SCHEDULES
C1SCHEDULE 15 Amalgamations, Transfers of Engagements and Conversion: Supplementary
Part II Confirmation by F51appropriate authority
Words in Sch. 15 Pt. 2 heading substituted (1.4.2013) by The Financial Services Act 2012 (Mutual Societies) Order 2013 (S.I. 2013/496), art. 1(1), Sch. 9 para. 56(5) (with Sch. 12)
Applications for confirmation
5
1
An application by a friendly society for confirmation by the F54appropriate authority—
a
of an amalgamation under section 85 above,
b
of a transfer of engagements of a friendly society under section 86 above, or
c
of the conversion of a friendly society into a company under section 91 above,
2
An application for confirmation of an amalgamation shall be made jointly by the friendly societies concerned.
F23
The F55appropriate authority may, on the application or with the consent of a friendly society, direct in relation to any provision of regulations made for the purposes of sub-paragraph (1) above that the provisions shall not apply to the society, or shall apply to it with such modifications as may be specified in the direction.
F24
A direction under sub-paragraph (3) above may be subject to conditions.
F25
F535A
The PRA must send the FCA a copy of any direction, variation or revocation it makes under this paragraph.
F26
Where the F57appropriate authority—
a
makes a direction under subsection (3) above, or
b
revokes or varies such a direction,
F58the FCA must cause the direction, variation or revocation to be entered on a register kept by it for the purposes of this subsection.
F27
The register kept for the purposes of subsection (6) above shall be available for inspection on reasonable notice by members of the public.
F28
a
any direction made F60... under subsection (3) above, and
b
any revocation or variation of any such direction,
F4. . . in the public file of the society to which it relates.
6
1
Where a friendly society applies for confirmation of an amalgamation, transfer or conversion, it shall publish a notice of the application—
a
in one or more of the London Gazette, the Edinburgh Gazette or the Belfast Gazette, as the Commission directs, and,
b
if it so directs, in one or more newspapers.
F51A
Where an application for confirmation of a transfer is made by a friendly society to which section 37(2) or (3) above applies and F6. . .-
2
The notice shall—
a
state that any interested party has the right to make representations to the F66appropriate authority with respect to the application;
b
c
specify a date determined by the F66appropriate authority as the day on which it intends to hear any oral representations.
3
Where a friendly society participating in a transfer is required under section 88 above to furnish an actuary’s report, the society shall publish a notice in the manner required by sub-paragraph (1) above—
a
stating that such a report has been obtained;
F10b
stating–
i
the addresses of the offices of the society, and
ii
where the society is directed in accordance with sub–paragraph (1A) above to publish a notice of the application in two national newspapers in a State other than the United Kingdom, the address of such place in that State as the F66appropriate authority directs,
at which copies of the report shall be available for inspection for a period of not less than 21 days beginning with the date of the first publication of the notice; and
- c
containing such particulars of any other matter relating to the report which the F66appropriate authority requires in the case of the transfer in question;
and such a society may include the notice required by this sub-paragraph in the notice required by sub-paragraph (1) above.
7
After the date specified in the notice in pursuance of paragraph 6(2)(b) above, the F67appropriate authority shall—
a
determine the time and place at which oral representations may be made;
b
give notice of that determination to the friendly society applying for confirmation and to any persons who have give notice of their intention to make oral representations; and
c
send copies of any written representations received by the F67appropriate authority to that society;
Confirmation by F49appropriate authority: General
Words in Sch. 15 para. 8 cross-heading substituted (1.4.2013) by The Financial Services Act 2012 (Mutual Societies) Order 2013 (S.I. 2013/496), art. 1(1), Sch. 9 para. 56(8) (with Sch. 12)
8
1
Where an application is duly made for confirmation by the F52appropriate authority of an amalgamation, transfer of engagements or conversion, the F52appropriate authority shall confirm the amalgamation, transfer or conversion unless it is precluded from doing so by any of the following provisions of this Schedule.
2
If it appears to the F52appropriate authority, in relation to any amalgamation or transfer of engagements, that there is a substantial risk that the successor society or the person taking the transfer will not be able lawfully to carry out the engagements to be transferred to it under section 85(4) or 86(5) above, the F52appropriate authority—
a
shall not confirm the amalgamation or transfer; and
b
where it has confirmed the amalgamation or transfer, shall F11. . . withdraw its confirmation;
but it may not withdraw its confirmation on or after the transfer date for the amalgamation or transfer.
3
9
1
Subject to sub-paragraph (3) below, the F52appropriate authority shall not confirm an amalgamation or transfer if it considers that—
a
some information material to the members’ decision (including any decision on an affected members’ resolution under section 86 above) about the amalgamation or transfer was not made available to all the members eligible to vote;
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 friendly society participating in the amalgamation or transfer was not fulfilled or not fulfilled as regards that society.
2
Subject to sub-paragraph (3) below, the F52appropriate authority shall not confirm the conversion of a society if it considers that—
a
some information material to the members’ decision about the conversion was not made available to all the members eligible to vote;
b
the vote on any resolution approving the conversion does not represent the views of the members eligible to vote;
F12c
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
d
some relevant requirement of this Act or the rules of the society was not fulfilled.
3
The F52appropriate authority shall not be precluded from confirming an amalgamation, transfer or conversion by virtue only of the non-fulfilment of some relevant requirement of this Act or the rules of a friendly society if it appears to the F52appropriate authority that it could not have been material to the members’ decision about the amalgamation, transfer or conversion and the F52appropriate authority gives a direction that the failure is to be disregarded for the purposes of this paragraph.
10
1
Where the F52appropriate authority would be precluded—
a
from confirming an amalgamation or transfer by reason of any of the defects specified in paragraph 9(1) above, or
b
from confirming a conversion by reason of any of the defects specified in paragraph 9(2) above, F13or
c
from confirming a conversion by reason of paragraph 11 below,
it may give to any friendly society participating in the amalgamation or transfer or, as the case may be, to the society proposing to convert a direction under sub-paragraph (2) below.
2
A direction under this sub-paragraph is a direction requiring a friendly society—
a
to take such steps to remedy the defect or defects, including the calling of a further meeting, F14or (as the case may be) to remove the risk referred to in paragraph 11 below, as are specified in the direction; and
b
to furnish the F52appropriate authority with evidence that those steps have been taken;
F17. . .
Cross-heading repealed (1.12.2001) by S.I. 2001/2617, arts. 2, 13(2), Sch. 4 (with art. 13(3), Sch. 5); S.I. 2001/3538, art. 2(1)
F1611
The F61appropriate authority shall not confirm an amalgamation, transfer of engagements or conversion unless it is satisfied that there is no substantial risk that the successor society, the proposed transferee, or the company into which the society is converted, will not have—
a
such permission (if any) under F62Part 4A of the Financial Services and Markets Act 2000, or
b
such permission (if any) 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 amalgamation, transfer or conversion without contravening section 19 of that Act (the general prohibition).
F5011A
1
The PRA must consult the FCA before confirming an amalgamation, transfer of engagements or a conversion.
2
The PRA must notify the FCA if it makes any such confirmation.
Confirmation of transfers of engagements
12
The F68appropriate authority shall not confirm a transfer unless it is satisfied—
a
that all the engagements included in the transfer may be transferred under section 86 above to the transferee;
b
that the transfer is in the interests of the members of each friendly society participating in the transfer; and
c
where the transfer is not of all the engagements of the transferor, that the purposes of each friendly society participating in the transfer will, after the transfer, continue to include the carrying on of one or more activities falling within Schedule 2 to this Act.
F1813
1
The F63appropriate authority shall not confirm a transfer in any case where the transferee is required by section 87 above to furnish the F63appropriate authority with a report unless it is satisfied (after taking the proposed transfer into account) either that the transferee will possess the margin of solvency required by rules made by the F64appropriate authority under Part 9A of the Financial Services and Markets Act 2000 or, where no margin of solvency is required by such rules, that the value of the transferee’s assets will exceed its liabilities.
2
The F63appropriate authority shall not confirm a transfer of any engagements the fulfilment of which will constitute effecting or carrying out contracts of insurance in the United Kingdom unless it is satisfied (after taking the proposed transfer into account) either that the transferee will possess the margin of solvency required by rules made by the F64appropriate authority under Part 9A of the Financial Services and Markets Act 2000 or, where no margin of solvency is required by such rules, that the value of the transferee’s assets will exceed its liabilities.
3
This paragraph does not apply to any transfer of engagements to which paragraph 15 or 15A below applies.
4
The reference in sub-paragraph (2) to effecting or carrying out contracts of insurance must be read with—
a
section 22 of the Financial Services and Markets Act 2000;
b
any relevant order under that section; and
c
Schedule 2 to that Act.
F7814
The Commission shall not confirm a transfer of any engagements the fulfilment of which will constitute the carrying on in the United Kingdom of insurance business unless it is satisfied—
a
that the proposed transferee will be able to fulfil the engagements without authorisation under Part I of the Insurance Companies Act 1982 or section 32 of this Act; or
b
that there is no substantial risk that the proposed transferee will not have such authorisation as will permit it to fulfil them.
F1915
1
This paragraph applies to any transfer of engagements (other than contracts of reinsurance) where–
a
the effecting of the engagements constituted the carrying on of general business;
b
the transferor is a friendly society to which section 37(3) above applies; and
c
the transferee is–
i
a friendly society to which section 37(2) or (3) above applies;
F72ii
a UK firm which has an EEA right deriving from any of the insurance directives;
F73iii
an EEA firm of the kind mentioned in paragraph 5(d) of Schedule 3 to the Financial Services and Markets Act 2000;
F74iv
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F75v
an insurance company whose head office is in Switzerland, which has permission under F77Part 4A of the Financial Services and Markets Act 2000 to effect or carry out contracts of insurance, which permission is not limited to reinsurance business;
vi
an insurance company whose margin of solvency is required to be supervised in accordance with F81Article 166 or 167 of the Solvency 2 Directive.
2
The F65appropriate authority shall not confirm the transfer unless–
F20a
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
b
it is F21. . . satisfied that every policy included in the transfer evidences a contract which was entered into before the date of the application;
c
the relevant authority certifies that the transferee possesses the necessary margin of solvency after taking the proposed transfer into account; and
d
where the establishment from which the policies are to be transferred is situated in F22an EEA State other than the United Kingdom, the F65appropriate authority is satisfied–
i
that the supervisory authority in that F22EEA State has been consulted about the proposed transfer; and
ii
either that the authority has responded or that the period of three months beginning with the consultation has elapsed.
3
Where, as regards any policy F23. . . which is included in the proposed transfer, the risk is situated in a F22an EEA State other than the United Kingdom, the F65appropriate authority shall not confirm the transfer unless it is satisfied–
a
that the supervisory authority in that F22an EEA State has been notified of the proposed transfer;
b
either that the authority has consented to the transfer or that the authority has not refused its consent to the transfer within the period of three months beginning with the notification.
F244
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .
F255
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .
F766
In this paragraph “the relevant authority" means—
a
if the transferee falls within paragraph (1)(c)(iii), its home state regulator;
b
if the transferee falls within paragraph (1)(c)(v), the supervisory authority in Switzerland;
c
if the transferee falls within paragraph (1)(c)(vi), the F65appropriate authority or other supervisory body responsible for the supervision;
d
in any other case, the F65 appropriate authority.
F2615A
1
This paragraph applies to any transfer of engagements (other than contracts of reinsurance) where–
a
the effecting of the engagements constituted the carrying on of long term business;
b
the transferor is a friendly society to which section 37(3) above applies; and
c
the transferee is–
i
a friendly society to which section 37(2) or (3) above applies;
F27ii
a UK firm which has an EEA right deriving from any of the insurance directives;
F28iii
an EEA firm of the kind mentioned in paragraph 5(d) of Schedule 3 to the Financial Services and Markets Act 2000;
iv
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
v
an insurance company whose margin of solvency is required to be supervised in accordance with F80Article 166 or 167 of the Solvency 2 Directive.
2
The F69appropriate authority shall not confirm the transfer unless–
F29a
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
b
the relevant authority certifies that the transferee possesses the necessary margin of solvency after taking the proposed transfer into account; and
c
where the establishment from which the policies are to be transferred is situated in F30an EEA State other than the United Kingdom, the F69appropriate authority is satisfied–
i
that the supervisory authority in that F30 EEA State has been consulted about the proposed scheme; and
ii
either that the authority has responded or that the period of three months beginning with the consultation has elapsed.
3
Where, as regards any policy F31. . . which is included in the proposed transfer, F30an EEA State other than the United Kingdom, is the State in which the commitment is situated, the F69appropriate authority shall not confirm the transfer unless it is satisfied–
a
that the supervisory authority in that F30an EEA State has been notified of the proposed scheme; and
b
either that the authority has consented to the scheme or that the authority has not refused its consent to the scheme within the period of three months beginning with the notification.
F324
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .
F335
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .
F346
In this paragraph “the relevant authority" means—
a
if the transferee falls within paragraph (1)(c)(iii), its home state regulator;
b
if the transferee falls within paragraph (1)(c)(v), the F69appropriate authority or other supervisory body responsible for the supervision;
c
in any other case, the F69appropriate authority.
F7916
The Commission shall not confirm a transfer to a friendly society of engagements the fulfilment of which will constitute the carrying on in the United Kingdom of non-insurance business of any description unless it is satisfied that there is no substantial risk that the society will not be authorised under section 32 above to carry on non-insurance business of that description.
F45Rights of policy holders
Sch. 15 para. 16A and Cross-heading inserted (1.9.1994) by S.I. 1994/1984, reg. 25, Sch. 4 para. 5
F3516A
1
This paragraph applies where the F70appropriate authority confirms a transfer in accordance with paragraph 15 above and F36. . .–
F37.
F39b
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2
The F70appropriate authority shall direct that–
a
b
the notice shall specify the period during which the policy holder may exercise any right to cancel the policy;
and the instrument shall not bind the policy holder if either such a notice is not so published or the policy holder exercises any such right during the period so specified.
3
a
whether the policy holder has a right to cancel the policy; and
b
the conditions applicable to any such right.
F4016B
1
This paragraph applies where the F71appropriate authority confirms a transfer in accordance with paragraph 15A above and F41. . .–
F42 .
F44b
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2
The F71appropriate authority shall direct that–
a
b
the notice shall specify the period during which the policy holder may exercise any right to cancel the policy;
and the instrument or order shall not bind the policy holder if either such a notice is not so published or the policy holder exercises any such right during the period so specified.
3
The law of the F43 EEA StateF41. . . which is the State in which the commitment is situated shall determine–
a
whether the policy holder has a right to cancel the policy; and
b
the conditions applicable to any such right.
Effect of failure to comply with relevant requirements
17
A failure to comply with a relevant requirement of this Act or any rules of a friendly society shall not invalidate any amalgamation, transfer of engagements or conversion; but a society which—
a
participates in an amalgamation or transfer or converts into a company; and
b
fails without reasonable excuse to comply with such a requirement;
shall be guilty of an offence and liable on summary conviction to a fine not exceeding level 4 on the standard scale.
Interpretation
F4618
1
In this Part of this Schedule expressions used which are defined in F47Schedule 3 to the Financial Services and Markets Act 2000 but are not defined for the purposes of this Part of this Schedule have the same meaning as they have for the purposes of that Act.
2
In this Part of this Schedule–
“policy" means a contract (other than a contract of reinsurance) the effecting of which by a friendly society to which section 37(2) or (3) above applies constituted the carrying on of insurance business of any class;
“policy holder" means a member whose contract with such a society is a contract the effecting of which by the society constituted the carrying on of insurance business (other than reinsurance business) of any class;
“relevant requirement", with reference to this Act or the rules of a friendly society, means a requirement of this Part of 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 or its conversion into a company.
F483
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sch. 15: power to modify conferred (16.1.2009) by Building Societies (Funding) and Mutual Societies (Transfers) Act 2007 (c. 26), ss. 3, 6(2); S.I. 2009/36, art. 2