Retail and other co-operative societies7.

(1)

Without prejudice to regulation 5, the acceptance by a co-operative society of a deposit is an exempt transaction if the society fulfils the requirements of paragraph (2) below and the deposit is not taken in breach of the society’s obligations under the Scheme.

(2)

The requirements of this paragraph are—

(a)

that the society is an industrial and provident society;

(b)

that either—

(i)

the principal business of the society is the sale by retail of goods for the domestic or personal use of individuals dealing with the society, or the provision of services for such individuals; or

(ii)

at least seventy-five per cent. of the votes which may be cast to determine the conduct of the society’s affairs and at least ninety per cent. of its shares by reference to their nominal value are held by qualifying shareholders; or

(iii)

the principal business of the society is the sale of goods or the provision of services to societies fulfilling the requirements of paragraph (i) above; and

(c)

the society participates in the Scheme and accordingly is a Participating Society within the meaning of clause 2(4) thereof.

(3)

In this regulation—

(a)

references to the Scheme are to the Scheme constituted by deed dated the 29th February 1980 between the Co-operative Union Limited of the one part and the Co-operative Bank Limited of the other part (as amended by qualifying resolutions of Participating Societies (as therein defined) dated 29th May 1989 and 15th January 1997) the provisions of which are set out in Schedule 1 to these Regulations, and such references do not include references to the Scheme as subsequently amended or varied;

(b)

the reference to qualifying shareholders is to industrial and provident societies which have the principal business described in paragraph (2)(b)(i) of this regulation and societies which are registered within the meaning of the Friendly Societies Act 197423 or are registered and incorporated within the meaning of the Friendly Societies Act 199224.