-paragraph (3)(b) have agreed that information that is required to be sent to him may instead be accessed by him on a web site;

(b) the agreement applies to the notice or statement in question;

(c) [F28 the person] is notified of—

(i) the publication of the notice or statement on a web site,

(ii) the address of that web site, and

(iii) the place on that web site where the notice or statement may be accessed, and how it may be accessed; and

(d) the notice or statement is published on the web site throughout a period of at least 14 days, beginning with the day on which the person is notified in accordance with paragraph (c).]

(8) If default is made in complying with sub-paragraph (3) or sub-paragraph (7) the building society shall be liable—

(a) on conviction on indictment to a fine; or

(b) on summary conviction to a fine not exceeding the statutory maximum and, in the case of a continuing offence, to a fine not exceeding [F29 one tenth of the statutory maximum ] [F29 one-tenth of the greater of £5,000 or the amount corresponding to level 4 on the standard scale for summary offences] for every day during which the offence continues;

and so shall any officer who is also guilty of the offence.

[F30 (8A) Where, in a case in which sub-paragraph (7C) is relied on for compliance with a requirement under sub-paragraph (3) or (7)—

(a) a notice or a statement is published for a part, but not all, of the period mentioned in sub-paragraph (7C)(d), but

(b) the failure to publish it throughout that period is wholly attributable to circumstances which it would not be reasonable to have expected the society to prevent or avoid,

no offence is committed under sub-paragraph (8) by reason of that failure.]

Textual Amendments

F23 Words in Sch. 11 para. 7(3)(a) substituted (1.4.2013) by The Financial Services Act 2012 (Mutual Societies) Order 2013 (S.I. 2013/496), art. 1(1), Sch. 8 para. 55(6)(a) (with Sch. 12)

F24 Words in Sch. 11 para. 7(4) substituted (1.4.2013) by The Financial Services Act 2012 (Mutual Societies) Order 2013 (S.I. 2013/496), art. 1(1), Sch. 8 para. 55(6)(b) (with Sch. 12)

F25 Words in Sch. 11 para. 7(6) substituted (1.4.2013) by The Financial Services Act 2012 (Mutual Societies) Order 2013 (S.I. 2013/496), art. 1(1), Sch. 8 para. 55(6)(b) (with Sch. 12)

F26 Words in Sch. 11 para. 7(7) substituted (1.4.2013) by The Financial Services Act 2012 (Mutual Societies) Order 2013 (S.I. 2013/496), art. 1(1), Sch. 8 para. 55(6)(b) (with Sch. 12)

F27 Sch. 11 para. 7(7A)-(7C) inserted (20.3.2003) by The Building Societies Act 1986 (Electronic Communications) Order 2003 (S.I. 2003/404), arts. 1(1), 23(2)

F28 Words in Sch. 11 para. 7(7C)(c) substituted (18.2.2014) by Financial Services (Banking Reform) Act 2013 (c. 33), s. 148(2), Sch. 9 para. 14(3)

F29 Words in Sch. 11 para. 7(8)(b) substituted (E.W.) (12.3.2015) by The Legal Aid, Sentencing and Punishment of Offenders Act 2012 (Fines on Summary Conviction) Regulations 2015 (S.I. 2015/664), reg. 1(1), Sch. 3 para. 4(b) (with reg. 5(1))

F30 Sch. 11 para. 7(8A) inserted (20.3.2003) by The Building Societies Act 1986 (Electronic Communications) Order 2003 (S.I. 2003/404), arts. 1(1), 23(3)

8 (1) Where an auditor’s notice of resignation contains a statement under paragraph 7(2)(b) above he may also deposit at the principal office of the society a requisition signed by him calling on the directors of the society forthwith duly to convene a special general meeting of the society for the purpose of receiving and considering such explanation of the circumstances connected with this resignation as he may wish to place before the meeting. U.K.

(2) Where an auditor’s notice of resignation contains such a statement the auditor may request the society to send to its members—

(a) before the general meeting at which his term of office would otherwise expire or expires, as the case may be; or

(b) before any general meeting at which it is proposed to fill the vacancy caused by his resignation,

a statement in writing (not exceeding a reasonable length) of the circumstances connected with his resignation.

(3) The society shall in that case (unless the statement is received by it too late for it to comply)—

(a) in any notice of the meeting given to members state the fact of the statement having been made, and

(b) send a copy of the statement to every member to whom notice of the meeting is or has been sent.

[F31 (3A) Where a copy of a statement is required to be sent to a member under sub-paragraph (3)(b)—

(a) it may be sent to him electronically only if it is sent to an electronic address notified by the member for the purpose; but

(b) the requirement to send it shall also be treated as satisfied if the conditions set out in sub-paragraph (3B) are satisfied.

(3B) The conditions of this sub-paragraph are satisfied in the case of a copy of a statement if—

(a) the society and the member have agreed that information which is required to be sent to him may instead be accessed by him on a web site;

(b) the agreement applies to the statement in question;

(c) that member is notified F32 ... of—

(i) the publication of the statement on a web site,

(ii) the address of that web site, and

(iii) the place on that web site where the notice may be accessed, and how it may be accessed; and

(d) the statement is published continuously on that web site throughout the period beginning with the giving of that notification and ending with the conclusion of the meeting.

(3C) Where, in a case in which sub-paragraph (3A)(b) is relied on for compliance with a requirement under sub-paragraph (3)(b)—

(a) a statement is published for a part, but not all, of the period mentioned in subparagraph (3B)(d), but

(b) the failure to publish it throughout that period is wholly attributable to circumstances which it would not be reasonable to have expected the society to prevent or avoid,

that failure shall not invalidate the proceedings of the meeting.]

(4) If the directors of the society do not within 21 days from the date of the deposit of a requisition under this paragraph proceed duly to convene a meeting for a day not more than 28 days after the date on which the notice convening the meeting is given, every director who failed to take all reasonable steps to secure that a meeting was so convened shall be liable—

(a) on conviction on indictment to a fine; or

(b) on summary conviction to a fine not exceeding the statutory maximum.

(5) If a copy of the statement mentioned in sub-paragraph (2) is not sent out as required by sub-paragraph (3) because it was received too late or because of the society’s default, the auditor may (without prejudice to his right to be heard orally) require that the statement be read out at the meeting.

(6) Copies of a statement need not be sent out and the statement need not be read out at the meeting if—

(a) on an application made to the High Court by the society or a person aggrieved, the court is satisfied that the rights conferred by this paragraph are being abused to secure needless publicity for defamatory matter; or

(b) on an application to the [F33 PRA] by the society or a person aggrieved, the [F33 PRA] is satisfied that the circulating or reading out of the statement would be likely to diminish substantially the confidence in the society of investing members of the public.

(7) If the High Court makes an order under sub-paragraph (6)(a) above it may also order the society’s costs of the application to be paid by the auditor notwithstanding that he is not a party to the application.

(8) An auditor who has resigned his office is entitled to attend any such meeting as is mentioned in sub-paragraph (2)(a) or (b) and to receive all notices of, and other communications relating to, any such meeting which any member of the society is entitled to receive, and to be heard at any such meeting which he attends on any part of the business of the meeting which concerns him as former auditor of the society.

Textual Amendments

F31 Sch. 11 para. 8(3A)-(3C) inserted (20.3.2003) by The Building Societies Act 1986 (Electronic Communications) Order 2003 (S.I. 2003/404), arts. 1(1), 24

F32 Words in Sch. 11 para. 8(3B)(c) omitted (18.2.2014) by virtue of Financial Services (Banking Reform) Act 2013 (c. 33), s. 148(2), Sch. 9 para. 14(4)

F33 Word in Sch. 11 para. 8(6)(b) substituted (1.4.2013) by The Financial Services Act 2012 (Mutual Societies) Order 2013 (S.I. 2013/496), art. 1(1), Sch. 8 para. 55(7) (with Sch. 12)

[F34 Duty of auditor to notify appropriate audit authority U.K.

Textual Amendments

F34 Sch. 11 paras. 8A-8C and cross-headings inserted (29.6.2008) by The Building Societies Act 1986 (Accounts, Audit and EEA State Amendments) Order 2008 (S.I. 2008/1519), arts. 1(2), 6(2)

8A. (1) Where an auditor of a building society ceases for any reason to hold office, he must notify the appropriate audit authority. U.K.

(2) The notice must—

(a) inform the appropriate audit authority that he has ceased to hold office, and

(b) if the auditor resigns, be accompanied by a copy of the auditor’s notice of resignation.

(3) The notice required by this paragraph must also be accompanied by a statement of the reasons for his ceasing to hold office unless—

(a) the auditor resigns, and

(b) the notice of resignation contains a statement under paragraph 7(2)(b).

(4) The auditor must comply with this paragraph—

(a) if the auditor resigns, at the same time as he deposits his notice of resignation at the principal office of the building society;

(b) in any other case, not later than the end of the period of fourteen days beginning with the date on which he ceases to hold office.

(5) A person ceasing to hold office as auditor who fails to comply with this paragraph commits an offence.

(6) If that person is a firm an offence is committed by—

(a) the firm, and

(b) every officer of the firm who is in default.

(7) A person guilty of an offence under this paragraph is liable—

(a) on conviction on indictment, to a fine;

(b) on summary conviction, to a fine not exceeding the statutory maximum.

Duty of building society to notify appropriate audit authority U.K.

8B. (1) Where an auditor ceases to hold office before the end of his term of office, the building society must notify the appropriate audit authority. U.K.

(2) The notice must—

(a) inform the appropriate audit authority that the auditor has ceased to hold office, and

(b) be accompanied by—

(i) a statement by the society of the reasons for his ceasing to hold office, or

(ii) if the auditor resigns, and his notice of resignation contains a statement under paragraph 7(2)(b), a copy of that statement.

(3) The society must give notice under this paragraph—

(a) if the auditor resigns, not later than the end of the period of fourteen days beginning with the date on which the auditor’s notice of resignation is deposited at the society’s principal office;

(b) in any other case, not later than the end of the period of fourteen days beginning with the date on which the auditor ceases to hold office.

(4) If a building society fails to comply with this paragraph, an offence is committed by—

(a) the society, and

(b) every officer of the society who is in default.

(5) A person guilty of an offence under this paragraph is liable—

(a) on conviction on indictment, to a fine, and

(b) on summary conviction, to a fine not exceeding the statutory maximum.

[F35 Interpretation] U.K.

Textual Amendments

F35 Sch. 11 para. 8C heading substituted (17.6.2016) by The Statutory Auditors and Third Country Auditors Regulations 2016 (S.I. 2016/649), reg. 1(1)(a), Sch. 4 para. 8(f) (with reg. 1(6))

[F36 8C. U.K. In this Schedule—

• “appropriate audit authority” means—

  (a)

  the Secretary of State, or

  (b)

  if the Secretary of State has delegated functions under section 1252 of the Companies Act 2006 F37 to a body whose functions include receiving the equivalent notice under section 522 F38 or 523 F39 of that Act, that body;

• “audit committee” means a body which performs the functions referred to in Article 39(6) of Directive 2006/43/EC of the European Parliament and of the Council on statutory audits of annual accounts and consolidated accounts, amending Council Directives 78/660/EEC and 83/349/EEC and repealing Council Directive 84/253/EEC, or equivalent functions;

• “Audit Regulation” means Regulation 537/2014 of the European Parliament and of the Council on specific requirements regarding statutory audit of public interest entities and repealing Commission Decision 2005/989/EC; and

• “competent authority” means the Financial Reporting Council Limited F40 .]]

Textual Amendments

F36 Sch. 11 para. 8C substituted (17.6.2016) by The Statutory Auditors and Third Country Auditors Regulations 2016 (S.I. 2016/649), reg. 1(1)(a), Sch. 4 para. 8(g) (with reg. 1(6))

F37 2006 c. 46.

F38 Section 522 was amended by S.I. 2015/1732.

F39 Section 523 was amended by section 18 of the Deregulation Act 2015.

F40 A company registered in England and Wales with number 02486368.

U.K.

9 U.K. In the application of this Schedule to Scotland, references to the High Court shall be read as references to the Court of Session.