Part X Dissolution, Winding Up, Mergers and Transfer of Business

Mergers

95 Mergers; provisions supplementing ss. 93 and 94. C1

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 central office, of the receipt by the society of proposals for a transfer of engagements or an amalgamation.

3

Where application is made to the Commission for confirmation of an amalgamation or transfer of engagements it shall, except as provided in subsections (4) to (9) 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 Commission shall not confirm an amalgamation or transfer of engagements if it considers that—

a

some information material to the members’ decision about the amalgamation or transfer was not made available to all the members eligible to vote; or

b

the vote on any resolution approving the amalgamation or transfer does not represent the views of the members eligible to vote; or

c

some relevant requirement of this Act or the rules of any of the societies participating in the amalgamation or transfer was not fulfilled or not fulfilled as regards that society.

5

The Commission shall not be precluded from confirming an amalgamation or transfer of engagements by virtue only of the non-fulfilment of some relevant requirement of this Act or the rules of a society if it appears to the Commission that it could not have been material to the members’ decision about the amalgamation or transfer and the Commission gives a direction that the failure is to be disregarded for the purposes of this section.

6

Where the Commission would be precluded from confirming an amalgamation or transfer of engagements by reason of any of the defects specified in paragraphs (a), (b) and (c) of subsection (4) above, it may direct any building society concerned—

a

to take such steps to remedy the defect or defects, including the calling of a further meeting, as it specifies in the direction; and

b

to furnish the Commission with evidence satisfying it that it has done so;

and, if the Commission is satisfied that the steps have been taken and the defect or defects has or have been substantially remedied; the Commission shall confirm the amalgamation or transfer; but, if it is not so satisfied, it shall refuse its confirmation.

7

The Commission shall not confirm an amalgamation of or transfer of engagements between any two building societies one of which does not have a qualifying asset holding and is, for the purposes of this subsection, of disproportionate size in relation to the other unless the Commission is satisfied that, as regards the smaller society, the amalgamation or transfer—

a

has the requisite support of its members, or

b

is desirable in order to protect the investments of shareholders and depositors.

8

For the purposes of subsection (7) above—

a

one society is of “disproportionate size” in relation to another if its total assets amount to less than one eighth of the total assets of the other;

b

“the requisite support”, in relation to the members of a society, is constituted by the votes of not less than 20 per cent. of the members qualified to vote on a special resolution of the society cast in favour of the special resolution approving the terms of the amalgamation or transfer of engagements; and

c

“total assets”, in relation to a building society, means its total assets as shown in the latest balance sheet.

9

Where more than two building societies propose an amalgamation or transfer of engagements and, by virtue of subsection (7)(a) above the Commission refuses to confirm the amalgamation or transfer because of the failure of the smaller of any two of the societies that are of disproportionate size to secure the requisite support, the Commission shall refuse to confirm the amalgamation or transfer in relation to the other societies participating in the amalgamation or transfer.

10

A failure to comply with a relevant requirement of this Act or any rules of a society shall not invalidate an amalgamation or transfer of engagements; 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.

11

In this section “relevant requirement", with reference to this Act or the rules of a society, means a requirement of section 93 or 94 or this section or of Schedule 16 to this Act or of any rules prescribing the procedure to be followed by the society in approving or effecting an amalgamation or transfer of engagements.