http://www.legislation.gov.uk/ukpga/1986/53/2003-01-01

Building Societies Act 1986

An Act to make fresh provision with respect to building societies and further provision with respect to conveyancing services.

1986-07-25

text

text/xml

Statute Law Database

2024-11-14

2003-01-01

Building Societies Act 1986

s. 5(13)(a)

The Financial Services Act 2012 (Mutual Societies) Order 2013

Sch. 8

para. 4(4)

Sch. 12

art. 1(1)

Building Societies Act 1986

Sch. 11

para. 5

The Companies Act 2006 (Consequential Amendments etc) Order 2008

Sch. 1

para. 14(b)

art. 6

art. 2(2)

Building Societies Act 1986

s. 176ZB

The Deregulation Act 2015, the Small Business, Enterprise and Employment Act 2015 and the Insolvency (Amendment) Act (Northern Ireland) 2016 (Consequential Amendments and Transitional Provisions) Regulations 2017

reg. 14

reg. 1(2)

Building Societies Act 1986

s. 246ZA-246ZC

reg. 15

reg. 1(2)

Building Societies Act 1986

s. 246ZD

reg. 16

reg. 1(2)

Building Societies Act 1986

s. 5(11)-(14)

Building Societies (Funding) and Mutual Societies (Transfers) Act 2007

s. 1(2)

s. 6(2)

Building Societies Act 1986

s. 7(6A)-(6C)

Building Societies (Funding) and Mutual Societies (Transfers) Act 2007

s. 1(1)(a)

s. 6(2)

Building Societies Act 1986

s. 7(8)

Building Societies (Funding) and Mutual Societies (Transfers) Act 2007

s. 1(1)(b)

s. 6(2)

Building Societies Act 1986

s. 7(8A)

Building Societies (Funding) and Mutual Societies (Transfers) Act 2007

s. 1(1)(c)

s. 6(2)

Building Societies Act 1986

Sch. 18

para. 18(2)

Housing Act 1996

s. 227

Sch. 19

Pt. 14

Building Societies Act 1986

Sch. 21

para. 9(f)

Family Law Act 1996

s. 66(3)

Sch. 10

Building Societies Act 1986

s. 122(2)

Northern Ireland Act 1998

s. 100(2)

Sch. 15

Building Societies Act 1986

s. 35

Courts and Legal Services Act 1990

Sch. 20

s. 124(3)

Building Societies Act 1986

s. 124

Courts and Legal Services Act 1990

Sch. 20

s. 124(3)

Building Societies Act 1986

1986 c. 53

An Act to make fresh provision with respect to building societies and further provision with respect to conveyancing services.

[25th July 1986]

C1 C2 C3 C4 C5 C6Be it enacted by the Queen’s most Excellent Majesty, by and with the advice and consent of the Lords Spiritual and Temporal, and Commons, in this present Parliament assembled, and by the authority of the same, as follows:—

Annotations:

Modifications etc. (not altering text)

Act modified (temp.) by S.I. 1986/2168, art. 3(1)(2)(a)(b)

Act modified by S.I. 1986/2168, art. 4(1)(2)(b)(3) and by S.I. 1987/1498, art. 7

Act applied (with modifications) and modified by S.I. 1988/1394, arts. 2, 7, Schs. 1, 2

Act applied (N.I.) (1.10.1991) by S.I. 1989/2404, art. 12, Sch. 1 Pt. I para. 6; S.R. 1991/410, art. 1(2)

Act applied (N.I.) (1.10.1991) by S.I. 1990/1504, art. 111; S.R. 1991/438, art. 2(d)

Act applied (with modifications) (1.7.1992) by S.I. 1992/1547, arts. 5, 6, Sch. 2

Act: definition applied (N.I.) (1.6.1992) by Northern Ireland (Emergency Provisions) Act 1991 (c. 24, SIF 39:1), ss. 55, 69(1)(2), Sch. 4 para. 7(4); S.I. 1992/1181, art. 2 (which 1991 Act was repealed (25.8.1996) by 1996 c. 22, ss. 59, 62(1), 63(3)(7), Sch. 7 Pt. I)

Act: definition applied by Finance Act 1991 (c. 31, SIF 63:2), s. 51, Sch. 10 para. 4(3)

Act: power to amend conferred (9.6.1997) by 1997 c. 32, s. 32(5)(c); S.I. 1997/1427, art. 2(g)

F2PART I FUNCTIONS OF THE AUTHORITY

Annotations:

Amendments (Textual)

Pt. I (s. 1) substituted (17.8.2001 for specified purposes and otherwise 1.12.2001) for Pt. I (ss. 1-4) by S.I. 2001/2617, arts. 2, 13(1), Sch. 3 Pt. II, para. 132 (with art. 13(3), Sch. 5); S.I. 2001/3538, art. 2(a)

1F1 Functions of the Financial Services Authority in relation to building societies.

1

The Financial Services Authority (“the Authority”) has the following functions under this Act in relation to building socities—

a

to secure that the principal purpose of building societies remains that of making loans which are secured on residential property and are funded substantially by their members;

b

to administer the system of regulation of building societies provided for by or under this Act; and

c

to advise and make recommendations to the Treasury and other government departments on any matter relating to building societies.

2

The Authority also has, in relation to such societies, the other functions conferred on it by or under this Act or any other enactment.

2 Financial provision for Commission.

1

There shall be charged on building societies such a general charge towards the expenses of the Commission and such fees in respect of the exercise of its functions as are authorised under this section.

P22

The Treasury may, by regulations, make provision for—

a

a general charge to be levied, with respect to each accounting year of the Commission, on every authorised building society to be paid at such rate computed by reference to such criteria, at such time and in such manner as may be prescribed; and

b

fees of such amounts as may be prescribed to be paid by building societies in respect of the exercise of the Commission’s functions in relation to them.

3

The provision to be made from time to time under subsection (2) above, by way of the general charge and fees, shall be such as to produce an annual revenue of the Commission sufficient to meet its expenses properly chargeable to revenue account, taking one year with another.

4

Regulations under subsection (2) above may include—

a

provision for any fees payable by societies to be reduced or for payment of any fees to be waived by the Commission in circumstances determined by or under the regulations; and

b

such incidental, supplementary and transitional provision as appears to the Treasury to be necessary or expedient.

5

The power to make regulations under subsection (2) above is exercisable by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament.

6

The amounts received by the Commission under this section shall be applied as an appropriation in aid of money provided by Parliament for the expenses of the Commission under this Act, and in so far as not so applied, shall be paid into the Consolidated Fund.

7

In this section—

“authorised”, in relation to an accounting year of the Commission, means authorised at any time during that year; and
“prescribed” means prescribed in regulations under subsection (2) above.

3 Accounts of Commission and audit.

1

The Commission shall keep proper accounts and proper accounting records and shall prepare in respect of each accounting year a statement of accounts in such form as the Treasury may direct.

A society incorporated under this Act is referred to in this Act as a “building society”.

4

A society incorporated under the repealed enactments whose principal office, as registered with the central office immediately before the commencement of this section, was in the United Kingdom, shall be deemed to be registered (and accordingly as incorporated) under this Act.

F54A

If, after its establishment, a building society fails to comply with the requirements imposed by subsection (1)(a) or (b) above—

a

the powers conferred on the F4Authority by section 36 or 37 shall become exercisable in relation to the society; but

b

the failure shall not affect the validity of any transaction or other act.

F65

Subject to the provisions of this Act, a building society shall have the powers conferred on it by its memorandum.

8

Schedule 2 to this Act has effect as respects the constitution, powers, and regulation of building societies and in that Schedule—

a

Part I makes provision with respect to the constitution, memorandum, rules and certain incidents of membership;

F7b

Part II makes provision with respect to the capacity of a society and the powers of its directors to bind it; and

C7c

Part III makes provision with respect to meetings, postal ballots and resolutions;

F8and in this section “scheduled”, with reference to requirements for establishment, means contained in that Schedule

9

Any obligation imposed by this Act or the rules of a building society to give or send notices or other documents to members is subject to paragraph 14 of that Schedule.

F910

In this Act “residential property” means land at least 40 per cent of which—

a

is normally used as, or in connection with, one or more dwellings; or

b

has been, is being or is to be developed or adapted for such use;

and for the purposes of this subsection, the area of any land which comprises a building or other structure containing two or more storeys shall be taken to be the aggregate of the floor areas of each of those storeys.

F25Making loans

Annotations:

Amendments (Textual)

F25

S. 6 and cross-heading substituted for s. 6 (1.12.1997 in specified cases and for specified purposes and otherwise in accordance with art. 2(2)(3)(5) of S.I. 1997/2668) by 1997 c. 32, ss. 4, 47(3); S.I. 1997/2668, art. 2, Sch. Pt. II(d)

6F10The lending limit.

1

A building society shall secure that the difference between—

a

the value of X on any quarter day; and

b

the value of Y on that day or the value of Y on the immediately preceding quarter day, whichever is the greater,

does not exceed 25 per cent of that value of X.

2

14

In this section and section 7—

“accounts”—
1. a
  in relation to a building society without subsidiary undertakings, means individual accounts under subsection (1) of section 72;
2. b
  in relation to such a society with such undertakings, means group accounts under subsection (2) of that section;
“quarter day”, in relation to a building society, means a day on which a financial year of the society ends, or a day which is three months, six months or nine months after such a day;

and references to any value on a quarter day are references to that value at the close of business on that day.

15

If an agreement between the F17Authority and a building society so provides, the definition of “quarter day” in subsection (14) above shall have effect in relation to the society as if for any reference to a number of months there were substituted a reference to a number of days specified in the agreement.

F186A Loans secured on land.

1

For the purposes of this Act a loan is secured on land if it is secured by—

a

a mortgage of a legal estate in land in England and Wales or Northern Ireland;

b

a heritable security over land in Scotland; or

c

a qualifying security over land in an EEA country or territory other than the United Kingdom.

2

For the purposes of this Act a loan is also secured on land if—

a

it is secured by a mortgage of an equitable interest in land in England and Wales or Northern Ireland;

C9b

the equitable interest is an equitable interest in land of a description, and is created in circumstances, prescribed in an order made by the F19. . . Treasury; and

c

any conditions prescribed in the order are complied with;

and an order under this subsection may apply in relation to securities held by or on behalf of building societies or connected undertakings of a description specified in the order, or securities held by or on behalf of all such societies or undertakings other than those of a description so specified.

3

For the purposes of this Act—

a

a loan shall be treated as secured by a mortgage of a legal estate in registered land in England and Wales or Northern Ireland notwithstanding that the loan is made before the mortgagor is registered as proprietor of the estate; and

b

a loan shall be treated as secured by a heritable security over land in Scotland notwithstanding that the loan is made before title to that land has been transferred to the debtor in the heritable security.

C94

The F20Treasury may, by order provide for any provisions of this Act to have effect in relation to loans secured on land outside the European Economic Area with such modifications as appear to F21them to be appropriate.

C95

An order under subsection (2) or (4) above may make such incidental, supplementary and transitional provision as appears to the F22Treasury to be necessary or expedient.

6

The power to make an order under subsection (2) or (4) above is exercisable by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament.

7

In this section and section 6B—

“EEA country or territory” means a country or territory in the European Economic Area;
“qualifying security”, in relation to land in an EEA country or territory other than the United Kingdom and a loan, means a security over the land which—
1. a
  acknowledges, and requires repayment of, the loan; and
2. b
  secures repayment of the loan on the land;
and for the purposes of this section and that section, the Channel Islands, the Isle of Man and Gibraltar shall be treated as included in the European Economic Area.

8

In this Act “land”, in the expression “loan secured on land”, means—

a

land in an EEA country or territory; and

b

in so far as land in any other country or territory is, under any provision of this Act, land on which loans may be secured, land in that other country or territory.

F236B Loans fully secured on land.

1

For the purposes of this Act a loan which is owed to a building society or a subsidiary undertaking of a building society and is secured on residential property or other land is fully secured on the land if—

a

the principal of, and interest accrued on, the loan does not exceed the value of the requisite security; and

b

no, or no more than one, mortgage of the land which has priority over the society’s or undertaking’s mortgage is outstanding in favour of an outside person.

2

Where a mortgage of the residential property or other land which has priority over the society’s or undertaking’s mortgage is outstanding, the principal of the loan secured or, in the case of a loan by instalments, intended to be secured by that mortgage shall be deducted from the value of the requisite security for the purposes of subsection (1)(a) above.

3

Where the loan is secured on residential property or other land in the United Kingdom, any outstanding charge over the land which—

a

in the case of land in England and Wales, is registered in the appropriate local land charges register;

b

in the case of land in Scotland, is recorded in the Register of Sasines, or registered in the Land Register, under section 108 of the M1Civic Government (Scotland) Act 1982 or Schedule 9 to the M2Housing (Scotland) Act 1987;

c

in the case of land in Northern Ireland, is registered in the statutory charges register under section 87 of, and Schedule 11 to, the M3Land Registration Act (Northern Ireland) 1970,

shall be disregarded for the purposes of subsections (1)(b) and (2) above.

4

Where, on the occasion on which a building society or a subsidiary undertaking of a building society makes or acquires a loan which is secured on land, the society or undertaking is satisfied that the loan is—

C10a

a loan which is fully secured on residential property;

C11b

a loan which is not so secured but is fully secured on land; or

C12c

a loan which is not fully secured on land,

the loan shall be treated as such a loan for the purposes of this Act until such time (if any) as subsection (7) below applies.

5

Subsection (4) above shall have effect in relation to a loan which the society or undertaking makes by two or more payments on different dates as if—

a

the reference to the occasion on which the society or undertaking makes the loan were a reference to the occasion on which it makes the first of the payments;

b

other references to the loan were references to it in its intended maximum amount; and

c

the value of any security for the loan were its expected maximum value.

6

Where a building society or a subsidiary undertaking of a building society makes or acquires a loan which is secured on land, the society or undertaking shall be deemed to be satisfied as mentioned in paragraph (c) of subsection (4) above until such time (if any) as it is satisfied as mentioned in paragraph (a) or (b) of that subsection.

7

Where at any time, in the case of a loan treated as falling within paragraph (a), (b) or (c) of subsection (4) above, the society or undertaking—

a

is satisfied—

i

on a revaluation that the value of the requisite security has changed;

ii

on notice given to it by the borrower that there has been a change in the use of the land;

iii

that so much of the mortgage debt as represents the principal of the loan has changed;

iv

that the principal of the loan secured by a prior mortgage has changed or has been repaid; or

v

that the relative priority of the mortgage of the land on which the loan is secured has changed;

b

is also satisfied that the change or repayment is such that, if it were to make a loan equal to the mortgage debt at that time, the loan would instead be a loan falling within another of those paragraphs; and

c

in a case falling within paragraph (a)(i) above, elects that this subsection shall apply,

the loan shall be treated as such a loan for the purposes of this Act until such time (if any) as this subsection again applies.

8

In this section—

“outside person”, in relation to a building society or a subsidiary undertaking of a building society, means any person other than the following, namely—
1. a
  the society;
2. b
  a subsidiary undertaking of the society;
3. c
  a lending syndicate of which the society or such an undertaking is a member; and
4. d
  trustees of a trust under which the society or such an undertaking is a beneficiary;
“the requisite security”, in relation to a loan secured on residential property or other land, means—
1. a
  the security constituted by the legal estate in, or the heritable or qualifying security over, the land; or
2. b
  in a case where an equitable interest in land in England and Wales or Northern Ireland is or is also taken as security, that constituted by that security or, as the case may be, the combined securities;
“trust” includes arrangements—
1. a
  which have effect under the law of a country or territory outside the United Kingdom; and
2. b
  under which persons acting in a fiduciary capacity hold and administer property on behalf of other persons,
and “beneficiary” and “trustees”, in relation to such arrangements, shall be construed accordingly.

9

In the application of subsections (1), (2) and (7) above to residential property or other land in Scotland or an EEA country or territory other than the United Kingdom, references to a mortgage of the land shall be construed as references to a heritable or, as the case may require, qualifying security over the land.

F246C Discharge of mortgages.

Schedule 2A to this Act, which contains supplementary provisions as to the discharge of mortgages, shall have effect.

Raising funds and borrowing

F267 The funding limit.

1

A building society shall secure that the difference between—

a

the value of X on any quarter day; and

b

the value of Y on that day or the value of Y on the immediately preceding quarter day, whichever is the greater,

does not exceed 50 per cent of that value of X.

2

For the purposes of subsection (1) above—

X = the aggregate of the following, namely—

a

the principal value of, and interest accrued on, shares in the society;

b

the principal of, and interest accrued on, sums deposited with the society or any subsidiary undertaking of the society; and

c

the principal value of, and interest accrued under, bills of exchange, instruments or agreements creating or acknowledging indebtedness and accepted, made, issued or entered into by the society or any such undertaking; and

Y = the principal value of, and interest accrued on, shares in the society held by individuals otherwise than as bare trustees (or, in Scotland, simple trustees) for bodies corporate or for persons who include bodies corporate.

3

The following shall be disregarded for the purposes of subsection (2) above, namely—

a

any sums or amounts which are own funds; and

b

to the extent that they are not included in the total liabilities of the society and any subsidiary undertakings of the society as shown in the society’s accounts—

i

any sums deposited with the society or any such undertaking; and

ii

any indebtedness created or acknowledged by bills of exchange, instruments or agreements accepted, made, issued or entered into by the society or any such undertaking.

4

The reference in subsection (3) above to anything being shown in a society’s accounts shall be construed—

a

in relation to a quarter day on which a financial year of the society ends, as a reference to its being shown in the accounts prepared by the society for that year;

such supplementary, transitional and saving provision as appears to the F29Treasury to be necessary or expedient.

9

The power to make an order under subsection (7) above is exercisable by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament.

to issue them either as shares paid up in full or as shares to be paid by periodical or other payments, and (in either case) with accumulating or other interest;

and funds so raised may be repaid when they are no longer required for the purposes of the society.

6

In the case of deferred shares, the power of a building society to raise funds by the issue of shares includes the issue of shares at a premium.

7

If a building society issues deferred shares at a premium, whether for cash or otherwise, a sum equal to the aggregate amount or value of the premiums on those shares shall be transferred to the society’s reserves.

8

For the purposes of this section the acceptance of deposits (including the issue of debt securities) shall not constitute the raising of funds.

9

In this section, in relation to a building society—

“overseas deposit” means a deposit which is accepted by a branch or agency of the society in a country or territory outside the United Kingdom and is repayable in such a country or territory;
“qualifying time deposit” has the meaning given by section 482(6) of the M4Income and Corporation Taxes Act 1988;
“raise funds” means, subject to subsection (8) above, raise funds by the issue of shares or other securities;
“transferable instrument” means an instrument which embodies a transferable right to receive an amount referable to a deposit with the society.

10

A right is transferable for the purposes of the definition of “transferable instrument” in subsection (9) above if it is transferable by delivery of the instrument, or it is a right—

a

which may, under the terms of the instrument, be held by any person, or by any person other than a person of a description specified in the instrument;

b

express provision for the transfer of which is included in the instrument; and

c

the transfer of which, under the terms of the instrument, does not require the consent of any person.

11 C1412

The F32Treasury may by order vary subsections (2), (9) and (10) above by adding to or deleting from them any provision or by varying any provision contained in them; and an order under this subsection may make such supplementary, transitional and saving provision as appears to the F32Treasury to be necessary or expedient.

13

The power to make an order under subsection (12) above is exercisable by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament.

F339. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F44Restrictions on powers

Annotations:

Amendments (Textual)

F44

S. 9A and cross-heading inserted (1.12.1997 in specified cases and for specified purposes and otherwise in accordance with art. 2(2)(3)(5) of S.I. 1997/2668) by 1997 c. 32, ss. 10, 47(3); S.I. 1997/2668, art. 2, Sch. Pt. II(i)

F349ARestrictions on certain transactions.

1

Subject to subsections (2) to (4) below, a building society shall not do, and shall secure that each of its subsidiary undertakings does not do, any of the following things, namely—

a

act as a market maker in securities, commodities or currencies;

b

trade in commodities or currencies; and

c

ii

shares held by him in; or

iii

a deposit of his with,

the society, or a connected undertaking of the society.

5

Nothing in subsection (1)(c) above shall apply in relation to any transaction entered into by a subsidiary undertaking of a building society, if it is entered into in the undertaking’s capacity—

F37a

as a person who has permission under Part IV of the Financial Services and Markets Act 2000 to effect or carry out contracts of long-term insurance, or

b

an EEA firm of the kind mentioned in paragraph 5(d) of Schedule 3 to that Act, which has permission under paragraph 15 of that Schedule (as a result of qualifying for authorisation under paragraph 12 of that Schedule) to effect or carry out contracts of long-term insurance.

. . .

6

A building society shall also do all that is reasonably practicable to secure that neither it nor any of its subsidiary undertakings (either alone or with any or any others of those undertakings)—

a

holds at any time more than 5 per cent of the issued share capital; or

b

is at any time entitled to exercise, or to control the exercise of, more than 5 per cent of the voting power at any general meeting,

of an undertaking which is, at that time, doing any of the things which the society is prohibited from doing by subsection (1) above, or an undertaking whose subsidiary undertaking is, at that time, doing any of those things.

7

The monetary limit in subsection (2) or (3) above refers to the time when the transaction is entered into; and where the amount or value of the consideration there referred to is not in sterling, it shall be converted at the rate of exchange prevailing at that time.

8

For the purposes of subsection (2) or (3) above, two or more transactions which form part of a larger transaction or series of transactions shall be treated as a single transaction.

9

In this section—

“collective investment scheme” has the same meaning as in the F38Financial Services and Markets Act 2000;
“commodity” means any produce of agriculture, forestry or fisheries, or any mineral, either in its natural state or having undergone only such processes as are necessary or customary to prepare the produce or mineral for the market;
F39“derivative investment”means an investment of the following kinds—
1. a
  instruments giving entitlements to investments;
2. b
  options;
3. c
  futures;
4. d
  contracts for differences;
“market maker” means, subject to subsection (10) below, a person who holds himself out as willing at all normal times to buy or sell at a price specified by him securities, commodities or currencies of a particular description;
“securities” means shares, stock, debentures, debenture stock, loan stock, bonds, units of a collective investment scheme and other securities of any description.

and the power to make such an order is exercisable by statutory instrument.

14

No order shall be made under subsection (11) above unless a draft of the order has been laid before and approved by a resolution of each House of Parliament.

15

A statutory instrument containing an order under subsection (12) above shall be subject to annulment in pursuance of a resolution of either House of Parliament.

F439BRestriction on creation of floating charges.

1

A building society shall not create a floating charge on the whole or part of its undertaking or property.

2

A floating charge created in contravention of this section shall be void.

F94Part III Advances, Loans and Other Assets

Annotations:

Amendments (Textual)

F94

Pt. III (ss. 10-23) repealed (1.12.1997 in specified cases and for specified purposes and otherwise in accordance with art. 2(2)(3)(5) of S.I. 1997/2668) by 1997 c. 32, ss. 12(1)(a), 46(2), 47(3), Sch. 9; S.I. 1997/2668, art. 2, Sch. Pts. I(b), II(j)

Class 1 advances and class 2 advances secured on land

F45 C16 C1710 Advances secured on land.

1

A building society may make advances to members (in this Act referred to as “advances secured on land”) secured by—

a

a mortgage of a legal estate or, as provided under subsection (6) below, an equitable interest in land in England and Wales or Northern Ireland, or

b

a heritable security over land in Scotland,

and for that purpose may (in England and Wales or Northern Ireland) hold land with the right of foreclosure.

2

Advances secured on land may, in accordance with sections 11 and 12—

a

be fully or partly secured by a mortgage of the legal estate or equitable interest in land in England and Wales or Northern Ireland, or

b

be fully secured by a heritable security over land in Scotland,

and in this Part “the basic security” means the security constituted by the legal estate in or heritable security over the land or, in a case where an equitable interest in land in England and Wales or Northern Ireland is or is also taken as security by virtue of this section, that constituted by that security or, as the case may be, the combined securities; and a reference to the land which is to secure an advance or on which an advance is secured is a reference to the estate or interest or the heritable security which constitutes or will constitute the basic security.

3

The power to make an advance secured on land includes power, subject to the restriction imposed by subsection (4) below, to make, as a separate advance, an advance which is to be applied in or towards payment of the deposit for the purchase of the land (in this Part referred to as “an advance for a deposit for the purchase of land.”)

4

The restriction referred to is that an advance for a deposit for the purchase of land must not exceed 10 per cent. of the total amount to be paid for the purchase of the land.

F464A

The power to make an advance secured on land includes power to make an advance which is secured as mentioned in subsection (1) above by virtue of security granted otherwise than by the borrower (in this Act referred to as “an advance secured on third party land”).

5

An advance shall be treated for the purposes of this Act as secured by a mortgage of a legal estate in registered land in England and Wales or Northern Ireland notwithstanding that the advance is made before the F47mortgagor is registered as proprietor of the estate.

6

A building society may advance money on the security of an equitable interest in land in England and Wales or Northern Ireland if the equitable interest is an equitable interest in land of a description and is created in circumstances prescribed in an order made by the Commission with the consent of the Treasury under this subsection and any conditions prescribed in the order are complied with.

7

Any powers conferred on building societies by an order under subsection (6) above may be conferred on building societies of a description specified in the order or all building societies other than those of a description so specified.

8

The power to make an order under subsection (6) above includes power—

a

to prescribe the circumstances in which the power conferred by section 17(10) on building societies of the description specified therein is to be available to them; and

b

to make such incidental, supplementary and transitional provision as the Commission considers necessary or expedient.

9

An instrument containing an order under subsection (6) above shall be subject to annulment in pursuance of a resolution of either House of Parliament.

10

The power to make advances secured on land includes power to make them on terms that include provision as respects the capital element in the mortgage debt (with or without similar provision as respects the interest element)—

a

that the amount due to the society may be adjusted from time to time by reference to such public index of prices other than housing prices as is specified in the mortgage;

b

that the amount due to the society may be adjusted from time to time by reference to such public index of housing prices as is specified in the mortgage;

c

that the amount due to the society at any time shall be determined by reference to a share, specified or referred to in the mortgage, in the open market value of the property at that time;

and, in cases where the amount due to the society in respect of capital exceeds the amount advanced, references in this Act to the repayment of an advance include references to payment of the excess.

11

Advances secured on land shallbe classified for the purposes of the requirements of this Part for the structure of commercial assets into—

a

class 1 advances, and

b

class 2 advances;

and in this Act “advances fully secured on land” means advances which are class 1 or class 2 advances, and any reference to “fully secured” shall be construed accordingly.

12

Nothing in this section or section 11 or 12 is to be taken as precluding a society from taking other security for an advance secured on land than such security as is required for an advance to be a class 1 or class 2 advance under those sections; but the value of the other security shall be disregarded for the purpose of classifying the advance as a class 1 or class 2 advance.

F4811 Class 1 and class 2 advances

C18 C191

The provisions of this section and section 12 define what is a class 1 advance and what is a class 2 advance for the purpose of the requirements of this Part for the structure of commercial assets and when an advance may, for those purposes, be treated partly as a class 1 advance and partly as a class 2 advance.

C18 C192

Class 1 advances are advances as to which the society when it makes the advance is satisfied that the advance is an advance secured on land and that—

a

the borrower is an individual;

C20b

F49where the advance is not an advance secured on third party land,the land is for the residential use of the borrower or a dependant of his of a prescribed description;

F50ba

where the advance is an advance secured on third party land—

i

the borrower intends that the advance will be used for the purpose of acquiring land for the residential use of himself or a dependant of his of a prescribed description; and

ii

the land on which the advance is secured is for the residential use of the mortgagor or a dependant of his of a prescribed description;

c

the amount advanced will not exceed the value of the basic security (after deducting from that value any F51outstanding amount secured by a mortgage of the land in favour of the society); and

d

subject to subsection (5) below, no other mortgage of the land which is to secure the advance is outstanding in favour of a person other than the society;

and which are not made on terms as respects the capital element of the mortgage debt authorised by section 10(10)(b) or (c).

C21 C193

Subject to any order made under section 12(1),

F52a

the requirement in subsection (2)(b) above shall be treated as satisfied if no less than 40 per cent. of the area of the land is used for the residential purposes by the borrower or a dependant of his of a prescribed description;

F53b

the requirement in subsection (2)(ba)(i) above shall be treated as satisfied if the borrower intends that no less than 40 per cent. of the area of the land will be for the residential use of himself or a dependant of his of a prescribed description; and

c

the requirement in subsection (2)(ba)(ii) above shall be treated as satisfied if no less than 40 per cent. of the area of the land is used for residential purposes by the mortgagor or a dependant of his of a prescribed description.

C18 C194

Class 2 advances are advances as to which the society when it makes the advance—

a

either is not satisfied that the requirements for the time being of subsection (2) above are fulfilled or is satisfied that any of them is not fulfilled, but

b

is satisfied that the advance is an advance secured on land, and

c

is satisfied, where the amount advanced will exceed the value of the basic security (after deducting from that value any F54outstanding amount secured by a mortgage of the land), that the excess will be secured by the taking of security of a prescribed description in addition to the basic security, and

d

is satisfied that no, or no more than one, other mortgage of the land which is to secure the advance is outstanding in favour of a person other than the society.

C18 C195

The requirement in subsection (2)(d) and (4)(d) above shall be treated as satisfied if the advance is made on terms that the other mortgage is redeemed or postponed to the basic security.

C18 C196

An advance for a deposit for the purchase of land is also a class 1 or class 2 advance according as it is made with a view to the making of a class 1 or class 2 advance secured on the land.

C18 C197

Advances which would be class 2, and not class 1, advances by reason only that the extent of the residential use of the land is not such as to satisfy the requirement in subsection (2)(b) F55or (2)(ba)(i) or (ii) above shall be treated as class 1 advances if and to the extent prescribed by an order under section 12(5).

8

For the purposes of the requirements of this Part for the structure of commercial assets—

a

class 1 advances constitute class 1 assets, and

b

class 2 advances constitute class 2 assets,

and accordingly the aggregate amount of mortgage debts outstanding in respect of class 2 advances counts in accordance with section 20 towards the limit applicable to class 2 assets under that section.

C18 C199

For the purposes of subsections (2) and (4) above, where a building society makes an advance by instalments, any reference to the time when the society makes the advance is a reference to the time when it pays the first of the instalments, disregarding for this purpose any instalment which is to be applied towards payment of the deposit in respect of the purchase of the land which is to secure the advance.

C18 C1910

Subject to subsection (11) below, any land to which a building society becomes absolutely entitled by foreclosure or by release or other extinguishment of a right of redemption—

a

shall as soon as may be conveniently practicable be sold or converted into money; and

b

shall, until the sale or conversion, constitute a class 1 asset if the advance secured on the land was a class 1 advance and a class 2 asset if it was a class 2 advance.

C18 C1911

Where a building society which has for the time being adopted the powers conferred by section 17 becomes entitled to land as mentioned in subsection (10) above, and the land is land that may be held under that section, then, if the society—

a

elects to hold the land under that section, or

b

without such an election, retains the land after the expiry of the period of twelve months immediately following the date on which it so becomes entitled to the land.

the society shall be taken to hold the land under that section.

C18 C1912

An election under subsection (11) above shall be made by resolution of the board of directors and shall be irrevocable.

C18 C1913

If a building society contravenes subsection (10) above the society shall be liable on summary conviction to a fine not exceeding level 5 on the standard scale and so shall any officer who is also guilty of the offence.

14

c

make such incidental, supplementary and transitional provision as the Commission considers necessary or expedient.

F575A

Subsection (5) above shall also apply as respects advances secured on third party land which is to any extent used for the residential use of mortgagors or persons who are dependants of theirs for the purposes of section 11(2).

C22 C236

The Commission shall not make an order under this section, except with the consent of the Treasury.

C22 C237

An instrument containing an order under this section shall be subject to annulment in pursuance of a resolution of either House of Parliament.

C22 C238

For the purpose of facilitating the repayment to a building society of a class 1 advance or a class 2 advance, the society may make to the borrower, by way of addition to the advance, a further advance of or towards the cost of a single premium payable in respect of an appropriate policy of life assurance; and a sum added to an advance under this subsection shall be treated as not forming part of the advance for the purpose of determining whether the requirements of section 11(2) or (4) are satisfied with respect to the advance.

C22 C239

Where an advance secured on land in England and Wales or Northern Ireland is made, then, for the purpose of determining whether the land is subject to a prior mortgage for the purposes of section 11(2)(d) or (4)(d) above, any outstanding charge over the land which is registered—

a

in the case of land in England and Wales, in the appropriate local land charges register, and

b

in the case of land in Northern Ireland, in the statutory charges register under section 87 of, and Schedule 11 to, the M6Land Registration Act (Northern Ireland) 1970,

shall be disregarded.

C22 C2310

If at any time when a class 1 advance or a class 2 advance secured on land is outstanding the building society—

a

is satisfied on a revaluation that the value of the basic security has changed,

b

is satisfied that so much of the mortgage debt as represents the principal of the advance has changed,

c

F58 in the case of an advance which is not an advance secured on third party landis satisfied on notice given to it by the borrower that there has been a change in the use of the land,

F59ca

in the case of an advance which is an advance secured on third party land—

i

is satisfied on notice given to it by the borrower that there has been a change in the use of the land acquired with the advance, or

ii

is satisfied on notice given to it by the mortgagor that there has been a change in the use of the land on which the advance is secured, or

d

agrees to a change in the relative priority of the mortgage on which the advance is secured,

and is satisfied that the change is such that, if it were to make an advance equal to the mortgage debt at that time, the advance would instead be a class 2 advance or a class 1 advance, as the case may be, the advance shall be reclassified as from that time.

C22 C2311

Nothing in subsection (10) above requires a building society to revalue its securities from time to time.

C24 C2512

Every building society shall establish and maintain a system to ensure the safe custody of all documents relating to property mortgaged to the society.

where the society has made, or undertaken to make, to any person a payment for introducing to it an applicant for the advance, that person;

c

where the advance is to be made following a disposition of the land, any person having a financial interest in the disposition of the land and any director, other officer or employee of his or of an associated employer; F61. . .

d

where the advance is to be made following a disposition of the land, any person receiving a commission for introducing the parties to the transaction involving the disposition and any director, other officer or employee of his.

F62e

where the advance is to be made in connection with a disposition of other land to the borrower, any person having a financial interest in the disposition of the other land and any director, other officer or employee of his or of an associated employer; and

f

where the advance is to be made in connection with a disposition of other land to the borrower, any person receiving a commission for introducing the parties to the transaction involving the disposition and any director, other officer or employee of his.

3

In relation to any land which is to secure an advance where the advance is to be made following a disposition of the land F63or in connection with a disposition of other land to the borrower, the following persons are disqualified from making an assessment of the security or authorising the making of the advance, that is to say—

a

any person, other than the building society making the advance, having a financial interest in the disposition F64. . . and any director, other officer or employee of his or of an associated employer; and

b

any person receiving a commission for introducing the parties to the transaction involving the disposition and any director, other officer or employee of his.

4

Any person who, being disqualified from doing so—

a

makes a report on any land which is to secure an advance,

b

makes an assessment of the adequacy of the security for an advance, or

c

authorises the making of an advance,

if the instrument designates any relevant British overseas territory and no other country or territory, the instrument shall be subject to annulment in pursuance of a resolution of either House of Parliament.

8

In this section—

“relevant British overseas territories” means the Channel Islands, the Isle of Man and Gibraltar;
“security on land” includes any right or power in or over land to secure the payment of a debt and “secured on land” has a corresponding meaning;
“specified” means specified in an order under subsection (1) above;

and any reference to a provision of this Part is a reference to that provision as applied to advances under this section.

F66 F6714A Power to participate in secured syndicated lending.

and if two or more loans under this section or this section and section 16 are made simultaneously by the society to the same individual they shall be treated for the purposes of this subsection as a single loan of an amount equal to the aggregate of the principal of each of those loans.

6

Joint borrowers under this section shall be treated, for the purpose of the limit on loans under this section, as a single individual and any sums outstanding in respect of loans made under this section or section 16 by the society to any one of the joint borrowers F71and also the cost of leasable chattels bailed under any current leasing agreement between the society and any one of the joint borrowers are to be taken into account in determining the balance available for any further loan to him or to him and any joint borrower with him F72, and so is any facility limit which is agreed for the time being between the society and any one of the joint borrowers.

7

The limit on loans to any one individual under this section is £10,000 or such sum as the Commission may, with the consent of the Treasury, specify by order in a statutory instrument.

8

Loans under this section constitute class 3 assets for the purposes of the requirements of this Part for the structure of commercial assets and accordingly the aggregate of the amounts outstanding in respect of—

a

the principal of loans under this section,

b

the interest on those loans, and

c

any other sums which borrowers are obliged to pay the society under the terms of those loans,

counts in accordance with section 20 towards the limits applicable to class 3 assets under that section.

9

The power conferred by this section is not available to a building society which does not for the time being have a qualitying asset holding, but the cessation of its availability does not require the disposal of any property or rights.

10

The power conferred by this section on a building society, if available to it, must in order to be exercisable, be adopted by the society.

11

An instrument containing an order under subsection (2) or (7) above shall be subject to annulment in pursuance of a resolution of either House of Parliament.

12

In this section—

F73“facility limit” has the meaning which it has for the purposes of the Building Societies (Limited Credit Facilities) Order 1987;
F74“leasable chattels”, “bailed” and “leasing agreement” have the meanings which they respectively bear in Part III of Schedule 1 to the Building Societies (Commercial Assets and Services) Order 1988 and “cost”, in respect of any leasable chattel bailed by a building society, means the price at which it was acquired by the society;
“mobile home” has the same meaning as “caravan” in Part I of the M8Caravan Sites and Control of Development Act 1960;
“prescribed”, in relation to descriptions of dependants of borrowe rs, means such as are for the time being prescribed in an order under section 12(1) as respects class 1 advances; and
“protected site” has the same meaning as in the M9Mobile Homes Act 1983.

F7516 Power to lend to individuals otherwise than by class 1 or class 2 advances etc.

1

Subject to the provisions of this section, a building society may, with or without security and whether or not at interest, lend money to individuals, whether or not they are members of the society.

2

Advances fully secured on land do not constitute loans under this section except that an advance for a deposit for the purchase of land shall, if the purchase is not completed within the period of six months beginning with the date of the advance, be treated after the end of that period as a loan under this section and shall accordingly cease to be a class 1 or class 2 advance.

3

Mobile home loans do not constitute loans under this section F76and neither do bridging loans made under Part IV of Schedule 1 to the Building Societies (Commercial Assets and Services) Order 1988.

4

The power to lend money under this section includes power, as regards members of and depositors with the society, to lend on overdraft on such terms as the society thinks fit.

5

Subject to subsection (9) below a building society shall not make a loan to an individual under this section if the principal exceeds—

a

the limit for the time being imposed by or under subsection (8) below; or

b

the balance remaining after deducting from that limit the aggregate of any other sums outstanding in respect of loans made under this section by the society to that individual F77and any facility limits agreed for the time being between the society and that individualF78and also the cost of leasable chattels bailed under any current leasing agreement between the society and that individual;

and if two or more loans under thissection or this section and section 15 are made simultaneously by the society to the same individual they shall be treated for the purposes of this subsection as, in the case of loans under this section, a single loan of an amount equal to the aggregate of the principal of each of those loans and, in the case of loans under this section and section 15, as made on different occasions such that loans under section precede those made under that section.

6

Subsection (5) above shall have effect (subject to subsection (9) below) in a case where a building society has made a loan under section 15 as if it precluded a building society from making a loan to an individual under this section if the principal exceeds—

a

the limit referred to in paragraph (a) of it; or

b

the balance referred to in paragraph (b) of it; or

c

the balance remaining after deducting from the limit imposed by or under subsection (7) of that section the aggregate of any sums outstanding in respect of loans made under that section and under this section by the society to that individual F79and any facility limits agreed for the time being between the society and that individualF80and also the cost of leasable chattels bailed under any current leasing agreement between the society and that individual.

7

Joint borrowers under this section shall be treated, for the purpose of the limit on loans under this section, as a single individual and any sums outstanding in respect of loans made under this section or section 15 by the society to any one of the joint borrowers F81and also the cost of leasable chattels bailed under any current leasing agreement between the society and any one of the joint borrowers are to be taken into account in determining the balance available for any further loan to him or to him and any joint borrower with him F82, and so is any facility limit which is agreed for the time being between the society and any one of the joint borrowers.

8

The limit on loans to any one individual under this section is £5,000 or such other sum as the Commission may, with the consent of the Treasury, specify by order in a statutory instrument.

9

The limit on loans to any one individual under this section does not apply to an advance for a deposit for the purchase of land which has come to be treated as a loan under this section and accordingly no account shall be taken of it for the purposes of subsection (5) above.

10

An order under subsection (8) above may specify different sums as the limit in relation to individuals in different circumstances.

11

a

the principal of loans under this section,

b

the interest on those loans,and

c

any other sums which borrowers are obliged to pay the society under the terms of those loans,

counts in accordance with section 20 towards the limits applicable to class 3 assets under that section.

12

The power conferred by this section is not available to a building society which does not for the time being have a qualifying asset holding, but the cessation of its availability does not require the disposal of any property or rights.

13

The powers conferred by this section on a building society, if available to it, must, in order to be exercisable, be adopted by the society.

14

An instrument containing an order under subsection (8) above shall be subject to annulment in pursuance of a resolution of either House of Parliament.

15

If at any time when a loan under this section which is secured by a mortgage of any land is outstanding, the building society is satisfied—

a

on a revaluation, that the value of the security has changed,

b

F83where the mortgage is granted by the borrower, on notice given to it by the borrower that there has been a change in the use of the land,

F84c

where the mortgage is granted otherwise than by the borrower and the loan has been used to purchase land—

i

on notice given to it by the borrower that there has been a change in the use of the land purchased, or

ii

on notice given to it by the mortgagor that there has been a change in the use of the mortgaged land, or

d

on notice given to it—

i

where the mortgage is granted by the borrower, by him, and

ii

where the mortgage is granted otherwise than by the borrower, by the mortgagor,

that there has been a change in the relative priority of the mortgage and that the change is such that, if it were to make a loan equal to the mortgage debt at that time and on that security, the loan would be a class 1 advance or, as the case may be, a class 2 advance, then the outstanding loan shall be reclassified as from that time.

16

Nothing in subsection (15) above requires a building society to revalue its securities from time to time.

F8517

In this section—

“facility limit” has the meaning which it bears in the Building Societies (Limited Credit Facilities) Order 1987; and
“leasable chattels”, “bailed” and “leasing agreement” have the meanings which they respectively bear in Part III of Schedule 1 to the Building Societies (Commercial Assets and Services) Order 1988 and “cost”, in respect of any leasable chattel bailed by a building society, means the price at which it was acquired by the society.

F86 C2917 Power to hold and develop land as commercial asset.

1

Subject to subsections (2), (9) and (11) below, a building society may acquire, hold and dispose of land in the United Kingdom for purposes other than those for which it may acquire, hold or dispose of land under section 6 or 10.

2

Land may not be acquired or held or disposed of by way of lease under this section except where the land is or is to be used—

a

primarily for residential purposes, or

b

for purposes incidental to the use of adjoining land held or to be held by the society which is or is to be used primarily for residential purposes.

3

A building society may develop or participate in developing for use for residential purposes or purposes connected with the residential use of land any land it holds under this section.

4

If land acquired under this section ceases to be used for the purposes authorised by subsection (2) above the society shall sell its estate or interest in the land as soon as it is conveniently practicable without undue loss to the society.

5

Land held under this section constitutes a class 3 asset for the purposes of the requirements of this Part for the structure of commercial assets and accordingly the aggregate value of all land so held counts in accordance with section 20 towards the limits applicable to class 3 assets under that section.

6

Premises held under section 6, by virtue of subsection (5) of that section, shall, in prescribed circumstances, be treated in their entirety (and regardless of their use) as land held under this section for the purposes of the requirements of this Part for the structure of commercial assets and subsection (5) above applies accordingly.

7

The Commission, with the consent of the Treasury, may by order made by statutory instrument make such provision for the purposes of subsection (6) above as it thinks fit and in that subsection “prescribed” means prescribed in an order under this subsection.

8

An instrument containingan order under subsection (7) above shall be subject to annulment in pursuance of a resolution of either House of Parliament.

9

Except as provided in subsection (10) below, the powers conferred by this section are not available to a building society which does not for the time being have a qualifying asset holding, but the cessation of their availability does not require the disposal of any property or rights.

C3010

A building society which does not for the time being have a qualifying asset holding may acquire, hold and dispose of land which is or is to be used for residential purposes if the purpose of the acquisition and holding of the land is to enable the society to make advances on the security of equitable interests in the land in the circumstances authorised by an order under section 10(6).

11

The powers conferred by this section on a building society, if available to it, must in order to be exercisable, be adopted by the society.

C31 F87 C3218 Power to invest in subsidiaries and other associated bodies.

1

Subject to the following provisions of this section, a building society may—

a

acquire and hold shares or corresponding membership rights in bodies corporate and form or take part in forming bodies corporate, and

b

provide bodies corporate in which it holds shares or such rights or to which it is, for the purpose of any power under this section, linked by resolution with any of the following supporting services—

i

loans of money, with or without security and whether or not at interest,

ii

grants of money, whether or not repayable,

iii

guarantees of the discharge of their liabilities, and

iv

13

Where the board of directors of a building society passes a resolution rescinding a resolution passed in pursuance of subsection (9) above the society shall send three copies of a record of the rescinding resolution signed by the secretary of the society to the central office and paragraph 4(3), (4) and (5) of Schedule 2 to this Act shall apply as it applies to a record of the alteration of a building society’s powers, but subject to subsection (14) below.

14

No rescinding resolution shall be registered without the consent of the Commission.

15

Where, by virtue of this section, property is held by a building society the property shall constitute class 3 assets for the purposes of the requirements of this Part for the structure of commercial assets and"accordingly the aggregate value of the property shall count in accordance with section 20 towards the limits applicable to class 3 assets under that section.

16

The power to make an order under subsection (2)(c) above is exercisable by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament.

17

In this section—

“company” means a company within the meaning of the M10Companies Act 1985 or the M11Companies (Northern Ireland) Order 1986;
“corresponding membership rights”, in relation to a body corporate, means such rights (other than rights arising from the holding of shares) as are attributable to membership of the body;
“deposit” and “deposit-taking business” have the same meaning as in F88the Banking Act 1987;
“industrial and provident society” means a society registered under the M12Industrial and Provident Societies Act 1965 or, in Northern Ireland, the M13Industrial and Provident Societies Act (Northern Ireland) 1969;
“property” includes rights of any description;

and in this Act “associated body”, in relation to a building society, means a body as respects which any of the following conditions is satisfied, that is to say—

i

the body is one in which the society holds shares or corresponding membership rights, or

ii

the body is one to which the society is linked by resolution, or

iii

the body is one in which, by virtue of subsection (8)(b) above, shares or corresponding membership rights are held by a body which falls within (i) or (ii) above;

and “associated” shall be construed accordingly.

F8919 Power for Treasury to add powers to hold other descriptions of class 3 assets.

1

The Treasury may, with a view to extending or altering, or extending to other descriptions of building societies, the forms of property which are to constitute class 3 assets in the hands of building societies or building societies of particular descriptions, by order—

a

specify forms of property which a building society is to have power to acquire, hold and dispose of as assets of that class, subject to any specified conditions or restrictions;

b

without prejudice to paragraph (a) above, specify descriptions of bodies corporate shares or other interests or rights in which a building society is to have power to acquire, hold and dispose of as assets of that class, subject to any specified conditions or restrictions;

c

make any amendments of or repeals in this Act which are consequential on the exercise of its powers under paragraph (a) or (b) above;

d

make such incidental, supplemental or transitional provision as it considers necessary or expedient.

2

The powers conferred by subsection (1) above may be exercised so as to apply in relation to property situated or bodies incorporated within the United Kingdom or any other member State or other country or territory and so as to be exercisable for purposes other than the purposes of building societies under the powers conferred on them for the time being by or under this Act.

3

Any powers conferred on building societies under this section may be conferred on building societies of a specified description or all building societies other than those of a specified description.

4

Any power conferred on a building society under this section, if available to it, must, in order to be exercisable, be adopted by the society.

5

Where, by virtue of an order under subsection (1)(a) or (b) above, property is held by a building society the property shall constitute class 3 assets for the purposes of the requirements of this Part for the structure of commercial assets and accordingly the aggregate value of the property, as determined in accordance with the order, shall count in accordance with section 20 towards the limits applicable to class 3 assets under that section.

6

Subsection (5) above is subject to any provision contained in the order.

7

The power to make an order under subsection (1) above is exercisable by statutory instrument but no such order shall be made unless a draft of the order has been laid before and approved by a resolution of each House of Parliament.

8

In this section—

“property” includes rights of any description; and
“specified” means specified in an order under subsection (1) above.

c

make such transitional provision as appears to the Treasury to be necessary or expedient;

and any reference in this Act to a limit for a class of commercial assets shall, if a limit is in force under subsection (4) above for any sub-class of class 3 assets, be construed as including a reference to the limit for that sub-class.

6

No order under subsection (4) above shall prescribe as a limit for a sub-class of class 3 assets a percentage of total commercial assets less than the percentage in force immediately before the making of the order for that sub-class or, if the subclass is created by the order, for class 3 assets generally

7

An order under subsection (4) above shall not be made unless a draft of it has been laid before and approved by a resolution of each House of Parliament.

8

The amount or value of the assets of any class of a building society for the purposes of this section is the amount or value as shown in the latest balance sheet or such other amount or value as the Commission determines to be the correct or, as the case requires, appropriate amount or value; and where the Commission determines an amount or value under this subsection the appropriate alterations shall be noted against the annual accounts of the society kept in the public file of the society.

9

In determining for the purposes of this section the asset holding of a building society with which another body corporate is associated there shall, subject to subsection (12) below, be attributed to the society, in accordance with aggregation rules made by the Commission with the consent of the Treasury under this subsection, the whole or part of the assets of whatever description of the associated body, as provided in the rules and subject to any exceptions provided in the rules.

10

The power to make aggregation rules under subsection (9) above includes power to make—

a

different rules for different circumstances,

b

provision for assets of societies to be disregarded,

c

provision for assets to be attributed to any class of assets of societies, and

d

such supplementary, transitional and saving provisions as appear to the Commission to be necessary or expedient.

11

The power to make aggregation rules under subsection (9) above is exercisable by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament.

12

The Commission may, on the application of a building society, approve rules to be applied for the purposes of this section for the attribution to the society of assets of bodies associated with the society; and so long as the rules continue to be approved by the Commission they, and not the aggregation rules in force under subsection (9) above, shall apply for the attribution of assets for the purposes of this section.

13

If the commercial assets of any class of a building society exceed the limits in force under this section the powers conferred on the Commission by section 36 shall become exercisable in relation to the society, but exceeding the limit shall not affect the validity of transactions effected in excess of it nor require the disposal of any assets.

Liquid assets

F9121 Liquid assets.

1

Subject to the following provisions of this section, a building society shall secure that, of its total assets, it keeps such a proportion of them having such a composition as will at all times enable the society to meet its liabilities as they arise.

2

A building society may keep assets of an authorised character beyond those required for the purpose of complying with subsection (1) above.

3

Subject to subsections (5) and (6) below, the assets held by a building society under subsection (1) or (2) above—

a

shall not exceed in the aggregate a proportion of its total assets greater than 33 per cent., and

b

shall be composed of assets of an authorised character and no others;

but, subject to that, a building society, in deciding on the composition and proportion appropriate for the purpose of complying with subsection (1) above, shall have regard to the range and scale of its business and the composition and character of its assets and liabilities.

4

Subsection (3) above, in its application to a building society with which other bodies corporate are associated, is to be read as requiring the society to have regard to the range and scale of the business, and the composition and character of the assets and liabilities, of the society and the associated bodies.

5

The Commission may, by order made with the consent of the Treasury, direct that this section shall have effect during the currency of the order as if such percentage as if specified in the order were substituted for the percentage specified in subsection (3) above; but any order under this subsection shall expire (unless previously revoked) at the end of the period of twelve months beginning with the day on which the order came into operation.

6

The Commission may, at any time, by notice to a building society, direct that the limit in force under this section shall not, subject to any conditions specified in the notice, apply to the society during such period as the Commission specifies in the notice.

7

Regulations to be known as liquid asset regulations shall be made by the Commission, with the consent of the Treasury, for the purposes of this section and such regulations—

a

shall prescribe descriptions of assets as assets of a character which societies may, in any prescribed circumstances and subject to any prescribed conditions, hold under this section for the purpose of meeting their liabilities as they arise,

b

may make different provision for different descriptions of building societies, and

c

may make such supplementary or incidental provision and such transitional provision as appears to the Commission to be necessary or expedient.

8

The power to make an order or regulations under subsection (5) or (7) above is exercisable by statutory instrument which shall be subject to annulmentin pursuance of a resolution of either House of Parliament.

9

If the assets of a building society which are kept in the form directed by subsection (1) above exceed at any time the percentage in force under this section at that time the powers conferred on the Commission by section 36 shall become exercisable in relation to the society, but exceeding the limit shall not affect the validity of transactions effected in excess of it.

10

In this section—

“authorised”, in relation to the character of assets, means authorised by regulations under subsection (7) above for the purpose specified in paragraph (a) of that subsection;
“business” includes business the society proposes to carry on; and
“prescribed” means prescribed in regulations under subsection (7) above.

Liabilities of associated bodies

F9222. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Other powers

F9323 Power to hedge.

1

Subject to subsections (3) and (4) below, a building society may effect contracts of a prescribed description for the purpose of reducing the risk of loss arising from changes in interest rates, currency rates or other factors of a prescribed description which affect its business.

2

The Commission, with the consent of the Treasury, may by order—

a

specify as contracts which building societies have power to effect under this section descriptions of contract whose purpose or one of whose purposes is the reduction of the risk to businesses of loss arising from the factors specified in subsection (1) above or other similar factors, and

b

regulate, or provide for the regulation of, the terms on which, the persons or descriptions of persons with whom, and the circumstances in which, contracts of a description specified under paragraph (a) above, may be effected by building societies.

3

Except as provided under subsection (4) below, the powers conferred by this section are not available to a building society which does not for the time being have a qualifying asset holding, but the cessation of their availability does not require the disposal of any property or rights.

4

The Commission, with the consent of the Treasury, may by order provide that subsection (3) above shall not have effect, as regards prescribed powers, in relation to prescribed descriptions of building societies.

5

The powers conferred by this section on a building society, if available to it, must, in order to be exercisable, be adopted by the society.

6

The power to make an order under subsection (2) or (4) above—

a

includes power to make such transitional provision as the Commission considers necessary or expedient, and

b

is exercisable by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament.

7

In this section “prescribed” means prescribed in an order under subsection (2) or (4) above, as the case may be.

C37Part IV Protection of Investors

Annotations:

Modifications etc. (not altering text)

C37

Pt. IV (ss. 24-33) modified (1.7.1995) (temp. until 31.12.1999) by S.I. 1995/1442, reg. 54(2)

Investor Protection Scheme

F9524. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F9625. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F9725A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F9826. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F9927. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F10027A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F10128. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F10229. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F10329A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F10430. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Other provisions

F10531. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

32 Special provisions as regards investors.

The Provisions of Schedule 7 to this Act relating to shareholders in and depositors with a building society shall have effect.

F10633 Assistance by building societies to other building societies.

Where it appears to the Commission that a building society is in financial difficulties it may authorise a building society to lend money to that society, and a building society shall have power to do so accordingly.

F110Part V Powers to Provide Services

Annotations:

Amendments (Textual)

F110

Pt. V (ss. 34-35) repealed (1.12.1997 in specified cases and for specified purposes and otherwise in accordance with art. 2(2)(3)(5) of S.I. 1997/2668) by 1997 c. 32, ss. 12(1)(c), 46(2), 47(3), Sch. 9; S.I. 1997/2668, art. 2, Sch. Pt. II(j)(y)(cc)(iv)

F10734 Powers to provide financial services or services relating to land.

1

A building society may provide services of the descriptions for the time being specified in Part I of Schedule 8 to this Act subject to the restrictions (if any) for the time being specified in Part II or III of that Schedule.

2

The appropriate authority may by order vary Schedule 8 by adding to or deleting from it any description of service or any provision or by varying any description of service or any provision for the time being specified or contained in it but not so as to confer any power to provide services other than services that appear to the authority making the order to be financial services or services relating to land or to be services similar to any such services.

3

Any power conferred on building societies under subsection (2) above may be conferred on building societies of a specified description or all building societies other than those of a specified description.

4

Where a provision of Part III of that Schedule states that a power to provide a specified service is available only to a subsidiary or other associated body of a building society the power to provide that service is to be treated as a power of the society for the purposes of section 18 only.

5

Any power to provide a specified service, if available to a building society or any subsidiary or other associated body, must, in order to be exercisable, be adopted by the society.

6

Subject to any specified restriction, any power to provide a specified service shall be exercisable in relation to members of the building society or other persons.

7

Part IV of Schedule 8 has effect for supplementing Parts I, II and III of that Schedule and the power under subsection (2) above to vary that Schedule includes, without prejudice to the generality of that subsection, power to make such provision as appears to the authority making the order to be appropriate by way of a sanction for contravention of any restriction for the time being contained in Part III.

8

The “appropriate authority” for the purpose of exercising the powers conferred by this section is the Treasury as regards any variation of Part I of Schedule 8 with or without other provision and the Commission in any other case.

9

The power to make an order under subsection (2) above is exercisable by statutory instrument and—

a

in the case of an order varying Part I of Schedule 8 with or without other provision no such order shall be made unless a draft of it has been laid before and approved by a resolution of each House of Parliament, and

b

in the case of any other order, the instrument containing it shall be subject to annulment in pursuance of a resolution of either House of Parliament.

10

An order under subsection (2) above may make such incidental and transitional provision as appears to the authority making the order to be necessary or expedient.

11

In this section—

“financial services” means any of the following services, that is to say, banking, insurance, investment, trusteeship and executorship;
“services relating to land” means any service relating to the acquisition, management, development or disposal of land; and
“specified” means specified for the time being in Schedule 8 to this Act.

F108 F10935Prohibition on linking services.

1

A building society which, or a subsidiary of which, provides services of any description specified in Part I of Schedule 8 to this Act shall not offer to make a class 1 advance to any person subject to a condition that any services of that description which are or may be required by that person in connection with the making of the advance shall be provided by the society or its subsidiary.

2

Where, in connection with a class 1 advance by a building society, several services are made available by a building society or by a building society and one or more of its subsidiaries the society shall not, and shall secure that each of its subsidiaries does not,make the services available on terms other than terms which distinguish the consideration payable for each service so made available; nor shall any of its subsidiaries make the services available on terms other than terms which make that distinction.

3

Nothing in subsection (2) above prevents a service from being provided free of charge in particular circumstances.

4

If a building society contravenes subsection (1) or (2) above the society shall be liable on summary conviction to a fine not exceeding level 4 on the standard scale and so shall any officer who is also guilty of the offence.

5

If a body corporate which is a subsidiary of a building society contravenes subsection (2) above the body corporate shall be liable on summary conviction to a fine not exceeding level 4 on the standard scale.

Part VI Powers of Control of the Commission

F124Powers in relation to principal purpose and nature limits

Annotations:

Amendments (Textual)

F124

S. 36 and cross-heading substituted (1.12.1997 in specified cases and for specified purposes and otherwise in accordance with art. 2(2)(3)(5) of S.I. 1997/2668) by 1997 c. 32, ss. 13(1), 47(3); S.I. 1997/2668, art. 2, Sch. Pt. II(k)

F11136 Power to direct restructuring of business etc.

1

The provisions of this section have effect where, by reason of a building society’s failure to comply with—

a

the requirement imposed by section 5(1)(a) or (b) (purpose or principal purpose and principal office);

b

the requirement imposed by section 6(1) (the lending limit); or

c

the requirement imposed by section 7(1) (the funding limit),

the powers conferred by this section become exercisable by the F112Authority in relation to the society (the requirements referred to in paragraphs (a), (b) and (c) above being referred to in this section as “the relevant statutory requirements”).

Where a restructuring plan is submitted by a society to the F112Authority under subsection (3) or (6) above then—

a

if it appears to the F112Authority that the plan is reasonably likely to secure its purposes, the F112Authority shall approve it and direct the society to carry it out;

b

if it appears to it that the plan is, with modifications, likely to secure its purposes and the F112Authority and the society agree on appropriate modifications within the period of 21 days from the date on which the F112Authority notifies the society of the modifications it proposes for the society’s agreement, the F112Authority shall approve the plan as modified and direct the society to carry it out;

but otherwise it shall reject the plan.

9

Where a meeting is held, in pursuance of a direction under subsection (5) or (6) above, for the purpose of voting on the requisite transfer resolutions, then—

a

if the resolutions are agreed to and the confirmation of the transfer by the F112Authority is obtained, the society shall proceed under section 97 to transfer its business to a successor company;

b

if either resolution is disagreed to, the society shall notify the F112Authority of that fact as soon as it is practicable to do so.

10

In the event of the F112Authority receiving a notice from a society under subsection (9)(b) above, it may, if it thinks fit, serve on the society a direction requiring it, within a specified period, to submit to the F112Authority for its approval a restructuring plan; and if the F112Authority does so, subsection (8) above shall apply as if the plan had been submitted under subsection (3) above.

11

The Authority may, if it thinks fit, extend or further extend any period during which a building society is to take any steps required of it under any of the foregoing provisions of this section and may do so whether or not application is made to it before the expiry of the period in question.

12

If a building society which has been directed under subsection (8) above to carry out a restructuring plan fails, within the period allowed to it under the foregoing provisions of this section, to secure the purpose of the plan specified in subsection (3)(a) above, the powers conferred on the F112Authorityby section 36A shall become exercisable in relation to the society.

13

If a building society fails, within the period allowed to it under the foregoing provisions of this section—

a

where it has been given a direction under subsection (3) or (10) above, to submit a restructuring plan;

b

where it has been given a direction under subsection (5) above, to submit to members the requisite transfer resolutions;

c

where it has been given a direction under subsection (6) above, to either submit a restructuring plan or submit to members the requisite transfer resolutions;

d

where it has been given a direction under subsection (7) above, to comply with any requirement imposed by the direction;

e

where it has been directed under subsection (8) above to carry out a restructuring plan, to secure the purpose of the plan specified in subsection (3)(a) above;

f

to agree to the requisite transfer resolutions submitted to the members in pursuance of subsection (5) or (6) above; or

g

where it has agreed to the requisite transfer resolutions, to proceed under section 97 to transfer its business to the successor company,

or if the F112Authority rejects a restructuring plan under subsection (8) above, the powers conferred on the F112Authority by section 37 shall become exercisable in relation to the society.

F11314

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

15

In this section—

“confirmation”, “the requisite transfer resolutions” and “transfer” have the same meaning as in section 97;
“quarter day” has the same meaning as in sections 6 and 7.

16

Nothing in this section implies that it is improper for the F112Authority to give to a building society or building societies generally an indication of the action it might or might not take in relation to any proposed activity of theirs.

The requirement of subsection (8) above, so far as it relates to directors, is satisfied by serving a copy on each director whose appointment has been officially notified and the non-receipt of a copy by a director or the chief executive does not affect the validity of the order.

10

Subject to subsection (11) below, a prohibition order shall remain in force until revoked by the F120Authority.

11

The F120Authority may suspend or revoke a prohibition order so far as it relates to an asset the disposal of which appears to it, on the application of the society, to be impracticable.

12

If a society contravenes a prohibition order issued against it under this section—

a

the power conferred on the F120Authority by section 37(1) shall become exercisable in relation to the society; and

b

the F120Authority may exercise that power or certify the contravention in writing to the High Court, or do both of those things;

but the contravention shall not invalidate any transaction or other act.

13

On receiving such a certification, the High Court—

a

may inquire into the case; and

b

after hearing any witnesses who may be produced against or on behalf of the society and after hearing any statement which may be offered in defence, may punish the society in like manner as if it had been guilty of contempt of the court.

14

Where a contravention of a prohibition order which is so certified is proved to have been committed with the consent or connivance of, or to be attributable to any neglect on the part of, any officer of the society he, as well as the society, may be punished in like manner as if he had been guilty of contempt of the court.

15

In the application of this section to a building society whose principal office is in Scotland, references to the High Court shall be read as references to the Court of Session.

F12137 Powers to petition for winding up etc.

1

Where—

a

by virtue of section 36(13) the powers conferred by this section become exercisable in relation to a building society;

b

by virtue of section 36A(12) the power conferred by this subsection becomes so exercisable; or

c

the F122Authority has reason to believe that a building society has ceased to comply with the requirement imposed by section 5(1)(a) (purpose or principal purpose),

the F122Authority may present a petition to the High Court for the winding up of the society under the applicable winding up legislation; and the power conferred by this subsection is available to the F122Authority whether or not it has previously presented a petition.

2

Where by virtue of section 36(13) the powers conferred by this section become exercisable in relation to a building society, the F122Authority may make an application to the High Court for an order giving directions to the society under subsection (3) below; and the power conferred by this subsection is available to the F122Authority whether or not it has previously made an application for such an order.

3

An order under this subsection is an order directing the society to comply with a direction under subsection (3), (5), (6), (7) or (10) of section 36 as directed in the order, or to carry out a restructuring plan as so directed.

4

Where the High Court makes an order under subsection (3) above, the F122Authority shall F123keep a copy of the order in the public file of the society.

5

The High Court shall not make an order winding up the society on an application under subsection (1)(c) above unless it is satisfied that the society has ceased to comply with the requirement imposed by section 5(1)(a).

6

In the application of this section to a building society whose principal office is in Scotland, references to the High Court shall be read as references to the Court of Session.

Power to determine extent of building society powers

F12538 Power to determine building society’s powers.

1

The Commission shall have power to determine whether a particular activity of a building society or its subsidiary is or is not within the existing powers of the society and may, if it thinks fit, take such professional advice as it considers it needs to enable it to make the determination.

2

A determination may be made under this section in relation to an activity which is proposed to be carried on as well as in relation to one which is being carried on.

3

The powers of the Commission in relation to a building society are exercisable—

a

on an application made by the society, requesting the Commission to make the determination,

b

on an application made by the society at the direction of the central office under Part II of Schedule 2 to this Act, or

c

on the Commission’s own motion or on an application made by the society at its direction,

as provided in subsection (4), (5), (6) or (8) below.

4

A building society may at any time, on complying with the following provisions of this section, make an application to the Commission for a determination under this section whether an activity specified in the application is or is not within its powers if the directors of the society are of the opinion that there is a doubt about the existence or extent of the powers to carry on the activity which requires to be resolved in the interests of the society.

5

A building society which has been directed by the central office under Part II of Schedule 2 to this Act to make an application to the Commission under this section shall, in accordance with the direction, make an application to the Commission for a determination whether the activity specified in the application is or is not within its powers.

6

If it appears to the Commission at any time that a building society or its subsidiary is carrying on or is about to carry on an activity which is or may be outside the existing powers of the society, the Commission may, by notice to the society specifying the activity and its opinion, direct it to make an application for a determination under this section whether the activity is or is not within its powers and it shall be the duty of the society to comply with the direction.

7

A direction under subsection (6) shall require the application to be made within the period of 21 days beginning with the date on which the notice is given, but the Commission may extend or further extend the period within which the application is to be made.

8

If a building society fails, within the time allowed by or under subsection (7) above, to make an application as directed under subsection (6) above, the Commission may, of its own motion, proceed to make a determination under this section as if an application had been made by the society.

9

An application by a building society under subsection (4), (5) or (6) above shall be made in writing, signed by the secretary as such an application, and shall comprise—

a

a statement of the question for determination, specifying the activity and the powers in question, the nature of the doubt and (except in the case of an application under subsection (6)) the arguments for and against the activity being within those powers, as they appear to the society, and

b

such documents or draft documents and such other information as are necessary to enable the determination to be made.

10

The statement of the question for determination may, with the agreement of the Commission, be amended at any time before the determination is made and in that event further documents and other information may be included in the application.

11

The Commission may, by notice to the society, require a society making an application under subsection (4), (5) or (6) above to amend the statement of the question for determination or to furnish such further documents or other information or such explanations of the statement, documents or information as appear to it to be necessary to enable the determination of the question to be made; and the Commission may allow or require the explanations to be made orally instead of in writing.

12

In this section and sections 39 and 40—

“activity” includes the exercise, or purported exercise, of any power under this Act, including the holding of any property or rights;
“existing”, with reference to powers, means existing at the relevant date and, in relation to a building society, “existing powers” denotes the powers it has, or has adopted, under this Act, with any restrictions it has assumed, as at that date but disregarding anything done by the Commission and then in force (otherwise than under section 39 or 40) by virtue of which the society is precluded from exercising, or is subject to restrictions on the exercise of, its powers;
“the relevant date”, in relation to a building society, means—

a

in a case where the Commission decides to proceed of its own motion, the date when the Commission so decides;

b

in a case where the society makes the application at the direction of the central office, the date specified in the direction; and

c

in any other case, the date on which the society makes the application.

13

Nothing in this section or section 39 or 40 implies that it is improper for the Commission to give to a building society or building societies generally an indication of the action it might or might not take in relation to any proposed activity of theirs; and if any determination comes to be made in relation to the activity the proceedings shall not be liable to be set aside by reason of the indication having been given.

F12639 The determination: notification, effect, appeal.

1

A determination of the Commission under section 38 shall be in writing and, as soon as practicable after it is made, the Commission shall notify the society of the determination and the reasons for it.

2

On receiving notice of the determination the society shall, if it is a determination that the activity in question was outside its powers, forthwith send a copy of it to every person who the society has reason to believe will or may be affected by it other than a person whose only interest is as a shareholder in, or depositor with, the society.

3

Subject to subsection (4) below, the Commission shall, within the period of one month beginning with the date of the notice to the society under subsection (1) above, publish the determination in such manner as it thinks appropriate.

4

Where the determination is made on an application made by the society under section 38(4), the Commission may, on the application of the society, postpone the publication of the determination for such period as it thinks fit, not exceeding the period of six months beginning with the date of the notice to the society under subsection (1) above, if it appears to the Commission that it is just to do so.

5

A determination under section 38 shall bind all persons, whether or not (in the case of an application) they were parties to it and, subject to any appeal under subsection (8) below, shall be final and conclusive for all purposes.

6

Where the activity in question was at the relevant date being carried on by the society and the determination is that the activity is outside the powers of the society the directors of the society shall be personally liable, jointly and severally, for any loss or expense to the society consequent on the activity’s being outside its powers (including, if a prohibition order under section 40 is made, any loss or expense consequent on the order).

7

If it appears to the Commission that proceedings under subsection (6) above have not been, but ought in the interests of the society to be, brought, the Commission may bring such proceedings in the name and on behalf of the society; and if it does so the Commission may indemnify the society against the costs or expenses incurred by the society in, or in connection with, proceedings brought by virtue of this subsection.

8

Any person affected by a determination under section 38 shall be entitled within the period of six weeks beginning with the date of the notice under subsection (1) above or such further period as the Court may allow, to appeal to the High Court against the determination in accordance with rules of court on the ground that it is erroneous in law and the Commission shall be made respondent on the appeal.

9

On any appeal to the High Court under subsection (8) above the High Court may confirm, reverse or vary the determination appealed from.

10

In the application of this section to a building society whose principal office is in Scotland, references to the High Court shall be read as references to the Court of Session.

11

The Commission may, if it thinks fit, require a building society in whose case it has made a determination under section 38 to pay such fee as the Commission directs.

F12740 Power to make prohibition orders.

1

On or at any time after making a determination under section 38 that a specified activity is outside the powers of a building society, the Commission shall, if it appears to it—

a

that the activity is being carried on by the society, or

b

that the activity has not been but, unless a prohibition order is made under this section, may be carried on by the society.

serve on the society a notice of the Commission’s intention to issue a prohibition order directed to the society.

2

A prohibition order under this section is an order prohibiting, subject to the saving or transitional provisions of the order, the continuance or, as the case may be, the carrying on of the activity specified in the order, either absolutely or unless conditions specified in the order are complied with, after a date specified in the order and requiring, subject to the saving or transitional provisions of the order, the disposal within a specified period of all assets acquired or otherwise in its possession by virtue of the activity.

3

A disposal of assets in pursuance of a prohibition order shall vest the assets in the transferee but without prejudice to any claim against the society by a person who had an interest in the assets.

4

The saving or transitional provisions which may be included in a prohibition order shall be such as appear to the Commission to be just having regard to the interests of shareholders of and the depositors with the society and the interests of other persons who will be affected by the order; but the provisions shall not in any respect suspend the operation of the order beyond the period of one year.

5

A prohibition order may include a direction for treating assets of any description as assets of the class specified in the direction for the purposes of the requirements of Part III for the structure of commercial assets.

6

A notice under subsection (1) above of the Commission’s intention to issue a prohibition order shall—

a

specify the date on which the order is to be issued, being a date not earlier than the end of the period of 21 days beginning with the date of the notice;

b

specify the terms of the order, including any saving or transitional provisions proposed to be included in it;

c

inform the society of its right to make representations to the Commission before the order is issued as to the saving or transitional provisions to be included in the order; and

d

inform the society of its duty under subsection (7) below.

7

On receiving a notice under subsection (1) above the society shall forthwith send a copy of it to every other person whom it has reason to believe will or may be affected by the determination under section 38 on which the order will be founded.

8

Any person who may be affected by the determination under section 38 on which the order will be founded may, at any time before the order is made, make representations to the Commission as to the inclusion in it of saving or transitional provisions affecting his interests and they may be made orally or in writing.

9

After considering any representations made under subsection (8) above the Commission shall make the prohibition order with such saving and transitionalprovisions (if any) as it thinks just, shall issue the order by causing it to be served on the society and shall direct the central office to keep a copy of it in the public file of the society.

10

A prohibition order so made and issued shall, subject to subsection (15) below, take effect on the date specified in the order.

11

A copy of any order issued under subsection (9) above shall also be served on each director and on the chief executive of the society.

12

The requirement of subsection (11) above, so far as it relates to directors, is satisfied by serving a copy on each director whose appointment has been officially notified and the non-receipt of a copy by a director or the chief executive does not affect the validity of the direction.

13

Subject to subsection (14) below, a prohibition order shall remain in force until revoked by the Commission.

14

The Commission may suspend or revoke a prohibition order so far as it relates to an asset the disposal of which appears to it, on the application of the society, to be impracticable.

15

If, when a prohibition order has been made, an appeal is pending before the High Court under section 39(8) against the determination on which the order is founded the High Court may, on application made to it, order that the operation of the prohibition order be stayed until the determination of the appeal; but it shall not do so unless it is satisfied that it is in the public interest that it be stayed.

16

If a society contravenes a prohibition order issued against it under this section the Commission may certify the contravention in writing to the High Court; and the Court may thereupon inquire into the case and, after hearing any witnesses who may be produced against or on behalf of the society and after hearing any statement which may be offered in defence, may punish the society in like manner as if it had been guilty of contempt of the court.

17

In the application of this section to a building society whose principal office is in Scotland, references to the High Court shall be read as references to the Court of Session and references to staying shall be read as references to sisting.

Powers in relation to authorisation

F12841. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F12942. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F13042A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F13142B Power to direct transfers of engagements or business.

1

If, with respect to a building society F132which has a permission under Part IV of the Financial Services and Markets Act 2000 to accept deposits, the Authority considers it expedient to do so in order to protect the investments of shareholders or depositors, it may either—

a

direct the society, within a specified period, to transfer all its engagements to one or more other building societies under section 94; or

b

direct the society, within a specified period, to transfer its business to an existing company under section 97.

F1332

If it appears to the Authority that a society has failed to comply with a direction under subsection (1), the Authority may exercise its power under section 45 of the Financial Services and Markets Act 2000 in relation to the society (power to vary or cancel a Part IV permission on the Authority’s own initiative).

may be given subject to such limitations or conditions as the F134Authority may think fit; and

c

unless renewed by a further direction, shall cease to have effect at the end of the period of 90 days beginning with the day on which it is given.

F1356

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

7

In Schedule 8A to this Act—

a

Part I (which contains provisions modifying sections 94 to 96 and Schedule 16 to this Act) shall apply where a direction is given under subsection (3) above; and

b

Part II (which contains provisions modifying sections 97 to 100 and Schedule 17 to this Act) shall apply where a direction is given under subsection (4) above.

C398

The F136Treasury may make regulations for the purpose of specifying, as prescribed matters—

a

the matters of which statements under paragraph 3 of Schedule 8A to this Act are to give particulars; and

b

the matters of which statements under paragraph 9 of that Schedule are to give particulars.

9

The power to make regulations under this section is exercisable by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament.

F13842CF137Variation and revocation of transfer directions

1

A direction under section 42B(1) F139. . . may be varied by a further direction; and a direction may be revoked by the F140Authority by a notice in writing to the building society concerned.

F1412

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F1413

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F14243. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F14343A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F14443B. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F14544. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F14645. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F149General functions of Commission

Annotations:

Amendments (Textual)

F149

S. 45AA and cross-heading inserted (1.12.1997) by 1997 c. 32, s. 22; S.I. 1997/2668, art. 2, Sch. Pt. I(d)

F14745AA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F14845A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F151Notices, hearings and appeals

Annotations:

Amendments (Textual)

F151

S. 46A and cross-heading substituted (17.8.2001 for specified purposes and otherwise 1.12.2001) for ss. 46-49 and cross-heading by S.I. 2001/2617, arts. 2, 8, 13(1), Sch. 3 Pt. II para. 148 (with art. 13(3), Sch. 5); S.I. 2001/3538, art. 2(1)

F15046A Notices, hearings and appeals.

C401

If the Authority proposes—

a

to give a direction to a society under section 36(3), (5), (6), (7) or (10), or

b

to give a direction to a society under section 42B(1), other than a direction varying a previous direction with the agreement of the society concerned,

it must give the society a warning notice.

2

The warning notice must set out the terms of the direction which the Authority proposes to give.

3

If the Authority decides—

a

to give a direction to a society under section 36(3), (5), (6), (7) or (10), or

b

to give a direction to a society under section 42B(1), other than a direction varying a previous direction with the agreement of the society concerned,

it must give the society a decision notice.

4

The decision notice must set out the terms of the direction which the Authority has decided to give.

5

A society to whom a decision notice is given under this section may refer the matter to the Financial Services and Markets Tribunal.

6

7

The provisions of Part IX of the Financial Services and Markets Act 2000 (hearings and appeals) are to be treated as applying in respect of references to the Financial Services and Markets Tribunal made under this section as they apply in respect of references made to that Tribunal under that Act.

8

In the application of Part XXVI of that Act in respect of warning notices and decision notices given under this section—

a

section 388(1)(e)(i) (which requires a decision notice to indicate any right given under that Act to refer a decision to the Tribunal) is to be read as if, for the words “this Act”, there were substituted “ the Building Societies Act 1986 ”;

b

section 388(2) (which makes provision for the type of action which may be proposed in a decision notice which was preceded by a warning notice) is to be read as if, for the word “Part”, there were substituted “ section ”;

c

section 390(4) (which provides for the content of a final notice about an order) is to be read as if—

i

for the words “an order” there were substituted “ a direction ”, and

ii

for the words “the order”, in both places where they appear, there were substituted “ the direction ”; and

d

section 392 (application of sections 393 (third party rights) and 394 (access to Authority material)) is to be read—

C41i

as if paragraph (a) of that section contained a reference to a warning notice given under subsection (1) above, and

ii

as if paragraph (b) of that section contained a reference to a decision notice given under subsection (3) above.

C13246F744Rights of appeal.

F7451

A building society which is aggrieved by a decision of the Commission—

a

to refuse to grant authorisation;

b

to revoke authorisation;

c

to impose or vary conditions or as to the conditions imposed or varied; or

d

to give a direction,

may appeal against the decision to a tribunal constituted in accordance with section 47.

C1332

Any person in relation to whom the Commission, in deciding to refuse to grant or to revoke authorisation, to impose or vary conditions or to give a direction, makes a determination that a person is not a fit and proper person to hold, or as the case may be, to remain in an office in the society or imposes a requirement that he be removed from an office in the society, may appeal against the decision so far as it relates to that determination or requirement.

3

The revocation of a society’s authorisation, or a direction under section 36(3), (5), (6), (7) or (10), shall not have effect until—

a

the end of the period within which an appeal can be brought against the Commission’s decision to revoke the authorisation or give the direction; and

b

if such an appeal is brought, until it is determined or withdrawn.

4

Subsection (3) above applies in relation to the expiry of a society’s authorisation on a refusal to grant authorisation under section 41 as it applies to the revocation of a society’s authorisation.

C1345

Subject to subsection (3) above and any order of the tribunal made under section 47(5), an appeal under subsection (1)(c) or (d) or (2) above shall not affect the operation, pending the determination of the appeal, of any condition or direction which is the subject of the appeal; and no determination of an appeal by any person under subsection (2) above shall affect the revocation or direction for the purposes of which the Commission made its determination or requirement in relation to that person.

C1356

In this section and section 47—

“conditions” means conditions to be complied with by a building society and imposed on the grant of authorisation under section 9, on the renewal of authorisation under section 41, on reauthorisation under section 44, or under section 42, or imposed or varied under section 42A;
“direction” means a direction under section 36(3), (5), (6), (7) or (10), section 42B(1) or section 43A;
“grant” includes renew;
“revoke” means revoke under section 43(1).

F746 C136 C137 C138 C139 C14047 Determination of appeals.

1

Where an appeal is brought under section 46, a tribunal to determine the appeal shall be constituted in accordance with subsection (2) below.

C1362

The tribunal shall consist of—

in the case of an appeal against the variation of conditions or as to the variation imposed by the decision, to determine different variations of the conditions subject to which the authorisation is to continue;

e

in the case of an appeal against the giving of a direction under section 36(3), to give a direction under section 36(5) or (6);

f

in the case of an appeal against the giving of a direction under section 36(5), to give a direction under section 36(3) or (6);

Where by virtue of subsection (7), (7A) or (7B) above the tribunal, on an appeal against any conditions or variations of conditions or any direction, directs the Commission—

a

to determine different conditions or variations; or

b

to give a different direction,

the other provisions of that subsection shall apply as they apply where the tribunal gives such a direction by virtue of subsection (6) above.

9

Where the tribunal reverses a decision of the Commission to refuse to grant authorisation, it shall direct the Commission to grant it; and where the tribunal reverses a decision of the Commission to make the grant of authorisation subject to conditions, it shall direct the Commission to grant it unconditionally.

10

Notice of a tribunal’s determination, together with a statement of its reasons, shall be given to the appellant and to the Commission; and unless the tribunal has directed the Commission to determine F750conditions, variations or directions or, in any other case, the tribunal directs otherwise, the determination shall come into operation when the notice is given to the appellant.

C14211

The Treasury may out of money provided by Parliament pay to the persons appointed as members of a tribunal under this section such fees and allowances in respect of expenses as the Treasury may determine and any other expenses incurred for the purposes of this section.

F751 C14348 Costs, procedure and evidence.

1

A tribunal may give such directions as it thinks fit for the payment of costs or expenses by any party to the appeal.

2

On an appeal under section 46(2) the building society in relation to which the determination was made, or upon which the requirement was imposed, shall be entitled to be heard.

C1443

The Treasury may, F752. . ., make regulations with respect to appeals under section 46; and those regulations may in particular make provision—

a

as to the period within which and the manner in which such appeals are to brought;

b

as to the manner in which such appeals are to be conducted, including provision for any hearing to be held in private;

c

for requiring any person, on tender of the necessary expenses of his attendance, to attend and give evidence or produce documents in his custody or under his control and for authorising the administration of oaths to witnesses;

d

for granting to any person such discovery or inspection of documents or right to further particulars as might be granted by a county court in England and Wales or Northern Ireland or, in Scotland, for granting to any person such recovery or inspection of documents as might be granted by the sheriff;

e

for enabling an appellant to withdraw an appeal or the Commission to withdraw its opposition to an appeal and for the consequences of any such withdrawal;

f

for taxing or otherwise settling any costs or expenses directed to be paid by the tribunal and for the enforcement of any such direction;

g

for enabling any functions in relation to an appeal to be discharged by the chairman of the tribunal; and

h

as to any other matter connected with such appeals.

4

A person who, having been required in accordance with regulations under this section to attend and give evidence, fails without reasonable excuse to attend or give evidence shall be liable on summary conviction to a fine not exceeding level 5 on the standard scale.

5

A person who intentionally alters, suppresses, conceals, destroys or refuses to produce any document which he has been required to produce in accordance with regulations under this section, or which he is liable to be so required to produce, shall be liable—

a

on conviction on indictment, to imprisonment for a term not exceeding two years or to a fine or both;

b

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

6

The power to make regulations under this section is exercisable by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament.

F753 C14549 Further appeals on points of law.

1

An appeal shall lie to the High Court at the instance of the building society or other person concerned or of the Commission on any question of law arising from any decision of a tribunal under section 47; and if the court is of the opinion that the decision was erroneous in law, it shall remit the matter to the tribunal for re-hearing and determination by it.

2

In the application of this section to a building society whose principal office is in Scotland, references to the High Court shall be construed as references to the Court of Session.

3

No appeal to the Court of Appeal or to the Court of Appeal in Northern Ireland shall be brought from a decision under subsection (1) above except with the leave of that court or of the court or judge from whose decision the appeal is brought.

4

An appeal shall lie, with the leave of the Court of Session or the House of Lords, from any decision of the Court of Session under this section, and such leave may be given on such terms as to costs, expenses or otherwise as the Court of Session or the House of Lords may determine.

Advertising etc.

F15250. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F15351 Powers to avoid apparent association with other bodies.

1

If, as regards a building society and another body corporate which is not an associated body by virtue of section 18, it appears to the Commission that persons who might invest in or otherwise deal with that other body may be misled into believing that there is such a business relationship between the society and that body as indicates that the society has assumed an obligation to discharge that body’s liabilities in any event, the Commission may give the society a direction under subsection (2) below.

2

A direction under this subsection is a direction requiring the society—

a

if they are available to it, to assume and make exercisable, or to make exercisable, as regards a body specified in the direction, the powers conferred by section 18; or

b

to take such steps as are agreed with the Commission for the purpose of removing the appearance of a business relationship with the specified body which indicates the assumption of an obligation of the description referred to in subsection (1) above;

and, within a specified period, to notify the Commission of the course it has decided to take.

3

The steps that a building society may be required to take for the purpose of complying with a direction under subsection (2) above may relate to the conduct of its business or to its business relationship (if any) with the other body and, in particular, may require the removal of any person from any office in the society or that body.

4

A direction under subsection (2) above shall—

a

specify the matters which appear to the Commission to be capable of giving rise to such a belief as is mentioned in subsection (1) above;

b

specify the period within which the society must comply with the direction;

c

require the society, if it decides to comply with the direction by taking steps to secure the purpose mentioned in subsection (2)(b) above, to notify the Commission of the steps it proposes to take.

5

Where a building society, in pursuance of subsection (2)(b) above notifies the Commission of steps which it proposes to take to secure the purpose mentioned in that paragraph then—

a

if it appears to the Commission that the steps proposed are reasonably likely to secure that purpose, the Commission shall approve them and direct the society to carry them out;

b

if it appears to the Commission that the steps proposed are, with modifications, likely to secure that purpose and the Commission and the society agree on appropriate modifications within the period of 21 days from the date on which the Commission notifies the society of the modifications it proposes for their agreement, the Commission shall approve the steps as modified and direct the society to carry them out;

but otherwise the Commission shall reject the society’s proposals.

6

If the Commission rejects a society’s proposals under subsection (5) above the Commission shall direct the society, within a specified period, to take the steps specified in the direction.

7

Any direction under subsection (2), (5) or (6) above shall be given by the Commission by notice served on the society.

8

The Commission may, if it thinks fit, extend, or further extend, any period during which a building society is to take any steps required of it under any of the foregoing provisions of this section and may do so whether or not application is made to it before the expiry of the period in question.

9

If a building society fails, within the period allowed to it under the foregoing provisions of this section, to comply with a direction under subsection (2) or (6) above, the Commission may serve on the society an aggregation notice to take effect on such date as is specified in the notice.

10

An aggregation notice under subsection (9) above is a notice directing that, from the date specified in the notice until the notice is withdrawn by the Commission, the assets and liabilities of the body specified in the notice will be aggregated with those of the society for the purposes of the provisions of this Act requiring aggregation of assets or liabilities; and where such a notice is served, and whilst it remains in force, the assets and liabilities of the body specified in the notice shall for the purposes of those provisions be aggregated with those of the society in accordance with the aggregation rules in force under sections 7(10), 8(3) and 20(9).

11

A copy of any aggregation notice served on a building society under subsection (9) above shall, whilst in force, be kept in the public file of the society.

12

In this section—

“business relationship” includes the use of business names and the holding by one individual of offices in more than one body;
“specified” means specified in a direction under any provision of this section;

any information, documents or other material to which it related would be removed, tampered with or destroyed.

for other purposes as well as purposes mentioned in that subsection.

4

Information is excluded information if—

a

it has been made available to the public by virtue of being disclosed in any circumstances in which, or for any purposes for which, disclosure is not precluded by section 348 of the Financial Services and Markets Act 2000; or

b

it is in the form of a summary or collection of information so framed that it is not possible to ascertain from it information relating to any particular person.

C4354Information disclosed to F177Authority from other sources.

shall be liable on summary conviction to a fine not exceeding level 5 on the standard scale.

5

Any officer, employee or agent of a building society or other body who knowingly or recklessly furnishes to any person appointed under subsection (1) above any information which is false or misleading in a material particular, shall be liable—

a

on conviction on indictment to imprisonment for a term not exceeding two years or to a fine or both; and

b

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

6

In this section—

the F182Authority may appoint a person to be chairman at the meeting or, in default of such an appointment, the meeting may appoint its own chairman;

c

the meeting shall have all the powers of a meeting called according to the rules of the building society;

and the provisions of this subsection and any direction given under it shall have effect notwithstanding anything in the rules of the building society.

11

In this section “the corresponding Companies Act limit”, in relation to security for the payment of the costs of an investigation, is £5,000 or such other sum as is specified for the time being in an order under section 431(4) of the M17Companies Act 1985 for the purposes of that section.

57 Inspections: supplementary provisions.

C461

In this section—

“the body under investigation” means the building society whose affairs or, as the case may be, the building society whose affairs, and each F187connected undertaking of the building society whose affairs, are the subject of the investigation;
“the inspectors” means the persons appointed by the F188Authority under section 56 to conduct the investigation;
“the investigation” means the investigation under section 56 which the inspectors have been appointed to hold;

and references to officers or to agents include past, as well as present, officers or agents (as the case may be) and “agents”, in relation to a building society or any F187connected undertaking of a building society, includes its bankers, its accountants and solicitors and its auditors.

2

When the inspectors have been appointed it is the duty of all officers and agents of the body under investigation—

a

to produce to the inspectors all documents and material of or relating to the body under investigation which are in their custody or power;

b

to attend before the inspectors when required to do so, and

c

otherwise to give the inspectors all assistance in connection with the investigation which they are reasonably able to give.

3

If the inspectors consider that a person other than an officer or agent of the body under investigation is or may be in possession of information concerning its affairs, they may require that person to produce to them any documents or material in his custody or power relating to the body under investigation, to attend before them and otherwise to give them all assistance in connection with the investigation which he is reasonably able to give; and it is that person’s duty to comply with the requirement.

4

The inspectors may examine on oath the officers and agents of the body under investigation, and any such person as is mentioned in subsection (3) above, in relation to the affairs of the body under investigation, and may administer an oath accordingly.

C475

An answer given by a person to a question put to him under the foregoing provisions of this section may be used in evidence against him.

F189 C475A

However, in criminal proceedings in which that person is charged with an offence to which this subsection applies—

a

no evidence relating to the answer may be adduced, and

b

no question relating to it may be asked,

by or on behalf of the prosecution, unless evidence relating to it is adduced, or a question relating to it is asked, in the proceedings by or on behalf of that person.

C475B

Subsection (5A) above applies to any offence other than—

a

an offence under section 2 or 5 of the Perjury Act 1911 (false statements made on oath otherwise than in judicial proceedings or made otherwise than on oath);

b

an offence under section 44(1) or (2) of the Criminal Law (Consolidation) (Scotland) Act 1995 (false statements made on oath or otherwise than on oath); or

c

an offence under Article 7 or 10 of the M18Perjury (Northern Ireland) Order 1979 (false statements made on oath otherwise than in judicial proceedings or made otherwise than on oath).

6

If an officer or agent of the body under investigation or any such person as is mentioned in subsection (3) above—

a

refuses to produce any document or material which it is his duty under this section to produce, or

b

refuses to attend before the inspectors when required to do so, or

c

refuses to answer any question put to him by the inspectors with respect to the affairs of the body under investigation,

the inspectors may certify the refusal in writing to the High Court; and the court may thereupon inquire into the case and, after hearing any witnesses who may be produced against or on behalf of the alleged offender and after hearing any statement which may be offered in defence, may punish the offender in like manner as if he had been guilty of contempt of the court.

7

The inspectors may, and if so directed by the F188Authority shall, make interim reports to the F188Authority, but they may at any time in the course of the investigation, without making an interim report, inform the F188Authority of matters coming to their knowledge as a result of the investigation tending to show that an offence has been committed.

8

The F188Authority may, if it thinks fit—

a

send a copy of any report made by the inspectors to the body whose affairs are or were the subject of the investigation;

b

furnish a copy of any such report on request F190. . . to—

i

any member of the body whose affairs are or were the subject of the investigation;

ii

the auditors of that body;

iii

any person whose conduct is referred to in the report;

iv

any other person whose financial interests appear to the F188Authority to be affected by matters dealt with in the report, whether as creditor or otherwise; and

c

cause the report to be printed and published.

F1918A

The Authority may charge a reasonable fee for furnishing to any person a copy of a report under subsection (8)(b) above.

9

A copy of a report of inspectors appointed under section 56 to hold an investigation under that section, certified by the F188Authority to be a true copy, is admissable in any legal proceedings as evidence of the opinion of the inspectors in relation to any matter contained in the report; and a document purporting to be such a certificate shall be received in evidence and be deemed to be such a certificate, unless the contrary is proved.

10

The F188Authority shall be entitled to be repaid the expenses of the investigation defrayed by it under section 56(6)(d) as provided in the following paragraphs, that is to say—

a

by the applicants for the investigation, to such extent (if any) as the F188Authority may direct;

c

by any person convicted of an offence in proceedings instituted as a result of the investigation, to such extent (if any) as the court by or before which he was convicted may order;

and a person liable under any one of paragraphs (a) to (c) above is entitled to contribution from any other person liable under the same paragraph, according to the amount of their respective liabilities under it.

11

In the application of this section to a building society whose principal office is in Scotland, any reference to the High Court shall be read as a reference to the Court of Session.

Part VII Management of Building Societies

Directors and other officers

58 Directors: number.

1

Every building society shall have at at least two directors.

2

One of the directors shall be appointed to be chairman of the board of directors.

59 Chief executive and secretary.

1

Every building society shall have a chief executive, that is to say, a person who is employed by the society and who either alone or jointly with one or more other persons, is or will be responsible under the immediate authority of the directors for the conduct of the business of the society.

2

Every building society shall have a secretary.

3

The offices of chief executive and secretary of a building society may be held by the same person.

4

The chief executive and the secretary of a building society shall be appointed by the directors of the society.

5

The directors of a building society shall, as regards the appointment of the secretary or the chief executive of the society, take all reasonable steps to secure that the person appointed is a person who has the requisite knowledge and experience to discharge the functions of his office.

6

Where a person becomes or ceases to be the chief executive of a building society, the society shall within one month give notice of that fact to the F192Authority, stating the person’s full name and address and the date on which he became, or ceased to be, chief executive; and the F192Authority shall record the person’s name and the date on which he began to hold, or, as the case may be, ceased to hold office, in the public file of the society.

7

Anything required or authorised to be done by or to the secretary or chief executive of a building society may, if the office is vacant or there is for any other reason no secretary or chief executive capable of acting, be done by or to any assistant or deputy secretary or assistant or deputy chief executive, as the case may be, or, if there is no assistant or deputy capable of acting, by or to any officer of the society authorised generally or specially for that purpose by the directors.

60 Directors: elections and retirements.

C481

Except in so far as they may be co-opted by virtue of subsection (13) below, the directors of a building society must be elected to office, either—

F193a

on a poll taken at the annual general meeting of the society, or

b

C49 C489

The rules of a building society may impose, as a condition of a person’s eligibility to be or to remain a director of the society, a requirement that he shall hold beneficially shares in the society not less in value than the amount prescribed by the rules, but the minimum holding to be required shall not exceed £1,000 or such other amount as may be substituted for it by order of the F199Treasury under this subsection.

has not attained—

i

the normal retirement age, or

ii

the compulsory retirement age (where that age is less than the normal retirement age), and

b

appears to them to be fit and proper to be a director.

not being a person who, having been nominated for election as a director at any election held within the preceding twelve months, was not elected as a director.

14

A person who is co-opted under subsection (13) above shall cease to hold office at the end of the permitted period unless he is elected as a director of the society in accordance with this section within that period.

15

A person who holds office as, or is to his knowledge nominated for election or proposed for appointment under subsection (13) above as, a director of a building society shall, not later than 28 days before he attains the normal retirement age or, as the case may be, the compulsoryretirement age for directors of the society, give the society notice of the date on which he will attain that age; and if he fails to do so he 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 week during which the offence continues.

C4916

The power of the F199Treasury to make an order under subsection (9) above—

a

includes power to make such transitional provision as F202they consider necessary or expedient, and

b

shall be exercisable by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament.

17

In this section—

F203 “ordinary resolution” means a resolution which will be effective without being passed as a special resolution or borrowing members’ resolution;
“permitted period”, in relation to a co-opted director, has the meaning given by section 61(12); and
“the voting date” means—

a

in the case of an election at a meeting, the date of the meeting, except where paragraph (c) below applies;

b

in the case of an election conducted by postal ballot, the date which the society specifies as the final date for the receipt of completed ballot papers;

c

in a case where a member appoints a proxy to vote at the meeting for him, the date which the society specifies as the final date for receipt of instruments appointing proxies to vote at the election;

and, for the purposes of this Act, the date of a person’s election to office as a director of a building society, in a case where the rules provide for election by postal ballot, is the date of the meeting at which the declaration of the result of the ballot is made.

C5061 Directors: supplementary provisions as to elections, etc.

F2041

Rules made under section 60(10)(a), in order to comply with this section, must not require—

a

in the case of a society whose total commercial assets do not exceed £100 million, more than F20550 members;

b

in the case of a society whose total commercial assets exceed £100 million but do not exceed £250 million, more than F205100 members;

c

in the case of a society whose total commercial assets exceed £250 million but do not exceed £1,000 million, more than F205150 members;

d

in the case of a society whose total commercial assets exceed £1,000 million but do not exceed £5,000 million, more than F205200 members; and

e

in the case of a society whose total commercial assets exceed £5,000 million, more than F205250 members,

to join in nominating a person for election as a director.

2

Rules under section 60(10)(b), in order to comply with this section, must not require a nominating member—

a

to have been a member for more than two years before the date of the nomination; or

b

if he claims eligibility as a shareholding member, to hold, or to have held at any time during that period, shares in the society to a value greater than £100; or

c

if he claims eligibility as a borrowing member, to owe to the society, or to have owed to the society at any time during that period, a mortgage debt of an amount greater than £100.

3

Rules made under section 60(10)(c), in order to comply with this section—

a

must not require more than £250 to be deposited with the society;

b

must not require the money to be deposited before the date which, under the rules, is the closing date for the nomination of candidates for the election; and

c

must provide for the return of the deposit to the candidate in the event of his securing—

If a building society, in a case where the board of directors has approved as eligible for election a person who has attained the normal retirement age, fails to notify every person entitled to vote at the election as required by section 60(7), the society shall be liable on summary conviction to a fine not exceeding level 4 on the standard scale and so shall any officer who is also guilty of the offence; but no such failure shall invalidate the election.

7

F211If, before the closing date for the nomination of candidates, a duly nominated candidate for election as a director of a building society furnishes the society with an election address, or a revised election address, of not more than 500 words, then, subject to subsection (8) below—

a

it shall be the duty of the society to send a copy of the address F212or, as the case may require, the revised addressto each member of the society who is entitled to vote in the election;

b

each member’s copy shall be sent in the same manner and, so far as practicable, at the same time as the notice of the meeting at which the election is to be conducted or the ballot papers are sent out, as the case may be, or as soon as is practicable thereafter; and

c

if the building society fails to comply with the requirements of this subsection the society shall be liable on summary conviction to a fine not exceeding level 4 on the standard scale and so shall any officer who is also liable for the offence;

but no such failure shall invalidate the election.

8

Subsection (7) above does not require a building society to send copies of an address F213or a revised addressto members of the society in any case where—

a

publicity for the address F214or revised addresswould be likely to diminish substantially the confidence in the society of investing members of the public, or

b

the rights conferred by that subsection are being abused to seek needless publicity for defamatory matter or for frivolous or vexatious purposes;

and that subsection shall not be taken to confer any rights on members, or to impose any duties on a building society, in respect of an address F213or a revised addresswhich does not relate directly to the affairs of the society.

9

The F215Authority shall hear and determine any dispute arising under subsection (8)(a) above, whether on the application of the society or of any other person who claims to be aggrieved.

10

The rules of a building society, if they provide for the retirement by rotation of its directors, may provide that a person elected to fill a vacant seat on the board must retire at the annual general meeting at which, in accordance with the rules for retirement by rotation, the seat is to fall vacant.

11

Subsection (10) above applies to any vacancy arising when an elected director ceases to hold office for any reason before the annual general meeting at which (disregarding his age) the seat is due to fall vacant under section 60(11)(a).

12

For the purposes of section 60(17) “the permitted period”, with reference to the tenure of office of co-opted directors, is the period beginning with the date of the co-opted director’s appointment and ending with whichever of the following first occurs, that is to say—

i

in the case of a building society which elects its directors at its annual general meeting, the conclusion of the next such meeting following his appointment;

ii

in the case of a building society which elects its directors by postal ballot, the declaration at its annual general meeting of the result of the next such ballot conducted after his appointment;

iii

the expiration of the period of sixteen months beginning with the date of his appointment;

but a general meeting or postal ballot shall be disregarded for the purposes of this paragraph if the closing date for the nomination of candidates falls before the date of the co-opted director’s appointment.

13

Where a person becomes or ceases to be a director of a building society, the society shall within one month give notice of that fact to the F215Authority, stating the person’s full name and address and the date on which he became, or ceased to be, a director; and the F215Authority shall record the person’s name and the date on which he began to hold, or, as the case may be, ceased to hold office, in the public file of the society.

14

If a building society fails to comply with subsection (13) above the society shall be liable on summary conviction to a fine not exceeding level 4 on the standard scale and so shall any officer who is also guilty of the offence.

Dealings with directors

C5262 Prohibition of tax-free payments to directors.

1

A building society shall not pay a director remuneration (whether as director or otherwise) free of income tax, or otherwise calculated by reference to or varying with the amount of his income tax, or to or with any rate of income tax.

2

Any rule of a building society and any provision of any contract, or in any resolution of a building society, for payment to a director of remuneration falling within subsection (1) above has effect as if it provided for payment, as a gross sum subject to income tax, of the net sum for which the rule, contract or resolution actually provides.

C5363 Directors to disclose interests in contracts and other transactions.

1

It is the duty of a director of a building society who is in any way, whether directly or indirectly, interested in a contract or proposed contract with the society to declare the nature of his interest to the board of directors of the society in accordance with this section.

2

In the case of a proposed contract, the declaration shall be made—

a

at the meeting of the directors at which the question of entering into the contract is first taken into consideration; or

b

if the director was not at the date of that meeting interested in the proposed contract, at the next meeting of the directors held after he became so interested.

3

Where the director becomes interested in a contract after it is made, the declaration shall be made at the first meeting of the directors held after he becomes interested in the contract.

4

For the purposes of this section, a general notice given to the directors of a building society by a director to the effect that—

a

he is a member of a specified company or firm and is to be regarded as interested in any contract which may, after the date of the notice, be made with that company or firm, or

b

he is to be regarded as interested in any contract which may, after the date of the notice, be made with a specified person who is connected with him,

is a sufficient declaration of interest in relation to any contract made after that date with that company, firm or person.

5

A director need not make a declaration or give a notice under this section by attending in person at a meeting of the directors if he takes reasonable steps to secure that the declaration or notice is brought up and read at the meeting.

6

The foregoing provisions of this section apply in relation to any transaction or arrangement as they apply in relation to a contract and, for the purposes of this section, a transaction or arrangement of a kind described in section 65 made by a society for a director of the society or a person connected with a director of the society is to be treated (if it would not otherwise be so treated, and whether or not it is prohibited by that section) as a transaction or arrangement in which that director is interested.

7

A director who fails to comply with this section shall be guilty of an offence and liable—

Where an arrangement or transaction is entered into by a building society and a person connected with a director of the society in contravention of this section, that director is not liable under subsection (7) above if he shows that he took all reasonable steps to secure the society’s compliance with this section.

9

In any case, a person so connected and any such other director as is mentioned in subsection (7) above is not so liable if he shows that, at the time the arrangement was entered into, he did not know the circumstances constituting the contravention.

An order under subsection (8) above shall be subject to annulment in pursuance of a resolution of either House of Parliament.

10

In this section—

“authorising provision” and “authorised”, in relation to a transaction of a description falling within paragraph (a), (b) or (c) of subsection (1) above, mean respectively any provision of subsection (2), (3) or (4) or constituted by subsection (5) above and any transaction or thing done to which that paragraph does not apply or which is not precluded from being done by virtue of that provision;
“outstanding”, in relation to loans, means outstanding in respect of principal and interest and, in relation to the provision of funds subject to a condition for repayment or discharge of any other liability, means unpaid or undischarged to any extent;
“provision of funds” includes anything else which, by virtue of subsection (5) above, a society is not precluded from doing by subsection (1) above; F223and
“relevant”, in relation to a transaction of a description falling within paragraph (a), (b) or (c) of subsection (1) above, means an outstanding or, in the case of a lease or hiring, current transaction of that description (whether entered into by, or by arrangement with, the society) not being one authorised by any other authorising provision.
F224“subsidiary” has the meaning given by section 736 of the M19Companies Act 1985.

11

Section 70 has effect for the interpretation, in the subsequent provisions of this Part, of references to transactions or arrangements contravening this section and to such transactions or arrangements being made “for” a person.

b

to indemnify the society for any loss or damage resulting from the transaction.

4

Nothing in the above provisions shall be construed as excluding the operation of any other enactment or rule of law by virtue of which the transaction may be called in question or any liability to the society may arise.

5

The transaction ceases to be voidable if—

a

restitution of any money or other asset which was the subject-matter of the transaction is no longer possible, or

if, having been convicted of an offence under paragraph (a) above, the person accepting the commission fails to pay over to the society the amount or value of the commission, as and when directed to do so by the court which convicted him, he shall be guilty of an offence under this paragraph and liable on summary conviction to imprisonment for a term not exceeding six months.

4

No offence under paragraph (a) of subsection (3) above is committed by the person who paid the commission unless he did so knowing the circumstances that constituted the offence under that paragraph on the part of the person who accepted it from him.

5

Where—

a

a charge upon a policy of life assurance is given as additional security for F227a loan made by a building society, or

b

a building society makes F227an additional loan to enable payment to be made of a premium on a policy of insurance, or

c

any policy of insurance is taken out so as to comply with the terms on which F227a loan is made by a building society, whether by way of insuring the property given as security for F227the loan or otherwise,

and the policy is effected through the building society, or the society nominates or selects a person by whom the policy is to be issued, it shall be unlawful for any person to whom this section applies, in connection with the effecting of the policy, to receive any commission from a person by or through whom the policy is issued.

6

A person who pays, and a person who accepts, any commission which subsection (5) above makes it unlawful to receive shall be liable on summary conviction to a fine not exceeding level 4 on the standard scale.

C597

In this section—

“charge upon a policy of life assurance”, in relation to F228a loan secured on land in Scotland, means an assignation in security in respect of such a policy;
“commission” includes any gift, bonus or benefit;
“solicitor”, in relation to England and Wales, includes licensed conveyancer.

C6068 Records of loans, etc. for directors falling within s. 65.

1

A building society shall maintain a register containing a copy of every subsisting transaction or arrangement (other than an excepted transaction or arrangement) falling within section 65(1) made for a director or a person connected with a director of the society during the current financial year or any of the preceding ten financial years.

2

In the case of a transaction or arrangement which is not in writing, there shall be kept in the register a written memorandum setting out its terms.

3

A building society shall make available for inspection by members—

a

at its principal office during the period of 15 days expiring with the date of its annual general meeting, and

b

at the annual general meeting,

in the case of a guarantee or security within paragraph (d), it is made as an incident of or in connection with a loan or disposal to him or a payment on his behalf; and

c

in the case of an arrangement within paragraph (e), the transaction to which the arrangement relates was made for him.

C79 C80Part VIII Accounts and Audit

Annotations:

Modifications etc. (not altering text)

C79

Pt. VIII (ss. 71–82) excluded by S.I. 1986/2168, art. 12(1)(a)

C80

Pt. VIII (ss. 71–82) modified (temp.until 1.1.1993) by S.I. 1990/1392, art. 6(3)

Accounting records F254. . .

Annotations:

Amendments (Textual)

F254

Words in s. 71 cross-heading omitted (17.8.2001 for certain purposes) and repealed (1.12.2001) by S.I. 2001/2617, arts. 2(a)(b), 8, 13(1)(2), Sch. 3 para. 163(a), Sch. 4 (with art. 13(3), Sch. 5); S.I. 2001/3538, art. 2(1)

C7071 Accounting records F245. . .

C711

Every building society shall—

a

cause accounting records to be kept, F246. . .

F246b

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

in accordance with this section.

C712

The accounting records of a society must be such as to—

a

explain its transactions;

b

disclose, with reasonable accuracy and promptness, the state of the business of the society at any time;

c

enable the directors properly to discharge the duties imposed on them by or under this Act and their functions of direction of the affairs of the society; and

d

enable the society properly to discharge the duties imposed on it by or under this Act;

and must be kept in an orderly manner.

C713

The accounting records shall in particular contain—

a

entries from day to day of all sums received and paid by the society and the matters in respect of which they are received or paid;

b

entries from day to day of every transaction entered into by the society which will or there is reasonable ground for expecting may give rise to liabilities or assets of the society other than insignificant assets or liabilities in respect of the management of the society; and

c

a record of the assets and liabilities of the society and in particular of assets and liabilities of any class specifically regulated by or under F247section 6 or 7.

F2484

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F2485

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F2486

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F2487

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

C718

The accounting records shall be kept at the society’s principal office or at such other place or places as the directors think fit, and shall at all times be open to inspection by the directors.

C719

Accounting records shall be preserved for six years from the date on which they were made.

C7110

Where a building society has F249connected undertakings, the society shall also secure that such accounting records are kept F250. . . by the society and the F249connected undertakings as will enable the society to comply with the requirements of this section in relation to the business of the society and those F249connected undertakings.

F25110A

The Commission may, for the purpose of implementing the Council Directive on the supervision of credit institutions on a consolidated basis (No.92/30/EEC) F252, direct that subsection (10) above shall have effect in relation to any building society specified in the direction as if any associated body of the society so specified were linked to it by resolution.

F25311

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Accounts

72 Duty of directors to prepare annual accounts.

1

Subject to subsection (4) below, the directors of every building society shall prepare with respect to each financial year of the society—

a

an income and expenditure account showing the income and expenditure for that year, F255and

b

a balance sheet showing the state of its affairs as at the end of that year, F256. . .

c

a statement of the source and application of the funds during that year.

2

F257 . . ., if, at the end of its financial year, a building society has F258subsidiary undertakings , the directors shall also prepare, with respect to that year, group accounts dealing respectively with the income and expenditure, F259and the state of the affairs, of the society and the F258subsidiary undertakings.

3

The directors of a building society which has F258subsidiary undertakings shall secure that, except where in their opinion there are good reasons against it, the financial year of each of its F258subsidiary undertakings coincides with the society’s own financial year.

F2604

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F2615

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F2616

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

C727

The F262Treasury may by regulations—

a

add to the classes of documents to be comprised in a society’s accounts to be prepared for each financial year under subsection (1) or (2) above;

b

make provision as to the matters to be included in any document so added;

c

modify the requirements of this Part as to the matters to be stated in any document comprised in the society’s accounts; and

d

reduce the classes of documents to be comprised in a society’s accounts.

C728

Regulations under subsection (7) above may make different provision for different descriptions of society, and may include incidental and supplementary provisions.

9

The power to make regulations under subsection (7) above is exercisable by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament.

10

The accounts prepared with respect to a society’s financial year under this section (whether as individual accounts or group accounts), with the notes to them, are referred to in this Part as “the annual accounts”.

73 Contents and form of annual accounts.

1

The annual accounts of a building society shall conform to the requirements of this section and regulations made under it.

2

Every income and expenditure account shall give a true and fair view of the income and expenditure of the society for the financial year.

3

Every balance sheet shall give a true and fair view of the state of the affairs of the society as at the end of the financial year.

F2634

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5

Subsections F264(2) and (3) above, in their application to the group accounts of a society, are to be read as referring to the society and (so far as it concerns the members of the society) the F265subsidiary undertakings dealt with in the group accounts.

C736

The annual accounts shall also contain, whether in the form of notes or otherwise, such supplementary information as is prescribed.

C737

The F266Treasury shall by regulations make provision with respect to the contents and the form of the annual accounts.

C738

Without prejudice to the generality of subsections (6) and (7) above, the regulations may—

a

prescribe accounting principles and rules;

b

require corresponding information for a preceding financial year;

c

require the accounts of societies to deal also with F267their associated undertakings;

d

make different provision for different descriptions of society;

e

require the accounts to give particulars of the emoluments, pensions, compensation for loss of office and financial interests of directors, other officers and employees of prescribed descriptions of the society;

and may permit group accounts to be prepared in other than consolidated form.

9

Where compliance with regulations under this section would not secure compliance with the requirements of subsection F268(2) or (3) above the directors shall take such steps with regard to the contents or form of the accounts, in addition to or, if additions do not suffice, in derogation of the provisions of the regulations, as they think necessary to secure compliance with those subsections and record, in the notes to the accounts, what they have done, the reasons for it and its effects.

10

The power to make regulations under this section is exercisable by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament.

11

It is the duty of every director, other officer and employee of a building society as respects whom prescribed particulars are by virtue of subsection (8)(e) above required to be given in the accounts to give notice of such matters as may be necessary to enable the society to give those particulars in the accounts.

12

In this section “prescribed” means prescribed in regulations under it.

74 Duty of directors to prepare annual business statement.

1

The directors of every building society shall, by reference to the annual accounts and other records and information at their disposal, prepare with respect to each financial year of the society a statement (referred to in this Act as “the annual business statement”) relating to prescribed aspects of the business of the society during the year.

2

Where the society has F269connected undertakings the annual business statement shall deal also with prescribed aspects of the business of the F269connected undertakings during the year to which it relates.

C743

The annual business statement shall contain such information relating to such aspects of the business of the society and shall be in such form as the F270Treasury prescribe by regulations; and in this section “prescribed” means prescribed by regulations under this subsection.

C744

Without prejudice to the generality of subsections (1) to (3) above the regulations may require the annual business statements of building societies to include prescribed information about directors and past directors and persons connected with them and other officers and past officers and persons connected with them and their financial interests.

5

The information comprising the annual business statement shall give a true representation of the matters in respect of which it is given.

6

To such extent as may be prescribed matters contained in the society’s annual business statement shall not be the subject of report by the auditors under section 78.

7

The power to make regulations under subsection (3) above is exercisable by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament.

8

It is the duty of every director or other officer of a building society to give notice to the society of such matters relating to himself or his financial interests as may be necessary for the purposes of compliance with the preceding provisions of this section.

9

Any person who fails to comply with subsection (8) above shall be liable on summary conviction to a fine not exceeding level 5 on the standard scale.

10

Any director who fails to comply with subsection (1) above shall be liable on conviction on indictment or on summary conviction to a fine not exceeding, on summary conviction, the statutory maximum.

75 Directors’ report.

1

The directors of a building society shall prepare for submission to the annual general meeting a report on the business of the society containing—

a

a fair review of the development of its business during the financial year and of its position at the end of it, and

C75b

such information relating to such aspects of the business of the society or the society and any F271connected undertakings as may be prescribed by regulations made by the F272. . . Treasury, and

F273c

a statement as to the matters mentioned in subsection (1A) below.

F2741A

The said matters are—

a

whether the society has acquired or established, or allowed a subsidiary undertaking to acquire or establish, a business to which subsection (3) and subsection (4) or, as the case may be, subsection (5) of section 92A applied;

b

if the society has acquired or established, or allowed such an undertaking to acquire or establish, such a business, what the business is and whether the society complied with the requirements of subsection (1) of that section; and

c

if the society did not comply with those requirements, why the society nevertheless proceeded, or allowed the undertaking to proceed, with the acquisition or establishment.

2

Where the society has F275connected undertakings the report shall, in addition to containing the information prescribed in relation to them under subsection (1)(b) above, review the development of the business of the society and its F276connected undertakings during the year and their position at the end of it.

3

The power to make regulations under subsection (1) above is exercisable by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament.

4

If a directors’ report does not contain F277the review, information and statement required by subsection (1) above and, where applicable, the review required by subsection (2) above, each director shall be liable on conviction on indictment or on summary conviction to a fine not exceeding, on summary conviction, the statutory maximum.

If default is made by a building society in complying with subsection (8) above, the society shall be liable on summary conviction—

a

to a fine not exceeding level 5 on the standard scale; and

b

in the case of a continuing offence, to an additional fine not exceeding £200 for every day during which the offence continues,

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

11

If default is made by a building society in complying with subsection (9) 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 continues,

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

12

The F283Authority shall keep one of the copies of the summary financial statement received by it under subsection (8) above in the public file of the society.

Auditors and audit of accounts

77 Auditors: appointment, tenure, qualifications, etc.

1

Every building society shall at each annual general meeting appoint an auditor or auditors to hold office from the conclusion of that meeting until the conclusion of the next annual general meeting.

in the case of the statement of the source and application of funds, of the manner in which the business of the society has been financed and in which its financial resources have been used during the year.

5

Subsection (4) above, in its application to the group accounts of a society, is to be read as referring to the society and (so far as it concerns the members of the society) the F288subsidiary undertakings dealt with in the group accounts.

6

If the auditors’ report includes a qualification of their opinion that the annual accounts give a true and fair view of the matters specified in subsection (4) above, subsections (8) and (9) of section 76 extend also to the auditors’ report.

7

The auditors’ report, in so far as it deals with the documents specified in subsection (3) above, shall state whether they have been prepared so as to conform to the requirements of sections 74 and 75 respectively and the regulations thereunder and whether, in the opinion of the auditors—

a

the information given in the annual business statement gives a true representation of the matters in respect of which it is given, and

b

the information given in the directors’ report is consistent with the accounting records and the annual accounts for the year.

8

The auditors’ report on the annual business statement shall not deal with any matters which, by virtue of section 74(6), are not to be the subject of report under this section.

9

The auditors of a building society shall, as regards the statement of particulars of transactions falling within section 65 which the society is to make available for "inspection by members under section 68(3), examine the statement before it is made available to members and make a report to the members on it; and the report shall be annexed to the statement before it is so made available.

10

The auditors’ report under subsection (9) above shall state whether in their opinion the statement contains the particulars required by section 68; and where their opinion is that it does not, they shall include in their report, so far as they are reasonably able to do so, a statement giving the requisite particulars.

is false or misleading in a material particular,

that person shall be liable—

i

on conviction on indictment, to imprisonment for a term not exceeding two years or to a fine, or both; and

ii

on summary conviction, to imprisonment for a term not exceeding six months or to a fine not exceeding the statutory maximum, or both.

Procedure on completion of accounts

80 Signing of balance sheet: documents to be annexed.

1

Every balance sheet of a building society shall be signed by two directors on behalf of the board of directors and by the chief executive of the society.

2

The income and expenditure account, F294. . . and the annual business statement shall be annexed to the balance sheet, and so shall any group accounts; and the auditor’s report shall be attached to it.

3

The income and expenditure account, F295. . . and the annual business statement shall be approved by the board of directors before the balance sheet is signed on their behalf, and so shall any group accounts; and the date of their approval of those documents shall be endorsed on the balance sheet.

4

The directors’ report shall be attached to the balance sheet.

5

If a balance sheet has not been signed as required by subsection (1) above, and a copy of it is issued, circulated or published, the building society shall be liable on summary conviction to a fine not exceeding level 3 on the standard scale and so shall any officer who is also guilty of the offence.

6

If any copy of a balance sheet is issued, circulated or published—

a

without having annexed to it a copy of the income and expenditure account, or

F296b

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

c

without having annexed to it a copy of the annual business statement, or

d

without having attached to it a copy of the auditors’ report, or

e

without having attached to it a copy of the directors’ report,

the building society shall be liable on summary conviction to a fine not exceeding level 3 on the standard scale and so shall any officer who is also guilty of the offence.

81 Laying and furnishing accounts, etc., to F297members and the Authority.

1

The directors of every building society shall lay before the society at the annual general meeting the annual accounts for the last financial year.

2

The directors of every building society shall send F298two copies of the annual accounts for the last financial year to the F299Authority not later than 14 days before the annual general meeting at which the accounts are to be considered.

3

Every building society shall, as from the date by which at the latest its directors are required to send them to the F300Authority, make copies of the annual accounts available free of charge to members of and depositors with the society at every office of the society and, free of charge, shall send copies of those documents to any member or depositor who demands it.

4

If default is made in complying with subsection (1) or (2) above, every person who was a director at any time during the relevant period shall be liable on summary conviction—

a

to a fine not exceeding level 5 on the standard scale; and

b

in the case of a continuing offence, to an additional fine not exceeding £200 for every day during which the offence continues.

5

If, on demand made of it under subsection (3) above, a building society fails, in accordance with that subsection, to make available or, as the case may be, within seven days of the demand, to send, to a person a copy of the annual accounts 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 continues,

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

6

In subsection (4) above “the relevant period” means the period beginning at the end of the last financial year and ending with the date which falls 14 days before the annual general meeting following the end of that year.

7

The F301Authority shall keep one of the copies of the annual accounts of a building society received by it under subsection (2) above in the public file of the society.

8

In this section any reference to the annual accounts includes a reference to the documents annexed or attached to them under section 80.

F30282. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Part IXF307. . . Disputes

Annotations:

Amendments (Textual)

F307

Words in Pt.IX heading repealed (1.12.2001) by S.I. 2001/2617, arts. 2(b), 13(2), Sch. 4 (with art. 13(3), Sch. 5); S.I. 2001/3538, art. 2(a)

F30383. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F30483A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F30584. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

C8185 Settlement of disputes.

1

Schedule 14 to this Act shall have effect for the settlement of certain disputes between a building society and a member, or representative of a member, of the society or, as provided by Part II of the Schedule, between a building society and F306one or more members of the society or a complainant.

2

Nothing in that Schedule affects the jurisdiction of any court to hear and determine disputes arising out of any mortgage or any contract other than the rules of a society.

Part X Dissolution, Winding Up, Mergers and Transfer of Business

Dissolution and winding up

86 Modes of dissolution and winding up.

1

A building society—

a

may be dissolved by consent of the members, or

b

may be wound up voluntarily or by the court,

in accordance with this Part; and a building society may not, except where it is dissolved by virtue of section 93(5), 94(10) or 97(9), be dissolved or wound up in any other manner.

2

A building society which is in the course of dissolution by consent, or is being wound up voluntarily, may be wound up by the court.

87 Dissolution by consent.

1

A building society may be dissolved by an instrument of dissolution, with the consent (testified by their signature of that instrument) of three-quarters of the members of the society, holding not less than two-thirds of the number of shares in the society.

2

An instrument of dissolution under this section shall set out—

a

the liabilities and assets of the society in detail;

b

the number of members, and the amount standing to their credit in the accounting records of the society;

c

the claims of depositors and other creditors, and the provision to be made for their payment;

d

the intended appropriation or division of the funds and property of the society;

e

the names of one or more persons to be appointed as trustees for the purposes of the dissolution, and their remuneration.

3

An instrument of dissolution made with consent given and testified as mentioned in subsection (1) above may be altered with the like consent, testified in the like manner.

4

The provisions of this Act shall continue to apply in relation to a building society as if the trustees appointed under the instrument of dissolution were the board of directors of the society.

5

The trustees, within 15 days of the necessary consent being given and testified (in accordance with subsection (1) above) to—

a

an instrument of dissolution, or

b

any alteration to such an instrument,

shall give notice to the F308Authority of the fact and, except in the case of an alteration to an instrument, of the date of commencement of the dissolution, enclosing a copy of the instrument or altered instrument, as the case may be; and if the trustees fail to comply with this subsection they shall each be liable on summary conviction to a fine not exceeding level 3 on the standard scale.

6

An instrument of dissolution under this section, or an alteration to such an instrument, shall be binding on all members of the society as from the date on which the copy of the instrument or altered instrument, as the case may be, is placed in the public file of the society under subsection (10) below.

7

The trustees shall, within 28 days from the termination of the dissolution, give notice to the F308Authority of the fact and the date of the termination, enclosing an account and balance sheet signed and certified by them as correct, and showing the assets and liabilities of the society at the commencement of the dissolution, and the way in which those assets and liabilities have been applied and discharged; and, if they fail to do so they shall each be liable on summary conviction—

a

to a fine not exceeding level 2 on the standard scale, and

b

in the case of a continuing offence, to an additional fine not exceeding £10 for every day during which the offence continues.

8

Except with the consent of the F308Authority, no instrument of dissolution, or alteration of such an instrument, shall be of any effect if the purpose of the proposed dissolution or alteration is to effect or facilitate the transfer of the society’s engagements to any other society F309or the transfer of its business to a company.

9

Any provision in a resolution or document that members of a building society proposed to be dissolved shall accept investments in a company or another society (whether in shares, deposits or any other form) in or towards satisfaction of their rights in the dissolution shall be conclusive evidence of such a purpose as is mentioned in subsection (8) above.

10

The F308Authority shall keep in the public file of the society any notice or other document received by it under subsection (5) or (7) above and shall record in that file the date on which the notice or document is placed in it.

88 Voluntary winding up.

1

A building society may be wound up voluntarily under the applicable winding up legislation if it resolves by special resolution that it be wound up voluntarily.

2

A copy of any special resolution passed for the voluntary winding up of a building society"shall be sent by the society to the F310Authority within 15 days after it is passed; and the F310Authority shall keep the copy in the public file of the society.

3

A copy of any such resolution shall be annexed to every copy of the memorandum or of the rules issued after the passing of the resolution.

4

If a building society fails to comply with subsection (2) or (3) above the society shall be liable on summary conviction to a fine not exceeding level 3 on the standard scale and so shall any officer who is also guilty of the offence.

5

For the purposes of this section, a liquidator of the society shall be treated as an officer of it.

89 Winding up by court: grounds and petitioners.

1

A building society may be wound up under the applicable winding up legislation by the court on any of the followng grounds in addition to the grounds referred to or specified in section 37(1), that is to say, if—

a

the society has by special resolution resolved that it be wound up by the court;

b

the number of members is reduced below ten;

c

the number of directors is reduced below two;

d

being a society registered as a building society under this Act or the repealed enactments, the society has not been F311given permission under Part IV of the Financial Services and Markets Act 2000 to accept deposits and more than three years has expired since it was so registered;

e

the society’s permission under Part IV of the Financial Services and Markets Act 2000 to accept deposits has been cancelled (and no such permission has subsequently been given to it);

f

the society exists for an illegal purpose;

g

the society is unable to pay its debts; or

h

the court is of the opinion that it is just and equitable that the society should be wound up.

2

Except as provided by subsection (3) below, section 37 or the applicable winding up legislation, a petition for the winding up of a building society may be presented by—

a

the F312Authority,

b

the building society or its directors,

c

any creditor or creditors (including any contingent or any prospective creditor), or

d

any contributory or contributories,

or by all or any of those parties, together or separately.

3

A contributory may not present a petition unless either—

a

the number of members is reduced below ten, or

b

the share in respect of which he is a contributory has been held by him, or has devolved to him on the death of a former holder and between them been held, for at least six months before the commencement of the winding up.

4

For the purposes of this section, in relation to a building society,

F313a

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F314b

the reference to its existing for an illegal purpose includes a reference to its existing after it has ceased to comply with the requirement imposed by section 5(1)(a) (purpose or principal purpose).

5

In this section, “contributory” has the same meaning as in paragraph 9(2) or, as the case may be, paragraph 37(2) of Schedule 15 to this Act.

90 Application of winding up legislation to building societies.

1

In this section “the companies winding up legislation” means the enactments applicable in relation to England and Wales, Scotland or Northern Ireland which are specified in paragraph 1 of Schedule 15 to this Act (including any enactment which creates an offence by any person arising out of acts or omissions occurring before the commencement of the winding up).

2

In its application to the winding up of a building society, by virtue of section 88(1) or 89(1), the companies winding up legislation shall have effect with the modifications effected by Parts I to III of Schedule 15 to this Act; and the supplementary provisions of Part IV of that Schedule shall also have effect in relation to such a winding up.

C823

In sections 37, 88, 89 and 103, “the applicable winding up legislation” means the companies winding up legislation as so modified.

F31590A Application of other companies insolvency legislation to building societies.

For the purpose of—

a

enabling voluntary arrangements to be approved in relation to building societies,

b

enabling administration orders to be made in relation to building societies, and

c

making provision with respect to persons appointed in England and Wales or Northern Ireland as receivers and managers of building societies’ property,

the enactments specified in paragraph 1(2) of Schedule 15A to this Act shall apply in relation to building societies with the modifications specified in that Schedule.

91 Power of court to declare dissolution of building society void.

1

Where a building society has been dissolved under section 87 or following a winding up, the High Court or, in relation to a society whose principal office was in Scotland, the Court of Session, may, at any time within 12 years after the date on which the society was dissolved, make an order under this section declaring the dissolution to have been void.

2

An order under this section may be made, on such terms as the court thinks fit, on an application by the trustees under section 87 or the liquidator, as the case may be, or by any other person appearing to the Court to be interested.

3

When an order under this section is made, such proceedings may be taken as might have been taken if the society has not been dissolved.

4

The person on whose application the order is made shall, within seven days of its being so made, or such further time as the Court may allow, furnish the F316Authority with a copy of the order; and the F316Authority shall keep the copy in the public file of the society.

5

If a person fails to comply with subsection (4) above, he 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 continues.

F31792 Supplementary.

Where at any time a building society is being wound up or dissolved by consent, a borrowing member shall not be liable to pay any amount other than one which, at that time, is payable under the mortgage or other security by which his indebtedness to the society in respect of the loan is secured.

F324New business

Annotations:

Amendments (Textual)

F324

the greater part of the resources of the business are or will be devoted to such activities; or

c

the greater part of the business consists or will consist of such activities.

4

This subsection applies to a business which is proposed to be acquired if X is not less than 15 per cent of Y where—

X = the amount or value of the consideration to be given for the shares, voting rights or assets proposed to be acquired;

The power to make an order under subsection (10) or (11) above is exercisable by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament.

Mergers

C8493 Amalgamations.

1

Any two or more buildings societies desiring to amalgamate may do so by establishing a building society as their successor in accordance with this section and Schedule 16 to this Act

2

In order to establish a building society as their successor the societies desiring to amalgamate must—

F325a

agree the purpose or principal purpose of their successor to be that of making loans which are secured on residential property and are funded substantially by its members, and agree upon the extent of its powers, in a memorandum which complies with the requirements of Schedule 2 to this Act;

b

agree upon the rules for the regulation of their successor which comply with the requirements of that Schedule;

F326c

each approve the terms of the amalgamation by two resolutions which also approve the memorandum and the rules of their successor and of which—

i

one is passed as a shareholding members’ resolution, and

ii

the other is passed as a borrowing members’ resolution,

in accordance with the applicable provisions of that Schedule;

d

make a joint application to the F327Authority for confirmation of the amalgamation and send to the F328Authority three copies of the rules and of the memorandum, each copy signed by the secretary of each of the societies.

3

If the F329Authority confirms the amalgamation under section 95, F330and is satisfied, as regards the proposed successor, of the matters relating to its rules, its purpose and powers and its name as to which it must, under paragraph 1 of Schedule 2 to this Act, be satisfied before it registers a society, F331it shall—

a

b

issue to it a certificate of incorporation, specifying a date (“the specified date”) as from which the incorporation takes effect,

c

retain and register one copy of the memorandum and of the rules,

d

return another copy to the secretary of the successor, together with a certificate of registration, and

e

keep another copy, together with a copy of the certificate of incorporation and of the certificate of registration of the memorandum and the rules, in the public file of the successor society.

4

On the specified date all the property, rights and liabilities of each of the societies whose amalgamation was confirmed by the F332Authority (whether or not capable of being transferred or assigned) shall by virtue of this subsection be transferred to and vested in the society so incorporated as their successor.

5

On the specified date, each of the societies to which the successor succeeds shall be dissolved by virtue of this subsection; but the transfer effected by subsection (4) above shall be deemed to have been effected immediately before the dissolution.

F3336

If, on the specified date, each of the societies whose amalgamation was confirmed by the Authority has permission under Part IV of the Financial Services and Markets Act 2000 to accept deposits, the Authority shall, with effect from that date, give their successor such permission under that Part as it considers appropriate, and shall notify the successor of the permission by giving the successor a decision notice.

6A

Part XXVI of the Financial Services and Markets Act 2000 applies to a decision notice given under this section as it applies to a decision notice given under subsection (9) of section 52 of that Act by virtue of paragraph (a) of that subsection, except that—

a

section 390 (final notices) does not apply, and

b

for the purposes of section 391 (publication) the decision notice is to be treated as if it were a final notice rather than a decision notice.

6B

The giving of permission pursuant to subsection (6) above is to be treated for the purposes of section 55 of the Financial Services and Markets Act 2000 (right to refer matters to the Financial Services and Markets Tribunal) as if it were the determination of an application made by the successor under Part IV of that Act, and Part IX of that Act (hearings and appeals) applies accordingly (but subject to subsection (6C) below).

6C

In the application of Part IX of that Act by virtue of subsection (6B) above, section 133(9) (which prevents the Authority from taking action specified in a decision notice until after any reference and appeal) is omitted.

F3347

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

C8594 Transfer of engagements.

1

A building society may, in accordance with this section and Schedule 16 to this Act, transfer its engagements to any extent to another building society which, in accordance with this section and that Schedule, undertakes to fulfil the engagements.

2

A building society, in order to transfer its engagements, must resolve to do so by two resolutions, of which one is passed as a F335shareholding members’ resolution and the other as a borrowing members’ resolution in accordance with the applicable provisions of Schedule 2.

3

A building society, in order to transfer some but not all of its engagements to its members in respect of shares held by them (with or without other engagements) must, in addition to resolving to transfer the engagements by the two resolutions required by subsection (2) above, resolve to do so by an affected shareholders’ resolution.

4

For the purposes of this section in its application to a transfer by a society of engagements in respect of some shares in the society, an “affected shareholders’ resolution” is a resolution passed by a majority of the holders of those shares who, under the rules of the society, would be entitled to vote on a F335shareholding members’ resolution, disregarding for this purpose any shares of theirs in respect of which the society’s engagements are not to be transferred.

5

A building society, in order to undertake to fulfil the engagements of another society, must resolve to do so—

a

by two resolutions, of which one is passed as a F335shareholding members’ resolution and the other as a borrowing members’ resolution in accordance with the applicable provisions of Schedule 2; or

b

by a resolution of the board of directors, if the F336Authority consents to that mode of proceeding.

6

The extent of the transfer, as so resolved by the society making and the society taking the transfer, shall be recorded in an instrument of transfer of engagements.

7

A transfer of engagements between building societies shall be of no effect unless—

a

the transfer is confirmed by the F336Authority under section 95; and

b

a registration certificate is issued in respect of the transfer under subsection (8) below.

8

Where the F337Authority confirms a transfer of engagements between building societies, F338it shall—

a

b

issue a registration certificate to the building society taking the transfer;

and, on such date as is specified in the certificate, the property, rights and liabilities of the society transferring its engagements (whether or not capable of being transferred or assigned) shall, by virtue of this subsection, be transferred to and vested in the society taking the transfer to the extent provided in the instrument of transfer of engagements.

9

The F339Authority shall keep a copy of the instrument and of the registration certificate issued under subsection (8) above in the public file of the building society taking the transfer.

10

Where all its engagements have been transferred, the society shall, by virtue of this subsection, be dissolved on the date specified in the registration certificate; but the transfer effected by subsection (8) above shall be deemed to have been effected immediately before the dissolution.

C8695 Mergers; provisions supplementing ss. 93 and 94.

1

Part I of Schedule 16 to this Act shall have effect for imposing on building societies proposing to amalgamate or to transfer or undertake engagements requirements to issue statements to their members relating to the proposed amalgamation or transfer.

2

Part II of Schedule 16 to this Act shall have effect for imposing requirements for notification by a building society, to its members and to the F340Authority of the receipt by the society of proposals for a transfer of engagements or an amalgamation.

3

Where application is made to the F341Authority for confirmation of an amalgamation or transfer of engagements it shall, except as provided in F342subsections (4) to (6) below, confirm the amalgamation or transfer; and Part III of Schedule 16 to this Act shall have effect with respect to the procedure on an application for such confirmation.

4

Subject to subsection (5) below, the F341Authorityshall not confirm an amalgamation or transfer of engagements if it considers that—

subject to paragraph (b) below, the provision for such a distribution by a society shall not exceed the limits prescribed by regulations under subsection (5) below and the distribution must be approved by F347each of the two resolutions giving the approval of the society to the terms of the amalgamation or transfer;

b

if the provision for such a distribution by a society exceeds the prescribed limits, it must be approved by F347each of the two resolutions of that society and each of the other societies particpating in the amalgamation or transfer by which each approved the terms of the amalgamation or transfer.

C885

The F346Treasury shall by regulations authorise distributions of funds to members by building societies particpating in amalgamations or transfers of engagements subject to limits specified in or determinable under the regulations and the regulations may make different provision for different circumstances.

6

Where the terms of a transfer of engagements include provision for a distribution of the funds of the society transferring or the society undertaking the engagements and the society undertaking the engagements applies to the F348Authority for its consent to the society’s approving the transfer by a resolution of the board of directors instead of F349the two resolutions required by section 94(5)(a), the F348Authorityshall not give its consent unless it is satisfied that the distribution proposed to be made by each society will not exceed the prescribed limits.

7

The power to make regulations under subsection (2) or (5) above is exercisable by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament.

8

In this section—

“compensation” includes the provision of benefits in kind;
“distribution of funds” with reference to bonuses paid to members, includes distribution by means of a special rate of interest available to members for a limited period;
“loss of office” includes, in relation to a director or other officer of a building society holding office in F350any other body by virtue of his position in that society, the loss of that office;
“prescribed” with reference to limits on compensation or on distributions of assets, means prescribed by regulations under subsection (2) or (5) above, as the case may be.

Transfer of business to commercial company

97 Transfer of business to commercial company.

1

A building society may, in accordance with this section and the other applicable provisions of this Act, transfer the whole of its business to a company (its “successor”).

2

The applicable provisions of this Act other than this section are section 98, section 99, F351section 99A,section 100, section 101, section 102 F352sections 102B, 102C and 102D, paragraph 30 of Schedule 2 and Schedule 17.

3

The successor may be a company formed by the society wholly or partly" for the purpose of assuming and conducting the society’s business in its place or an existing company which is to assume and conduct the society’s business in its place; F353and for the purposes of the transfer the society may, notwithstanding anything in section 18, form, or acquire and hold shares in, a company whose objects extend to the carrying on of activities which the building society has no power to carry on.

4

In order to transfer its business to its successor a building society must—

a

in the case of a specially formed company, secure that it is formed having articles of association with the requisite protective provisions;

b

agree conditionally with its successor in a transfer agreement on the terms of the transfer which, in so far as they are regulated terms, comply with section 99, section 100 and transfer regulations;

c

approve the transfer and the terms of the transfer by the requisite transfer resolutions, that is to say, resolutions passed by the members of the society in accordance with paragraph 30 of Schedule 2 to this Act; and

d

obtain the confirmation of the F354Authority of the transfer and its terms.

5

In so far as the transfer agreement made between the society and its successor provides for rights to be conferred on members or officers of the society, whether or not in pursuance of regulated terms, the members or officers shall, in relation to those provisions, be treated as if they had been parties to the agreement and the rights shall be enforceable accordingly.

6

If the F354Authorityconfirms the transfer under section 98 then, on the vesting date, all the property, rights and liabilities of the society making the transfer (whether or not capable of being transferred or assigned), except any shares in its successor, shall by virtue of this subsection and in accordance with transfer regulations be transferred to and vested in the successor.

7

Where a building society continues to hold shares in its successor after the vesting date, the consideration (if any) for the disposal of the shares together with any other property, rights or liabilities of the society acquired or incurred after that date shall, by virtue of this subsection, be transferred to and vested in its successor on the date specified for its dissolution under subsection (10) below.

8

A building society which has obtained confirmation of the transfer of its business shall send to the F354Authority notice of the date which is to be the vesting date and shall do so not later than seven days before that date; and the F354Authority shall record the date and, if a later date is notified under subsection (10) below, that date, in the public file of the society.

9

Except where notice is given under subsection (10) below, a building society which, under this section, transfers its business to its successor shall, by virtue of this subsection, be dissolved on the vesting date; but the transfer effected by subsection (6) above shall be deemed to have been effected immediately before the dissolution.

10

A building society may, for the purpose of facilitating the disposal of shares in its successor, include in the notice of the vesting date under subsection (8) above notice of a later date for the dissolution of the society; and if it does so, the society shall by virtue of this subsection be dissolved on that date instead of the vesting date, but the transfer effected by subsection (7) above shall be deemed to have been effected immediately before the dissolution.

11

As from the vesting date, a society which has given notice under subsection (10) above shall cease to transact any business except such as is necessary for the purpose of securing the disposal of the society’s holding of shares in its successor.

12

In this section, and the other applicable provisions of this Act—

“company” means a company within the meaning of the M23Companies Act 1985 or the M24Companies (Northern Ireland) Order 1986 which is a public company limited by shares; and a company is a “specially formed” company if it is formed by a building society (and by no others than its nominees) for the purpose of assuming and conducting its business in its place and is an “existing” company if it is a company carrying on business as a going concern on the date of the transfer agreement;
“confirmation”, in relation to a transfer, means the confirmation of the F354Authority required by subsection (4)(d) above;
“regulated terms” means any terms of a transfer agreement which are regulated terms under section 99, section 100 or section 102;
“the requisite protective provisions” means the provisions required to be made by section 101(2);
F355“the requisite shareholders” resolution’ has the meaning given by paragraph 30(1) of Schedule 2;
“the requisite transfer resolutions” has the meaning given by subsection (4)(c) above;
“successor”, in relation to a building society, has the meaning given by subsection (1) above;
“transfer agreement” means the agreement required by subsection (4)(b) above and, in relation to it, “conditionally” means conditional on the approval of the transfer by the requisite transfer resolutions and on confirmation of the transfer;
“transfer of business” means the transfer of the business of a building society to its successor under this section and “transfer” has a corresponding meaning;
“transfer regulations” means regulations under section 102; and
“the vesting date” means the date specified in or determined under the transfer agreement as the vesting date for the purposes of subsection (6) above.

F35613

References in this section, and the other applicable provisions of this Act, to a company include references to a body corporate which—

a

is incorporated in an EEA State other than the United Kingdom; and

b

has power under its constitution to offer its shares or debentures to the public;

and in this subsection “EEA State” means a Contracting Party to the Agreement on the European Economic Area signed at Oporto on 2nd May 1992 as adjusted by the Protocol signed at Brussels on 17th March 1993.

98 Transfers of business: supplementary provisions.

1

Part I of Schedule 17 to this Act shall have effect for imposing on a building society proposing to transfer its business to a company an obligation to issue statements F357or summaries to its members relating to the proposed transfer.

F3581A

Part IA of that Schedule shall have effect for imposing requirements for notification by a building society, to its members and to the F359Authority, of the receipt by the society of a proposal for the transfer of the whole of its business to a company.

2

Where application is made to the F359Authority for confirmation of a transfer of business to a company it shall, except as provided in subsections (3) to (5) below, confirm the transfer; and Part II of that Schedule shall have effect with respect to the procedure on an application for such confirmation.

C893

Subject to subsection (4) below, the F359Authority shall not confirm a transfer of business if it considers that—

a

some information material to the members’ decision about the transfer was not made available to all the members eligible to vote; or

b

the vote on any resolution approving the transfer does not represent the views of the members eligible to vote; or

c

there is a substantial risk that the successor will not F360have—

i

such permission under Part IV of the Financial Services and Markets Act 2000, or

ii

such permission under paragraph 15 of Schedule 3 to that Act (as a result of qualifying for authorisation under paragraph 12 of that Schedule),

as will enable it to carry on the business which it will have as a result of the transfer without being taken (by virtue of section 20 of that Act) to have contravened a requirement imposed on it by the Authority under that Act; or

d

some relevant requirement of this Act or the rules of the society was not fulfilled.

4

The Authority shall not be precluded from confirming a transfer of business by virtue only of the non-fulfilment of some relevant requirement of this Act or the rules of the society if it appears to the F359Authority that it could not have been material to the members’ decision about the transfer and the F359Authority gives a direction that the failure is to be disregarded for the purposes of this section.

5

Where the F359Authority would be precluded from confirming a transfer of business by reason of any of the defects specified in paragraphs (a), (b), (c) and (d) of subsection (3) above, it may direct the society making the transfer—

a

to take such steps to remedy the defect or defects as it specifies in the direction; and

b

to furnish the F359Authority with evidence satisfying it that it has been done so;

and, if the F359Authority is satisfied that the steps have been taken and the defect or defects has or have been substantially remedied, the F359Authority shall confirm the transfer; but, if it is not so satisfied, it shall refuse its confirmation.

6

The steps that a society may be required under subsection (5)(a) above to include the calling of a further meeting, securing the variation of the transfer agreement or securing the alteration of the approved protective provisions of the articles of association of its successor.

7

A failure to comply with a relevant requirement of this Act or the rules of a building society shall not invalidate a transfer of the business of the society; but, if a society fails without reasonable excuse to comply with such a requirement, the society shall be liable on summary conviction to a fine not exceeding level 4 on the standard scale and so shall any officer who is also guilty of the offence.

8

In this section “relevant requirement", with reference to this Act or the rules of a society, means a requirement of the applicable provisions of this Act or of any rules prescribing the procedure to be followed by the society in approving the transfer and its terms.

99 Regulated terms: compensation for loss of office, etc.

1

Subject to subsections (2) and (3) below, the terms of a transfer of business by a building society to the company which is to be its successor may include provision for compensation to be paid by the society or the company to or in respect of any director or other officer of the society for loss of office or diminution of emoluments attributable to the transfer.

2

Any such provision must be authorised so far as the society is concerned as follows, that is to say—

a

except in so far as paragraph (b) below applies, the provision must be approved by a resolution passed as a special resolution, not being one of the requisite transfer resolutions;

b

if regulations are made under subsection (3) below authorising payments of such compensation within prescribed limits and the provision for such compensation includes only payments of amounts not exceeding the prescribed limits, the passing of the requisite transfer resolutions is sufficient authority for their payment.

C903

The F361Treasury may by regulations authorise payments of compensation to directors or other officers attributable to transfers of business under section 97 subject to limits specified in or determinable under the regulations and the regulations may make different provision for different classes of person.

4

Nothing in subsection (2) or (3) above prevents a director or other officer from receiving payments which, in the aggregate, exceed any limit applicable to him under either of those subsections if the excess payment is included in provision approved as required by subsection (2)(a) above; but if any payment is received which has not been authorised under paragraph (a) or (b) of that subsection it shall be repaid.

5

The power to make regulations under subsection (3) above is exercisable by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament.

6

In this section—

“compensation” includes the provision of benefits in kind;
“loss of office” includes, in relation to a director or other officer of a building society holding office in F362any other body by virtue of his position in that society, the loss of that office; and
“prescribed”, with reference to limits on compensation, means prescribed by regulations under subsection (3) above;

and any terms of a transfer of business to which subsection (2) or regulations under subsection (3) above apply are regulated terms for the purposes of section 97.

F36399A Transfers of business: increased remuneration etc.

1

Subject to subsection (2) below, the terms of a transfer of business by a building society to the company which is to be its successor may include provision for any director or other officer of the society to receive increased emoluments in consequence of the transfer, whether by way of increased remuneration or the grant of share options or otherwise.

2

An ordinary resolution approving any such provision must be put before a meeting of the society.

C91100 Regulated terms etc: distributions and share rights.

1

Subject to subsections (2) to (10) below, the terms of a transfer of business by a building society to the company which is to be its successor may include provision for part of the funds of the society or its successor to be distributed among, or other rights in relation to shares in the successor conferred on, members of the society in consideration of the transfer.

2

The terms of a transfer of a society’s business must—

a

require its successor to assume as from the vesting date a liability to every qualifying member of the society as in respect of a deposit made with the successor corresponding in amount to the value of the qualifying shares held by him in the society; and

b

confer a right, subject to subsection (7) below, to a distribution of funds, whether of the society or its successor, by way of bonus on every qualifying member of the society equal to the relevant proportion of the value of the qualifying shares held by him in the society; F364. . .

F364c

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3

For the purposes of the liabilities assumed under subsection (2)(a) above by the society’s successor, a member is a qualifying member if he held shares in the society on the day immediately preceding the vesting date and his qualifying shares are those held by him on that day.

4

For the purposes of the rights conferred under subsection (2)(b) above on members of the society, a member is a qualifying member is he held shares in the society on the qualifying day and was not eligible to vote on the F365requisite shareholders’ resolution, his qualifying shares are those held by him on that day and the relevant proportion is the portion which (as shown in the latest balance sheet of the society) the society’s reserves bear to its total liability to its members in respect of shares.

F3665

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F3666

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

7

The F367Authority may, where it confirms a transfer of a society’s business to an existing company, as it thinks fit having regard to what is equitable between the members of the society, direct that no bonus distribution of funds in pursuance of subsection (2)(b) above shall be made or that the amount distributed shall be such lesser amount as it provides for in the direction; and where the F367Authority gives a direction under this subsection no liability to make such a distribution shall arise or, as the case may be, that liability shall be discharged by payment of the lesser amount.

8

Where, in connection with any transfer, rights are to be conferred on members of the society to acquire shares in priority to others subscribers, the right shall be restricted to those of its members who held shares in the society throughout the period of two years which expired with the qualifying day; and it is unlawful for any right in relation to shares to be conferred in contravention of this subsection.

9

Where the successor is an existing company, any distribution of funds to members of the society, except for the distribution required by subsection (2)(b) above, shall only be made to those members who held shares in the society throughout the period of two years which expired with the qualifying day; and it is unlawful for any distribution to be made in contravention of the provisions of this subsection.

10

The following restrictions apply to any distribution of funds, or any conferring of rights in relation to shares, in connection with the transfer of its business from the society to its successor where the successor is a company specially formed by the society, that is to say—

a

no distribution shall be made except that required by subsection (2)(b) above; and

b

where negotiable instruments acknowledging rights to shares are issued by the successor within the period of two years beginning with the vesting date, no such instruments shall be issued to former members of the society unless they are also issued, and on the same terms, to all other members of the company;

and it is unlawful for any distribution of funds to be made in contravention of the provisions of this subsection.

11

Where the successor is a specially formed company, the terms of the transfer must include provision to secure that the society ceases to hold any shares in the successor by the date on which the society is to dissolve.

12

Any terms of a transfer of business to which subsection (2), (8), (9), (10) or (11) above apply are regulated terms for the purposes of section 97.

13

In subsections (4), (5), (8) and (9) above, “qualifying day” means the day specified in the transfer agreement as the qualifying day for the purposes of this subsection.

F368101 Protective provisions for specially formed successors.

1

No company specially formed by a building society to be its successor shall, at any time during the protective period—

a

offer for sale or invite subscription for any shares in the company or allot or agree to allot any such shares with a view to their being offered for sale, or

b

allot or agree to allot any share in the company, or

c

if the effect of the offer, the invitation, the allotment or the registration of the transfer would be that more shares than the permitted proportion would be held by any one person (other than the society), or by any two or more persons who are parties to a concert party agreement which relates to shares in the company.

2

The articles of association of the company shall include provision such as will secure that the company does not offer, invite subscription for, allot or register transfers of, shares in contravention of subsection (1) above and no alteration in those provisions may be made by the company during the protective period.

3

Any provision (including any altered provision) of the company’s articles of association which is to any extent inconsistent with subsection (1) above shall, to that extent, be void; and any allotment or registration of a transfer of shares in contravention of that subsection shall be void.

C92 C934

This section shall cease to apply to a company if—

a

a F369person who is an authorised person within the meaning of section 31 of the Financial Services and Markets Act 2000 becomes a subsidiary undertaking of the company, or the company or such an undertaking acquires the whole, or substantially the whole, of the business of such F370a person;

b

a special resolution to that effect is passed by the requisite majority of the members of the company; or

c

the F371Authority by notice to the company gives a direction to that effect;

and the F371Authority shall not give such a direction unless it considers it desirable to do so in the interests of the depositors and potential depositors of the company.

5

If this section ceases to apply to a company, any provision included by virtue of subsection (2) above in its articles of association shall cease to have effect.

6

In this section—

F372. . .
“concert party agreement” means an agreement to which section 204 of the M25Companies Act 1985 or Article 212 of the M26Companies (Northern Ireland) Order 1986 applies;
“EEA country or territory” has the same meaning as in sections 6A and 6B;
F373. . .
“the permitted proportion”, in relation to shares in the company, is 15 per cent. of the company’s issued share capital;
“the protective period” is the period beginning with the date of the company’s incorporation and ending five years after the vesting date or, if this section ceases to apply to the company, ending on the date on which it so ceases;
“the requisite majority” means a majority of the members having the right to attend and vote at a general meeting of the company, being a majority together holding not less than 75 per cent in nominal value of the shares giving that right;
“transfer”, in relation to shares, does not include a transfer to a person to whom the right to any shares has been transmitted by operation of law;

and any expression used in this section and in the M27Companies Act 1985 or, as regards Northern Ireland, the M28Companies (Northern Ireland) Order 1986 has the same meaning in this section as in that Act or that Order.

7

For the purposes of this section—

a

shares held by a person in a fiduciary capacity shall be treated as not held by him;

b

shares held by a person as nominee for another shall be treated as held by the other; and

c

shares shall be regarded as held as nominee for another if any voting rights attaching to them are exercisable only on his instructions or with his consent or concurrence.

8

Any reference in this section to shares includes a reference—

a

to any warrant or other instrument entitling the holder to subscribe for shares; and

b

to any certificate or other instrument issued by or on behalf of the company and conferring a right to acquire shares otherwise than by subscription;

and for the purposes of subsection (1) above any shares to which any such instrument relates shall be deemed to be held by the holder of the instrument.

102 Transfer regulations.

C941

The F374Treasury may, by transfer regulations under this section, make provision regulating transfers of business under section 97.

C942

Transfer regulations may, in particular—

where A was the first-named holder of the jointly held shares for part of the joint ownership period, any person who was the first-named holder of those shares for a later part of that period.

4

If a person dies during the requisite period at a time when he is named in the records of the society as a joint holder of any shares jointly held, this section shall have effect in relation to any later time as if he had never been so named.

5

In this section—

“the first-named holder”, in relation to any shares jointly held, means that one of the joint holders who is named first in the records of the society, that is to say, the person by whom alone, apart from this section, those shares would, by virtue of paragraph 7(5) of Schedule 2, be treated as held for the purposes of section 100;
“qualifying day” has the same meaning as in subsections (8) and (9) of section 100;
“the requisite period” means the period beginning two years before the end of the qualifying day and ending immediately before the vesting date;
“the second-named holder”, in relation to any shares jointly held, means that one of the joint holders who is named second in the records of the society;
“the vesting date” has the same meaning as in section 100.

b

the trustee account holder does not give the society that declaration before such date as may be specified in the society’s notice to him.

5

A statutory declaration complies with this subsection if the person making it declares in it—

a

that he is a trustee account holder in respect of an account identified in the declaration,

b

the name and address of each beneficiary for whom he holds the account,

c

the reason why it is not reasonably practicable for any beneficiary to act in relation to that account himself, and

d

in a case where section 102D(8) applies, the names and addresses of all the trustee account holders of the account during the period referred to in that subsection.

6

In any case, where in response to a notice under subsection (4) (and within the time specified in that notice), a person gives a society a statutory declaration complying or purporting to comply with subsection (5) that he is a trustee account holder as respects any account he holds with that society then, subject to section 102C, the society and its successor—

a

shall treat him as such an account holder in respect of that account, and

b

shall not be liable to any other person in respect of any distribution to him (whether or not the society makes any enquiry into his eligibility before making the distribution).

F379102C Consequences of false declaration.

1

Where it is shown, in relation to a person who has made a statutory declaration to a society purporting to comply with section 102B(5), that, at the time the declaration is made, he is not a trustee account holder in relation to the account in question, then—

a

a distribution shall not be made to him in pursuance of section 102B if it is so shown before the distribution is made;

b

if a distribution is made to him, he shall be liable—

i

to repay to the society’s successor any funds, and to surrender to it any shares or rights to any shares, which he may have received as the holder of that account,

ii

if any shares or rights to any shares are not surrendered, to pay the successor an amount equal to the relevant value of those shares or rights.

2

Where subsection (1)(b) applies in relation to a person, he shall also be liable to pay to the successor interest (at the rate applicable to judgment debts or, as respects Scotland, to decrees of the Court of Session)—

a

on any funds which he is liable to repay to the successor under sub-paragraph (i) of subsection (1)(b),

b

on the relevant value of any shares or rights which are surrendered under that sub-paragraph, and

c

on any amount payable under subsection (1)(b)(ii),

as from the day on which he received the funds, shares or rights until subsection (1)(b) is complied with in relation thereto.

3

In subsections (1) and (2) “relevant value”, in relation to any shares or rights to any shares, means the market value of those shares on the first day on which they are quoted on the Stock Exchange Daily Official List, and section 272 of the M30Taxation of Chargeable Gains Act 1992 shall apply for the purposes of this subsection.

4

Where the successor receives any payment in circumstances where subsection (1)(b) applies, the amount of the payment shall be treated as settlement of a debt due to the successor and accordingly not as an amount due to members of the society.

5

In section 146(1) of the M31Companies Act 1985 (treatment of shares held by or for a public company) the following paragraph shall be inserted after paragraph (a)—

aa
where shares in the company are surrendered to the company in pursuance of section 102C(1)(b) of the M32Building Societies Act 1986;

6

In Article 156(1) of the M33Companies (Northern Ireland) Order 1986 (treatment of shares held by or for a public company) the following sub-paragraph shall be inserted after sub-paragraph (a)—

aa
where shares in the company are surrendered to the company in pursuance of section 102C(1)(b) of the M34Building Societies Act 1986;

F380102D Provisions supplementary to sections 102B and 102C.

1

This section has effect for the purposes of sections 102B and 102C.

2

“Trustee account holder”, in relation to any society, is a person who is the holder of an account as respects which all the conditions in subsection (4) are satisfied and which he holds in trust for another person, but subject to subsection (5).

3

Any reference in this section or in sections 102B and 102C to the holder of an account (however expressed) includes a reference to a person to whom the society has advanced a loan secured on land.

4

The conditions referred to in subsection (2) are—

a

that he is a member of the society by virtue of holding that account;

b

that the account holder—

i

is the sole account holder or the representative joint holder (within the meaning of paragraph 7 of Schedule 2 to this Act), or

ii

in the case of a borrowing member, is not a joint borrower or is the representative joint borrower (within the meaning of paragraph 8 of that Schedule);

c

that it is not reasonably practicable for any one or more of the persons for whom he holds the account, by reason of ill-health or old age or any physical or mental incapacity or disability, to act in relation to the account himself.

5

Where a person holds more than one account in trust for any other person or persons and the beneficiary or any of the beneficiaries in respect of two or more of those accounts (“the duplicate accounts”) are the same, then—

a

the account holder shall not be a trustee account holder in respect of any of those duplicate accounts except the one which was first opened, and

b

accordingly, section 102B(3) and (4) shall apply only in relation to that first opened duplicate account.

2

Where the F382Authority is satisfied, with respect to a building society—

a

that a certificate of incorporation has been obtained for the society by fraud or mistake and that the society F383does not have permission under Part IV of the Financial Services and Markets Act 2000 to accept deposits, or

b

that the society has ceased to exist,

the F382Authority may cancel the registration of the society.

3

Without prejudice to subsection (2) above, the F382Authority may, if it thinks fit, cancel the registration of a building society at the request of the society, evidenced in such manner as the F382Authority may direct.

4

Before cancelling the registration of a building society under subsection (2) above, the F382Authorityshall give to the society not less than two months’ previous notice, specifying briefly the grounds of the proposed cancellation.

C965

Where the registration of a building society is cancelled under subsection (2) above, the society may appeal to—

a

the High Court, where the principal office of the society is situated in England and Wales or in Northern Ireland, or

b

the Court of Session, where that office is situated in Scotland.

and on any such appeal the High Court or the Court of Session, as the case may be, if it thinks it just to do so, may set aside the cancellation.

C966

Where the registration of a building society is cancelled under subsection (2) or (3) above, then, subject to the right of appeal conferred by subsection (5) above, the society, so far as it continues to exist, shall cease to be a society incorporated under this Act (and accordingly shall cease to be a building society within the meaning of this Act).

C967

Subsection (6) above shall have effect in relation to a building society without prejudice to any liability actually incurred by the society; and any such liability may be enforced against the society as if the cancellation had not taken place.

8

Any cancellation of the registration of a building society under this section shall be effected in writing signed by the F382Authority.

9

As soon as practicable after the cancellation of the registration of a society under this section the Authority shall cause notice thereof to be published in the London Gazette, the Edinburgh Gazette or the Belfast Gazette according to the situation of the society’s principal office, and if it thinks fit, in one or more newspapers.

Part XI Miscellaneous and Supplementary and Conveyancing Services

5

The power to make an order under this section is exercisable by statutory instrument but no such order shall be made unless a draft of it has been laid before and approved by a resolution of each House of Parliament.

6

In this section—

“modification” includes any additions and, as regards modifications of the statutory provisions relating to companies, any modification whether effected by any future Act or by an instrument made after the passing of this Act under an Act whenever passed; and
“statutory provisions” includes the provisions of any instrument made under this Act.

F387104A Registration of charges: application of company law.

1

For the purpose of securing the registration of charges created by building societies, the Secretary of State may, by order made with the concurrence of the Treasury F388. . ., provide that such of the provisions of—

a

Part XII of the M40Companies Act 1985 (registration of charges); and

b

Part XIII of the M41Companies (Northern Ireland) Order 1986,

as may be specified in the order shall apply in relation to building societies, and charges created by building societies, with such modifications as may be so specified.

2

An order under this section may make different provision for different cases or different areas and may contain such incidental, supplemental and transitional provisions as may appear to the Secretary of State to be necessary or expedient.

3

The power to make an order under this section is exercisable by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament.

F389105 Limited power to anticipate future statutory instrument powers.

1

This section has effect as regards any power conferred under any provision of this Act on building societies or building societies of any description by—

a

an instrument a draft of which has to be approved by a resolution of each House of Parliament before it can be made, or

b

an instrument which is subject to annulment in pursuance of a resolution of either House of Parliament and which defers its operation until a future date;

and in this section “the anticipation date” is, in the case of an instrument falling within paragraph (a), the date on which either House approves the draft and, in the case of an instrument falling within paragraph (b), the date on which it was laid before Parliament.

2

Every building society or, as the case may be, every building society of the description to which the instrument applies, has, as from the anticipation date, power, for the purposes of the power conferred by the instrument, to do such things, subject to subsection (3) below, as are reasonably necessary to enable it—

a

to decide whether or not, and to what extent, to exercise (and in the case of an adoptable power to adopt) the power, and

b

if it decides to exericse the power, to exercise it as from the date when it becomes exercisable by the society.

3

Subsection (2)(b) above does not authorise a society—

a

to make contracts, other than conditional contracts, for the acquisition of land, the acquisition of a business or the acquisition of shares in any company if that company offers the public any service or facility within the power,

b

to issue invitations to members of the society or the public to apply for any power to be exercised for their benefit, or

c

to retain shares in a company which offers the public any service or facility within the power;

and, in this subsection, “conditional”, in relation to contracts with respect to the exercise of a power, means conditional on the power’s becoming exercisable by the society.

4

The power conferred by this paragraph, and activities carried on under it, for the purposes of an adoptable power are not to be treated as included in, or in activities comprised in, that adoptable power for the purposes of paragraph 16 of Schedule 2 to this Act.

106 Public file of the society.

1

The F390Authority shall prepare and maintain a file relating to each building society (to be known as the public file) and the file shall—

a

contain the documents or, as the case may be, the copies of the documents and the records of the matters directed by or under any provision of this Act to be kept in the public file of the society; and

b

be available for inspection on reasonable notice by members of the public F391subject to subsection (3) below.

2

Any member of the public shall be entitled, F391subject to subsection (3) below, to be furnished with a copy of all or any of the documents or records kept in the public file of a building society.

F3923

The Authority may charge a reasonable fee for making the public file available to any person for inspection under subsection (1)(b) above, or for furnishing any person with a copy of any documents or records under subsection (2) above.

An application for approval under subsection (2) or (4) above shall be made to the F393Authority in such form as it directs and accompanied by such information or evidence as it requires generally or in the particular case.

7

The F393Authoritymay revoke any approval under subsection (2) or (4) above of a distinguishing description or a name, as the case may be, if it is of the opinion—

a

in the case of a distinguishing description, that, by reason of any change in the matters by reference to which the distinction is made, the description does not or does not any longer distinguish the institution as required by subsection (2) above, or

b

in the case of a name.

i

that the name has proved to be misleading to the public,

ii

that the approval has been obtained by fraud or mistake, or

iii

that there has been a change in the facts to which the F393Authority had regard in giving its approval,

but it shall not do so without first giving the person to whom the approval was given an opportunity of making representations with respect to the proposed revocation of that approval.

8

Subsection (1) above does not prohibit a person from using a description (other than his name) which, or from holding himself out in a way that, indicates a connection between himself or his business and one or more building societies if and to the extent he has been authorised to do so in writing by the society or societies in question.

9

Subsection (1) above does not prohibit a person from using a description (other than his name) which, or from holding himself out in a way that, indicates a connection between himself or his business and building societies generally where the connection indicated is not misleading.

10

Where on an application for—

a

the first registration of a company, or the registration of a company by a new name, by the registrar under the M42Companies Act 1985 or the M43Companies (Northern Ireland) Order 1986, or

b

approval by the Secretary of State of words or expressions for inclusion in a business name under section 2 of the M44Business Names Act 1985, or

c

approval by the Department of Economic Development of words or descriptions for inclusion in a business name under Article 4 of the M45Business Names (Northern Ireland) Order 1986,

it appears to the registrar, the Secretary of State or the Department, as the case may be, that the use of the name or the words or description by the person seeking to register with it would contravene subsection (1) above, the registration shall not be made or the approval given.

11

A person who contravenes subsection (1) above shall be liable on summary conviction to a fine not exceeding level 5 on the standard scale; and where the contravention involves a public display or exhibition of the offending name, description or other matter, there shall be a fresh contravention of the subsection on each day during which that person causes or permits the display or exhibition to continue for which that person shall be liable on summary conviction to a fine not exceeding £200.

F39412

In this section—

“deposit” must be read with—
1. a
  section 22 of the Financial Services and Markets Act 2000;
2. b
  any relevant order under that section; and
3. c
  Schedule 2 to that Act;
“institution” means—
1. a
  a body corporate wherever incorporated;
2. b
  a partnership formed under the law of any part of the United Kingdom;
3. c
  a partnership or other unincorporated association of two or more persons formed under the law of a member State other than the United Kingdom.

F395108. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

109 Exemption from stamp duty.

F3961

The following instruments shall be exempted from all such stamp duties (if any) as apart from this section would be chargeable on them, that is to say—

a

any copy of the rules of a building society;

b

any transfer of a share in a building society;

c

any bond or other security to be given to, or on account of, a building society or by an officer of a building society;

d

any instrument appointing an agent of a building society or revoking such an appointment; and

e

any other instrument whatsoever which is required or authorised to be given, issued, signed, made or produced in pursuance of this Act or of the rules of a building society.

F3972

No transfer effected by subsection (6) or (7) of section 97 shall give rise to any liability to stamp duty

110 Officers and auditors not to be exempted from liability

1

Subject to subsection (3) below, any provision to which this section applies, whether contained in the rules of a building society or in any contract with a building society or otherwise, shall be void.

2

This section applies to any provision for—

a

exempting any director, other officer or person employed as auditor of a building society from any liability which, by virtue of any rule of law, would otherwise attach to him in respect of the negligence, default, breach of duty or breach of trust of which he may be guilty in relation to the society, or

b

indemnifying any such person against any such liability.

F3983

Subsection (1) above shall not prevent a building society from

a

purchasing and maintaining for a person insurance against any such liability, or

b

indemnifying a person against any liability incurred by him in defending any proceedings (whether civil or criminal) in which judgment is given in his favour or he is acquitted.

4

Section 727 of the M46Companies Act 1985 or, as the case may be, Article 675 of the M47Companies (Northern Ireland) Order 1986 (which empower the court to grant relief in certain cases of negligence, default, breach of duty or breach of trust) shall apply in relation to officers and auditors of a building society as it applies in relation to officers and auditors a company.

111 Time limit for commencing proceedings.

1

Notwithstanding any limitation on the time for the taking of proceedings contained in any Act, summary proceedings for any offence under this Act may, subject to subsection (2) below, be commenced by the F399Authority at any time within the period of one year beginning with the date of which evidence sufficient in the opinion of the F399Authority to justify a prosecution for the offence, comes to its knowledge.

2

Nothing in subsection (1) above shall authorise the commencement of proceedings for any offence at a time more than three years after the date on which the offence was committed.

3

For the purposes of subsection (1) of this section a certificate, purporting to be signed by or on behalf of the F399Authority, as to the date on which such evidence as is mentioned in that subsection came to its knowledge, shall be conclusive evidence of that date.

4

In the application of this section to Scotland, in subsection (1) the words “by the Authority” shall be omitted and in this section references to the F399Authority shall be read as references to the Lord Advocate.

5

In the application of this section to Scotland, F400section 136(3) of the Criminal Procedure (Scotland) Act 1995 shall apply for the purposes of this section as it applies for the purposes of that section.

112 Offences: liability of officers and defence of due diligence.

1

Where an offence under any provision of this Act committed by a building society is proved to have been committed with the consent or connivance of, or to be attributable to any neglect on the part of, any officer of the society he, as well as the society, shall be guilty of that offence and liable to be proceeded against and punished in accordance with that provision.

F4012

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3

Where an offence under any provision of this Act committed by a body corporate other than a building society is proved to have been committed with the consent or connivance, or to be attributable to any neglect on the part of, any officer of the body corporate he, as well as the body corporate, shall be guilty of that offence and liable to be proceeded against and punished accordingly.

4

In any proceedings for an offence under this Act, it shall be a defence for a person charged to prove that he took all reasonable precautions and exercised all due diligence to avoid the commission of such an offence by himself or any person under his control

113 Evidence.

F4021

Any document bearing the seal or stamp of the Authority shall be received in evidence without further proof.

1A

Any document purporting to have been signed by a person authorised to do so on behalf of the Authority shall, in the absence of any evidence to the contrary, be received in evidence without proof of the signature.

1B

In subsections (1) and (1A), “document” means any document issued, received or created by the Authority for the purposes of or in connection with this Act.

2

Any printed document purporting to be a copy of the rules or memorandum of a building society, and certified by the secretary or other officer of the society to be a true copy of its rules or memorandum as registered, shall be received in evidence and shall, in the absence of any evidence to the contrary, be deemed to be a true copy of its rules or memorandum.

114 Records.

1

Subject to any other provision of this Act or regulations under it, any record to be kept by a building society may be kept in any manner.

2

Where any such record is not kept by making entries in a bound book, but by some other means, adequate precautions shall be taken for guarding against falsification and facilitating its discovery.

3

The power in subsection (1) above includes power to keep the record by recording matters otherwise than in legible form so long as the recording is capable of being reproduced in a legible form; and any duty imposed by or under this Act to allow inspection of, or to furnish a copy of, the record or any part of it is to be treated as a duty to allow inspection of, or to furnish, a reproduction of the recording or of the relevant part of it in a legible form.

C974

The F403Treasury may by regulations, make such provision in addition to subsection (3) above as F404they consider appropriate in connecton with such records as are kept otherwise than in legible form; and the regulations may make modifications of this Act so far as it relates to the records of building societies.

5

If default is made in complying with this section the building society shall be liable on summary conviction—

a

to a fine not exceeding level 4 on the standard scale, and

b

in the case of a continuing offence, to an additional fine not exceeding £100 for every day during which the offence continues,

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

in the case of a director or the chief executive of a building society, his officially notified address;

d

in the case of a body corporate (other than a building society) its secretary or clerk, the address of its registered or principal office in the United Kingdom;

e

in the case of an unincorporated association (other than a partnership) or a member of its governing body, its principal office in the United Kingdom;

and, in any other case, his last-known address (whether of his residence or of a place where he carries on business or is employed).

116F407 Form of documents.

1

The Authority may, by directions under this section, make provision with respect to the form of, and the particulars to be included in, any document to be sent to it under this Act.

2

The directions have effect subject to any other provision of or made under this Act.

117 Financial year of building societies.

1

Subject to the provisions of this section and Schedule 20, the financial year of building societies shall be the period of twelve months ending with 31st December.

2

The initial financial year of a building society shall be such period as expires with the end of the calendar year in which it is established and the final financial year of a building society shall be such shorter period than twelve months as expires with the date as at which the society makes up its final accounts.

3

A building society whose financial year does not, by virtue of the saving provisions of Schedule 20, end with 31st December may alter its financial year by making up its accounts for one period of more than 6 months, and not more than 18 months, ending with 31st December; and in relation to a building society exercising the power conferred by this subsection, references in this Act to a financial year of the society include references to that period.

F408118 Qualifying asset holding for certain powers.

1

This section has effect for determining for the purposes of this Act whether, in any financial year, a building society has a “qualifying asset holding”.

2

A building society has a qualifying asset holding in any financial year, if, and only if, the aggregate value of its total commercial assets, as shown in its annual accounts for the previous year, is not less than £100 million or such other amount as may be substituted for it under subsection (3) below.

3

The Commission, with the consent of the Treasury, may by order made by statutory instrument substitute for the amount for the time being specified in subsection (2) above such other amount as the Commission considers appropriate.

4

An order under subsection (3) above may contain such transitional provisions as the Commission considers necessary or expedient.

5

An instrument containing an order under subsection (3) above shall be subject to annulment in pursuance of a resolution of either House of Parliament.

F409118A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

119 Interpretation.

C981

In this Act, except where the context otherwise requires—

F410“adopt” and “adopted”, in relation to powers, and “adoptable powers” have the meaning given by paragraph 1 of Schedule 2 of this Act;
F410“advance secured on land” and “advance fully secured on land” have the meanings given by section 10(1) and (11) and references to class 1 or class 2 advances are to be construed in accordance with sections 11 and 12;
F411 F410“advance secured on third party land” has the meaning given by section 10(4A);
“the annual accounts” has the meaning given by section 72(10);
“the annual business statement” has the meaning given by section 74(1);
“the applicable winding up legislation” and “the companies winding up legislation” have the meanings given by section 90;
F412“associated undertaking” shall be construed in accordance with paragraph 20 of Schedule 4A to the M49Companies Act 1985 read—
1. a
  in conjunction with sections 259 and 260 of, and paragraphs 5 to 11 of Schedule 10A to, that Act; and
2. b
  as if the reference to an undertaking included in the consolidation were a reference to an undertaking which would be so included if consolidated accounts were being prepared at the material time;
F413. . .
F414“the Authority” means the Financial Services Authority;
F415“borrowing members’ resolution” has the meaning given by paragraph 29(1) of Schedule 2 to this Act and, subject to paragraph 29(2), “borrowing member” has the meaning given by paragraph 5 of that Schedule;
“building society” means a building society incorporated (or deemed to be incorporated) under this Act;
F416. . .
F416. . .
F416. . .
F417“connected undertaking” means a subsidiary undertaking or an associated undertaking;
F418“the court”, in relation to a building society, means the court which has jurisdiction under the applicable winding up legislation to wind up the society;
F416. . .
F419 F420. . .;
“deferred shares” means shares of a class defined by order of the F421Treasury, in a statutory instrument subject to annulment in pursuance of a resolution of either House of Parliament;
F422“deposit” includes—
1. a
  a loan; and
2. b
  a subordinated deposit, that is to say, a deposit which, on a winding up, would fall to be repaid only after repayment in full had been made to the holders of shares in the society other than deferred shares,
and cognate expressions shall be construed accordingly;
“dispose”, in relation to any property, includes the granting of any interest in or right over it;
“executive”, in relation to a director, means a person who holds office as a director and also as chief executive, secretary or manager;
“financial year” is to be construed in accordance with section 117;
“heritable security” means a security capable of being constituted over any land by disposition or assignation of that interest in security of any debt and of being recorded in the Register of Sasines or, as the case may be, in the Land Register of Scotland and includes a security constituted by a standard security and any other charge enforceable in the same manner as a standard security;
F423“interest”, in relation to shares, includes dividends;
F424. . .
F425“land”, in the expression “loan secured on land”, has the meaning given by section 6A(8);
“loan secured on land” and “loan fully secured on land” shall be construed in accordance with sections 6A and 6B respectively;
“manager”, in relation to a building society, means a person (other than the chief executive) employed by the society who, under the immediate authority of a director or the chief executive of the society exercises managerial functions or is responsible for maintaining accounts or other records of the society;
F426“member” shall be construed in accordance with paragraph 5 of Schedule 2 to this Act;
“memorandum” has the meaning given by paragraph 1 of Schedule 2 to the Act;
F410“mobile home loan” means a loan under section 15;
“mortgage” includes charge;
F427“mortgage debt”, in relation to a loan secured on land and any time, means the total amount outstanding at that time in respect of—
1. a
  the principal of the loan;
2. b
  interest on the loan; and
3. c
  any other sum which the borrower is obliged to pay the society under the terms of the loan;
F428. . .
“notice” means written notice and “notice to” a person means notice given to that person, and “notify” shall be construed accordingly;
“officer”, in relation to a building society, means any director, chief executive, secretary or manager of the society; and, in relation to any offence, “officer” also includes any person who purports to act as an officer of the society; and in relation to any other body corporate means the corresponding officers of that body;
“officially notified”, in relation to the appointment or address of a director or the chief executive of a building society, means respectively notified to, and the last address notified to, the F429Authorityunder section 61(13) or 59(6), as the case may be;
F430“ordinary resolution” means a resolution which will be effective without being passed as a special resolution, shareholding members’ resolution or borrowing members’ resolution;
F431“own funds” means own funds as defined in Section 1 of Chapter 2 of Title V of the Banking Consolidation Directive;
F432. . .
“the public file”, in relation to a building society, means the file relating to the society which the F433Authority is required to maintain under section 106;
F410“qualifying asset holding”, in relation to a building society, shall be construed in accordance with section 118;
“registered address”, in relation to a member of a building society, has the meaning given by paragraph 13 of Schedule 2 to this Act;
“the repealed enactments” means the M50Building Societies Act 1962 or the M51Building Societies Act 1874 or, in relation to Northern Ireland, the M52Building Societies Act (Northern Ireland) 1967;
F434“residential property” has the meaning given by section 5(10);
F435“share”, in relation to a building society, shall be construed in accordance with section 8;
“shareholder and depositor” includes a potential shareholder or depositor;
F436“shareholding member” has the meaning given by paragraph 5 of Schedule 2 to this Act;
“shareholding members” resolution’ has the meaning given by paragraph 27A of that Schedule;
“special resolution” has the meaning given by paragraph 27 of Schedule 2 to this Act;
F410“subsidiary” F437has the meaning given by section 736 of the M53Companies Act 1985;
F438“Subsidiary undertaking” shall be construed in accordance with the provisions of section 258 of the Companies Act 1985, read in conjunction with sections 259 and 260 of, and Schedule 10A to, that Act;
“summary financial statement” has the meaning given by section 76(1);
F410 C99“total commercial assets”, in relation to a building society, means the aggregate of its class 1 assets, its class 2 assets and its class 3 assets.

F4391A

Any reference in this Act to the seal of the Authority is a reference to the seal provided for in regulations made under section 109(1)(b) of the Friendly Societies Act 1974 (and not to the Authority’s common seal).

2

In relation to F440loans secured on land in Scotland, “mortgage” means a heritable security, “mortgagor” and “mortgagee” mean respectively the debtor and creditor in a heritable security and connected expressions shall be construed accordingly.

F4412A

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F4422B

In this Act “The Banking Consolidation Directive” means Directive 2000/12/EC of the European Parliament and of the Council of 20 March 2000 relating to the taking up and pursuit of the business of credit institutions.

F4432C

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3

For the purposes of any provision of this Act referring to the value of a person’s shareholding in a building society—

a

the value of a person’s shares shall be taken as the amount standing to his credit in respect of payments made F444. . . on the shares and interest credited F444. . . by way of capitalisation; and

b

shares held by a person to whom, as the holder of the share, the society has made F445a loan, shall be disregarded.

F4463A

Any reference in this Act (however expressed) to loans being owed to a building society or a subsidiary undertaking of a building society is a reference to their being so owed either at law or in equity.

F4474

Subject to F448section 9A(7), the value in sterling of—

a

any transaction effected by or with a building society or connected undertaking in another currency, or

b

any assets or liabilities of a building society or connected undertaking denominated in another currency,

shall be determined for any purpose of this Act in accordance with directions given by the F449Authority under this subsection.

5

The foregoing provisions of this Act shall be construed and have effect as if section 124 and Schedule 21 were contained in another Act and references in those provisions to this Act shall be construed accordingly.

120 Amendments, repeals, revocations and transitional and saving provisions.

1

The enactment specified in Schedule 18 to this Act shall have effect with the amendments made by that Schedule.

C1002

Subject to the saving provisions of Schedule 20, and of any order under section 121, the enactments specified in Schedule 19 to this Act are hereby repealed or revoked to the extent specified in the third column of that Schedule.

3

Where any enactment amended or repealed or revoked by subsection (1) or (2) above extends to any part of the United Kingdom, the amendment or repeal or revocation extends to that part.

4

The transitional and saving provisions of Schedule 20 to this Act shall have effect.

C101121 Power to make transitional and saving provisions.

1

The Treasury may, by order made by statutory instrument, make such provision as appears to them to be necessary or expedient for the purposes of the transition to the provisions of this Act from the existing enactments applicable in England and Wales, Scotland or Northern Ireland to building societies.

2

An order under this section may—

a

modify any of the existing enactments or provisions of this Act, in particular in their application to proceedings pending before the Chief Registrar or the Commission;

b

create criminal offences or otherwise provide for the enforcement of obligations imposed by or under the order;

c

provide for the charging of fees but not of any charge in the nature of taxation.

3

An order under this section which contains any provision authorised by subsection (2)(b) or (c) above shall be subject to annulment in pursuance of a resolution of either House of Parliament.

4

In this section “the existing enactments” means the enactments in force at the passing of this Act, including any enactment amended by Schedule 18 to this Act.

122 Northern Ireland

1

With the exception of F450section 15, section 124 and Schedule 21 and subject to section 120(3), this Act extends to Northern Ireland.

2

Subject to any Order made by virtue of subsection (1)(a) of section 3 of the M54Northern Ireland Constitution Act 1973 building societies shall not be a transferred matter for the purposes of that Act but shall for the purposes of subsection (2) of that section be treated as specified in Schedule 3 to that Act.

F451123. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Provision of conveyancing services by recognised institutions and practitioners

F798124 Recognition of building societies, other institutions and individuals as suitable to provide conveyancing services.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

General

125 Short title.

This Act may be cited as the Building Societies Act 1986.

126 Commencement.

1

This Act shall come into operation as follows.

2

Part I (and Schedule 1) shall come into operation at the end of the period of two months beginning with the day on which this Act is passed.

C1023

The remaining provisions of this Act, except sections 121, 124, 125, this section, in Schedule 20, paragraph 7 (and section 120(4) so far as it relates to that paragraph) and Schedule 21, shall come into operation on such day as the Treasury may appoint by order made by statutory instrument and different days may be appointed for different provisions or different purposes.

C1034

Section 124 and Schedule 21 shall come into operation on such day as the Lord Chancellor may appoint by order made by statutory instrument.

5

Any reference to the commencement of or the commencement date for a provision of this Act is a reference to the date appointed under this section for that provision to come into operation.

SCHEDULES

F452SCHEDULE 1

Annotations:

Amendments (Textual)

F452

Sch. 1 repealed (1.12.2001) by S.I. 2001/2617, arts. 2(b), 13(2) Sch. 4 (with art. 13(3), Sch. 5); S.I. 2001/3538, art. 2(1)

Status

1

The Commission shall be a body corporate.

The First Commissioner, etc.

2

The person who holds office as Chief Registrar may also hold the office of chairman of the Commission and any person who holds office as an assistant registrar may also hold office as a member of the Commission.

Tenure of office of member

3

1

Subject to the provisions of this paragraph, a person shall hold and vacate office as a member or the chairman or deputy chairman of the Commission in accordance with the terms of the instrument appointing him to that office.

2

A person may at any time resign office as a member or the chairman or deputy chairman of the Commission by giving the Treasury a signed notice stating that he resigns that office.

3

When a member becomes or ceases to be the chairman or deputy chairman, the Treasury may vary the terms of his appointment so as to alter the date on which he is to vacate office as a member.

4

If the chairman or deputy chairman ceases to be a member, he shall cease to be the chairman or deputy chairman, as the case may be.

5

If the Treasury are satisfied that a member—

a

has been absent from meetings of the Commission for a period longer than three consecutive months without the permission of the Commission, or

b

has become bankrupt or made an arrangement with his creditors, or

c

is incapacitated by physical or mental illness, or

d

is otherwise unable or unfit to discharge the functions of his office,

the Treasury may declare his office as a member vacant, and shall notify the declaration in such manner as they think fit; and thereupon the office shall become vacant.

4

No person who has attained the age of 70 years is eligible to be or to remain a part-time member of the Commission.

Remuneration and pensions, etc. for part-time members

C1465

The Commission shall pay to its part-time members such fees for services and such allowances in respect of expenses as may be determined by the Treasury.

C1476

1

If the Treasury so determines in the case of any person who is or has been a part-time member of the Commission, the Commission shall pay or make arrangements for the payment of such pensions to or in respect of that person as the Treasury may determine.

2

Where a person who is a part-time member of the Commission ceases to be a member otherwise than on the expiry of his term of office and it appears to the Treasury that there are special circumstances which make it right for that person to receive compensation, the Treasury may direct the Commission to make to that person a payment of such amount as the Treasury may determine.

Parliamentary disqualification

7

1

In part II of Schedule 1 to the M109House of Commons Disqualification Act 1975 (bodies of which all members are disqualified under that Act) there shall be inserted at the appropriate place the entry: “The Building Societies Commission".

2

A corresponding amendment shall be made in Part II of Schedule 1 to the M110Northern Ireland Assembly Disqualification Act 1975.

Staff

8

The Commission may appoint such staff as the chairman of the Commission thinks fit, subject to the approval of the Treasury as to numbers and as to terms and conditions of service.

Proceedings

9

The quorum of the Commission and the arrangements relating to its meeting shall be such as the Commission may determine.

10

The validity of any proceedings of the Commission shall not be affected by any vacancy among the members or by any defect in the appointment of a member.

Performance of functions

11

1

With the exception 34specified in sub-paragraph (2) below, the Commission may authorise

F754a

any member or members of the Commission,

b

any committee or sub-committee of the Commission, or

c

any officer, servant or agent of the Commission,

to perform on behalf of the Commission such of the Commission’s functions (including the power conferred by this paragraph) as are specified in the authorisation.

2

The Commission shall not delegate any power it has under this Act to make orders, rules or regulations by statutory instrument.

12

The M111Statutory Instruments Act 1946 shall apply to all powers of the Commission of making statutory instruments under this Act as if the Commission were a Minister of the Crown.

13F755. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Instruments

14

1

The fixing of the common seal of the Commission shall be authenticated by the signature of the chairman or deputy chairman or by some other person authorised by the Commission to act for that purpose.

15

1

A document purporting to be duly executed under the seal of the Commission shall be received in evidence and shall, unless the contrary is proved, be deemed to be so executed.

2

A document purporting to be signed on behalf of the Commission shall be received in evidence and shall, unless the contrary is proved, be deemed to be so signed.

C116SCHEDULE 2 Establishment, Incorporation and Constitution of Building Societies

Sections 5, 93, 94 and 97.

Annotations:

Modifications etc. (not altering text)

C116

Sch. 2 modified (3.1.1995) by 1994 c. 40, ss. 17(3), 82(2)

Part I General

Requirements for establishment

1

Any ten or more persons may establish a society under this Act by taking the following steps—

a

agreeing upon the purpose or principal purpose of the society and upon the extent of its powers in a memorandum the provisions of which comply with the requirements of this Part of this Schedule;

b

4

The provisions of the memorandum of a building society, as read with the provisions of ths Act as in force for the time being, are binding upon—

a

each of the members and officers of the society; and

b

all persons claiming on account of a member or under the rules;

and all such members, officers and persons so claiming and all persons dealing with the society shall be taken to have notice of those provisions.

F4575

Where any adoptable power conferred by virtue of an instrument under a provision of this Act ceases, by reason of the amendment or revocation of the instrument, to be available to building societies or building societies of any description, every society affected by the amendment or revocation shall annex to its memorandum a note of the fact that, as from the operative date of the instrument, it no longer has that power and shall send a copy of the note to the F458Authority which shall keep the copy in the public file of the society.

The rules

3

1

The rules of a building society shall provide for the matters specified in the Table in sub-paragraph (4) below.

2

The rules of a building society are binding upon each of the members and officers of the society and on all persons claiming on account of a member or under the rules; and all such members, officers and persons (but no others) shall be taken to have notice of the rules.

3

Nothing in this paragraph shall be taken to authorise any provision to be made which is inconsistent with this Act or an instrument made under it by F459. . . the Treasury or to affect the operation of any provision of this Act making rules void to any specified extent.

4

The Table referred to in sub-paragraph (1) above is as follows:—

TABLE OF MATTERS TO BE COVERED BY THE RULES

1. The name of the society and the address of its principal Office.
2. The manner in which the F460funds of the society are to be raised.
3. The manner in which the terms are to be determined on which shares are to be issued and the manner in which shareholders are to be informed of changes in the terms on which their shares are held.
4. Whether any preferential or deferred shares are to be issued and, if so, within what limits.
5. The manner in which F461loans are to be made and repaid, and the conditions on which a borrower may redeem the amount due from him before the end of the period for which the loan was made.
6. The manner in which losses are to be ascertained and provided for.
7. The manner in which membership is to cease.
8. The manner of remunerating the auditors.
9. As respects directors—
- (a) the manner of electing them and whether they may be co-opted;
- (b) any conditions which must be satisfied with respect to the holding of shares in the society if a person is to become, or is to remain, a director;
- (c) the manner of remunerating and, where it is not to be fixed by resolution at the annual general meeting, the maximum amount of the remuneration to be paid to, directors; and
- (d) the circumstances in which pensions may be awarded to persons by virtue of their office as director and the method of determining the terms of such pensions.
10. The powers and duties of the board of directors.
11. The custody of the mortgage deeds and other securities belonging to the society.
12. The form, custody and use of the society’s common seal.
13. The calling and holding of meetings and, in particular—
- (a) the right of members to requisition meetings;
- (b) the right of members to move resolutions at meetings;
- (c) the manner in which notice of any resolutions to be moved at meetings is to be given to members;
- (d) the procedure to be observed at meetings;
- (e) the form of notice for the convening of a meeting and the manner of its service;
- (f) the voting rights of members, the right to demand a poll and the manner in which a poll is to be taken.
14. The entitlement of members to participate in the distribution of any surplus assets after payments to creditors, on the winding up, or dissolution by consent, of the society.

If a building society fails to comply with sub-paragraph (2) above, the society shall be liable on summary conviction to a fine not exceeding level 4 on the standard scale and so shall any officer who is also guilty of the offence.

Membership

5 F4651

The rules of a building society shall provide that no person shall be a member of the society unless he is a shareholding member or a borrowing member or both.

2

In this Act, in relation to a building society—

“borrowing member” means, subject to sub-paragraphs (2A) and (2B) and paragraph 29(2) below, an individual who is indebted to the society—
1. a
  in respect of a loan which is fully secured on land; or
2. b
  if the rules of the society so provide, in respect of a loan which is (within the meaning of the rules) substantially secured on land;
“shareholding member” means a person who holds a share in the society.

2A

If the rules of a building society so provide, an individual shall cease to be a borrowing member at any time if at that time the society—

a

takes possession of, or exercises its power of sale in relation to, the whole or any part of the land on which the loan is secured; or

b

obtains an order for foreclosure absolute or, in Scotland, foreclosure in respect of the whole or any part of that land.

2B

Unless the rules of a building society so provide, an individual shall not be a borrowing member at any time if at that time the loan is owed to the society in equity rather than at law.

3

A person who is a minor—

a

may, if the rules do not otherwise provide, be admitted as a member of a building society and give all necessary receipts; but

b

may not F466propose a resolution,vote or hold any office in the society; and

c

may not F467join in requisitioning a special meeting ornominate, or join in nominating, a person for election as a director of the society.

Liability of members

F4686

1

The liability at any time of a shareholding member of a building society shall be limited to the amount which, at that time, has been actually paid, or is in arrear, on his shares in the society.

2

The liability at any time of a borrowing member of a building society shall be limited to the amount which, at that time, is payable under the mortgage or other security by which his indebtedness to the society in respect of the loan is secured.

Joint shareholders

7

1

Two or more persons may jointly hold shares in a building society and the following provisions of this paragraph shall apply to any shares so held.

2

In this paragraph, in relation to any shares jointly held, “representative joint holder” means that one of the joint holders who is named first in the records of the society.

3

Except where the rules of the society otherwise provide, any notice or other document may be given or sent by the society to the joint holders by being given or sent to the representative joint holder; but this sub-paragraph shall not prevent any of the joint holders from exercising the rights under this Act of a member of a building society to obtain from the society on demand a copy of the summary financial statement, the annual accounts and the annual business statement.

4

For the purpose of determining—

a

who is entitled to vote in an election of directors of the society;

b

who is qualified to vote on a resolution of the society, and

c

where it is relevant, the number of votes a person may then give,

the shares shall be treated as held by the representative joint holder alone; and accordingly a person who is a member of the society by reason only of being a joint holder of those shares (other than the representative joint holder) shall not be entitled to vote in any such election or qualified to vote on any such resolution.

5

For the purposes of sections 87 and 93 to 102 the shares shall be treated as held by the representative joint holder alone; and accordingly a person who is a member of the society by reason only of being a joint holder of those shares (other than the representative joint holder) shall not be regarded as a member of the society for the purposes of those sections.

F4695A

In its application to section 100, sub-paragraph (5) above shall have effect subject to the provisions of section 102A.

6

The representative joint holder (but none of the other joint holders) shall have the right to join in making an application under section 56 and any reference in that section to the total membership of a building society shall be construed accordingly.

7

In the register to be maintained under paragraph 13 below the entry of that one of the joint holders who is the representative joint holder shall indicate that fact.

8

The joint holders shall be entitled to choose the order in which they are named in the records of the society.

Joint borrowers

8

1

Where F470a loan secured on land is made by a building society to two or more persons jointly the following provisions of this paragraph shall apply to their rights as borrowing members of the society.

2

In this paragraph, in relation to any rights of theirs as borrowing members, “representative joint borrowers” means that one of the joint borrowers who is named first in the records of the society.

3

Except where the rules of the society otherwise provide, any notice or other document may be given or sent by the society to the joint borrowers by being given or sent to the representative joint borrowers; but this sub-paragraph shall not prevent any of the joint borrowers from exercising the rights under this Act of a borrowing member of a building society to obtain from the society on demand a copy of the summary financial statement, the annual accounts and the annual business statement.

4

For the purpose of determining—

a

who is entitled to vote in any election of directors of the society, and

b

who is qualified to vote on a resolution of the society,

the rights of the joint borrowers as borrowing members of the society shall be treated as the rights of the representative joint borrower alone; and accordingly a person who is a member of the society by reason only of being a joint borrower (other than the representative joint borrower) shall not be entitled to vote in any such election or qualified to vote on any such resolution.

5

For the purposes of sections 87 and 93 to 102 the rights of the joint borrowers as borrowing members of the society shall be treated as the rights of the representative joint borrower alone; and accordingly a person who is a member of the society by reason only of being a joint borrower (other than the representative joint borrower) shall not be regarded as a borrowing member of the society for the purposes of those sections.

6

The representative joint borrower (but none of the other joint borrowers) shall have the right to join in making an application under section 56 and any reference in that section to the total membership of a building society shall be construed accordingly.

7

In the register to be maintained under paragraph 13 below the entry of that one of the joint borrowers who is the representative joint borrower shall indicate that fact.

8

The joint borrowers shall be entitled to choose the order in which they are named in the records of the society.

Use and change of name

9

1

The common seal of a building society shall bear the registered name of the society.

F4712

Every building society shall paint or affix, and keep painted or affixed, its registered name on the outside of every office or place in which its business is carried on, in a conspicuous position and in letters easily legible.

2A

Every building society shall state its registered name in legible characters in all of the following documents, namely—

a

its business letters;

b

its account statements, including those relating to deposit, share, loan or mortgage accounts;

c

its passbooks;

d

its notices and publications, including all documents sent to members;

e

its invoices and receipts;

f

its letters of credit and any instruments creating or acknowledging its indebtedness;

g

its contracts, agreements, mortgages and deeds; and

h

its bills of exchange, promissory notes, endorsements, cheques and orders for money or goods.

3

A building society may change its name by special resolution.

4

Where a society changes its name in accordance with this paragraph notice of the change of name shall be sent to the F472Authority and, unless the F472Authority is of the opinion that the changed name is undesirable, the F472Authority shall register the notice of the change of name and give the society a certificate of registration.

5

A change of name shall take effect on the date on which the certificate of registration under sub-paragraph (4) above is issued or on such later date as may be specified in the certificate.

6

The F472Authority shall keep a copy of the certificate of registration issued under sub-paragraph (4) above in the public file of the society.

7

A change of name shall not affect the rights and obligations of the society or of any of its members or of any other person concerned.

F4738

For the purposes of this paragraph and paragraphs 10 to 10C below “registered name”, in relation to a building society, means the name of the society which is for the time being registered with the F472Authority.

Offences relating to society’s name

F47410

1

If a building society does not—

a

paint or affix its registered name; or

b

keep its registered name painted or affixed,

as required by paragraph 9(2) above, the society shall be liable on summary conviction to a fine not exceeding level 3 on the standard scale.

2

A building society which, without reasonable excuse, does not comply with paragraph 9(2A) above shall be liable on summary conviction to a fine not exceeding level 3 on the standard scale.

3

If an officer of a building society or a person on its behalf issues or authorises the issue of any document mentioned in paragraph 9(2A)(a) to (g) above, in which the society’s registered name is not stated as required by that paragraph, he shall be liable on summary conviction to a fine not exceeding level 3 on the standard scale.

4

If an officer of a building society or a person on its behalf signs or authorises to be signed on behalf of the building society any document mentioned in paragraph 9(2A)(h) above in which the society’s registered name is not stated as required by that paragraph—

a

he shall be liable on summary conviction to a fine not exceeding level 3 on the standard scale; and

b

he shall be further personally liable to the holder of the bill of exchange, promissory note, cheque or order for money or goods for the amount of it (unless it is duly paid by the building society).

5

If a building society fails to send to the F475Authority a notice which it is required to send to it under paragraph 9(4) above, the society shall be liable on summary conviction to a fine not exceeding level 3 on the standard scale and so shall any officer who is also guilty of the offence.

F479Restrictions on business names

Annotations:

Amendments (Textual)

F479

Cross-heading inserted (1.12.1997) by 1997 c. 32, s. 36(4); S.I. 1997/2668, art. 2, Sch. Pt. I(h)

Annotations:

Amendments (Textual)

F482

Cross-heading inserted (1.12.1997) by 1997 c. 32, s. 36(4); S.I. 1997/2668, art. 2, Sch. Pt. I(h)

F48010B

1

Paragraph 9(2A) above shall have effect as if after the words “in legible characters” there were inserted the words “ which are reasonably prominent ”.

2

The society shall in all documents mentioned in paragraph 9(2A) above state in legible characters an address in the United Kingdom at which service of any document relating in any way to the business will be effective.

3

The society shall also in any premises where the business is carried on and to which the members of the society, the customers of the business or suppliers of any goods or services to the business have access, display in a prominent position so that it may easily be read by such persons a notice containing the society’s registered name and the address mentioned in sub-paragraph (2) above.

4

The society shall secure that the registered name and the address mentioned in sub-paragraph (2) above is immediately given, by written notice, to any person with whom anything is done or discussed in the course of the business and who asks for the registered name or the address.

C1065

The F481Treasury may, by regulations require a notice under sub-paragraph (3) or (4) above to be displayed or given in a specified form.

F485Use of business names: supplementary

Annotations:

Amendments (Textual)

F485

Cross-heading inserted (1.12.1997) by 1997 c. 32, s. 36(4); S.I. 1997/2668, art. 2, Sch. Pt. I(h)

F48310C

1

A building society which contravenes paragraph 10A(2) above shall be liable on summary conviction to a fine not exceeding level 3 on the standard scale.

2

A building society which, without reasonable excuse, does not comply with paragraph 9(2A) or 10B(2), (3) or (4) above, or any regulations made under paragraph 10B(5) above, shall be liable on summary conviction to a fine not exceeding level 3 on the standard scale.

3

Where paragraph 10A above applies any legal proceedings brought by the society to enforce a right arising out of a contract made in the course of the business in respect of which the society was, at the time the contract was made, in breach of paragraph 9(2A) or 10B(2), (3) or (4) above shall be dismissed if the defendant (or, in Scotland, the defender) to the proceedings shows—

a

that he has a claim against the plaintiff (pursuer) arising out of that contract which he has been unable to pursue by reason of the plaintiff’s (pursuer’s) breach of paragraph 9(2A) or 10B(2), (3) or (4) above, or

b

that he has suffered some financial loss in connection with the contract by reason of the latter’s breach of paragraph 9(2A) or 10B(2), (3) or (4) above,

unless the court before which the proceedings are brought is satisfied that it is just and equitable to let the proceedings continue.

4

Sub-paragraph (3) above is without prejudice to the right of any person to enforce such rights as he may have against another person in any proceedings brought by that person.

5

Regulations made under paragraph 10A(3) or 10B(5) above shall be made by statutory instrument subject to annulment by resolution of either House of Parliament.

C1076

Such regulations may contain such transitional provisions and savings as the F484Treasury think fit, and may make different provision for different cases or classes of case.

Change of principal office

11

Register of members

13 F4891

Every building society shall maintain a register of members showing—

a

the name and address of each member; and

b

whether each member is a shareholding member or a borrowing member or both.

2

The register shall be kept at the principal office or at such other place or places as the directors think fit.

3

If a building society contravenes sub-paragraph (1) above, the society shall be liable on summary conviction to a fine not exceeding level 4 on the standard scale and so shall any officer who is also guilty of the offence.

4

For the purposes of this Act “registered address” in relation to a member of a building society, means—

a

the address shown in the register maintained under this paragraph, except in a case where paragraph (b) below applies;

b

where the member has requested that communications from the society be sent to some other address, that other address.

Exception to duties to send documents

14

1

A building society is not obliged by any provision of this Act or its rules to send a notice or other document to a member in whose case the society has reason to believe that communications sent to him at his registered address are unlikely to be received by him.

2

Where the requirement relates to notice of a meeting or postal ballot of the society, the society must, instead, comply with the advertising requirements of paragraph 35 below.

Right of members to obtain particulars from the register

15 F4901

At any time when a building society—

a

has had its F491permission under Part IV of the Financial Services and Markets Act 2000 to accept deposits cancelled; and

b

Amendments (Textual)

F504

Sch. 2 Pt. II substituted (1.12.1997 in specified cases and for specified purposes and otherwise in accordance with art. 2(2)(3)(5) of S.I. 1997/2668) by 1997 c. 32, ss. 3(2), 47(3), Sch. 1; S.I. 1997/2668, art. 2, Sch. Pt. II(c)

F499 Capacity of society not limited by its memorandum

Annotations:

Amendments (Textual)

F499

F49816

1

The validity of an act done by a building society shall not be called into question on the ground of lack of capacity by reason of anything included in the society’s memorandum.

2

A member of a building society may bring proceedings to restrain the doing of an act which but for sub-paragraph (1) above would be beyond the society’s capacity; but no such proceedings shall lie in respect of an act to be done in fulfilment of a legal obligation arising from a previous act of the society.

3

It remains the duty of the directors of a building society to observe any limitations on their powers flowing from the society’s memorandum; and action by the directors which but for sub-paragraph (1) above would be beyond the society’s capacity may only be ratified by the society by special resolution.

4

A resolution ratifying such action shall not affect any liability incurred by the directors or any other person; relief from any such liability must be agreed to separately by special resolution.

F501 Power of directors to bind society

Annotations:

Amendments (Textual)

F501

F50017

1

In favour of a person dealing with a building society in good faith, the power of the board of directors to bind the society, or authorise others to do so, shall not be limited by reason of anything included in the society’s constitution, that is to say, its memorandum and rules.

2

For this purpose—

a

a person deals with a building society if he is a party to any transaction or other act to which the society is a party;

b

a person shall not be regarded as acting in bad faith by reason only of his knowing that an act is beyond the powers of the directors under the society’s constitution; and

c

a person shall be presumed to have acted in good faith unless the contrary is proved.

3

The references above to limitations on the directors’ powers under the society’s constitution include limitations deriving from a resolution of the society passed at a general meeting or special meeting or on a postal ballot, or from any agreement between the members of the society.

4

Notwithstanding anything in paragraph 3(2) above, sub-paragraph (1) above applies in relation to members of the society, and to persons claiming on account of members or under the rules of the society, as it applies in relation to other persons.

5

Sub-paragraph (1) above does not affect any right of a member of the society to bring proceedings to restrain the doing of an act which is beyond the powers of the directors; but no such proceedings shall lie in respect of an act to be done in fulfilment of a legal obligation arising from a previous act of the society.

6

Nor does that sub-paragraph affect any liability incurred by the directors, or any other person, by reason of the directors’ exceeding their powers.

F503 No duty to enquire as to capacity of society etc.

Annotations:

Amendments (Textual)

F503

F50218

1

A party to a transaction with a building society is not bound to enquire as to whether it is permitted by the society’s constitution or as to any limitation on the powers of the board of directors to bind the society or authorise others to do so.

2

Notwithstanding anything in paragraph 3(2) above, sub-paragraph (1) above applies in relation to members of the society as it applies in relation to other persons.

Powers of central office

19

1

The central office, on receiving from a building society the declaration required by and the other documents referred to in paragraph 16 above, shall refer to the Commission for its determination the question whether or not the alteration of the society’s powers is to be registered.

2

On a reference to the Commission of the question whether or not the alteration of a society’s powers is to be registered—

a

if the declaration contains the statement specified in paragraph 16(3)(a) above and the Commission has no reasonable cause to believe that the society in question has carried on any activity comprised in the power to which the obligation imposed by paragraph 16 above extends at any time during the period which began one year before the specified date and expired on the date on which it considers the reference, the Commission shall direct the central office to register the alteration, and

b

in any other case, the Commission may, as it thinks fit, direct the central office to register, or not to register, the alteration.

3

The Commission, in deciding, in a case falling within subparagraph (2)(b) above, whether or not to direct the registration of the alteration of a society’s powers may have regard to all the circumstances of the case.

4

No registration of an alteration shall be effected by the central office under paragraph 4(4) above before the expiry of the period of 21 days beginning with the date on which it receives the declaration required by and the other documents referred to in paragraph 16 above.

5

If the central office, in pursuance of a direction of the Commission under sub-paragraph (2) above, refuses registration of the alteration of a society’s powers under sub-paragraph (1) above it shall serve on the society a notice—

a

recording its refusal,

b

specifying the activity which is believed to constitute a breach of the society’s obligation, and

c

directing the society to make an application to the Commission under section 38 for a determination under that section whether the activity was or was not within the powers of the society at the time specified under sub-paragraph (b) above,

and shall send a copy of the notice to the Commission.

6

The central office shall comply with any direction as regards the registration of the alteration of the society’s powers given to it by the Commission consequent on the Commission’s determination of the society’s powers under section 38.

7

In this paragraph “the specified date” has the same meaning as in paragraph 4 above.

C114 C115Part III Meetings, Resolutions and Postal Ballots

Annotations:

Modifications etc. (not altering text)

C114

Sch. 2 Pt. III (paras. 20–36) excluded (temp.) by S.I. 1986/2168, art. 3(1)(2)

C115

Sch. 2 Pt. III (paras. 20–36) modified by S.I. 1987/426, art. 4

Annual general meeting

20

1

Subject to sub-paragraph (2) below, every building society shall hold a meeting in the first four months of each financial year as its annual general meeting (in addition to any other meetings in that year) and shall specify the meeting as such in the notices calling it.

2

Sub-paragraph (1) above does not require a building society to hold an annual general meeting in the calendar year in which it is incorporated.

3

If default is made in holding a meeting in accordance with sub-paragraph (1) above, the F505Authority may—

a

call, or direct the calling of, an annual general meeting in that financial year, and

b

give such ancillary or consequential directions as it thinks expedient, including directions modifying or supplementing the operation of the rules of the society in relation to the calling, holding and conducting of the meeting.

4

Notwithstanding anything in the rules of a building society, the business which may be dealt with at the annual general meeting shall include any resolution whether special or not.

5

In any case where default is made—

a

in holding an annual general meeting in accordance with sub-paragraph (1) above, or

b

in complying with any directions of the F505Authority given under sub-paragraph (3) above,

the building society shall be liable on summary conviction to a fine not exceeding level 4 on the standard scale and so shall any officer who is also guilty of the offence.

F512Special meeting on members’ requisition

Annotations:

Amendments (Textual)

F512

Sch. 2 Pt. III para. 20A and cross-heading inserted (1.12.1997 in specified cases and for specified purposes and otherwise in accordance with art. 2(2)(3)(5) of S.I. 1997/2668) by 1997 c. 32, ss. 25, 47(3); S.I. 1997/2668, art. 2, Sch. Pt. II(q)

F50620A

1

On a members’ requisition, a building society shall—

a

duly call a special meeting, and specify the meeting as such in the notice calling it; and

b

if so required by the requisition, send to each member entitled to receive notice of the meeting a copy of a statement of not more than 500 words with respect to the matters to be dealt with at the meeting;

and where a meeting is so called no business shall be conducted at the meeting other than that stated in the notice calling it or (where applicable) that mentioned in sub-paragraph (8)(b) below.

2

A members’ requisition is a requisition of not less than the requisite number of members of the society; and that number is F507500 or such lesser number as may be specified in the rules of the society.

3

The requisition—

a

must state the objects of the meeting, be signed by the requisitionists and be deposited at the society’s principal office; and

b

may consist of several documents in like form each signed by one or more requisitionists and each after the first deposited within three months of the date on which the first was deposited.

4

Where the requisition consists of several documents, the date of its deposit shall be taken to be the date on which the document signed by the requisitionist making up the requisite number is deposited at the society’s principal office.

5

The rules of the society may require a requisitionist—

a

to state his full name and address;

b

to fulfil one or other of the following conditions, namely—

i

to have been a shareholding member for a specified period and to hold, or to have held at any time during that period, shares in the society to such value (not greater than the prescribed amount) as is specified in the rules; and

ii

to have been a borrowing member for a specified period and to owe to the society, or to have owed to the society at any time during that period, a mortgage debt of such amount (not greater than the prescribed amount) as is so specified; and

c

to identify a share or mortgage account with the society which will evidence the fact that he fulfils one or other of those conditions;

11

Where sub-paragraph (1)(b) above requires copies of a statement to be sent to members entitled to receive notice of a meeting, the proceedings at the meeting are not invalidated by—

a

the accidental omission to send a copy of the statement to a member entitled to receive one, or

b

the non-receipt of such a copy by such a member.

12

The F508Authority shall hear and determine any dispute arising under sub-paragraph (10)(a) above, whether on the application of the society or of any other person who claims to be aggrieved.

C10913

The F509Treasury may, by order substitute—

a

for the number specified in sub-paragraph (2) above; or

b

for the sum specified in sub-paragraph (7) above,

such other number or sum as appears to F510them to be appropriate; and an order under this subsection may make such supplementary, transitional and saving provision as appears to the F511Treasury to be necessary or expedient.

14

The power to make an order under sub-paragraph (13) above is exercisable by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament.

F514Failure to comply with members’ requisition

Annotations:

Amendments (Textual)

F514

Sch. 2 Pt. III para. 20B and cross-heading inserted (1.12.1997 in specified cases and for specified purposes and otherwise in accordance with art. 2(2)(3)(5) of S.I. 1997/2668) by 1997 c. 32, ss. 26, 47(3); S.I. 1997/2668, art. 2, Sch. Pt. II(r)

F51320B

1

This paragraph applies where a members’ requisition is deposited at a building society’s principal office and the society is not relieved of the obligation to call a special meeting by paragraph 20A(9)(a) above.

2

Subject to sub-paragraph (5) below, if the society does not within 28 days from the date of the deposit of the requisition duly call a meeting to be held within 63 days from that date—

a

the requisitionists, or any proportion of them exceeding one half, may themselves call a meeting to be held within five months from that date; and

b

no business shall be conducted at a meeting so called other than that stated in the notice calling it or (where applicable) that mentioned in paragraph 20A(8)(b) above.

3

A meeting called under sub-paragraph (2) above by requisitionists shall be called in the same manner, as nearly as may be, as that in which meetings are to be called by the society.

4

If—

a

paragraph 20A(1)(b) above requires the society to send to each member entitled to receive notice of the meeting a copy of a statement of not more than 500 words with respect to the matters to be dealt with at the meeting; and

b

subject to sub-paragraph (5) below, that requirement is not complied with within 28 days from the date of the deposit of the requisition,

the requisitionists, or any proportion of them exceeding one half, may themselves send a copy of the statement to each such member.

5

If the rules of the society make such provision as is mentioned in paragraph 20A(9)(b) above, any days falling within the period there mentioned shall be disregarded in determining any period for the purposes of sub-paragraph (2) or (4)(b) above.

6

Any reasonable expenses incurred by the requisitionists by reason of the failure of the society to call a meeting, or to comply with such a requirement as is mentioned in sub-paragraph (4) above, shall be repaid to the requisitionists by the society.

7

Any sum so repaid shall be recoverable by the society from such of the directors of the society as were responsible for the failure (whether by the retention of fees or other remuneration in respect of services or otherwise).

Length of notice for calling meetings

21

1

Any provision contained in the rules of a building society shall be void to the extent that it provides for the calling of a meeting of the society (other than an adjourned meeting) by less than 21 days’ notice expiring with the date of the meeting or, if earlier, the date specified by the society, under its rules, as the final date for the receipt of instruments appointing proxies to vote at the meeting.

2

A meeting of a building society may be called by 21 days’ notice, unless the rules provide for longer notice of the meeting to be given.

3

Where notice of a meeting is given in accordance with sub-paragraph (2) above, the notice shall be taken for the purposes of this Act or any other enactment to have been duly given according to the rules of the building society.

Persons entitled to notice of meetings

C11022

1

Subject to the provisions of this Part of this Schedule, notice of a meeting of a building society shall be given to every member of the society who would be eligible to vote at the meeting if the meeting were held on the date of the notice.

F5152

Notice of the meeting shall, subject to those provisions, be given also to every person—

a

who becomes a shareholding or borrowing member of the society after the date of the notice under sub-paragraph (1) above and before the specified date; or

b

who, being such a member at the date of that notice, attains the age of 18 after that date and on or before the date of the meeting,

and who would (in either case) be eligible to vote at the meeting if he remained such a member until the date of the meeting.

2A

In sub-paragraph (2) above “the specified date” means the date specified by the society as the final date for the receipt of instruments appointing proxies to vote at the meeting.

3

Accidental omission to give notice of a meeting to, or non-receipt of notice of a meeting by, any person entitled to receive notice of the meeting does not invalidate the proceedings at that meeting.

Members’ entitlement to vote on resolutions

23 F5161

A member of a building society is entitled to vote—

a

on an ordinary resolution or a special resolution if he was, at the end of the last financial year before the voting date, and is, on that date, a shareholding or borrowing member of the society;

b

on a shareholding members’ resolution, if he was, at the end of that year, and is, on that date, a shareholding member of the society; and

c

on a borrowing members’ resolution if he was, at the end of that year, and is, on that date, a borrowing member of the society,

The instrument appointing a proxy to vote at a meeting of a building society shall be taken also to confer authority to demand or join in demanding a poll; and for the purposes of sub-paragraph (1) above a demand by a person as proxy of a member shall be the same as the demand by the member.

Special resolutions

26

No resolution of a building society shall be passed as a special resolution F520, or as a shareholding members’ resolution,unless it is required to be so passed by or under any provision of this Act or by the rules of the society.

27

1

A resolution of a building society shall be a special resolution when it has been passed by not less than three-quarters of the number of the members of the society qualified to vote on a special resolution and voting either—

a

in person or by proxy on a poll on the resolution at a meeting of the society of which notice specifying the intention to move the resolution as a special resolution has been duly given; or

b

in a postal ballot on the resolution of which notice specifying that the resolution will not be effective unless it is passed as a special resolution has been duly given.

2

In any rules made by a building society on or after 1st October 1960, whether before or after the commencement of this Act, “special resolution”, unless the context otherwise requires, means a special resolution as defined in this paragraph.

F52127A

A resolution of a building society shall be a shareholding members’ resolution when it has been passed by not less than three-quarters of the number of the shareholding members of the society—

a

qualified to vote on a shareholding members’ resolution; and

b

voting in person or by proxy on a poll on the resolution at a meeting of the society of which notice specifying the intention to move the resolution as a shareholding members’ resolution has been duly given.

Borrowing members’ resolutions

28

No resolution of a building society shall be passed as a borrowing members’ resolution unless it is required to be so passed by or under any provision of this Act or by the rules of the society.

29 F5221

A resolution of a building society shall be a borrowing members’ resolution when it has been passed by a majority of the borrowing members of the society voting in person or by proxy on a poll on the resolution at a meeting of the society of which notice specifying the intention to move the resolution as a borrowing members’ resolution has been duly given.

F5232

For the purposes of this Part of this Schedule, an individual who is indebted to a building society in respect of a loan fully secured on land is not a borrowing member of the society at any time if at that time the amount of his mortgage debt is less than the prescribed amount.

3

Where a borrowing member’s resolution approving a transfer of engagements by a building society is moved, only those borrowing members whose mortgages are to be transferred shall be entitled to vote on the resolution.

4

In any rules made by a building society after the commencement of this paragraph, “borrowing members’ resolution”, unless the context otherwise requires, means a borrowing members’ resolution as defined in this paragraph.

Transfer resolutions

30

1

The transfer resolutions required for the purposes of section 97 for the approval by members of a building society of a transfer of its business are two resolutions, of which—

a

one is passed as a borrowing members’ resolution, and

The Treasury F532. . . may by order amend sub-paragraph (2)(b), (3)(a) or (3)(b) above so as to substitute for the percentage for the time being specified in the subparagraph such other percentage as F533they think appropriate.

7

The power to make orders under sub-paragraph (6) above is exercisable by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament.

8

In this paragraph “voting date”, with reference to a requisite shareholders’ resolution, has the same meaning as in paragraph 23(6) above.

Members’ right to propose and circulate resolutions

31

1

If at least the requisite number of qualified members of a building society give notice to the society of their intention to have moved on their behalf a resolution, other than F534a shareholding members’ resolution ora borrowing members’ resolution, specified in the notice at an annual general meeting of the society, it shall be the duty of the society, subject to sub-paragraphs (4), (5) and (6) below—

a

to include in the notice of the annual general meeting a notice specifying the intention to have the resolution moved on their behalf at the meeting and, where applicable, the intention to move it as a special resolution;

b

at the request of the members intending to have the resolution moved on their behalf, to send to each member entitled to receive notice of the meeting a copy of any statement of not more than F535500 words with respect to the matter referred to in the resolution.

2

For the purposes of sub-paragraph (1) above—

a

“the requisite number”—

F536i

in the case of a society in relation to which the difference between the total assets of the society as shown in the accounts last prepared by it under section 72 immediately before the date on which the members gave notice to the society under sub-paragraph (1) above and the aggregate of—

aa

the liquid assets of the society as shown in those accounts in pursuance of regulations under section 73(7); and

bb

the fixed assets of the society as so shown,

exceeds £100 million, is F537five hundred or such lesser number as is specified for the purpose in the rules of the society, and

ii

in the case of any other society is F538one hundred or such lesser number as is specified for the purpose in the rules of the society;

b

every member of a building society is a “qualified member” unless the rules make other provision for the purpose which is not rendered void under sub-paragraph (3) below.

3

Any provision contained in the rules of a building society shall be void to the extent that it would have the effect of requiring a qualified member, for the purposes of sub-paragraph (1) above,—

F539a

to have been a member for more than two years ending with the qualifying date; or

b

if he claims eligibility as a shareholding member, to hold, or to have held at any time, shares in the society to a value greater than the prescribed amount in force on the qualifying date; or

c

if he claims eligibility as a borrowing member, to owe to the society, or to have owed to the society at any time, a mortgage debt of an amount greater than the prescribed amount in force on the qualifying date;

and for the purposes of this sub-paragraph the qualifying date is the date on which the notice is given to the society under sub-paragraph (1) above.

4

Sub-paragraph (1) above does not require a building society to send notices of a resolution or copies of a statement to members of the society in any case where—

a

publicity for the resolution or, as the case may be, the statement would be likely to diminish substantially the confidence in the society of investing members of the public; or

b

the rights conferred by sub-paragraph (1) are being abused to seek needless publicity for defamatory matter or for frivolous or vexatious purposes;

and that sub-paragraph shall not be taken to confer any rights on members, or to impose any duties on a building society, in respect of a resolution or statement which does not relate directly to the affairs of the society.

5

If the rules of a building society so provide, sub-paragraph (1) above does not require notice of a resolution to be given to members of the society if the resolution is in substantially the same terms as any resolution which has been defeated at a meeting or on a postal ballot during the period beginning with the third annual general meeting before the date on which notice of the resolution is given to the society.

6

No copies of a statement with respect to a resolution shall be sent to members of a building society if, on any of the grounds in sub-paragraph (4) or (5) above, the society does not give the notice of the resolution to them required by sub-paragraph (1)(a) above.

7

The F540Authority shall hear and determine any dispute arising under sub-paragraph (4)(a) above, whether on the application of the building society or of any other person who claims to be aggrieved.

8

If a building society fails to comply with the requirements of sub-paragraph (1) above where notice is duly given under that sub-paragraph, the society shall be liable on summary conviction to a fine not exceeding level 4 on the standard scale and so shall any officer who is also guilty of the offence.

Members’ resolutions: supplementary provisions

32

1

Notice of a resolution given under paragraph 31(1) above must be given to the building society not later than the last day of the financial year preceding the financial year in which is held the annual general meeting at which it is intended to move the resolution; and any statement to be sent to members under paragraph 31 (1)(b) above must also be notified to the society not later than that day.

2

The notices of a resolution and the copies of a statement required to be sent to members by paragraph 31(1)(a) or (b) above shall be sent to them in the same manner and (so far as practicable) at the same time as the notice of the annual general meeting at which the resolution is intended to be moved; and, where it is not practicable for them to be sent at the same time as the notice, they shall be sent as soon as practicable thereafter.

3

Where notices of a resolution, or copies of a statement in respect of a resolution, intended to be moved at a meeting of a building society are required to be sent to any persons, the proceedings at the meeting are not invalidated by—

a

the accidental omission to send a notice or copy to a person entitled to receive one, or

b

the non-receipt of a notice or copy by such a person.

C1114

The F541Treasury may by order vary—

a

the definition of “requisite number” or “qualified member” in sub-paragraph (2) of paragraph 31 above, or

b

the descriptions of provisions which are rendered void by sub-paragraph (3) of that paragraph.

whether by the addition of any description or other provision or by the substitution or deletion of any definition, description or other provision for the time being specified or contained in that paragraph.

5

An order under sub-paragraph (4) above shall be made by statutory instrument subject to annulment in pursu" ance of a resolution of either House of Parliament.

C1116

An order under sub-paragraph (4) above may contain transitional, consequential or supplementary provision.

Postal ballots

33

1

The rules of a building society may provide for the voting in an election of directors or on any resolution of the society F542(other than a shareholding members’ resolution or a borrowing members’ resolution)to be conducted in all, or in any particular, circumstances by postal ballot; and in this Act “ballot” or “postal ballot”, in relation to an election or a resolution of the society, means the postal ballot, if any, taking place by virtue of those rules in the case of the election or the resolution in question.

2

Where, under the rules of a society, a postal ballot is to take place, the following provisions of this paragraph have effect.

3

Notice of a postal ballot shall be given not less than 21 nor more than 56 days before the date which the society specifies as the final date for the receipt of completed ballot papers (referred to in this paragraph as “the voting day”).

to send any document required by sub-paragraph (6) above to accompany such a notice,

to any person entitled to receive it, or non-receipt of such a notice or document by such a person, does not invalidate the postal ballot.

Declarations to be made in proxy and ballot forms

C11234

1

If a member of a building society who purports to exercise his right—

a

to appoint a proxy to vote instead of him at a meeting of the society, or

b

to vote in a postal ballot, or

c

to vote on a poll at a meeting of the society,

fails to make a declaration in accordance with sub-paragraph (2) below in the instrument of appointment or, as the case may be, on the voting paper, the appointment made or, as the case may be, the vote cast by him is invalid.

F5442

A person making a declaration in pursuance of sub-paragraph (1) above shall—

a

declare that he has attained the age of 18 years or will have attained that age on or before the voting date or, where he is voting by proxy, on or before the date of the meeting;

b

where the vote is to be cast on a shareholding members’ resolution, declare—

i

that on the voting date he is or, so far as he can reasonably foresee, will be a shareholder of the society; and

ii

where the person is not entitled to vote unless he had a qualifying shareholding on the qualifying shareholding date, that he had or, so far as he can reasonably foresee, will have such a shareholding on that date;

c

where the vote is to be cast on a borrowing members’ resolution, declare that on the voting date he is or, so far as he can reasonably foresee, will be a borrowing member of the society; and

d

where the vote is to be cast on an ordinary or special resolution, declare either as mentioned in paragraph (b) above, or as mentioned in paragraph (c) above, or both.

3

A building society shall secure that every document issued by it for use as a voting paper or as an instrument for the appointment of a proxy incorporates a form of declaration under this paragraph for completion by the member using it.

4

If a building society fails to comply with the requirements of sub-paragraph (3) above, the society shall be liable on summary conviction to a fine not exceeding level 4 on the standard scale and so shall any officer who is also guilty of the offence.

5

In this paragraph—

“qualifying shareholding” shall be construed in accordance with paragraph 23(5) above;
“qualifying shareholding date” has the same meaning as it has for the purposes of paragraph 23 above; and
“voting date” has the meaning given by paragraph 23(6) above.

Advertising requirements in lieu of notice of meetings, etc.

35

1

The advertising requirements referred to in paragraph 14 above, in relation to notices of meetings or postal ballots of building societies, are as follows.

2

Notice of the holding of the meeting or of the postal ballot must be given either—

a

by displaying a notice in a prominent position in every branch office, or

b

by advertisement in one or more newspapers circulating in the areas in which the members of the society reside,

according as the rules of the society provide.

3

The notice must be given not later than 21 days before the date of the proposed meeting or, as the case may be, the final date for the receipt of completed ballot papers.

4

The notice shall state where members may obtain copies of the resolutions and any statements with respect to the matter referred to in a resolution, forms relating to voting by proxy and, in the case of a postal ballot, the ballot papers.

The prescribed amount

36 C1131

For the purposes of this Part of this Schedule, the “prescribed amount” is £100 or such other amount as the F545Treasury by order specify for the time being.

2

The power to make an order under sub-paragraph (1) above shall be exercisable by statutory instrument subject to annulment in pursuance of a resolution of either House of Parliament.

C1133

An order under sub-paragraph (1) above may contain transitional, consequential or supplementary provision.

F547SCHEDULE 2A Discharge of mortgages: supplementary provisions

Annotations:

Amendments (Textual)

F547

Sch. 2A inserted (1.12.1997) by 1997 c. 32, s. 7(2), Sch. 2; S.I. 1997/2668, art. 2, Sch. Pt. I(a)

Main provisions

1

When all money intended to be secured by a mortgage given to a building society has been fully paid or discharged, the society may endorse on or annex to the mortgage one or other of the following—

a

a receipt in the prescribed form signed by any person acting under the authority of the board of directors;

b

a reconveyance of the mortgaged property to the mortgagor;

c

a reconveyance of the mortgaged property to such person of full age, and on such trusts (if any), as the mortgagor may direct.

2

Where in pursuance of sub-paragraph (1) above a receipt is endorsed on or annexed to a mortgage, not being a charge or incumbrance registered under the M58Land Registration Act 1925, the receipt shall operate in accordance with section 115(1), (3), (6) and (8) of the M59Law of Property Act 1925 (discharge of mortgages by receipt) in the like manner as a receipt which fulfils all the requirements of subsection (1) of that section.

3

Section 115(9) of the Law of Property Act 1925 shall not apply to a receipt in the prescribed form endorsed or annexed by a building society in pursuance of sub-paragraph (1) above; and in the application of that subsection to a receipt so endorsed or annexed which is not in that form, the receipt shall be taken to be executed in the manner required by the statute relating to the society if it is signed as mentioned in sub-paragraph (1)(a) above.

4

The foregoing sub-paragraphs shall, in the case of a mortgage of registered land, have effect without prejudice to the operation of the Land Registration Act 1925 or any rules in force under it.

5

In this paragraph—

“mortgage” includes a further charge;
“the mortgagor”, in relation to a mortgage, means the person for the time being entitled to the equity of redemption; and
“registered land” has the same meaning as in the Land Registration Act 1925.

6

This paragraph does not extend to Scotland.

Application of paragraph 1 to Northern Ireland

2

1

In its application to Northern Ireland, paragraph 1 above shall have effect with the following modifications.

2

In sub-paragraph (1) after the words “on such trusts” there shall be inserted the words “ or uses ”.

3

In sub-paragraph (2)—

a

for the words from “charge” to “Property Act 1925” there shall be substituted the words “ charge on registered land, the receipt shall operate in accordance with Article 3(1), (7) and (9) of the M60Property (Discharge of Mortgage by Receipt) (Northern Ireland) Order 1983 ”; and

b

for the words “subsection (1) of that section” there shall be substituted the words “ paragraph (1) of that Article ”.

4

For sub-paragraphs (3) and (4) there shall be substituted the following sub-paragraphs—

3
If the mortgage is registered in accordance with the M61Registration of Deeds Act (Northern Ireland) 1970, the registrar under that Act shall—
a
on production of the receipt mentioned in sub-paragraph (1) above make a note in the Abstract Book against the entry relating to the mortgage that the mortgage is satisfied; and
b
grant a certificate, either on the mortgage or separately, that the mortgage is satisfied.
4
The certificate granted under sub-paragraph (3)(b) above shall—
a
be received in all courts and proceedings without further proof; and
b
have the effect of clearing the register of the mortgage.

5

In sub-paragraph (5) for the definition of “registered land” there shall be substituted the following definition—

“registered land” means land the title to which is registered under Part III of the M62Land Registration Act (Northern Ireland) 1970.

Power to prescribe form of documents

3 C1171

The F546Treasury may make rules for prescribing anything authorised or required by paragraph 1 above to be prescribed; and in this Schedule “prescribed” means prescribed by rules made under this paragraph.

2

The power to make rules under this paragraph shall be exercisable by statutory instrument.

F548SCHEDULE 3

Annotations:

Amendments (Textual)

F548

Sch. 3 repealed (1.12.2001) by 2000 c. 8, ss. 334, 336, 338, 432(3), Sch. 18 Pt. III para. 18, Sch. 22; S.I. 2001/3538, art. 2(1)

Part I Preliminary

1

In this Schedule—

“authorisation” means authorisation under section 9 or on renewal under section 41 or reauthorisation under section 44;
“conditions” means conditions to be complied with by a building society and imposed on the grant of authorisation under section 9, on the renewal of authorisation under section 41, on reauthorisation under section 44 or under section 42;
“revocation", with reference to authorisation, means revocation under section 43.

Part II Authorisation

Procedure for authorisation

2

5

1

This paragraph applies where the Commission has decided to impose conditions but proposes to impose conditions different from and more onerous than those stated in the notice served by the Commission under paragraph 4(1) above.

2

The Commission shall serve on the society and, subject to paragraph 10 below, on every director of the society and its chief executive, a notice stating—

a

what conditions the Commission proposes to impose;

b

the grounds for the imposition of those conditions instead of the conditions stated in the notice under paragraph 4(1) above; and

c

that the society may make representations with respect to the conditions the Commission proposes to impose within such period of not less than seven days as may be specified in the notice and that, if the society so requests, the Commission will afford to it an opportunity of being heard by the Commission within that period.

3

If any condition proposed to be imposed on the society includes a requirement for the removal from office of any officer of the society the Commission shall also serve the notice specified in sub-paragraph (2) above on the officer whose removal is proposed giving him the like right to make representations and to be heard with respect to his proposed removal from office.

4

The Commission shall, before reaching a decision on whether to impose conditions different from those stated in the notice served under paragraph 4(1) above and, if so, what conditions, consider any representations made in accordance with sub-paragraph (2) or (3) above and shall serve on the society and subject to paragraph 10 below, on every director of and the chief executive of the society and every other person on whom a notice was served under sub-paragraph (3) above, a notice stating its decision.

5

If the Commission decides to impose conditions the notice under sub-paragraph (4) above shall—

a

specify the conditions, and

b

state the grounds for their imposition.

6

The Commission may not impose conditions on grounds other than those stated, or grounds included in those stated, in the notice served by it under sub-paragraph (2) above.

Part IV Revocation of Authorisation

Procedure for revocation

6

1

If the Commission proposes to revoke a society’s authorisation it shall serve on the society and, subject to paragraph 10 below, on every director and its chief executive a notice stating—

a

that the Commission proposes to revoke the authorisation

b

the grounds for the proposed revocation; and

c

that the society may make representations with respect to the proposed revocation within such period of not less than 14 days as may be specified in the notice and that, if the society so requests, it will be afforded an opportunity of being heard by the Commission within that period.

2

If the grounds for the proposed revocation include the ground that any officer of the society is not a fit and proper person to hold office in the society the Commission shall also serve the notice specified in sub-paragraph (1) above on the officer concerned giving him the like right to make representations and to be heard with respect to his fitness and propriety for office.

3

The Commission shall, before reaching a decision on whether to revoke the authorisation, consider any representations made to it in accordance with sub-paragraph (1) or (2) above and, except where paragraph 7 below applies the Commission shall serve on the society and, subject to paragraph 10 below, on every director of and the chief executive of the society and every other person on whom a notice was served under sub-paragraph (2) above, a notice stating its decision.

4

If the Commission decides to revoke a society’s authorisation, the notice under sub-paragraph (3) above shall state the grounds for the decision.

5

The Commission may not revoke a society’s authorisation on grounds other than those stated, or grounds included in those stated, in the notice served under sub-paragraph (1) above.

7

1

This paragraph applies where the Commission proposes, instead of revoking a society’s authorisation, to impose conditions.

2

The Commission shall serve on the society and, subject to paragraph 10 below, on every director of the society and its chief executive a notice stating—

a

that it proposes to impose conditions instead of revoking the society’s authorisation;

b

what conditions it proposes to impose;

c

the grounds for the imposition of conditions instead of revoking the society’s authorisation; and

d

that the society may make representations with respect to the conditions the Commission proposes to impose within such period of not less than seven days as may be specified in the notice and that, if the society so requests, it will be afforded an opportunity of being heard by the Commission within that period.

3

If any condition proposed to be imposed on the society includes a requirement for the removal from office of any officer of the society, the Commission shall also serve the notice specified in sub-paragraph (2) above on the officer whose removal is proposed giving him a like right to make representations and to be heard with respect to his proposed removal from office.

4

b

state the grounds for their imposition.

6

The Commission may not impose conditions on grounds other than those stated, or grounds included in those stated, in the notice served by it under sub-paragraph (2) above.

Part V Supplementary

Imposition of conditions on appeal

9

1

The modifications of the provisions of Part III of this Schedule in their application to the imposition of conditions by the Commission in pursuance of a direction of an appeal tribunal under section 47(6) or (7) are as follows.

2

The notice under paragraph 4(1) shall be served on the society and the other persons there specified within the period of 14 days beginning with the date on which the Commission received notice of the tribunal’s decision under subsection (10) of that section; and a copy shall also be sent within that period to the tribunal.

3

The notice under paragraph 4(1) may specify, as the period within which representations may be made, a period of not less than 7 days.

4

If the Commission serves a notice under paragraph 5(2) on the society and the other persons there specified it shall send a copy of the notice to the tribunal.

Notice to directors and chief executives

10

Where any provision of this Schedule requires notice of any matter to be served on every director of a building society that requirement is satisfied by serving notice on each director whose appointment has been officially notified and the non-receipt of a notice of a matter by a director or the chief executive does not affect the validity of any action on the part of the Commission.

F549SCHEDULE 4

Annotations:

Amendments (Textual)

F549

Sch. 4 repealed (1.12.1997) by 1997 c. 32, s. 12(1)(a); S.I. 1997/2668, art. 2, Sch. Pt. I(b)(o)(i)

Provisions as to sale of mortgaged property

1

Where any land has been mortgaged to a building society as security for an advance and a person sells the land in the exercise of a power (whether statutory or express) exercisable by virtue of the mortgage, it shall be his duty—

a

in exercising that power, to take reasonable care to ensure that the price at which the land is sold is the best price that can reasonably be obtained, and

b

within 28 days from the completion of the sale, to send to the mortgagor at his last-known address by the recorded delivery service a notice containing the prescribed particulars of the sale.

F7561A

Sub-paragraph (1)(b) above shall not apply where the person selling the land has reasonable cause to believe that communications sent to the mortgagor at his last-known address are unlikely to be received by him.

2

In so far as any agreement relieves, or may have the effect of relieving, a building society or any other person from the obligation imposed by sub-paragraph (1)(a) above, the agreement shall be void.

3

Breach by a building society or any other person of the duty imposed by sub-paragraph (1)(b) above, if without reasonable excuse, shall be an offence.

4

Any person guilty of an offence under sub-paragraph (3) above shall be liable on summary conviction—

a

to a fine not exceeding level 2 on the standard scale and

b

to an additional fine for each week during which the offence continues not exceeding £10,

and, in relation to such an offence on the part of a building society, so shall any officer who is also guilty of the offence.

5

Nothing in this section shall affect the operation of any rule of law relating to the duty of a mortgagee to account to his mortgagor.

6

In sub-paragraph (1) above “mortgagor”, in relation to a mortgage in favour of a building society, includes any person to whom, to the knowledge of the person selling the land, any of the rights or liabilities of the mortgagor under the mortgage have passed, whether by operation of law or otherwise.

Discharge of mortgages

2

1

When all money intended to be secured by a mortgage given to a building society has been fully paid or discharged, the society may endorse on or annex to the mortgage one or other of the following—

a

a receipt in the prescribed form under the society’s seal, countersigned by any person acting under the authority of the board of directors;

b

a reconveyance of the mortgaged property to the mortgagor;

c

a reconveyance of the mortgaged property to such person of full age, and on such trusts (if any), as the mortgagor may direct.

2

Where in pursuance of sub-paragraph (1) above a receipt is endorsed on or annexed to a mortgage, not being a charge or incumberance registered under the M112Land Registration Act 1925, the receipt shall operate in accordance with section 115(1), (3), (6) and (8) of the M113Law of Property Act 1925 (discharge of mortgages by receipt) in the like manner as a receipt which fulfills all the requirements of subsection (1) of that section.

3

4

The foregoing sub-paragraphs shall, in the case of a mortgage of registered land, have effect without prejudice to the operation of the M114Land Registration Act 1925 or any rules in force under it.

(5) In this paragraph—

“mortgage” includes a further charge;
“the mortgagor”, in relation to a mortgage, means the person for the time being entitled to the equity of redemption; and
“registered land” has the same meaning as in the Land Registration Act 1925.

6

This paragraph does not apply to Scotland.

7

In the application of this paragraph to Northern Ireland—

a

in sub-paragraph (1) for the words “on such trusts" there shall be subsituted the words “on such uses";

b

in sub-paragraph (2)—

i

for the words from “charge" to “Property Act 1925" there shall be substituted the words “on registered land, the receipt to operate (N.I.9). in accordance with Article 3(1), (7) and (9) of the M115Property (Discharge of Mortgage by Receipt) (Northern Ireland) Order 1983"; and

ii

for the words “subsection (1) of that section" there shall be subsituted the words “paragraph (1) of that Article";

c

for sub-paragraphs (3) and (4) there shall be substituted—

3
If the mortgage is registered in accordance with the Registration of Deeds Act (Northern Ireland) 1970, the registrar under that act shall—
a
on production of the receipt mentioned in sub-paragraph (1) above make a note in the Abstract Book against the entry relating to the mortgage that the mortgage is satisfied; and
b
grant a certificate, either on the mortgage or separately, that the mortgage is satisfied.
4
The certificate granted under sub-paragraph (3)(b) above shall—
a
be received in all courts and proceedings without
further proof; and
b
have the effect of clearing the register of the mortgage.

d

in sub-paragraph (5) for the definition of “registered land" there shall be substituted the following definition—

“registered land” means land the title to which is registered under Part III of the Land Registration Act (Northern Ireland) 1970;

Power to prescribe form of documents

3

1

The Chief Registrar may make rules for prescribing anything authorised or required by any provision of this Schedule to be prescribed; and in this Schedule “prescribed” means prescribed by rules made under this paragraph.

2

The power to make rules under this paragraph shall be exercisable by statutory instrument.

F550SCHEDULE 5

Annotations:

Amendments (Textual)

F550

Sch. 5 repealed (1.12.2001) by S.I. 2001/2617 arts. 2(b), 13(2), Sch. 4 (with art. 13(3) Sch. 5); S.I. 2001/3538, art. 2

Constitution

1

The Board shall consist of seven members as follows, namely—

a

the First Commissioner for the time being, who shall be the chairman of the Board,

b

two members appointed by the First Commissioner from among the other members of the Commission, and

c

four other members appointed under sub-paragraph (2) below;

3

The Board shall pay to each member such allowances in respect of expenses as the Board may, with the consent of the Treasury, determine.

Proceedings

4

1

The Board shall determine its own procedure, including the quorum necessary for its meetings.

2

The validity of any proceedings of the Board shall not be affected by any vacancy among the members or by any defect in the appointment of any member.

5

1

The fixing of the common seal of the Board shall be authenticated by the signature of the chairman of the Board or some other person authorised by the Board to act for that purpose.

2

A document purporting to be duly executed under the seal of the Board shall be received in evidence and deemed to be so executed, unless the contrary is proved.

F758Performance of functions

Annotations:

Amendments (Textual)

F758

Sch. 5 para. 5A and cross-heading preceding it inserted (9.6.1997) by 1997 c. 32, s. 43, Sch. 7 para. 58; S.I. 1997/1427, art. 2(k)(n)(xvi)

F7595A

The Board may authorise—

a

any member or members of the Board,

b

any committee or sub-committee of the Board, or

c

any officer, servant or agent of the Board,

to perform on behalf of the Board such of the Board’s functions (including the power conferred by this paragraph) as are specified in the authorisation.

Accounts, audit and annual report

6

1

The Board may determine its own financial year.

2

It shall be the duty of the Board—

a

to keep proper accounts and proper records in relation to the accounts; and

b

to prepare in respect of any period (referred to in this paragraph as “the initial period”) beginning with the commencement date for section 24 and ending with the beginning of the Board’s first financial year and in respect of each of its financial years a statement of accounts showing the state of affairs and income and expenditure of the Board.

3

A statement of accounts prepared in accordance with sub-paragraph (2)(b) above shall be audited by auditors appointed by the Board and the auditors shall report to the Board stating whether in their opinion the provisions of sub-paragraph (2) above have been complied with.

F7574

A person shall not be appointed as auditor by the Board unless he is eligible for appointment as a company auditor under section 25 of the Companies Act 1989.

5

It shall be the duty of the Board, as soon as possible after the end of the initial period and of each of its financial years, to prepare a report on the discharge of its functions during that period or, as the case may be, during that financial year.

6

It shall be the duty of the Board to publish, in such manner as it thinks appropriate, every statement of account prepared in accordance with sub-paragraph (2)(b) above and every report prepared in accordance with sub-paragraph (5) above.

F551SCHEDULE 6

Annotations:

Amendments (Textual)

F551

Where an investment is made by a person whose business is the provision of professional services or the carrying on of investment business (within the meaning of the Financial Services Act 1986) with money held to the account of clients of his, each of them shall be treated as having a separate investment of an amount equal to so much of the amount of the investment as represents money held to his account as a client.

6

The Board may decline to make any payment under section 27 in respect of an investment until the person claiming to be entitled to it informs the Board of the capacity in which he is entitled to the investment; and if it appears to the Board—

a

that the persons entitled to an investment are so entitled as trustees, or

b

that paragraph 3 above applies to an investment, or

c

that two or more persons are jointly entitled to an investment other than as trustees, or

d

that paragraph 5 above applies to an investment,

the Board may decline to make any payment in respect of the investment until sufficient information has been disclosed to it to enable it to determine what payment (if any) should be made under that section and to whom.

7

In this Schedule “jointly entitled” means—

a

in England and Wales and Northern Ireland, beneficially entitled as joint tenants, tenants in common or as coparceners, and

b

in Scotland, beneficially entitled as joint owners or owners in common.

F7608

In the application of this Schedule in relation to investments in an office of a building society in another EEA State, references to persons entitled in any of the following capacities, namely—

a

as trustees;

b

as partners; or

c

as persons jointly entitled other than as trustees,

shall be construed as references to persons entitled under the law of that State in a capacity appearing to the Board to correspond as nearly as may be to that capacity.

SCHEDULE 7 Investors: Special Provisions

Section 32.

Members or depositors dying

1

The provisions of this paragraph have effect where a member of, or depositor with, a building society dies, testate or intestate, domiciled in any part of the United Kingdom leaving a sum of money in the funds of the society not exceeding £5000.

2

If a person claiming to be beneficially entitled to the sum of money under the will or the applicable law of intestacy furnishes to the society—

a

satisfactory evidence of the death, and

b

a statutory declaration that the member or depositor has died and that the person claiming the amount is beneficially entitled under the will or the applicable law of intestacy to receive it,

the society may, without probate of the will or the grant of letters of administration or confirmation, as the case may be, pay the sum of money to that person.

3

Where a building society has paid a sum of money to any person in reliance on evidence of death and a statutory declaration furnished as mentioned in sub-paragraph (2) above, the payment shall be valid and effectual with respect to any demand against the funds of the society from any other person claiming to be entitled to it but without prejudice to that other person’s pursuing his remedy for the amount against the person who received it.

4

The Treasury may from time to time by order direct that this paragraph shall have effect as if for the reference in sub-paragraph (1) above to £5,000 there were substituted a reference to such higher amount as may be specified in the order.

5

An order under sub-paragraph (4) above shall apply in relation to deaths occurring after the expiration of a period of one month beginning with the date on which the order comes into force.

6

The power to make an order under sub-paragraph (4) above is exercisable by statutory instrument but no such order shall be made unless a draft of it has been laid before and approved by a resolution of each House of Parliament.

Receipts by depositors under age

2

Any receipt or acknowledgment given to a building society by a person who is a minor in respect of the payment to him of any sum due in respect of a deposit made by him with the society, shall not be invalid on the ground of his minority.

F552SCHEDULE 7A

Annotations:

Amendments (Textual)

F552

Sch. 7A repealed (1.12.2001) by S.I. 2001/2617 arts. 2(b), 13(2), Sch. 4 (with art. 13(3), Sch. 5); S.I. 2001/3538 art. 2

Preliminary

Where any provision of this Schedule requires notice of any matter to be served on every director of a building society, that requirement is satisfied by serving notice on each director whose appointment has been officially notified and the non-receipt of a notice of a matter by a director or the chief executive does not affect the validity of any action on the part of the Commission.

SCHEDULE 8 Powers to Provide Services

Section 34.

F553Part I The Services

Annotations:

Amendments (Textual)

F553

Parts of Sch. 8 varied by S.I. 1988/1141, arts. 5, 6, Sch. 5 so as to have effect as set out in that Sch. 5

1

Banking services.

2

Investment services.

3

Insurance services.

4

Trusteeship.

5

Executorship.

6

Land services.

Part II General Restrictions On Services

1

Subject to paragraphs 2, 3, 4 and 5 below, no power conferred on a building society to provide a service of a description specified in Part I of this Schedule of itself confers power—

a

to perform the activities of—

i

taking deposits in circumstances which require authorisation under the Banking Act 1987 (or would require authorisation were the taker not a building society),

ii

making advances or loans of any description,

iii

acquiring the right to be paid any sum owing to another person arising out of any arrangement under which money is borrowed or goods or services are provided on credit,

iv

acquiring land,

v

acquiring or holding any asset the power to acquire or hold which is derived from section 19 of this Act by virtue of an order made under, or partly under, that section,

vi

acquiring or holding relevant investments, or

vii

underwriting risks of any description, or

F554b

i

to maintain a place of business in any country or territory for the purpose of providing that service unless the society also conducts the principal busi ness of a building society in that country or territory, save where that service is provided in any of the countries listed in paragraph (ii) below;

ii

Part III Restrictions In Relation To Certain Services

Banking services

1

In relation to the power to provide banking services—

F557a

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F558b

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F558c

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F557d

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F557e

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

f

provision of foreign exchange services, except where it arises for the purpose of or in the course of the provision of money transmission services, is restricted, save in excepted transactions, to their provision to individuals,

g

arranging the provision of foreign exchange services is, subject to the exception in subparagraph (f) above, restricted, save in excepted transactions, to their provision to individuals, and

h

administration of the issue of shares or corresponding membership rights by bodies corporate or of transferable instruments and registration of the transfer or cancellation of such shares, rights or instruments is restricted to administration and registration by a building society which has a qualifying asset holding.

Investment services

2

In relation to the power to provide investment services—

a

managing investments (except in relation to management of pension schemes) is restricted to managing by a building society which has a qualifying asset holding,

b

acquiring and holding relevant investments as a nominee is restricted to acquisition and holding by a building society which has a qualifying asset holding,

c

establishment and management of pension schemes is restricted to schemes which do not include provisions requiring the investment of any of the funds within the scheme in shares in or deposits with a building society of which the trustee or manager of the scheme is a subsidiary,

d

establishment of personal equity plans is restricted to establishment by a building society which has a qualifying asset holding, and

e

establishment of collective investment schemes is restricted to establishment by a building society which has a qualifying asset holding.

Trusteeship

F5593

In relation to the power to provide the service of trusteeship—

a

a building society may not accept trusteeship of a prohibited trust, and

b

a building society which becomes aware that a trust of which it is trustee has become a prohibited trust shall retire as trustee of that trust as soon as it is practicable to do so.

Land services

4

In relation to the power to provide land services—

a

the carrying on of estate agency work is restricted to carrying on by a subsidiary or other associated body of a building society,

b

removal and storage of furniture is restricted to removal and storage by a subsidiary or other associated body of a building society which society has a qualifying asset holding,

c

management of land is restricted to management by a building society which has a qualifying asset holding,

d

management of land is restricted to land which is or is to be used primarily for residential purposes or for purposes incidental to the use of adjoining land under the same management which is or is to be used primarily for residential purposes,

e

arranging the management of land is restricted to land which is or is to be used primarily for residential purposes or for purposes incidental to the use of adjoining land under the same management which is or is to be used primarily for residential purposes,

f

development of land is restricted to development by a building society which has a qualifying asset holding,

g

development of land is restricted to land which is to be used primarily for residential purposes or for purposes incidental to the use of adjoining land developed by the developer which is or is to be used primarily for residential purposes,

h

development of land is restricted to land of a local authority in Great Britain or of a development corporation or land which is charged in favour of the developer of the land to secure repayment of the costs of development, and

i

arranging the development of land is restricted to land which is to be used primarily for residential purposes or for purposes incidental to the use of adjoining land developed by the developer which is or is to be used primarily for residential purposes.

5

No employee of a building society, a subsidiary or other associated body of which carries on estate agency work, whose duties include—

a

making a report on the value of land which is to secure an advance,

b

making an assessment of the adequacy of the security of an advance to be secured on land, or

c

authorising the making of an advance to be secured on land,

shall perform any service on behalf of that subsidiary or other associated body.

Part IV Supplementary

Powers—general

1

Any power derived from this Schedule to perform any activity includes the power to arrange its performance but a restriction in Part III of this Schedule on the power to perform any activity does not imply an equivalent restriction on the power to arrange its performance.

Powers—specific services

2

Without prejudice to the general scope of any service specified in Part I of this Schedule—

a

the power to provide banking services includes power,

i

to administer the issue of, and payments in respect of, shares or corresponding membership rights in bodies corporate or transferable instruments and to register the transfer or cancellation of such shares, rights or instruments, and

ii

to provide advice on taxation and financial planning,

b

the power to provide investment services includes power to provide advice on taxation and financial planning,

c

the power to provide the service of executorship includes power—

i

to act as administrator of the estates of deceased persons, and

ii

to assist in the making of wills, and

d

the power to provide land services includes power to carry out the removal and storage of furniture.

Banking—particular provisions

3

1

A building society shall, so far as regards the carrying on of an activity which comprises provision of a banking service for the purposes of this Schedule, be treated for all purposes as a bank and a banker and as carrying on the business of banking or a banking undertaking whether or not it would be so treated apart from this paragraph.

2

This paragraph does not affect the determination of any question as to the status of a building society as a bank or banker for other purposes.

4

Where an account of a person with a building society has, by virtue of the provision of banking services under this Schedule, become overdrawn, it shall be the duty of the building society to take all reasonable steps to recover as soon as practicable from that person the amount due to it on the overdrawn account.

5

1

For the purposes of paragraph 1(f) and (g) of Part III of this Schedule, a transaction consisting in the provision of foreign exchange services is an excepted transaction where the value of the transaction is less than £10,000.

2

For the purposes of subparagraph (1) above the value of a transaction consisting in the provision of foreign exchange services is, where the building society is selling foreign currency, the sum paid to it and, where the building society is purchasing foreign currency, the sum paid by it.

Land services—sanction

6

If a person performs any service in contravention of paragraph 5 of Part III of this Schedule he shall be liable on summary conviction to a fine not exceeding level 4 on the standard scale.

Interpretation

C1187

This Schedule is to be construed as relating only to the capacity of building societies to provide the services for the time being specified in it and not as making lawful any activity, whether of a building society or a subsidiary or other associated body of a building society, which would not be lawful apart from this Schedule.

8

In this Schedule—

“arranging”, in relation to the performance of any activity, includes—
1. a
  arranging its performance on behalf of the person in respect of whom the activity is performed as well as the person who performs the activity, and
2. b
  acting as agent on behalf of either such person;
F560“bailment”, in relation to Scotland, means “hire”;
“chattels” means—
1. i
  in relation to England and Wales and Northern Ireland, all personal chattels other than things in action and money, and
2. ii
  in relation to Scotland, all corporeal moveables except money;
“collective investment scheme” has the meaning which it bears in section 75 of the Financial Services Act 1986;
“corresponding membership right” has the meaning which it bears in section 18(17) of this Act;
“development corporation” means any of the following bodies:
1. a
  in England, a development corporation within the meaning of the New Towns Act 1981;
2. b
  in Wales, the Development Board for Rural Wales established by section 1 of the Development of Rural Wales Act 1976 and the Welsh Development Agency established by section 1 of the Welsh Development Agency Act 1975;
3. c
  in Scotland, a development corporation within the meaning of the New Towns (Scotland) Act 1968;
4. d
  in Northern Ireland, the Department of the Environment for Northern Ireland and the Northern Ireland Housing Executive referred to in article 3 of the Housing (Northern Ireland) Order 1981;
“estate agency work” has the same meaning as in the Estate Agents Act 1979;
“land services” means services relating to the acquisition, management, development or disposal of land;
F561“leasable chattels” means chattels which are, or are to be, subject to bailment to a person in return for periodical payments by that person under an agreement which may but need not contain provision (or be part of a series of agreements containing provision) for the property in those chattels to become vested in that person;
“local authority in Great Britain” means any of the following authorities:
1. a
  in England F562. . ., a county council, a district council, a London borough council, a parish F562. . . council, the Common Council of the City of London, and the Council of the Isles of Scilly;
2. aa
  F563in Wales, a county council, a county borough council and a community council;
3. b
  in Scotland, a local authority within the meaning of section 235 of the Local Government (Scotland) Act 1973;
“managing investments” means activity of the kind specified in paragraph 14 of Part II (activities constituting investment business) of Schedule 1 to the Financial Services Act 1986;
“pension scheme” means—
1. a
  a retirement benefits scheme within the meaning of, and which is approved or a candidate for approval by the Commissioners of Inland Revenue for the purposes of, Chapter I of Part XIV of the Income and Corporation Taxes Act 1988 (retirement benefit schemes), or
2. b
  a personal pension scheme within the meaning of, and which is approved or a candidate for approval by the Commissioners of Inland Revenue under, Chapter IV (personal pension schemes) of that Part of that Act,
and for the purposes of this definition a scheme is a candidate for approval for the purposes of the first or, as the case may be, under the second of those Chapters if it has been prepared with a view to being so approved and steps are being taken towards obtaining that approval;
“personal equity plan” means a plan for the purposes of section 333 (personal equity plans) of the Income and Corporation Taxes Act 1988;
“the principal business of a building society” means the business of raising funds (whether by the issue of shares or receiving deposits) for the purposes of the society or of making advances secured on land;
F564“prohibited trust” means a trust which is either—
1. a
  a trust under which the majority in number of the beneficiaries who are for the time being ascertained are non-charitable corporate bodies, or
2. b
  a trust of funds in a pension scheme which includes provisions requiring the investment of any of those funds in shares in or deposits with a building society of which the trustee is a subsidiary.
“relevant investment” means—
1. a
  any share or corresponding membership right in a body corporate, and
2. b
  any other asset, right or interest falling within any paragraph of Part I (investments) of Schedule 1 to the Financial Services Act 1986; and
“transferable instrument” means—
1. a
  where the issuer of the instrument is a building society, an instrument which is a transferable bearer instrument or a transferable non-bearer instrument for the purposes of section 7 of this Act, and
2. b
  in any other case, an instrument which would, were the issuer a building society, be such a transferable bearer instrument or transferable non-bearer instrument.

F574SCHEDULE 8A Transfer directions: modifications of Part X

Annotations:

Amendments (Textual)

F574

Sch. 8A inserted (9.6.1997) by 1997 c. 32, s. 17(2), Sch. 4; S.I. 1997/1427, art. 2(c)

Part I Directions under section 42B(3)

Preliminary

with or without other particulars regarding that transfer.

3

The statement shall be sent—

a

where the F566Authority has given the society a direction under section 42B(1)(a), within the period (not being less than 28 days) specified in F567a final notice given by the Authority under section 390 of the Financial Services and Markets Act 2000;

b

where the F566Authority has not given the society such a direction, within 14 days of the board of directors passing a resolution in pursuance of the direction.

4

No statement shall be sent unless its contents, so far as they concern the prescribed matters or any matter of which particulars are required to be given under sub-paragraph (2)(b) above, have been approved by the F566Authority.

5

A failure to comply with a requirement of this paragraph shall not invalidate the transfer of engagements; but, if the society fails without reasonable excuse to comply with such a requirement the society shall be liable on summary conviction to a fine not exceeding level 4 on the standard scale and so shall any officer who is also guilty of the offence.

Application for confirmation

4

No application for confirmation by the F568Authority of the transfer of engagements may be made under Part III of Schedule 16 until after the society has complied with the requirements of paragraph 3 above.

Grounds for not confirming transfer

5

Section 95 shall apply as if—

a

for paragraphs (a) and (b) of subsection (4) there were substituted the following paragraph—

a
the members or a proportion of them would be unreasonably prejudiced by the transfer;

b

in subsection (6), for the words “paragraphs (a), (b) and (c)” there were substituted the words “ paragraphs (a) and (c) ” and, in paragraph (a), the words “, including the calling of a further meeting,” were omitted.

Part II Directions under section 42B(4)

Preliminary

6

This Part of this Schedule applies where a direction is given under section 42B(4) (“the direction”).

Compensation for loss of office

7

1

The consent of the F569Authority shall be sufficient authority for the provision for any such compensation as is mentioned in section 99(2)(a).

2

A resolution of the board of directors passed in pursuance of the direction shall be sufficient authority for any such payments as are mentioned in section 99(2)(b).

Increased remuneration

8

If the F570Authority consents to the inclusion of any such provision as is mentioned in section 99A(1), it shall not be necessary for an ordinary resolution approving the provision to be put before a meeting of the society.

Statements to members

C1199

1

The following provisions of this paragraph shall apply in place of Part I of Schedule 17.

2

The society shall send to every member entitled to notice of a meeting of the society, a statement containing—

a

the particulars required, in relation to prescribed matters, by regulations under section 42B(8); and

b

particulars of any other matters required by the F571Authority in the case of the particular transfer of business,

with or without other particulars regarding that transfer.

3

The statement shall be sent—

a

where the F571Authority has given the society a direction under section 42B(1)(b), within the period (not being less than 28 days) specified in F572a final notice given by the Authority under section 390 of the Financial Services and Markets Act 2000;

b

where the F571Authority has not given the society such a direction, within 14 days of the board of directors passing a resolution in pursuance of the direction.

4

5

A failure to comply with a requirement of this paragraph shall not invalidate the transfer of business; but, if the society fails without reasonable excuse to comply with such a requirement the society shall be liable on summary conviction to a fine not exceeding level 4 on the standard scale and so shall any officer who is also guilty of the offence.

Application for confirmation

10

No application for confirmation by the F573Authority of the transfer of business may be made under Part II of Schedule 17 until after the society has complied with the requirements of paragraph 9 above.

Grounds for not confirming transfer

11

Section 98 shall apply as if—

a

for paragraphs (a) and (b) of subsection (3) there were substituted the following paragraph—

a
the members or a proportion of them would be unreasonably prejudiced by the transfer;

b

in subsection (5), for the words “paragraphs (a), (b), (c) and (d)” there were substituted the words “ paragraphs (a), (c) and (d) ”; and

c

in subsection (6), the words “the calling of a further meeting,” were omitted.

SCHEDULE 9 Directors: Requisite Particulars of Restricted Transactions

Section 68(4).

Preliminary

1

In this Schedule—

“the financial year” means the financial year to which the statement under section 68(3) relates;
“restricted transaction or arrangement” means any transaction or arrangement falling within section 65(1) particulars of which are required to be included in that statement;

the maximum amount for which the society may become liable; and

iii

any amount paid and any liability incurred by the society for the purposes of fulfilling the guarantee or security (including any loss incurred by reason of its enforcement).

SCHEDULE 10 Requisite Particulars of Income or Related Businesses

Section 69(7).

Part I Requisite Particulars Where no Adoption of Part II

Conveyancers

1

Where the business associate of the building society provides conveyancing services the requisite particulars of its business in any financial year are the following—

a

the number of cases in which it has provided conveyancing services in respect of F576a loan secured on land and the purchase of the land both to the society and to the borrower;

b

the number of cases in which it has provided the society (but not the borrower) with conveyancing services in respect of F576a loan secured on land;

c

the aggregate amount of the fees paid to it by the society or by or on behalf of the borrower for the provision of conveyancing services falling within sub-paragraphs (a) and (b) above;

d

the aggregate of the amounts paid to it by the society by way of commission for its having introduced investment business to the society;

e

the aggregate amount of any fees paid to it by the society in consideration of the provision of conveyancing services in respect of any land held by the society F577under section 6, 10, 17 or 19;

f

the aggregate amount of any fees paid to it by the society in consideration of the provision of F578administrative services to the society.

Valuers and surveyors

2

Where the business associate of the building society provides the services of surveying and valuing property the requisite particulars of its business in any financial year are the following—

a

the number of cases in which it has, in respect of any land which is to secure F579a loan, surveyed the land or provided a valuation of it on behalf of the society or the borrower or both;

b

the number of cases in which it has, on behalf of the society (but not the borrower), surveyed any land which is to secure F579a loan or provided the society with a valuation of it;

c

the aggregate amount of the fees paid to it by the society or by or on behalf of the borrower for the provision of the services falling within sub-paragraphs (a) and (b) above;

d

the aggregate of the amounts paid to it by the society by way of commission for its having introduced investment business to the society;

e

the aggregate amount of any fees paid to it by the society in consideration of the provision of surveying or valuing services in respect of any property held by the society F580under section 6, 10, 17 or 19;

f

the aggregate amount of any fees paid to it by the society in consideration of the provision of F581administrative services to the society.

Accountants

3

Where the business associate of the building society provides accountancy services the requisite particulars of its business in any financial year are the following—

a

the aggregate amount of the fees paid to it by the society for the provision of accountancy services; and

b

the aggregate amount of any fees paid to it by the society in consideration of the provision of F582administrative services to the society.

Insurance agents, etc.

4

Where the business associate of the building society arranges for the provision of relevant insurance the requisite particulars of its business in any financial year are the following—

a

the aggregate of the amounts paid to it by the society or by way of commission by insurers in respect of relevant insurance effected by the society or by borrowers in compliance with the terms on which F583loans secured on land are made by the society; and

b

the aggregate amount of any fees paid to it by the society in consideration of the provision of F584administrative services to the society.

Part II Requisite Particulars on Adoption of This Part

Conveyancers

5

Where the business associate of the building society provides conveyancing services the requisite particulars of its business in any financial year are the following—

a

the prescribed band within which falls the estimated number of cases in which it has provided conveyancing services in respect of F585a loan secured on land and the purchase of the land both to the society and to the borrower;

b

the prescribed band within which falls the estimated number of cases in which it has provided the society (but not the borrower) with conveyancing services in respect of F585a loan secured on land;

c

the prescribed band within which falls the estimated aggregate amount of the fees paid to it by the society or by or on behalf of the borrower for the provision of conveyancing services falling within sub-paragraphs (a) and (b) above;

d

the prescribed band within which falls the estimated aggregate of the amounts paid to it by the society by way of commission for its having introduced investment business to the society;

e

the prescribed band within which falls the estimated aggregate amount of any fees paid to it by the society in consideration of the provision of conveyancing services in respect of any land held by the society F586under section 6, 10, 17 or 19;

f

the prescribed band within which falls the estimated aggregate of any fees paid to it by the society in consideration of the provision of F587administrative services to the society.

Valuers and surveyors

6

Where the business associate of the building society provides the services of surveying and valuing property the requisite particulars of its business in any financial year are the following—

a

the prescribed band within which falls the estimated number of cases in which it has, in respect of any land which is to secure F588a loan, surveyed the land or provided a valuation of it on behalf of the society or the borrower or both;

b

the prescribed band within which falls the estimated number of cases in which it has, on behalf of the society (but not the borrower), surveyed any land which is to secure an advance or provided the society with a valuation of it;

c

the prescribed band within which falls the estimated aggregate amount of the fees paid to it by the society or by or on behalf of the borrower for the provision of the services falling within sub-paragraphs (a) and (b) above;

d

the prescribed band within which falls the estimated aggregate of the amounts paid to it by the society by way of commission for its having introduced investment business to the society;

e

the prescribed band within which falls the estimated aggregate of any fees paid to it by the society in consideration of the provision of surveying or valuing services in respect of any property held by the society F589under section 6, 10, 17 or 19;

f

the prescribed band within which falls the estimated aggregate amounts of any fees paid to it by the society in consideration of the provision of F590administrative services to the society.

Accountants

7

Where the business associate of the building society provides accountancy services the requisite particulars of its business in any financial year are the following—

a

the prescribed band within which falls the estimated aggregate amount of the fees paid to it by the society for the provision of accountancy services; and

b

the prescribed band within which falls the estimated aggregate amount of any fees paid to it by the society in consideration of the provision of F591administrative services to the society.

Insurance agents, etc.

8

Where the business associate of the building society arranges for the provision of relevant insurance the requisite particulars of its business in any financial year are the following—

a

the prescribed band within which falls the estimated aggregate of the amounts paid to it by the society or by way of commission by insurers in respect of relevant insurance effected by the society or by borrowers in compliance with the terms on which F592loans secured on land are made by the society; and

b

the prescribed band within which falls the estimated aggregate amount of any fees paid to it by the society in consideration of the provision of F593administrative services to the society.

Part III Supplementary

Power to prescribe bands for Part II particulars

9 C1201

The F594Treasury may by order prescribe, for the purposes of the provisions of Part II of this Schedule,—

a

series of numbers by reference to limits specified in the order, or

b

series of monetary amounts by reference to limits so specified;

and, in any provision of Part II, “prescribed band” means, in relation to cases, any series of numbers so prescribed for the purposes of that provision and, in relation to monetary amounts, any series of monetary amounts so prescribed for the purposes of that provision.

C1202

The power conferred by this paragraph includes power to prescribe different series of numbers or of monetary amounts for the purposes of different provisions.

3

The power to make an order under this paragraph is exercisable by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament.

Interpretation

10

1

In this Schedule—

“administrative services” means services falling within section 69(4);
“business associate” and “associated”, in relation to a building society, have the same meaning as in section 69;
“financial year” means a financial year of the society with which the business associate is associated;
“prescribed band” has the meaning given by paragraph 9(1) above; and
“relevant insurance” means insurance falling within section 69(3)(d).

2

In section 69, “the volume of the business”, in relation to any business constituted by the provision of any services referred to in any provision of Part I or Part II of this Schedule means—

a

in the case of a paragraph of Part I, the aggregate of all the fees and commissions which are the subject of the requisite particulars under that paragraph; and

b

in the case of a paragraph of Part II, the aggregate of the amounts which are specified in orders under paragraph 9 above as the upper limits of the prescribed bands within which fall the estimated aggregates of the fees or commissions or other amounts received which are the subject of the requisite particulars under the provisions of that paragraph

C122SCHEDULE 11 Auditors: Appointment, Tenure, Qualifications

Section 77.

Annotations:

Modifications etc. (not altering text)

C122

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

Appointment

1

The first auditors 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 and auditors so appointed shall hold office until the conclusion of that meeting.

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.

2

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 auditors are appointed or re-appointed, the F595Authority may appoint a person to fill the vacancy; and the society shall, within one week of the power of the F595Authority becoming exercisable, give it notice of that fact.

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.

4

1

A resolution at a general meeting of a building society—

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

b

the F596Authority,

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 F596Authority 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 F596Authority 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 F596Authority 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.

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 one tenth of the statutory maximum for every day during which the offence continues;

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

Qualification and disqualification of auditors

5

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

5

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.

9

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

F607SCHEDULE 12

Annotations:

Amendments (Textual)

F607

Sch. 12 repealed (1.12.2001) by S.I. 2001/2617, arts. 2(b), 13(2), Sch. 4 (with art. 13(3), Sch. 5); S.I. 2001/3538 art. 2

Part I Matters to be Provided for in Schemes

Annotations:

Amendments (Textual)

F761

Words in Sch. 12 Pt. I substituted (1.12.1997) by 1997 c. 32, s. 43, Sch. 7 para. 62(1); S.I. 1997/2668, art. 2, Sch. Pt. I(l)(xvi)

The matters for which provision is, subject to F761Part III of this Schedule, to be made are the following:

Administration

1

The establishment and functioning of an independent body (whether corporate or unincorporate) which is to administer the scheme.

2

The identity of the members.

3

The manner in which the expenses of the scheme are to be met by the members.

The adjudicator

4

The appointment of an independent adjudicator to conduct investigations under the scheme and his tenure of office and remuneration.

Scope of scheme

5

The matters action in relation to which is to be subject to investigation under the scheme and the grounds for making it subject to investigation.

Functions of adjudicator

6

The duty of the adjudicator to investigate, and make determinations on, actions duly referred for investigation.

7

The powers of, and procedure to be followed in the conduct of investigations by, the adjudicator.

8

The powers of the adjudicator on the making of determinations.

Determinations and their effects

9

The extent to which determinations are binding.

10

The manner in which determinations are to be communicated and published.

Reports by investigators to administering body

11

The making to the body administering the scheme of regular reports by the adjudicator as to the discharge of his functions, and their publication.

Amendment or revocation of scheme

12

The manner of amending or revoking the scheme.

Accession to membership

13

Accession to membership of other societies.

Withdrawal from membership

14

Withdrawal from membership.

F762Part II Requirements for Recognised Schemes:Matters of Complaint

Annotations:

Amendments (Textual)

F762

Sch. 12 Pt. II repealed (1.12.1997) by 1997 c. 32, ss. 43, 46(2), Sch. 7 para. 62(2), Sch. 9; S.I. 1997/2668, art. 2, Sch. Pt. I(j)(l)(xvi)(o)(viii)

Deposit accounts

2

The operation or termination of a deposit account and the grant or refusal to grant a depositor other facilities normally available to depositors of his description.

Note: The operation or termination of a deposit account includes any aspect of the relationship or the termination of the relationship between the society and a depositor as such, including in particular the operation or termination of any services incidental to such accounts.

Note: The grant of facilities includes the terms on which they are granted.

Borrowing members: class 1 or class 2 advances

3

The operation or termination of the account of a member borrowing on a class 1 or class 2 advance and the grant or refusal to grant a borrowing member of that description other or further class 1, or as the case may be, class 2 advances secured on the same or different land or other facilities normally available to borrowing members of his description.

Note: The operation or termination of the account of a borrowing member includes any aspect of the relationship or the termination of the relationship between the society and a borrowing member as such, including in particular the exercise of the right of foreclosure or any other power over the land by virtue of the mortgage.

Note: The grant of advances includes the terms on which they are granted.

Borrowers: mobile home loans

4

The operation or termination of the account of a borrower under section 15 and the grant or refusal to grant a borrower under that section other facilities normally available to borrowers of his description.

Note: The operation or termination of the account of a borrower under section 15 includes any aspect of the relationship or the termination of the relationship between the lender and such a borrower, including in particular the exercise of any power over the security.

Note: The grant of facilities includes the terms on which they are granted.

Borrowers: other loans

5

The operation or termination of the account of a borrower under section 16 and the grant or refusal to grant a borrower under that section other facilities normally available to borrowers of his description.

Note: The operation or termination of the account of a borrower under section 16 includes any aspect of the relationship or the termination of the relationship between the lender and such a borrower including in particular, in the case of a secured loan, the exercise of any power over the security.

Note: The grant of facilities includes the terms on which they are granted.

Money transmission services

6

The terms on which are provided, the operation of, or the withdrawal of money transmission services.

Note: “Money transmission services” means the services of that description provided in accordance with Schedule 8 to this Act.

Foreign exchange facilities

7

The terms on which are provided, the operation of, or the withdrawal of foreign exchange services.

Note: “Foreign exchange services” means services of that description provided in accordance with Schedule 8 to this Act.

Agency payments and receipts

8

The terms on which payments are made or received as agents or the operation or withdrawal of the service.

Note: The payments made or received as agents are those made or received in accordance with Schedule 8 to this Act.

Provision of credit

9

The operation or termination of the account of a borrower with the person providing the credit.

Note: The credit provided is credit provided under arrangements for the provision of credit in accordance with Schedule 8 to this Act.

Part III Minimum Requirements for Recognised Schemes: Other Provisions

Grounds of complaint

F7631

1

The grounds for making action by a building society or connected undertaking subject to investigation under the scheme must be that the action constitutes—

a

in the case of a building society, a breach of the society’s obligations under this Act, its rules or any contract, or

b

in the case of a connected undertaking, a breach of the undertaking’s obligations under its rules (if any) or any contract, or

c

unfair treatment, or

d

maladministration, or

e

a decision to which sub-paragraph (2) below applies, or action consequential on such a decision,

in relation to the complainant and has caused him pecuniary loss or expense or inconvenience.

2

This sub-paragraph applies to any decision in connection with the provision of a relevant service which is made otherwise than in the legitimate exercise of commercial judgment.

Permissible exclusions from investigation

2

A scheme must not exclude action from investigation on any other than the following grounds, that is to say—

a

that the complaint is frivolous or vexatious;

b

that the action is the subject of proceedings in a court of law or was the subject of such proceedings in which a judgment on the merits was given;

F764bb

that the action is the subject of an investigation by another adjudicator (by whatever name called) operating under a comparable scheme (whether or not a recognised scheme), or was the subject of such an investigation in which a decision on the merits was made;

c

that, where the society or F765connected undertaking has a procedure for the resolution of complaints by it (an “internal procedure"), the procedure has not been invoked or has not been exhausted;

d

that there has been undue delay in having the matter investigated under the scheme F766, or in furnishing evidence in support of the complaint; or

e

that the action in question occurred outside the United Kingdom.

Note: An international procedure for resolution of complaints is not to be treated as having been invoked unless the complainant has made his complaint to the principal office of the society or, as the case may be, F767of the connected undertaking and is not to be treated as having been exhausted unless more than three months has elapsed since the complainant invoked it without any decision on his complaint having been communicated to him.

Note: Delay in having a matter investigated under the scheme is not “undue delay" unless at least six months (disregarding the period for exhausting the society’s or F768connected undertaking’s internal procedure) has expired since the matter came to the knowledge of the complainant; and a person is not, for this purpose, to be presumed to have knowledge of the contents of a document which contains or relates to the terms or proposed terms of any transaction between him and the society.

F769Note: Delay in furnishing evidence in support of the complaint is not “undue delay" unless at least six months have elapsed since the adjudicator acknowledged receipt of the complaint.

Functions of adjudicator

3

A scheme must, as regards the duties and powers attached to the investigation of complaints under the scheme—

a

impose on the adjudicator a duty, subject to the provision made in pursuance of sub-paragraph (c) below, to investigate and determine any complaint duly made;

b

impose on the adjudicator a duty to afford the complainant and the society or F770connected undertaking an opportunity to make representations (whether orally or in writing) in relation to the action complained of;

c

confer power on the adjudicator to advise, mediate or act as conciliator before proceeding further with an investigation;

d

confer power on the adjudicator to extend the scope of his investigation to other matters related to the action complained of; and

e

confer on an adjudicator such powers to require information and documents relevant to the matter to be furnished to him as are necessary for the purposes of the investigation.

4

1

Subject to any provision made in pursuance of sub-paragraph (3) below, a scheme must authorise the adjudicator, in reaching his decision, to have regard to, but not to be bound by, any matter (whether or not of obligation) relevant to the action complained of and to question any decision.

2

A scheme must impose on the adjudicator a duty, in reaching his decision, to have regard to—

a

the rules (if any) of the society or F771connected undertaking;

b

the provisions of any deed or contract binding the society and the complainant or, as the case may be, the F771connected undertaking and the complainant;

c

the provisions of any code of conduct applicable to the conduct by the society or F771connected undertaking of its affairs or business;

d

any advertisement issued by the society or F771connected undertaking in connection with any aspect of its activities and any communication with the complainant.

3

Subject to sub-paragraph (4) below, a scheme may preclude the adjudicator, in his determination, from questioning the merits of any decision taken by the society or F771connected undertaking with reference to—

a

the taking or conduct of legal proceedings to enforce any right of the society or F771connected undertaking; or

b

the creditworthiness, for the purposes of any advance or other service or facility, of the complainant;

but not otherwise.

4

Where investigation of a complaint on the ground of maladministration involves consideration by the adjudicator of any decision taken with reference to the creditworthiness of the complainant the scheme must confer power on the adjudicator to direct the society or associated body to take its decision again and reach it by proper procedures.

5

1

Subject to sub-paragraph (2) below, a scheme must confer power on the adjudicator, by his determination, to do either or both of the following, that is to say—

a

direct the society or F772connected undertaking whose action is complained of to take or desist from taking such steps as are specified in the determination;

b

order the society or F772connected undertaking whose action is complained of to pay the complainant a sum by way of compensation for the loss, expense or inconvenience caused by the action.

2

A scheme may impose a limit on the amount of compensation that a society or F772connected undertaking may be ordered to pay a complainant, but the limit must not be less than £100,000.

Effect of determinations and their communication

6

1

Subject to any provision made in pursuance of sub-paragraph (2) or (3) below, a scheme must provide that, if the complainant, by notice to the adjudicator within the period specified in the scheme, accepts his determination the society or F773connected undertaking is under an obligation to take the steps it is directed to take or pay the compensation awarded or both.

2

A scheme may relieve a society of the obligation imposed by a determination if, but only if, the society undertakes an obligation to give notice to its members of the reasons for its non-fulfilment of the obligations imposed by the determination in the next directors’ report under section 75 and to give notice of those reasons to the public in such manner as the adjudicator requires.

3

A scheme may relieve F774 a connected undertaking of the obligations imposed by a determination if, but only if, each of the building societies F775of which it is a connected undertaking undertakes an obligation to give notice to its members of the reasons for the non-fulfilment of the obligations imposed by the determination in the next directors’ report under section 75 and to give notice of those reasons to the public in such manner as the adjudicator requires.

7

A scheme must impose on the adjudicator an obligation not to disclose, whether in his determination or otherwise, any information or opinion furnished in confidence to the society or, as the case may be, to the F776connected undertaking for the purpose of any action on its part.

Reports by adjudicator to administering body

8

A scheme must require reports by the adjudicator as to the discharge of his functions to be made to the body administering the scheme not less frequently than once in every year.

Publication

9

1

A scheme must permit the body administering the scheme to publish the whole or any parts of the reports made to them by the adjudicator.

2

A scheme, if it makes the provision authorised by paragraph 6(2) or (3) above, must require the body administering the scheme to send to the Commission, not less frequently than once in every year, particulars of the cases in which building societies have undertaken the alternative obligation authorised by either or both of those sub-paragraphs.

F608SCHEDULE 13

Annotations:

Amendments (Textual)

F608

Sch. 13 repealed (1.12.2001) by S.I. 2001/2617 arts. 2(b), 13(2), Sch. 4 (with art. 13(3), Sch. 5); S.I. 2001/3538 art. 2

Preliminary

1

For the purposes of this Schedule, a scheme—

“qualifies for recognition” if it makes provision for the matters specified in Part I of Schedule 12 and F777the services action in relation to which is subject to investigation under the scheme consist of or include one or more F777relevant services; and
“conforms to the relevant requirements” if, in relation to a F778relevant service, it makes action in relation to F778that service subject to investigation in accordance with Part III of that Schedule;

and any reference to a scheme qualifying for recognition, or being recognised, to any “extent" indicates recognition of it for the purpose of investigations of action in relation to one or more F779relevant services.

2

1

The function of the Commission of granting recognition of schemes is exercisable, in accordance with paragraph 4 or 5 below, on the Commission’s own motion or on a submission for its approval made by or on behalf of any building societies.

2

In this Schedule, in relation to a scheme recognised by the Commission to any extent, a “direction for its recognition” means a direction that the scheme is, to the extent specified in the direction, a scheme recognised by the Commission.

The register of recognised schemes

3

b

accompanied by such information as the Commission may reasonably require, either generally or in any particular case, in order to make its decision on the application;

and in this paragraph “the applicants” means those societies or the person acting on their behalf for the purposes of the application.

2

Where an application is made to the Commission for recognition of a scheme then—

a

if it appears to the Commission that the scheme qualifies for recognition and conforms to the relevant requirements in respect of one or more F781relevant services, the Commission shall approve the scheme as a recognised scheme to such extent as it considers appropriate;

b

if it appears to the Commission that the scheme, with modifications, will, in addition to qualifying for recognition, conform to the relevant requirements in respect of one or more F781relevant services, and the applicants agree on appropriate modifications within the period of 21 days from the date on which the Commission notifies the applicants of the modifications it proposes for their agreement, the Commission shall approve the scheme as modified as a recognised scheme to such extent as it considers appropriate;

but otherwise it shall withold its approval.

3

The Commission shall, on approving a scheme, give a direction for its recognition and send copies of the direction to the applicants.

4

On giving a direction for the recognition of a scheme, the Commission shall also send a copy of the scheme and of the direction to the central office; and the central office shall keep the copy of the scheme and of the direction in the register.

Procedure on accession to schemes

6

1

A building society F782or connected undertaking of a building societywhich accedes to a recognised scheme or has acceded to a scheme which becomes a recognised scheme shall, within the period of 21 days beginning with the date of its accession or on which it receives a copy of the direction for its recognition, as the case may be, send a notice of that fact to the central office and to the Commission.

2

9

Withdrawal of recognition by the Commission shall take effect as from such date as is specified in the notice of its decision, being a date not less than one year nor more than two years after the date of the notice.

Withdrawal from membership

10

1

A building society F790or connected undertaking of a building societywishing to withdraw from membership of a recognised scheme shall send notice of its proposed withdrawal to the central office and to the Commission.

2

A notice by a society F791or undertakingunder sub-paragraph (1) above shall specify F792the relevant servicesaction in relation to which by the society F791or undertakingis subject to investigation under the scheme and the recognised scheme or recognised schemes of which it is or, on its withdrawal, will become a member under which, as regards each of F792the relevant services specified in the notice, action by the society F791or undertakingis or will be subject to investigation.

3

The central office, on receiving such a notice from a society, if satisfied that its withdrawal from the scheme will not result in a failure by it to comply with the duty imposed on it by section 83(3), shall confirm the withdrawal of the society from the scheme; but, if the central office is not so satisfied, the central office shall withold its confirmation.

F7933A

The central office, on receiving such a notice from a connected undertaking of a society, if satisfied that its withdrawal from the scheme will not result in a failure by the society to comply with the duty imposed on it by section 83(4), shall confirm the withdrawal of the undertaking from the scheme; but, if the central office is not so satisfied, the central office shall withhold its confirmation.

4

If the central office withholds its confirmation of a society’s F794or undertaking’swithdrawal from a scheme, the society F795or undertakingshall continue to a member of the scheme and bound and entitled under the scheme accordingly.

5

On confirming the withdrawal of a society F796or connected undertaking of a societyfrom a scheme the central office shall send to the society F797or undertakingand to the Commission notice of its decision and the central office shall record the decision in the public file of the society.

C123SCHEDULE 14 Settlement of Disputes

Section 85.

Annotations:

Modifications etc. (not altering text)

C123

Sch. 14 excluded (temp.) by S.I. 1986/2168, art. 3(1)(4)

Part I Proceedings in Court

Jurisdiction of the court

1

No court other than the High Court or, in the case of a building society whose principal office is in Scotland the Court of Session, shall have jurisdiction to hear and determine disputes to which this paragraph applies; and, in this Part of this Schedule, “the court” means the High Court or, as the case may be, the Court of Session.

2

This paragraph applies to any dispute—

a

between a building society and a member of the society in his capacity as a member, or

b

between a building society and a representative of such a member in that capacity,

in respect of any rights or obligations arising from the rules of the society or any provision of this Act or any statutory instrument under it.

3

Except in the cases referred to in sub-paragraph (5) below, no disputes to which this paragraph applies may be referred to arbitration.

4

The court shall not hear and determine any dispute arising out of section 61(8)(a) or F609paragraph 20A(10)(a) or 31(4)(a) of Schedule 2 to this Act.

5

The court shall not hear and determine any dispute which is required to be referred to arbitration under paragraph 4 below or which is referred to the F610Authority under paragraph 6 or to an adjudicator under paragraph 7 below except as provided in paragraph 2 below.

2

The court may hear and determine a dispute falling within paragraph 1(5) above in any case where, on the application of any person concerned, it appears to the court—

a

that application has been made by either party to the dispute to the other party for the purpose of having the dispute settled by arbitration, and

b

that either arbitrators have not been appointed within 40 days of that application or the arbitrators have refused, or have neglected for a period of 21 days, to proceed with the reference or make an award.

Right of F612Authority to be heard

Annotations:

Amendments (Textual)

F612

Words in cross-heading substituted (17.8.2001 for certain purposes and otherwise 1.12.2001) by S.I. 2001/2617, arts. 2, 8, 13(1), Sch. 3 Pt. II para. 208(a)(ii) (with art. 13(3), Sch. 5); S.I. 2001/3538, art. 2

3

1

Any person who institutes proceedings in the court in relation to a dispute to which paragraph 1 above applies shall give notice of the fact and of the matter in dispute to the F611Authority.

2

The court shall not proceed to hear a dispute to which paragraph 1 applies until the court is satisfied that the notice required by sub-paragraph (1) above has been given.

3

The F611Authority shall be entitled, with the leave of the court, to attend and to be heard at any hearing of a dispute to which paragraph 1 applies.

Part II Arbitration

Circulation of election addresses, resolutions and statements

4

1

If the rules of the society so provide, any dispute in respect of a refusal by a building society to send to its members—

a

copies of an election address F613or a revised election address, in accordance with section 61(7), or

b

any document required to be sent under F614paragraph 20A(1)(b) or 31(1) of Schedule 2 to this Act,

shall, unless the refusal is on one of the grounds specified in sub-paragraph (2) below, be referred to arbitration.

2

Those grounds are—

a

that publicity for the document in question would be likely to diminish substantially the confidence in the society of investing members of the public, or

b

that the rights conferred by section 61(7) or F615paragraph 20A(1)(b) or 31(1) are being abused to seek needless publicity for defamatory matter.

F617Calling of special meeting

Annotations:

Amendments (Textual)

F617

Sch. 14 para. 4A and cross-heading preceding it inserted (1.12.1997 in specified cases and for specified purposes and otherwise in accordance with art. 2(2)(3)(5) of S.I. 1997/2668) by 1997 c. 32, ss. 43, 47(3), Sch. 7 para. 64(4); S.I. 1997/2668, art. 2, Sch. Pt. II(w)(z)(xxxvii)

F6164A

If the rules of the society so provide, any dispute in respect of a refusal by a building society to call a special meeting required to be called under paragraph 20A(1)(a) of Schedule 2 to this Act shall be referred to arbitration.

Procedure on a reference to arbitration

5

1

This paragraph has effect in relation to an arbitration under paragraph 4(1) above.

2

One or more arbitrators shall be appointed in the manner provided for by the rules of the building society; and so shall another arbitrator if an appointed arbitrator dies or refuses to act.

3

No arbitrator acting on a reference shall be beneficially interested (whether directly or indirectly) in the funds of the society.

4

The rules of the society may provide for the procedure to be followed on a reference to arbitration.

5

An award made by arbitrators, or the majority of them, shall be final and binding.

6

For the purposes of F618Part I of the Arbitration Act 1996 the rules of the society shall be treated as an arbitration agreement.

7

In relation to Scotland, sub-paragraph (6) above shall be omitted.

Access to register of members

6

1

Any dispute as to the rights of a member of a building society under paragraph 15 of Schedule 2 to this Act shall be referred to the F619Authority.

2

The reference of a dispute to the F619Authority under this paragraph shall be treated as a reference to arbitration; and its award shall have the same effect as that of an arbitrator acting in a reference under paragraph 4(1) above.

Disputes cognizable under a scheme

F6207

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

General

8

In this Part of this Schedule, in relation to an arbitration in Scotland, references to an arbitrator shall be read as references to an arbiter.

SCHEDULE 15 Application of Companies Winding Up Legislation to Building Societies

Section 90.

Part I General Mode of Application

1

The enactments which comprise the companies winding up legislation (referred to in this Schedule as “the enactments”) are the provisions of—

a

Parts IV, VI, VIIF621, XII and XIII of the M63Insolvency Act 1986, or

F622b

Articles 5 to 8 of Part I and Parts V, VII and XI of the Insolvency (Northern Ireland) Order 1989; or

and, in so far as they relate to offences under any such enactment, sections 430 and 432 of, and Schedule 10 to, the Insolvency Act 1986 or F623Articles 2(6) and 373 of, and Schedule 7 to, the Insolvency (Northern Ireland) Order 1989.

2

Subject to the following provisions of this Schedule, the enactments apply to the winding up of building societies as they apply to the winding up of companies limited by shares and registered under the M64Companies Act 1985 or (as the case may be) the Companies (Northern Ireland) Order 1986.

3

1

The enactments shall, in their application to building societies, have effect with the substitution—

F624aa

every reference to a company registered in Scotland shall have effect as a reference to a building society whose principal office is situated in Scotland;

F625aa

every reference to a company registered in Scotland shall have effect as a reference to a building society whose registered office is situated in Scotland;

a

for “company” of “ building society ”;

b

for “the registrar of companies” or “the registrar” of “ F626Financial Services Authority ”;

c

for “the articles” of “ the rules ”; and

Paragraphs (a) to (d) of subsection (2) shall be omitted; and so shall subsection (3).

4

The extent of the liability of a member of a building society in a winding up shall not exceed the extent of his liability under paragraph 6 of Schedule 2 to this Act.

8

Sections 75 to 78 and 83 in Chapter I of Part IV (miscellaneous provisions not relevant to building societies) do not apply.

9

1

Section 79 (meaning of “contributory”) of the Act does not apply.

2

In the enactments as applied to a building society, “contributory”—

a

means every person liable to contribute to the assets of the society in the event of its being wound up, and

b

for the purposes of all proceedings for determining, and all proceedings prior to the determination of, the persons who are to be deemed contributories, includes any person alleged to be a contributory, and

c

includes persons who are liable to pay or contribute to the payment of—

i

any debt or liability of the building society being wound up, or

ii

any sum for the adjustment of rights of members among themselves, or

iii

the expenses of the winding up;

but does not include persons liable to contribute by virtue of a declaration by the court under section 213 (imputed responsibility for fraudulent trading) or section 214 (wrongful trading) of the Act.

Voluntary winding up

10

1

Section 84 of the Act does not apply.

2

In the enactments as applied to a building society, the expression “resolution for voluntary winding up” means a resolution passed under section 88(1) of this Act.

11

In subsection (1) of section 101 (appointment of liquidation committee) of the Act, the reference to functions conferred on a liquidation committee by or under that Act shall have effect as a reference to its functions by or under that Act as applied to building societies.

12

1

Section 107 (distribution of property) of the Act does not apply; and the following applies in its place.

2

Subject to the provisions of Part IV relating to preferential payments, a building society’s property in a voluntary winding up shall be applied in satisfaction of the society’s liabilities to creditors F630. . . pari passu and, subject to that application, in accordance with the rules of the society.

13

Sections 110 and 111 (liquidator accepting shares, etc. as consideration for sale of company property) of the Act do not apply.

14

Section 116 (saving for certain rights) of the Act shall also apply in relation to the dissolution by consent of a building society as it applies in relation to its voluntary winding up.

Winding up by the court

15

In sections 117 (High Court and county court jurisdiction) and 120 (Court of Session and sheriff court jurisdiction) of the Act, each reference to a company’s share capital paid up or credited as paid up shall have effect as a reference to the amount standing to the credit of shares in a building society as shown by the latest balance sheet.

16

Section 122 (circumstances in which company may be wound up by the court) of the Act does not apply.

17

Section 124 (application for winding up) of the Act does not apply.

18

1

In section 125 (powers of court on hearing of petition) of the Act, subsection (1) applies with the omission of the words from “but the court” to the end of the subsection.

2

The conditions which the court may impose under section 125 of the Act include conditions for securing—

a

that the building society be dissolved by consent of its members under section 87, or

b

that the society amalgamates with, or transfers its engagements to, another building society under section 93 or 94, or

c

that the society transfers its business to a company under section 97,

and may also include conditions for securing that any default which occasioned the petition be made good and that the costs, or in Scotland the expenses, of the proceedings on that petition be defrayed by the person or persons responsible for the default.

19

Section 126 (power of court, between petition and winding up order, to stay or restrain proceedings against company) of the Act has effect with the omission of subsection (2).

20

If, before the presentation of a petition for the winding up by the court of a building society, an instrument of dissolution under section 87 is placed in the society’s public file, section 129(1) (commencement of winding up by the court) of the Act shall also apply in relation to the date on which the instrument is so placed and to any proceedings in the course of the dissolution as it applies to the commencement date for, and proceedings in, a voluntary winding up.

21

1

Section 130 of the Act (consequences of winding-up order) shall have effect with the following modifications.

2

Subsections (1) and (3) shall be omitted.

3

A building society shall, within 15 days of a winding-up order being made in respect of it, give notice of the order to the F631Authority; and the F632 Authority shall keep the notice in the public file of the society.

4

If a building society fails to comply with sub-paragraph (3) above, it shall be liable on summary conviction to a fine not exceeding level 3 on the standard scale; and so shall any officer who is also guilty of the offence.

22

Section 140 (appointment of liquidator by court in certain circumstances) of the Act does not apply.

23

2

On such a reference to it the F636Authority shall exercise its power under section 55(1) of this Act to appoint one or more investigators to investigate and report on the matter.

3

An answer given by a person to a question put to him in exercise of the powers conferred by section 55 on a person so appointed may be used in evidence against the person giving it.

Preferential debts

33

Section 387 (meaning in Schedule 6 of “the relevant date”) of the Act applies with the omission of subsections (2) and (4) to (6).

F637Part III Modified application of Insolvency (Northern Ireland) Order 1989

Annotations:

Amendments (Textual)

F637

Sch. 15 paras. 34-55E substituted (N.I.) (1.10.1991) for Sch. 15 paras. 34-55 by S.I. 1989/2405 (N.I. 19), arts. 2(1), 381, Sch. 9 Pt. II para. 45(c); S.R. 1991/411, art. 2

Parts V and XI

Preliminary

34

In this Part of this Schedule, Part V of the Insolvency (Northern Ireland) Order 1989 is referred to as “Part V”, that Order is referred to as “the Order” and references to “Articles” are references to Articles of that Order.

Members of a building society as contributories in winding up

35

1

Article 61 (liability of members) is modified as follows.

2

In paragraph (1), the reference to any past member shall be omitted.

3

Sub-paragraphs (a) to (d) of paragraph (2) shall be omitted; and so shall paragraph (3).

4

The extent of the liability of a member of a building society in a winding up shall not exceed the extent of his liability under paragraph 6 of Schedule 2 to this Act.

36

Articles 62 to 65 and 69 in Chapter I of Part V (miscellaneous provisions not relevant to building societies) do not apply.

37

In the enactments as applied to a building society, “contributory”—

a

means every person liable to contribute to the assets of the society in the event of its being wound up, and

b

c

includes persons who are liable to pay or contribute to the payment of—

i

any debt or liability of the building society being wound up, or

ii

any sum for the adjustment of rights of members among themselves, or

iii

the expenses of the winding up;

but does not include persons liable to contribute by virtue of a declaration by the Court under Article 177 (imputed responsibility for fraudulent trading) or Article 178 (wrongful trading).

Voluntary winding up

38

1

Article 70 does not apply.

2

In the enactments as applied to a building society, the expression “resolution for voluntary winding up” means a resolution passed under section 88(1) of this Act.

39

In paragraph (1) of Article 87 (appointment of liquidation committee), the reference to functions conferred on a liquidation committee by or under the Order shall have effect as a reference to its functions by or under the Order as applied to building societies.

40

1

Article 93 (distribution of property) does not apply; and the following applies in its place.

2

Subject to the provisions of Part V relating to preferential payments, a building society’s property in a voluntary winding up shall be applied in satisfaction of the society’s liabilities to creditors (including any liability resulting from the variation to the liquidator’s duty effected by section 28 or 31 of this Act) pari passu and, subject to that application, in accordance with the rules of the society.

41

Articles 96 and 97 (liquidator accepting shares, etc, as consideration for sale of company property) do not apply.

42

Article 101 (saving for certain rights) shall also apply in relation to the dissolution by consent of a building society as it applies in relation to its voluntary winding up.

Winding up by the High Court

43

Article 102 (circumstances in which company may be wound up by the High Court) does not apply.

44

Article 104 (application for winding up) does not apply.

45

1

In Article 105 (powers of High Court on hearing of petition), paragraph (1) applies with the omission of the words from “but the Court” to the end of the paragraph.

2

The conditions which the High Court may impose under Article 105 include conditions for securing—

a

that the building society be dissolved by consent of its members under section 87, or

b

that the society amalgamates with, or transfers its engagements to, another building society under section 93 or 94, or

c

that the society transfers its business to a company under section 97,

and may also include conditions for securing that any default which occasioned the petition be made good and that the costs of the proceedings on that petition be defrayed by the person or persons responsible for the default.

46

Article 106 (power of High Court, between petition and winding-up order, to stay or restrain proceedings against company) has effect with the omission of paragraph (2).

47

If, before the presentation of a petition for the winding up by the High Court of a building society, an instrument of dissolution under section 87 is placed in the society’s public file, Article 109(1) (commencement of winding up by the High Court) shall also apply in relation to the date on which the instrument is so placed and to any proceedings in the course of the dissolution as it applies to the commencement date for, and proceedings in, a voluntary winding up.

48

1

Article 110 (consequences of winding-up order) shall have effect with the following modifications.

2

Paragraphs (1) and (3) shall be omitted.

3

A building society shall, within 15 days of a winding-up order being made in respect of it, give notice of the order to the central office; and the central office shall keep the notice in the public file of the society.

4

49

Article 119 (appointment of liquidator by High Court in certain circumstances) does not apply.

50

2

On such a reference to it the Commission shall exercise its power under section 55(1) of this Act to appoint one or more investigators to investigate and report on the matter.

3

An answer given by a person to a question put to him in exercise of the powers conferred by section 55 on a person so appointed may be used in evidence against the person giving it.

Preferential debts

55E

Article 347 (meaning in Schedule 4 of “the relevant date”) applies with the omission of paragraphs (2) and (4) to (6).

Part IV Dissolution of Building Society wound up (England and Wales, Scotland and Northern Ireland)

56

1

Where a building society has been wound up voluntarily, it is dissolved as from 3 months from the date of the placing in the public file of the society of the return of the final meetings of the society and its creditors made by the liquidator under—

a

section 94 or (as the case may be) 106 of the M66Insolvency Act 1986 (as applied to building societies), or on such other date as is determined in accordance with section 201 of that Act, or

b

Article F63880 or (as the case may be) 92 of the Insolvency (Northern Ireland) Order 1989(as so applied), or on such other date as is determined in accordance with that Article,

as the case may be.

2

Where a building society has been wound up by the court, it is dissolved as from 3 months from the date of the placing in the public file of the society of—

a

the liquidator’s notice under section 172(8) of the M67Insolvency Act 1986 (as applied to building societies) F639or, as the case may be, Article 146(7) of the Insolvency (Northern Ireland) Order 1989 (as applied to building societies), or

b

the notice of the completion of the winding up from the official receiver or the F640official receiver for Northern Ireland,

or on such other date as is determined in accordance with section 205 of that Act F641or Article 169 of that Order, as the case may be.

57

1

Sections 654 to 658 of the M68Companies Act 1985 or Articles 605 to 609 of the Companies (Northern Ireland) Order 1986 (provisions as to corporate property as bona vacantia) shall have the same effect in relation to the property of a dissolved building society (whether dissolved under section 87 or following its winding up) as they have in relation to the property of a dissolved company, but with the following modifications.

2

Paragraph 3(1) above shall apply to those sections for the purpose of their application to building societies.

3

Subsection (2) of section 654 and subsections (1) and (3) of section 655 apply without the words “or 653”; and the references in those subsections to section 651 shall have effect as references to section 91 of this Act.

4

Paragraph (2) of Article 605 and paragraph (1) of Article 606 apply without the words “or 604”; and references in those paragraphs to Article 602 shall have effect as references to section 91 of this Act.

Insolvency rules and fees: England and Wales and Scotland

58

1

Rules may be made under section 411 of the Insolvency Act for the purpose of giving effect, in relation to building societies, to the provisions of the applicable winding up legislation.

2

An order made by the competent authority under section 414 of the Insolvency Act 1986 may make provision for fees to be payable under that section in respect of proceedings under the applicable winding up legislation and the performance by the official receiver or the Secretary of State of functions under it.

Insolvency rules and fees: Northern Ireland

59

1

Rules may be made under F642Article 359 of the Insolvency (Northern Ireland) Order 1989for the purpose of giving effect in relation to building societies, to the provisions of the applicable winding up legislation.

F6432

An order made by the Department of Economic Development under Article 361 of the Insolvency (Northern Ireland) Order 1989 may make provision for fees to be payable under that Article in respect of proceedings under the applicable winding-up legislation and the performance by the official receiver for Northern Ireland or that Department of functions under it.

F676SCHEDULE 15A Application of other companies insolvency legislation to building societies

Annotations:

Amendments (Textual)

F676

Sch. 15A inserted (1.12.1997) by 1997 c. 32, s. 39(2), Sch. 6; S.I. 1997/2668, art. 2, Sch. Pt. I(i)

Part I General mode of application

1

Subject to the provisions of this Schedule, the enactments specified in sub-paragraph (2) below (referred to in this Schedule as “the enactments”) apply in relation to building societies as they apply in relation to companies limited by shares and registered under the M69Companies Act 1985 or (as the case may be) the M70Companies (Northern Ireland) Order 1986.

2

The enactments referred to in sub-paragraph (1) above are—

a

Parts I F644(except section 1A) and II, Chapter I of Part III, Parts VI, VII, XII and XIII, section 434 and Part XVIII of the M71Insolvency Act 1986, or

b

Parts I to IV, VII, XI and XII and Article 378 of the M72Insolvency (Northern Ireland) Order 1989,

and, in so far as they relate to offences under any such enactment, sections 430 and 432 of, and Schedule 10 to, the M73Insolvency Act 1986 or Article 2(6) and 373 of, and Schedule 7 to, the M74Insolvency (Northern Ireland) Order 1989.

2

1

The enactments shall, in their application to building societies, have effect with the substitution—

F645aa

every reference to a company registered in Scotland shall have effect as a reference to a building society whose principal office is situated in Scotland;

F646aa

every reference to a company registered in Scotland shall have effect as a reference to a building society whose registered office is situated in Scotland;

a

for “company” of “ building society ” ;

b

for “the registrar of companies” or “the registrar” of “ F647Financial Services Authority ”;

c

for “the articles” of “ the rules ”; and

d

for “registered office” of “ principal office ”.

2

In the application of the enactments to building societies—

a

b

every reference to an administrative receiver shall be omitted.

3

1

Where any of the enactments as applied to building societies requires a notice or other document to be sent to the F648Authority, it shall have effect as if it required the F648Authority to keep the notice or document in the public file of the society concerned and to record in that file the date on which the notice or document is placed in it.

2

4

1

Rules may be made under section 411 of the M75Insolvency Act 1986 or, as the case may be, Article 359 of the M76Insolvency (Northern Ireland) Order 1989 for the purpose of giving effect, in relation to building societies, to the provisions of the enactments.

2

An order made by the competent authority under section 414 of the Insolvency Act 1986 may make provision for fees to be payable under that section in respect of proceedings under the enactments and the performance by the official receiver or the Secretary of State of functions under them.

3

An order made by the Department of Economic Development under Article 361 of the Insolvency (Northern Ireland) Order 1989 may make provision for fees to be payable under that Article in respect of proceedings under the enactments and the performance by the official receiver or that Department of functions under them.

5

Any enactment which specifies a money sum altered by order under section 416 of the Insolvency Act 1986, or, as the case may be, Article 362 of the Insolvency (Northern Ireland) Order 1989, (powers to alter monetary limits) applies with the effect of the alteration.

F6495A

In this Schedule, “scheme manager” has the same meaning as in the Financial Services and Markets Act 2000.

Part II Modified Application of Parts I and II and Chapter I of Part III of Insolvency Act 1986

Preliminary

6

In this Part of this Schedule, the M77Insolvency Act 1986 is referred to as “the Act”.

Voluntary arrangements

7

Section 1 of the Act (proposals for voluntary arrangements) has effect as if—

In section 7A of the Act (prosecution of delinquent officers) as applied to a building society—

a

in subsection (2), for paragraphs (i) and (ii) there is substituted “ the F653Authority ”,

b

subsections (3) to (7) are omitted,

c

in subsection (8), for “Secretary of State” there is substituted “ F653Authority ”.

Administration orders

10

1

Section 8 of the Act (power of court to make administration order) has effect as if it included provision that, where—

a

an application for an administration order to be made in relation to a building society is made by the F654Authority (with or without other parties); and

b

the society has defaulted in an obligation to pay any sum due and payable in respect of any deposit or share,

the society shall be deemed for the purposes of subsection (1) to be unable to pay its debts.

2

In subsection (3) of that section, paragraph (c) and, in subsection (4) of that section, the words from “nor where” to the end are omitted.

Subsection (3) of section 13 of the Act (appointment of administrator) has effect as if it enabled an application for an order under subsection (2) of that section to be made by the F656Authority.

16

1

Subject to sub-paragraph (2) below, section 14 of the Act (general powers of administrator) has effect as if it required the administrator of a building society, in exercising his powers under that section—

a

to ensure compliance with the provisions of this Act; and

b

not to appoint to be a director any person who is not a fit and proper person to hold that position.

2

Sub-paragraph (1)(a) above does not apply in relation to section 5, 6 or 7 of this Act F657. . ..

3

In subsection (4) of that section as applied to a building society, the reference to any power conferred by the Act or the M78Companies Act 1985 or by the memorandum or articles of association is a reference to any power conferred by this Act or by the society’s memorandum or rules.

F6584

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

17

1

Subject to sub-paragraph (3) below, paragraph 16 of Schedule 1 to the Act (powers of administrators) as applied to a building society has effect as if it conferred power to transfer liabilities in respect of deposits with or shares in the society.

2

No transfer under that paragraph shall be a transfer of engagements for the purposes of Part X of this Act.

3

No transfer under that paragraph which, apart from sub-paragraph (2) above, would be a transfer of engagements for the purposes of that Part shall be made unless it is approved by the court, or by meetings summoned under section 23(1) or 25(2) of the Act (as modified by paragraph 21 or 23 below).

18

In section 15 of the Act (power to deal with charged property etc.)—

a

subsection (1) is omitted; and

b

for subsections (3) and (4) there is substituted the following subsection—

3
Subsection (2) applies to any security other than one which, as created, was a floating charge.

19

1

b

in relation to an application by the F662Authority or the scheme manager, as if the words “(including at least himself)” were omitted.

Receivers and managers

C12425

In section 38 of the Act (receivership accounts), “prescribed” means prescribed by regulations made by statutory instrument by the F663Treasury.

26

In subsection (1) of section 39 of the Act (notification that receiver or manager appointed), the reference to every invoice, order for goods or business letter is a reference to every statement of account, order for goods or services, business letter or advertisement.

27

Section 40 (payment of debts out of assets subject to floating charge) and sections 42 to 49 (administrative receivers) of the Act are omitted.

Part III Modified Application of Parts II, III and IV of Insolvency (Northern Ireland) Order 1989

Preliminary

28

In this Part of this Schedule, the M79Insolvency (Northern Ireland) Order 1989 is referred to as “the Order”.

means every person liable to contribute to the assets of the society in the event of its being wound up, and

b

c

includes persons who are liable to pay or contribute to the payment of—

i

any debt or liability of the building society being wound up, or

ii

any sum for the adjustment of rights of members among themselves, or

iii

the expenses of the winding up;

but does not include persons liable to contribute by virtue of a declaration by the High Court under Article 177 (imputed responsibility for fraudulent trading) or Article 178 (wrongful trading) of the Order.

F66531A

In Article 20A of the Order (prosecution of delinquent officers) as applied to a building society—

a

in paragraph (2) for the words “the Department”, in each place where they occur, there are substituted the words “ the Financial Services Authority ”,

b

paragraphs (3) to (7) are omitted,

c

in paragraph (8)—

i

after the words “Northern Ireland” there are inserted the words “ or the Financial Services Authority ”, and

ii

after the words “Northern Ireland” and the words “the Director”, in the second place where they occur, there are inserted the words “ or the Financial Services Authority ”,

d

in paragraph (9) after the words “for Northern Ireland” there are inserted the words “ or the Financial Services Authority ”.

Administration orders

32

1

Article 21 of the Order (power of High Court to make administration order) has effect as if it included provision that, where—

a

an application for an administration order to be made in relation to a building society is made by the F666Authority (with or without other parties); and

b

the society has defaulted in an obligation to pay any sum due and payable in respect of any deposit or share,

the society shall be deemed for the purposes of paragraph (1) to be unable to pay its debts.

2

In paragraph (3) of that Article, sub-paragraph (c) and, in paragraph (4) of that Article, the words from “nor where” to the end are omitted.

Paragraph (3) of Article 26 of the Order (appointment of administrator) has effect as if it enabled an application for an order under paragraph (2) of that Article to be made by the F668Authority.

38

1

Subject to sub-paragraph (2) below, Article 27 of the Order (general powers of administrator) has effect as if it required the administrator of a building society, in exercising his powers under that Article—

a

to ensure compliance with the provisions of this Act; and

b

not to appoint to be a director any person who is not a fit and proper person to hold that position.

2

Sub-paragraph (1)(a) above does not apply in relation to section 5, 6 or 7 of this Act F669. . ..

3

In paragraph (4) of that Article as applied to a building society, the reference to any power conferred by the Order or the M80Companies (Northern Ireland) Order 1986 or by the memorandum or articles of association is a reference to any power conferred by this Act or by the society’s memorandum or rules.

F6704

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

39

1

Subject to sub-paragraph (3) below, paragraph 17 of Schedule 1 to the Order (powers of administrators) as applied to a building society has effect as if it conferred power to transfer liabilities in respect of deposits with or shares in the society.

2

No transfer under that paragraph shall be a transfer of engagements for the purposes of Part X of this Act.

3

No transfer under that paragraph which, apart from sub-paragraph (2) above, would be a transfer of engagements for the purposes of that Part shall be made unless it is approved by the High Court, or by meetings summoned under Article 35(1) or 37(2) of the Order (as modified by paragraph 43 or 45 below).

40

In Article 28 of the Order (power to deal with charged property etc.)—

a

paragraph (1) is omitted; and

b

for paragraphs (3) and (4) there is substituted the following paragraph—

3
Paragraph (2) applies to any security other than one which, as created, was a floating charge.

41

1

b

in relation to an application by the F674Authority or the scheme manager, as if the words “(including at least himself)” were omitted.

Receivers and managers

C12547

In Article 48 of the Order (receivership accounts), “prescribed” means prescribed by regulations made by statutory instrument by the F675Treasury.

48

In paragraph (1) of Article 49 of the Order (notification that receiver or manager appointed), the reference to every invoice, order for goods or business letter is a reference to every statement of account, order for goods or services, business letter or advertisement.

49

Article 50 (payment of debts out of assets subject to floating charge) and Articles 52 to 59 (administrative receivers) of the Order are omitted.

C128SCHEDULE 16 Mergers: Supplementary Provisions

Sections 93, 94 and 95.

Annotations:

Modifications etc. (not altering text)

C128

Sch. 16 excluded by S.I. 1986/2168, art. 9(2)(b)(3)

Part I Issue of Statements to Members

1

A building society which desires—

a

to amalgamate with one or more other building societies, or

b

to transfer its engagements to another building society, or

c

to undertake to fulfil the engagements of another building society,

shall, unless the F677Authority, in the case of a society desirous of undertaking to fulfil another’s engagements, has consented under section 94(5) to its proceeding by resolution of the board of directors, send to every member entitled to notice of a meeting of the society a statement concerning the matters specified in sub-paragraph (4) below.

2

A building society shall include the statement referred to in sub-paragraph (1) above in or with the notice to be sent to its members of the meeting of the society at which the resolutions require for the approval of the amalgamation or, as the case may be, the transfer are to be moved.

3

No statement shall be sent unless its contents, so far as they concern the matters specified in sub-paragraph (4) below, have been approved by the F677Authority.

4

Those maters are the following, namely—

a

the financial position of the building society and that of the other building society or societies participating in the amalgamation or transfer;

b

the interest of the directors of the building society in the amalgamation or transfer of engagements;

c

the compensation or other consideration (if any) proposed to be paid to or in respect of the directors or other officers of the building society and of the other building society or societies participating in the amalgamation or transfer;

d

the payments (if any) to be made to members of the building society and of the other building society or societies participating in the amalgamation or transfer by way of a distribution of funds in consideration of the amalgamation or transfer;

e

the changes (if any) to be made, in connection with the amalgamation or transfer of engagements, in the terms governing outstanding F678loans made by the building society which are secured on land;

f

any other matter which the F677Authority requires in the case of the particular amalgamation or transfer of engagements.

F6795

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

6

Any expression used in this paragraph and in section 96 has the same meaning in this paragraph as in that section.

C127Part II Notification of Proposals for Merger

Annotations:

Modifications etc. (not altering text)

C127

Sch. 16 Pt. II (paras. 2–6) excluded by S.I. 1986/2169, art. 10

Preliminary

2

In this Part of this Schedule—

“merger” means an amalgamation of building societies under section 93 or a transfer of all the engagements of one building society to another under section 94; and “merger” has a corresponding meaning;
C126“merger proposal”, in relation to a building society, means a proposal in writing, by another building society desiring to merge with it, for the societies to merge, with or without terms for the merger; and “proposer” has a corresponding meaning;
“merger resolutions”, in relation to a building society, means the resolutions required for the approval of a merger of the society with another building society under section 93(2) or 94(2);
“merger statement” means a statement containing the requisite particulars of a merger proposal; and
“requisite particulars”, in relation to a merger proposal, means the particulars required by paragraph 3(2) below to be given in a merger statement.

Duty to notify members

3

1

Subject to sub-paragraph (3) below, it shall be the duty of a building society receiving a merger proposal to send, in accordance with this Part of this Schedule, a merger statement in respect of the proposal to every member entitled to notice of a meeting of the society.

2

A merger statement must contain the following particulars—

a

the fact that a merger proposal has been made, and

b

the identity of the proposer,

with or without other particulars regarding the proposal.

3

Sub-paragraph (1) above does not require a merger statement to be sent to members if the proposer has requested in writing that the requisite particulars are to be treated as confidential; and, where such a request is made and is at a later date withdrawn in writing, the society receiving the proposal shall, for the purposes of this Part of this Schedule, treat the proposal as having been received on that date instead of any earlier date.

4

1

A building society shall include in or with every notice of its annual general meeting a merger statement with respect to any merger proposal, other than a proposal of which notice has already been given under this paragraph,—

a

received by it during the period of 12 months ending with the ninth month of the last financial year of the society before that meeting; or

b

treated by paragraph 3(3) above as having been received by it during the last three months of that financial year;

and the society may also include, under this sub-paragraph, a merger statement with respect to any proposal received, or treated as received, by it after the end of either period.

F6802

In any case where merger resolutions are to be moved at any meeting of a building society, every notice of the meeting shall have included in or with it—

a

a merger statement with respect to any merger proposal, other than a proposal of which notice has already been given under this paragraph, received by it more than 42 days before the date of the meeting; and

b

a transfer proposal notification with respect to any transfer proposal so received by it.

3

In this paragraph and paragraph 5 below—

“transfer proposal” has the same meaning as in Part IA of Schedule 17;
“transfer proposal notification” means a transfer proposal notification (within the meaning of that Part) required to be sent to members by paragraph 5B(1) of that Schedule.

Duty to notify F685Authority

Annotations:

Amendments (Textual)

F685

Word in cross-heading substituted (17.8.2001 for certain purposes and otherwise 1.12.2001) by S.I. 2001/2617, arts. 2, 8, 13(1), Sch. 3 Pt. II para. 211(a)(ii) (with art. 13(3), Sch. 5); S.I. 2001/3538, art. 2

5

1

Where a building society sends a merger statement F681or transfer proposal notification to its members under paragraph 4 above in connection with a meeting of the society, it shall send a copy of the statement F682or notification to the F683Authority at least 14 days before the date of the meeting.

2

The F683Authority shall keep the copy of a merger statement F684or transfer proposal notification received by it from a building society in the public file of that society.

Penalty

6

If default is made by a building society in complying with paragraph 4(1), 4(2) or 5 above, the society shall be liable on summary conviction to a fine not exceeding level 4 on the standard scale; and so shall any officer who is also guilty of the offence.

Part III Confirmation by F690Authority: Procedure

Annotations:

Amendments (Textual)

F690

Words in Sch. 16 para. Pt. III (Heading) substituted (17.8.2001 for certain purposes and otherwise 1.12.2001) by S.I. 2001/2617, arts. 2, 8, 13(1), Sch. 3 Pt. II para. 211(a)(i) (with art. 13(3), Sch. 5); S.I. 2001/3538, art. 2

7

An application for confirmation by the F686Authority of an amalgamation or transfer of engagements shall be made in such manner as the F686Authority may F687direct.

8

1

Where a building society applies to the F688Authority for confirmation of an amalgamation or transfer or engagements, the society shall publish notice of the application in any one or more of the London Gazette, the Edinburgh Gazette or the Belfast Gazette, as the F688Authority directs and, if it so directs, in one or more newspapers.

2

A notice published in pursuance of sub-paragraph (1) above shall—

a

state that any interested party has the right to make representations to the F688Authority with respect to the application; and

b

specify a date determined by the F688Authority before which any written representations or notice of a person’s intention to make oral representations must be received by the Commission; and

c

specify a date determined by the F688Authority as the day on which it intends to hear any oral representations.

9

1

After the date specified in pursuance of paragraph 8(2)(b) above, the F689Authority shall—

a

determine the time and place at which oral representations may be made;

b

give notice of that determination to the building societies participating in the amalgamation or transfer and any persons who have given notice of their intention to make oral representations; and

c

send copies of the written representations received by the F689Authority to the building societies participating in the amalgamation or transfer.

2

The F689Authority shall allow any building society participating in the amalgamation or transfer an opportunity to comment on the written representations, whether at a hearing or in writing before the expiration of such period as the F689Authority specifies in a notice to the society.

SCHEDULE 17 Transfers of Business: Supplementary Provisions

Section 97 and 98.

F701PART I Issue of statement or summary to members

Annotations:

Amendments (Textual)

F701

Sch. 17 Pts. I, IA substituted for Sch. 17 Pt. I (1.12.1997) by 1997 c. 32, s. 30(3), Sch. 5 Pts. I, II; S.I. 1997/2668, art. 2, Sch. Pt. I(e)

F692Preliminary

Annotations:

Amendments (Textual)

F692

Sch. 17 Pts. I, IA substituted for Sch. 17 Pt. I (1.12.1997) by 1997 c. 32, s. 30(3), Sch. 5 Pts. I, II; S.I. 1997/2668, art. 2, Sch. Pt. I(e)

F6911

In this Part of this Schedule—

“prescribed matters” in relation to any transfer of the business of a building society to its successor, means the matters relating to the transfer, the society, its officers, members or depositors, or the successor, which are prescribed in regulations made under paragraph 5(1) below;
“transfer statement”, in relation to a transfer of business by a building society, means the statement with respect to the transfer which may be sent or handed to members of the society under paragraph 2 below;
“transfer summary”, in relation to a transfer of business by a building society, means the summary of the transfer statement which may be sent to members of the society under that paragraph.

F700Duty to send transfer statements or summaries to members

Annotations:

Amendments (Textual)

F700

Sch. 17 Pts. I, IA substituted for Sch. 17 Pt. I (1.12.1997) by 1997 c. 32, s. 30(3), Sch. 5 Pts. I, II; S.I. 1997/2668, art. 2, Sch. Pt. I(e)

F693 C1292

A building society which desires to transfer its business shall, in accordance with this Part of this Schedule, send a transfer statement, or a transfer summary, to every member entitled to notice of a meeting of the society.

F6943

1

A transfer statement, in relation to a transfer of business by a building society, shall contain—

a

the particulars required, in relation to the prescribed matters, by the regulations made under paragraph 5(1) below, and

b

particulars of any other matters required by the F695Authority in the case of the particular transfer,

with or without other particulars regarding the transfer.

2

A transfer summary, in relation to a transfer of business by a building society, shall contain—

a

the information required by the regulations made under paragraph 5(2) below, and

b

any other information required by the F695Authority in the case of the particular transfer,

with or without other particulars regarding the transfer.

F6964

1

Subject to sub-paragraph (3) below, a building society shall, in relation to a transfer of business, include a transfer statement, or a transfer summary, in or with the notice to be sent to its members of the meeting of the society at which the requisite transfer resolutions are to be moved.

2

Subject to sub-paragraph (3) below, where a building society sends a transfer summary, a transfer statement—

a

shall be handed forthwith and free of charge to any member to whom the summary was sent who asks for such a statement at an office or branch of the society; and

b

shall be sent forthwith and free of charge to any such member who asks for such a statement otherwise than at such an office or branch.

3

No transfer statement shall be sent or handed to a member unless its contents, so far as they concern the prescribed matters or any matter of which particulars are required to be given under paragraph 3(1)(b) above, have been approved by the F697Authority.

C130 F6985

1

The F699Treasury, may make regulations for the purpose of specifying, as prescribed matters, the matters of which transfer statements are to give particulars; and the regulations may also require particulars to be given of any alternatives to the particular transfer which were available to the society making the transfer.

2

The F699Treasury, may make regulations for the purpose of specifying the information which transfer summaries are to give.

3

Any power to make regulations under this paragraph is exercisable by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament.

F713PART IA Notification of proposals for transfers of business

Annotations:

Amendments (Textual)

F713

Sch. 17 Pts. I, IA substituted for Sch. 17 Pt. I (1.12.1997) by 1997 c. 32, s. 30(3), Sch. 5 Pts. I, II; S.I. 1997/2668, art. 2, Sch. Pt. I(e)

F703Preliminary

Annotations:

Amendments (Textual)

F703

Sch. 17 Pts. I, IA substituted for Sch. 17 Pt. I (1.12.1997) by 1997 c. 32, s. 30(3), Sch. 5 Pts. I, II; S.I. 1997/2668, art. 2, Sch. Pt. I(e)

F7025A

In this Part of this Schedule—

“requisite particulars”, in relation to a transfer proposal, means the particulars required by paragraph 5B(2) below to be given in a transfer proposal notification;
“transfer”, in relation to a building society, means a transfer of the whole of its business to a company under section 97;
C131“transfer proposal”, in relation to a building society, means a proposal in writing by a company for a transfer by the society to the company, with or without terms for the transfer; and “proposer” has a corresponding meaning;
“transfer proposal notification” means a notification containing the requisite particulars of a transfer proposal;
“transfer resolutions”, in relation to a building society, means the resolutions required for the approval of a transfer by the society under section 97.

F706Duty to notify members

Annotations:

Amendments (Textual)

F706

Sch. 17 Pts. I, IA substituted for Sch. 17 Pt. I (1.12.1997) by 1997 c. 32, s. 30(3), Sch. 5 Pts. I, II; S.I. 1997/2668, art. 2, Sch. Pt. I(e)

F7045B

1

Subject to sub-paragraph (3) below, it shall be the duty of a building society receiving a transfer proposal to send, in accordance with this Part of this Schedule, a transfer proposal notification in respect of the proposal to every member entitled to notice of a meeting of the society.

2

A transfer proposal notification must contain the following particulars—

a

the fact that a transfer proposal has been made, and

b

the identity of the proposer;

with or without other particulars regarding the proposal.

3

Sub-paragraph (1) above does not require a transfer proposal notification to be sent to members if the proposer has requested in writing that the requisite particulars are to be treated as confidential; and, where such a request is made and is at a later date withdrawn in writing, the society receiving the proposal shall, for the purposes of this Part of this Schedule, treat the proposal as having been received on that date instead of any earlier date.

F7055C

A building society shall include in or with every notice of its annual general meeting a transfer proposal notification with respect to any transfer proposal, other than a proposal of which notice has already been given under this paragraph—

a

received by it during the period of 12 months ending with the ninth month of the last financial year of the society before that meeting; or

b

treated by paragraph 5B(3) above as having been received by it during the last three months of that financial year;

and the society may also include, under this paragraph, a transfer proposal notification with respect to any proposal received, or treated as received, by it after the end of either period.

F709Duty to notify F710Authority

Annotations:

Amendments (Textual)

F709

Sch. 17 Pts. I, IA substituted for Sch. 17 Pt. I (1.12.1997) by 1997 c. 32, s. 30(3), Sch. 5 Pts. I, II; S.I. 1997/2668, art. 2, Sch. Pt. I(e)

F710

Words in cross-heading substituted (17.8.2001 for certain purposes and otherwise 1.12.2001) by S.I. 2001/2617, arts. 2, 8, 13(1), Sch. 3 Pt. II para. 212(c) (with art. 13(3), Sch. 5); S.I. 2001/3538, art. 2

F7075D

1

Where a building society sends a transfer proposal notification to its members under paragraph 5C above in connection with a meeting of the society, it shall send a copy of the notification to the F708Authority at least 14 days before the date of the meeting.

2

The F708Authority shall keep the copy of a transfer proposal notification received by it from a building society in the public file of that society.

F712Penalty

Annotations:

Amendments (Textual)

F712

Sch. 17 Pts. I, IA substituted for Sch. 17 Pt. I (1.12.1997) by 1997 c. 32, s. 30(3), Sch. 5 Pts. I, II; S.I. 1997/2668, art. 2, Sch. Pt. I(e)

F7115E

If default is made by a building society in complying with paragraph 5C or 5D above, the society shall be liable on summary conviction to a fine not exceeding level 4 on the standard scale; and so shall any officer who is also guilty of the offence.

Part II Confirmation by F717Authority: Procedure

Annotations:

Amendments (Textual)

F717

Words in Sch. 17 Pt II Heading substituted (17.8.2001 for certain purposes) (1.12.2001 for all purposes) by S.I. 2001/2617, ss. 2, 8, 13 Sch. 3 Pt. II para. 212(a) (with S. 13(3), Sch. 5); S.I. 2001/3538, art. 2

6

An application by a building society for confirmation by the F714Authority of a transfer of its business tschedule 16o a company shall be made in such manner as the F714Authority may F715direct.

7

1

Where a building society applies for confirmation of a transfer of its business, the society shall publish a notice of the application in any one or more of the London Gazette, the Edinburgh Gazette or the Belfast Gazette, as the F716Authority directs and, if it so directs, in one or more newspapers.

2

A notice published in pursuance of sub-paragraph (1) above shall—

a

state that any interested party has the right to make representations to the F716Authority with respect to the application;

b

specify a date determined by the F716Authority before which any written representations or notice of a person’s intention to make oral representations must be received by the F716Authority; and

c

specify a date determined by the F716Authority as the day on which it intends to hear any oral representations.

8

1

After the date specified in the notice in pursuance of paragraph 7(2)(b) above, the Commission shall—

a

determine the time and place at which oral representations may be made;

b

give notice of that determination to the building society making the transfer and any persons who have given notice of their intention to make oral representations; and

c

send copies of the written representations received by the Commission to the building society making the transfer.

2

The Commission shall allow the building society making the transfer an opportunity to comment on the written representations, whether at a hearing or in writing, before the expiration of such period as the Commission specifies in a notice to the society.

SCHEDULE 18 Amendments of Enactments

Section 120.

Part I United Kingdom

M81Bankers’ Books Evidence Act 1879 (c.11)

Annotations:

Marginal Citations

M81

1879 c. 11.

1

In section 9(1) of the Bankers’ Books Evidence Act 1879 (meaning of “bank” and “banker” for purposes of that Act), after paragraph (a) there shall be inserted the following—

aa
a building society (within the meaning of the Building Societies Act 1986);

Land Registration Act 1925 (c.21)

2

In section 25(1) (proprietor’s power to create charges) of the M82Land Registration Act 1925, in paragraph (b), for the words from “under” to “with” there shall be substituted “ (within the meaning of the Building Societies Act 1986), in accordance with. ”

Payment of Wages Act 1960 (c. 37)

3

1

This paragraph amends the M83 Payment of Wages Act 1960 as follows.

2

In section 1(3) (authorised means of payment of wages), after paragraph (a) there shall be inserted—

aa
payment into an account at a building society, being an account standing in the name of the person to whom the payment is due, or an account standing in the name of that person jointly with one or more other persons,

3

In section 2(1) (requirements applicable to authorised payments) after “bank” there shall be inserted “ or building society ”.

4

In section 7(1) (interpretation)—

a

after “way)” in the definition of “account”, there shall be inserted “ and, in relation to a building society, includes a share account and a deposit account (however described) ”,

b

after the definition of “bank”, there shall be inserted—

“building society” means a building society within the meaning of the Building Societies Act 1986;

c

in the definition of “branch”, after “head office of the bank” there shall be inserted, “ and, in relation to a building society, includes the principal office of the society; ”.

Trustee Investments Act 1961 (c. 62)

4

1

This paragraph amends the M84Trustee Investments Act 1961 as follows.

2

In Part II of Schedule 1 (narrower range investments requiring advice), for paragraph 12 there shall be substituted—

12
In deposits with a building society within the meaning of the Building Societies Act 1986.

3

In Part III of Schedule 1 (wider range investments), for paragraph 2 there shall be substituted—

2
In shares in a building society within the meaning of the Building Societies Act 1986.

Stock Transfer Act 1963 (c.18)

5

In section 1(4) of the M85Stock Transfer Act 1963 (simplified transfer of certain securities, not to apply to building society securities), for “1962” there shall be substituted “ 1986 ”.

Industrial and Provident Societies Act 1965 (c.12)

6

In section 31(b) of the M86Industrial and Provident Societies Act 1965 (authorised investments), for “society registered under the Building Societies Acts” there shall be substituted “ building society within the meaning of the Building Societies Act 1986 ”.

Income and Corporation Taxes Act 1970 (c.10)

F7187

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Banking and Financial Dealings Act 1971 (c.80)

8

1

This paragraph amends the M87Banking and Financial Dealings Act 1971 as follows.

2

In section 2(1) (power to suspend financial dealings on bank holidays) after paragraph (g) there shall be inserted—

; and
h
a direction that, subject as aforesaid, no building society shall, on that day, except with permission so granted, effect in the course of its business any transaction or, according as may be specified in the order, a transaction of such kind as may be so specified.

3

In section 2(6) after the definition of “authorised dealer in gold” there shall be inserted—

“building society” means a building society within the meaning of the Building Societies Act 1986.

Local Government Act 1972 (c.70)

9

In Schedule 12A (access to information: exempt information) to the M88Local Government Act 1972—

a

in Part II, in paragraph 2(d) for “1962” there shall be substituted “ 1986 ”; and

b

in Part III, in paragraph 1(1), after the definition of "protected informant’ there shall be inserted the following definition—

“registered”, in relation to information required to be registered under the Building Societies Act 1986, means recorded in the public file of any building society (within the meaning of that Act);

Consumer Credit Act 1974 (c. 39)

10

1

This paragraph amends the M89Consumer Credit Act 1974 as follows.

2

In section 16(1) (consumer credit agreement with certain bodies exempt from regulation) the words “or building society” shall be omitted and, after paragraph (f), there shall be inserted the words

, or
g
a building society.

3

In section 16(3) (Secretary of State’s duty to consult before making orders), after paragraph (d) there shall be inserted the words

or
e
under subsection (1)(g) without consulting the Building Societies Commission and the Treasury.

4

In section 189(1) (definitions), for the definition of “building society” there shall be substituted the following definition—

“building society” means a building society within the meaning of the Building Societies Act 1986;

Solicitors Act 1974 (c.47)

11

1

This paragraph amends the M90Solicitors Act 1974 as follows.

2

In section 32 (accounts rules and trust accounts rules), in subsections (1) and (2), in paragraph (a), after “banks”, there shall be inserted “ or with building societies ” and, in the words following paragraph (c), the word “banks” shall be omitted.

3

In section 33 (interest on clients’ money) in subsections (1) and (3), after “bank”, there shall be inserted “ or with a building society ”.

4

In section 85 (bank accounts)—

a

after “account with a bank” there shall be inserted “ or a building society ”, and

b

in paragraphs (a) and (b) after “bank” there shall be inserted “ or society ”.

5

In section 87(1) (interpretation), after the definition of “bank” there shall be inserted—

“building society” means a building society within the meaning of the Building Societies Act 1986; and a reference to an account with a building society is a reference to a deposit account.

Home Purchase Assistance and Housing Corporation Guarantee Act 1978 (c.27)

F71912

In section 3(1) (building society law) of the M91Home Purchase Assistance and Housing Corporation Guarantee Act 1978, after “determining” there shall be added the word “ (a) ” and at the end of that subsection there shall be added the words—

b
the classification of the advance, or any such further advance, for the purposes of Part III of the Building Societies Act 1986.

Banking Act 1979 (c.37)

F72013

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Charging Orders Act 1979 (c.53)

14

In section 6(1) (interpretation) of the M92Charging Orders Act 1979, in the definition of “building society”, for “1962” there shall be substituted “ 1986 ”.

Finance Act 1982 (c.39)

F72115

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Companies Act 1985 (c.6)

F72216

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Insolvency Act 1985 (c.65)

F72317

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Housing Act 1985 (c. 68)

18

1

This paragraph amends the M93Housing Act 1985 as follows.

2

In section 442(5) (consultations by Secretary of State regarding forms of local authority indemnity agreement) for “Chief Registrar of Friendly Societies" in paragraph (a), there shall be substituted “Building Societies Commission".

3

In section 447 (recognised lending institutions) and in section 448 (recognised savings institutions) for “designated building societies" there shall be substituted “building societies".

F7244

For section 450 (modifications of building society law) there shall be substituted the following section—

450 Modifications of building society law.
So much of an advance by a building society which is partly financed under section 445 (assistance for first-time buyers) or the corresponding Scottish or Northern Ireland provisions as is so financed shall be treated as not forming part of the advance for the purpose of determining—
a
whether the advance, or any further advance made within two years of the date of purchase, is beyond the powers of the society, and
b
the classification of the advance, or any such further advance, for the purposes of Part III of the Building Societies Act 1986.

5

In section 622 (minor definitions) for the definition of “building society" there shall be substituted—

“building society” means a building society within the meaning of the Building Societies Act 1986

Housing Associations Act 1985 (c.69)

19

1

This paragraph amends the M94Housing Associations Act 1985 as follows.

2

Sections 63 to 66 (building society advances) and in section 72 (minor definitions) the definitions of, and in section 73 (index of definitions) the entries relating to, “building society”, “Chief Registrar” and “officer” shall be omitted.

3

In section 84(5) and 86(4) (consultation by Secretary of State regarding building society indemnities) for “Chief Registrar of Friendly Societies” there shall be substituted “ Building Societies Commission ”.

4

In section 101 (minor definitions), for the definition of “building society” there shall be substituted—

“building society” means a building society within the meaning of the Building Societies Act 1986;

Part II Northern Ireland

Industrial and Provident Societies Act (Northern Ireland)1969 (c.24 N.I.)

20

In section 31(b) of the M95Industrial and Provident Societies Act (Northern Ireland) 1969 (authorised investments) for “society registered under the Building Societies Act” there shall be substituted “ building society within the meaning of the Building Societies Act 1986. ”.

M96Payment of Wages Act (Northern Ireland 1970

Annotations:

Marginal Citations

M96

1970 c. 12 (N.I.).

F72521

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Private Streets (Northern Ireland) Order 1980 (S.I. 1980/1086 (N.I.12))

22

In Article 33 (security not to be deemed prior mortgage under Building Societies Acts) of the M97Private Streets (Northern Ireland) Order 1980 for the words from “section 32” where they first occur onwards there shall be substituted “ section 11(2)(d) or (4)(d) of the Building Societies Act 1986 ”.

Housing (Northern Ireland) Order 1981 (S.I. 1981/156 (N.I.3))

23

1

This paragraph amends the M98Housing (Northern Ireland) Order 1981 as follows.

2

In Article 2(2) (interpretation) after the definition of “building regulations” there shall be inserted—

“building society” means a building society within the meaning of the Building Societies Act 1986

F7263

For Article 155 (building society law) there shall be substituted the following section—

155 Modifications of building society law.
So much of an advance by a building society which is partly financed under this Part or sections 445 to 449 of the Housing Act 1985 or the Home Purchase Assistance and Housing Corporation Guarantee Act 1978 as is so financed shall be treated as not forming part of the advance for the purpose of determining—
a
whether the advance, or any further advance made within two years of the date of purchase, is beyond the powers of the society, and
b
the classification of the advance, or any such further advance, for the purposes of Part III of the Building Societies Act 1986.

4

In Article 155A (exclusion of Restrictive Trade Practices Act 1976), after “Scottish Provisions” there shall be inserted “ (namely, sections 445 to 447 of the Housing Act 1985 or the Home Purchase Assistance and Housing Corporation Guarantee Act 1978) ”.

5

In Article 156(5)(b) (consultations by the Department regarding forms of indemnity agreements) for “Registrar of Friendly Societies for Northern Ireland” there shall be substituted “ Building Societies Commission ”.

6

For paragraph 1 of Schedule 10 there shall be substituted—

1
Building Societies.

Property (Discharge of Mortgage by Receipt) (Northern Ireland) Order 1983 (S.I. 1983/766 (N.I.9))

24

In Article 3(10) of the M99Property (Discharge of Mortgage by Receipt) (Northern Ireland) Order 1983, after “applies” in the definition of “mortgage” there shall be inserted “ and, subject to paragraph 2(7) of Schedule 4 to the Building Societies Act 1986, does not include a mortgage to which that paragraph 2 applies. ”.

Housing (Northern Ireland) Order 1983 (S.I. 1983/1118 (N.I.15))

25

In Article 3(4) of the M100Housing (Northern Ireland) Order 1983, in the definition of “building society” for the words from “1962” onwards there shall be substituted “ 1986 ”.

Companies (Northern Ireland) Order 1986

F72726

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

SCHEDULE 19 Repeals and Revocations

Section 120.

Part I Repeals: General

Chapter	Short title	Extent of repeal
37 & 38 Vict. c. 42.	The Building Societies Act 1874.	Section 1.
		Section 4.
		Section 32.
57 & 58 Vict. c. 47.	The Building Societies Act 1894.	Section 8(1).
		Section 29.
8 & 9 Eliz. 2 c. 64.	The Building Societies Act 1960.	Section 72.
		Section 73(1).
		Section 77.
		In Schedule 5, the entry relating to paragraph 4 of section 32 of the Building Societies Act 1874.
9 & 10 Eliz. 2 c. 62.	The Trustee Investments Act 1961.	In Part IV of Schedule 1, paragraphs 3A and 7.
10 & 11 Eliz. 2 c. 37.	The Building Societies Act 1962.
		The whole Act.
1965 c. 32.	The Administration of Estates (Small Payments) Act 1965.	In Schedules 1 and 3, the entries relating to the Building Societies Act 1962.
69 c. 46.	The Family Law Reform Act 1969.	In Schedule 1, the entry relating to the Building Societies Act 1962.
1970 c. 10.	The Income and Corporation Taxes Act 1970.	In section 343(5), the words “union or”.
1974 c. 39.	The Consumer Credit Act 1974.	In section 16, in subsection (1) the words “or building society,” and, in subsections (1)(e) and (3)(c), the word “or”.
1974 c. 46.	The Friendly Societies Act 1974.	In Schedule 10, paragraph 9.
1974 c. 47.	The Solicitors Act 1974.	In section 32, in subsections (1) and (2), the word “banks”.
1974 c. 49.	The Insurance Companies Act 1974.In Schedule 1, the entries relating to	the Building Societies Act 1962.
1978 c. 27.	The Home Purchase Assistance and Housing Corporation Guarantee Act 1978.	In section 3, subsections (2) to (4).
1979 c. 37.	The Banking Act 1979.	In paragraph 6 of Schedule 1, the words from “within” to the end.
		In Schedule 6, paragraphs 6, 7, 16, and 17.
1982 c. 50.	The Insurance Companies Act 1982.	In Schedule 5, paragraphs 3 and 5.
1984 c. 28.	The County Courts Act 1984.	In Schedule 2, paragraph 26.
1985 c. 9.	The Companies Consolidation (Consequential Provisions) Act 1985.	In Schedule 2, the entries relating to the Building Societies Act 1962.
1985 c. 58.	The Trustee Savings Banks Act 1985.	In Schedule 1, paragraph 11(2)(a) and so much of that sub-paragraph as relates to the section 59 specified therein.
1985 c. 61.	The Administration of Justice Act 1985.	Section 66.
1985 c. 68.	The Housing Act 1985.	In section 458, the definition of “designated building society”.
		In section 459, the entry relating to “designated buildings society”.
1985 c. 69.	The Housing Associations Act 1985.	Sections 63 to 66.
		In Section 72, the definitions of “building society”, “Chief Registrar” and “officer”.
		In section 73, the entries relating to “building society”, “Chief registrar” and “officer”.
1985 c. 71.	The Housing (Consequential Provisions) Act 1985.	In Schedule 2, paragraphs 5 and 6.

Part II Revocation Extending to Great Britain

Number	Title	Extent of revocation
S.I. 1981/1488.	The Building Societies (Authorisation) Regulations 1981.	The whole Regulations.

PART III Repeals and Revocations Extending Only to Northern Ireland

Chapter or number	Short title	Extent of repeal or revocation
1967 c. 5 (N.I.).	The Administration of Estates (Small Payments) Act (Northern Ireland) 1967.	In Schedule 1, the entry relating to the Building Societies Act 1874.
1967 c. 31 (N.I.).	The Building Societies Act (Northern Ireland) 1967.	The whole Act.
1969 c. 24 (N.I.).	The Industrial and Provident Societies Act (Northern Ireland) 1969.	In section 101(1), the definition of “Building Societies Acts”.
1969 c. 28 (N.I.).	The Age of Majority Act (Northern Ireland) 1969	In Schedule 1, the entry relating to the Building Societies Act (Northern Ireland) 1967.
1969 c. 31 (N.I.).	The Age of Majority Act (Northern Ireland) 1969.	In Part I of Schedule 1, the entry relating to the Building Societies Act (Northern Ireland) 1967.
1970 c. 18 (N.I.).	The Land Registration Act (Northern Ireland) 1970.	In Schedule 12 the entry relating to the Building Societies Act (Northern Ireland) 1967.
1978 c. 23.	The Judicature (Northern Ireland) Act 1978.	In Schedule 5, in Part II the entry relating to the Building Societies Act (Northern Ireland) 1967.
S.I. 1979/1573 (N.I.12).	The Statutory Rules (Northern Ireland) Order 1979.	In Schedule 4 the entry relating to the Building Societies Act (Northern Ireland) 1967.
1980 c. 25.	The Insurance Companies Act 1980.	In Schedule 3, paragraph 3.
S.I. 1981/156 (N.I.3).	The Housing (Northern Ireland) Order 1981.	Article 156(6).
		In Part II of Schedule 2, the entry relating to the Building Societies Act (Northern Ireland) 1967.
S.R. 1982/155 (N.I.).	The Building Societies (Authorisation) Regulations (Northern Ireland) 1982.	The whole Regulations.
S.I. 1983/776 (N.I.9).	The Property (Discharge of Mortgage by Receipt) (Northern Ireland) Order 1983.	In Article 3(10), in the definition of “mortgage” the words “section 37 of the Building Societies Act (Northern Ireland) 1967”.
S.I. 1983/1118 (N.I.15).	The Housing (Northern Ireland) Order 1983.	In Schedule 10, the entry relating to the Building Societies Act (Northern Ireland) 1967.
1985 c. 71.	The Housing (Consequential Provisions) Act 1985.	In Schedule 2, paragraphs 13, 51(2) and 51(5)(a).
S.I. 1986/1035 (N.I.9).	The Companies Consolidation (Consequential Provisions) (Northern Ireland) Order 1986.	In Part I of Schedule 1, the entry relating to the Building Societies Act (Northern Ireland) 1967.

SCHEDULE 20 Transitional and Saving Provisions

Section 120.

Preliminary

1

In this Schedule—

“the commencement date for” any provision of this Act means the date on which that provision comes into operation;
F728“existing society” means a building society registered at the passing of this Act under the repealed enactments; and
“existing rules” means the rules of a society in force immediately before the commencement date for section 5.

Adoption of powers and alteration of rules

F7292

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F7303

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Default powers

F7314

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Registration with existing authorities

5

A building society which, at the commencement date for section 5, was registered under the M101Building Societies Act (Northern Ireland) 1967 or registered or deemed to be registered in Northern Ireland under the enactments repealed by that Act shall be treated, for the purposes of this Act, as registered with the central office immediately before the commencement of that section.

Authorisation under existing enactments

6

1

A building society which, at the commencement date for section 9 is authorised to raise money and accept deposits under—

a

the M102Building Societies (Authorisation) Regulations 1981, or

b

the M103 Building Societies (Authorisation) Regulations (Northern Ireland) 1982,

shall be treated, whether or not the requirements of subsection (4) of section 9 would be fulfilled in its case, at the commencement of that section as authorised for the purposes of this Act (in particular Part VI).

2

The central office shall record in the public file of each building society to which sub-paragraph (1) above applies the fact that, by virtue of that sub-paragraph, the society is to be treated as authorised for the purposes of this Act.

Anticipation of powers: declaratory provision

F7327

1

It is hereby declared that every building society has had, as from 19th December 1985, power, for the purposes of any power conferred by this Act on building societies or building societies of its description, to do such things, subject to sub-paragraph (2) below, as are reasonably necessary to enable it—

a

to decide whether or not, and to what extent, to exercise (and in the case of an adoptable power to adopt) the power, and

b

if it decides to exercise the power, to exercise it as from the date when it becomes exercisable by the society.

2

Sub-paragraph (1)(b) above does not authorise a society—

a

b

to issue invitations to members of the society or the public to apply for any power to be exercised for their benefit, or

c

to retain shares in a company which offers the public any service or facility within the power;

and, in this sub-paragraph, “conditional”, in relation to contracts with respect to the exercise of a power, means conditional on the power’s becoming exercisable by the society.

3 Unlawful anticipation of powers

F7338

1

Where a building society adopts any adoptable power under paragraph 2 or 3 above—

a

it shall, by virtue of this paragraph, assume an obligation, enforceable as provided in pararaph 9 below, not to exercise that power until the date on which the memorandum of its powers takes effect as respects that power, and

b

it shall send to the central office, with the documents required by paragraph 2(1) or 3(1) above a declaration as respects that power made on behalf of the society which satisfies the requirements of this paragraph.

2

The obligation assumed by virtue of this paragraph on the adoption of a power does not extend to the exercise of any power included in the adoptable power which the society has under the law in force at any time before the registration takes effect.

3

A declaration, to satisfy the requirements of this paragraph, must be made by the chairman of the board of directors of the society, by one other director and by the chief executive of the society and it must either—

a

state that, to the best of the knowledge and belief of the declarants, after due enquiry, the society has not, or has not with the permitted qualification, carried on any activity comprised in the power during the period which began one year before the specified date (or with 1 April 1986, if later) and expired with the date of the meeting at which the power was adopted, or

b

state that, to the best of the knowledge and belief of the declarants, after due enquiry, the society, with specified exceptions, has not, or has not with the permitted qualification, carried on any activity comprised in the power during the period which began one year before the specified date (or with 1 April 1986, if later) and expired with the date of the meeting at which the power was adopted.

4

The qualification of the statement so required which is permitted is that in so far as the society has, at any time during the said period, carried on any activity comprised in the power to which the statement relates, the society had the power to carry on that activity at that time under the law in force at that time.

5

The exceptions to the statement so required must not include activities of the society which constitute significant excesses of its powers during the said period; and a declaration specifying activities as exceptions to the statement so required must also state the opinion of the declarants that the activities are believed not to constitute significant excesses of the society’s powers during the period to which the declaration relates.

Penalty for breach of undertaking

F7349

If, in breach of the obligation assumed by virtue of paragraph 8 above, a building society exercises any power to which the obligation extends, then—

a

the society shall be liable on conviction on indictment or on summary conviction to a fine not exceeding, on summary conviction, the statutory maximum, and

b

every officer of the society who is also guilty of the offence shall be liable, on summary conviction to a fine not exceeding the statutory maximum.

the Commission,

to give to a building society or building societies generally an indication of the action the Commission might or might not take in exercising its functions under this paragraph; and no decision of the Commission under this paragraph shall be liable to be set aside by reason of the indication having been given.

8

In this paragraph “the specified date” has the same meaning as in paragraph 2 or, as the case may be, 3 above.

Permissible securities for advances

F73712

1

Until provision is made by an order under section 10(6) prescribing the descriptions of equitable interests in land which may be taken as security for advances secured on land, building societies may advance money on the security of an equitable interest in land in England and Wales or Northern Ireland in addition to a mortgage of the freehold or leasehold estate where the lease or a related instrument includes provision entitling the leaseholder to acquire a beneficial interest of any extent in the freehold or a greater leasehold interest and the right to acquire that interest is assigned as additional security.

2

Until such provision is made, section 17(10) shall have effect with the substitution of a reference to an equitable interest of the description specified in sub-paragraph (1) above for the reference to an equitable interest specified in an order under section 10(6).

3

On the making of the first order under section 10(6) this paragraph shall cease to have effect.

F73813

Until provision is made by an order under section 12(3) prescribing indemnities given by a local authority as a description of additional security for the purposes of section 11(4)(c), an indemnity given under section 442 of the M104Housing Act 1985, under section 31 of the M105Tenants’ Rights, Etc. (Scotland) Act 1980 or under Article 156 of the M106Housing (Northern Ireland) Order 1981 shall be such a security; and on the making of the first order under section 12(3) this paragraph shall cease to have effect.

Existing business names

F73914

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Directors in office

F74015

1

Except as provided in this paragraph, an existing director shall be treated for the purposes of sections 60 and 61 as having been duly elected a director on the date of his appointment as a director or, as the case may be, of his most recent re-appointment to that office before the commencement date.

2

An existing director who holds office as director by virtue of holding some other position in the society shall, except in a case within sub-paragraph (4) below, be treated for the purposes of sections 60 and 61 as having been duly elected a director at the commencement date.

3

If the term of office of an existing director would, in accordance with the terms on which he holds office, expire on an earlier date than is provided for by sub-paragraph (1) above, he shall vacate office on that earlier date.

4

An existing director who has attained the normal retirement age, or the compulsory retirement age (if any), as the case may be, before the commencement date shall retire from office at the first annual general meeting of the society after the commencement date.

5

If, at the commencement date, an existing director, other than a director falling within sub-paragraph (2) above, has held office since the date of his appointment or most recent re-appointment for a period longer than is provided for in section 60(11)(a), he shall retire from office at the first annual general meeting of the society after the commencement date.

6

In this paragraph—

“the commencement date” means the commencement date for sections 60 and 61;
“existing director” means any director of a building society in office immediately before the commencement date; and
“the compulsory retirement age” and “the normal retirement age” have the meanings given in section 60(8).

Existing financial years

16

In the case of a building society established before 25th August 1894—

a

if—

i

before 1st October 1962 the society had altered its financial year in exercise of the power conferred by section 70(2) of the M107Building Societies Act 1960, or

ii

after that date and before the commencement date for section 117, the society has exercised the corresponding power conferred by section 128(2) of the M108Building Societies Act 1962,

“financial year” shall, after the date on which the society exercised the power, have the meaning given in section 117 and shall (so far as may be relevant for the purposes of this Act) include the period for which the society made up its accounts in the exercise of the power, and

b

subject to the preceding provisions of this paragraph, “financial year” means a period of 12 months ending with the time up to which, at the commencement date for section 117, the accounts of the society were annually made up.

Qualifying assets

F74117

For the purposes of the application of section 118 by reference to the annual accounts of a building society prepared before the first financial year for which accounts under Part VIII of this Act are prepared, the reference to the total commercial assets of a society shall have effect as a reference to the amount in the last balance sheet prepared under the Building Societies Act 1962 which represents the total assets constituted by mortgage debts outstanding to the society.

Provision of conveyancing services for building societies

F74218

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

SCHEDULE 21 Provision of Conveyancing Services by Recognised Institutions and Practitioners

Section 124.

F799...

Annotations:

Amendments (Textual)

F799

Sch. 21 repealed (22.7.2004) by Statute Law (Repeals) Act 2004 (c. 14), Sch. 1 Pt. 17 Group 2