The Building Societies (Designation of Qualifying Bodies) (No. 3) Order 1993

“holds directly or indirectly” means that a body corporate holds shares or corresponding membership rights in another body corporate either directly or through another body corporate (or bodies corporate), or partly directly and partly through another body corporate (or bodies corporate);

methods the same as those set out in section 838 (subsidiaries) of the Income and Corporation Taxes Act20 shall be used to determine an indirect holding as if references to “own” in that section are references to “hold”, and other derivatives of “own” shall be construed accordingly;

references to “ordinary share capital” in section 838 of the Income and Corporation Taxes Act shall be read as references to shares, or as the case may be, corresponding membership rights in a body corporate.

where a society holds 5% or more of the issued shares or corresponding membership rights in a body and becomes aware that any subordinate organisation of that body is, for the time being, within the prohibited range, the society shall, as soon as it is conveniently practicable to do so without undue loss, dispose of sufficient of its shares or corresponding membership rights so that it ceases to hold 5% or more of the issued shares or corresponding membership rights in that body,

within four months after the end of each financial year of a body in which the society, at such financial year end, holds 15% or more of the issued shares or corresponding membership rights, the society shall satisfy itself whether, for such financial year, at least 60% of the gross income of that body, or if the body has any subordinate organisations, at least 60% of the consolidated gross income of the body and such subordinate organisations, is derived from carrying on qualifying activities, and

if, for two successive financial years of a body less than 60% of the gross income (or, if appropriate, consolidated gross income) is derived from carrying on qualifying activities, the society shall, as soon as it is conveniently practicable to do so without undue loss, dispose of sufficient of its shares or corresponding membership rights so that it ceases to hold 15% or more of the issued shares or corresponding membership rights in that body.

for each financial year of the body ending more than 18 months after the acquisition of such shares or corresponding membership rights, within four months after the end of such financial year, the society shall satisfy itself whether at least 40% of the gross income of that body, unless paragraph (b) below applies, or, if an estate agency body has any subordinate organisations, that at least 40% of the consolidated gross income of that body and its subordinate organisations is derived from carrying on estate agency work in countries or territories where estate agency bodies may be incorporated;

if a society holds indirectly 15% or more of the issued shares or corresponding membership rights in an estate agency body which is a subordinate organisation of another estate agency body in which the society directly holds 15% or more of the issued shares or corresponding membership rights, the society need not calculate whether 40% of the gross income of the body in which it indirectly holds 15% or more of the issued shares or corresponding membership rights is derived from carrying on estate agency work in countries or territories where estate agency bodies may be incorporated;

if, in relation to an estate agency body to which paragraph (a) above applies, for two successive financial years of that estate agency body less than 40% of the gross income (or, if appropriate, consolidated gross income as referred to in paragraph (a) above), is derived from carrying on estate agency work, the society shall, as soon as it is conveniently practicable to do so without undue loss, dispose of sufficient of its shares or corresponding membership rights so that is ceases to hold, directly or indirectly, 15% or more of the issued shares or corresponding membership rights in that body.

it is a market maker,

it is an authorised institution, or its business requires it to be authorised, for the purposes of the Banking Act 198721, or it otherwise carries on a deposit taking business in the United Kingdom within the meaning of section 6 of that Act, or

its business includes activities in the range from which the society is restricted within the meaning of paragraph 7 below.

unless the body corporate is authorised or otherwise entitled to carry on insurance business of any class specified in Schedule 1 to the Insurance Companies Act 198222 in any member State or in any country or territory which is listed in paragraph 2(c) or (e) above, or (where applicable) a candidate for authorisation in any such member State, country or territory, or

if the body corporate or any subordinate organisation of the body corporate comes within the description of a general insurance body as specified in this Schedule.

it has not adopted a particular adoptable power, whether because the power is not available to it or for any other reason;

in the case of a body corporate other than an estate agency body, the activity would be in contravention of a restriction upon the extent of a power the society has adopted, being either a restriction derived from the Act or any instrument under the Act or a restriction assumed by the society, or

in the case of an estate agency body, the activity would be in contravention of a restriction upon the extent of a power the society has adopted being either a restriction specified in Part III of Schedule 8 to the Act25 and relating to a power to provide a financial service within the meaning of section 34(11) of the Act or a restriction assumed by the society.

in the case of an ancillary services body which is a subsidiary of a society, bailment of chattels by such body to that society or to any of that society’s subsidiaries in return for periodical payments by the society or any of the society’s subsidiaries, where property in the chattel is vested in the ancillary services body and whether or not the terms of the bailment contain provision for the property in such chattel to become vested in the bailee, and

in the case of any body except Girobank plc, the continuation, during the first fifteen months following the date on which the body corporate first became an associated body of the society, of any activity carried on as part of the business of that body corporate immediately before that date, or

that the power to support a general insurance body does not include any form of guarantee of that body’s liabilities.

has a subordinate organisation which is not within the prescribed range,

is a market maker, or

is carrying on activities in the range from which the society is restricted within the meaning of paragraph 7 above.

a body corporate in which a society has power to invest in and support or support, or

the office of the Banking Ombudsman.

the society shall for each financial year of the body ending more than 18 months after the acquisition of such shares or corresponding membership rights seek to obtain within four months after the end of that year a certificate signed by a director of the body stating that throughout that year the body complied with the determined requirements, and

if no such certificate is so obtained by the society for two successive financial years of the body, the society shall dispose of its shares or corresponding membership rights, as the case may be, in that body, as soon as it is conveniently practicable to do so without undue loss.

a requirement that the body shall maintain a system for ensuring (or shall satisfy itself that adequate arrangements are made for ensuring) the safe custody of all documents relating to property mortgaged to the lending body and property which is subject to a syndicated loan made by the lending body;

a requirement that the lending body will make such arrangements as may be reasonably expected to ensure that, where a lending body lends money on the security of land, other than where the lending body makes a syndicated loan, the body will not lend money on the security of land in circumstances where, if the borrower were a member of the society, the society itself would be unable to make the loan.

any two employers are associated if one is a body corporate of which the other (directly or indirectly) has control, or if both are bodies corporate of which a third person, directly or indirectly has control; and the expression “associated employer” shall be construed accordingly;

“commission” includes any gift, bonus or benefit, and

a person shall be taken to have a financial interest in the disposition of any land if, but only if, he would, on a disposition of that land, be entitled (whether directly or indirectly, and whether in possession or not) to the whole or part of the proceeds of the disposition.

“advance” means the total sum of money, which may be payable in instalments, required to be lent by a lender or lenders to person A, B or C (whichever is appropriate) pursuant to any of the arrangements described in sub–paragraph (2) below;

“all land” means all the land which is to secure an advance;

“beneficial and legal or beneficial interest in the mortgage” shall be deemed, in relation to land situated outside England, Wales and Northern Ireland, to refer to any title in the mortgage;

“expected value” means the value which land is expected to have by the time the last instalment payable pursuant to any arrangement referred to in sub–paragraph (2) below, (and whether or not to be paid or contributed to by the lending body) is paid to person A, B or C (whichever is appropriate);

“land” means land which is situated in the United Kingdom or in any country or territory for the time being designated by order under section 1429 of the Act (power to make advances secured on land overseas);

“lender” means any person who contributes or agrees to contribute to an advance, and any person who acquires a lender’s interest in the mortgage in place of that lender (and does not include any lending body such as referred to in the arrangement described in sub–paragraph (2)(c) below);

“original expected value” means, where all land can be valued at the time when the lending body pays its first contribution to an advance or acquires a right or interest in a mortgage as described in sub–paragraph (2) below, the expected value of all land as determined at that time, or where the expected value of all land cannot be determined at that time, the expected value of land which is to partially secure an advance as determined when the lending body pays its first contribution to an advance or acquires a right or interest in such a mortgage, and

“value of land” for the purposes of sub–paragraph (3) below, means the value of land after deducting from that value any mortgage debt of person A, B or C, whichever is appropriate, outstanding under a mortgage of land at the time the lending body is required to be satisfied of any of the matters referred to in sub–paragraph (3) below.

subject to sub–paragraph (6) below, where the lending body, acting alone or with one or more persons, makes or agrees to make an advance to another person or persons (“known as person A”) pursuant to an arrangement by virtue of which person A grants a mortgage of land to one or more persons (who may or may not be any one or more of the lenders) who may hold the mortgage on trust for, or otherwise hold the mortgage on behalf of the lenders, and the lending body thereby acquires a beneficial and legal or beneficial interest in the mortgage;

subject to sub–paragraph (6) below, where one or more persons has made, or has agreed to make, an advance to another person or persons “known as person B”) pursuant to an arrangement by virtue of which person B grants a mortgage of land to any one or more persons (who may or may not be any one or more of the lenders) who may hold the mortgage on trust for, or otherwise hold the mortgage on behalf of the lenders, and the lending body acquires a beneficial and legal or beneficial interest in the mortgage in place of one or more of the lenders in respect of all or part of the amount lent or to be lent by that lender or lenders under such arrangement, and

if the advance has been made before the time of acquisition by the lending body of the interest or right referred to in sub–paragraph (2) above that, at the time of such acquisition, the advance is not greater than the value of all land;

where paragraph (a) above does not apply, and the advance is not payable by instalments, that the advance does not exceed the value of all land at the time such advance is made;