The Building Societies (Accounts and Related Provisions) Regulations 1998

Regulation 11

SCHEDULE 11 INTERPRETATION OF SCHEDULES

1.  The following paragraphs apply for the purposes of the interpretation of the Schedules to these Regulations.

Balance sheet date

2.  “Balance sheet date”, in relation to a balance sheet, means the date as at which the balance sheet was prepared.

Capital

3.—(1) “Gross capital” means reserves as shown in the balance sheet plus any subordinated liabilities, subscribed capital, revaluation reserves and minority interests, where applicable, as shown in the balance sheet.

(2) “Free capital” means the aggregate of gross capital and general provisions for bad and doubtful debts less intangible fixed assets and tangible fixed assets, as shown in the balance sheet.

Leases

4.  In respect of leases—

“long lease” means a lease in the case of which the portion of the term for which it was granted remaining unexpired at the end of the financial year is not less than 50 years;

“short lease” means a lease which is not a long lease; and

“lease” includes an agreement for a lease.

Listed securities

5.  “Listed security” means a security listed on a stock exchange in an EEA State or on any stock exchange not in an EEA State which meets criteria agreed between the Financial Services Authority and the Stock Exchange and is included in a list maintained by the Stock Exchange for the purposes of the rules of the Stock Exchange(1) and the expression “unlisted security”shall be construed accordingly.

Loans

6.  A loan is treated as falling due for repayment, and an instalment of a loan is treated as falling due for payment, on the earliest date on which the lender could require repayment or (as the case may be) payment, if he exercised all options and rights available to him.

Materiality

7.  No provision of these Regulations requiring the inclusion of amounts in a particular account, or in notes to the annual accounts (other than paragraphs 4 to 11, 13, 14(3)(b) and 35 of Schedule 5), shall be taken to prohibit the disregarding of an amount which, in the particular context of that provision, is immaterial.

Participating interest

8.  “Participating interest” has the meaning given to that phrase in section 260 of the Companies Act 1985(2).

Provisions

9.—(1) References to provisions for depreciation or diminution in value of assets are to be taken as references to any amount written off by way of providing for depreciation or diminution in value of assets.

(2) Any reference in an income and expenditure account to the depreciation of, or amounts written off, assets of any description is to be taken as a reference to any provision for depreciation or diminution in value of assets of that description.

(3) References to provisions for liabilities and charges are to be taken as a reference to any amount retained as reasonably necessary for the purpose of providing for any liability or loss which is either likely to be incurred, or certain to be incurred but uncertain as to amount or as to the date on which it will arise.

Scots land tenure

10.  In the application of these Regulations in Scotland, “land of freehold tenure” means land in respect of which the society (or, as the case may be, a subsidiary undertaking of the society) is the proprietor of the dominium utile or, in the case of land not held on feudal tenure, is the owner, and “land of leasehold tenure” means land of which the society (or, as the case may be, a subsidiary undertaking of the society) is the tenant under a lease.

Staff costs

11.—(1) “Social security costs” means any contribution by the society to any state social security or pension scheme, fund or arrangement.

(2) “Pension costs” includes any costs incurred by the society in respect of any pension scheme established for the purpose of providing pensions for persons currently or formerly employed by the society, any sums set aside for the future payment of pensions directly by the society to current or former employees and any pensions paid directly to such persons without having been first set aside.

(3) Any amount stated in respect of the item “social security costs” or in respect of the item “wages and salaries” in the society’s income and expenditure account shall be determined by reference to payments made or costs incurred in respect of all persons employed by the society during the financial year.

Amounts repayable

12.  Only those amounts which can at any time be withdrawn without notice or for which a maturity or period of notice of twenty-four hours or one working day has been agreed shall be regarded as repayable on demand.

Other defintions

13.  In the Schedules to these Regulations—

“credit institution” means an undertaking carrying on a deposit-taking business within the meaning of the Banking Act 1987(3) and authorised by the competent authorities of an EEA State or any other State;

“EEA State” means a State which is a Contracting Party of the Agreement on the European Economic Area signed at Oporto on 2nd May 1992(4) as adjusted by the Protocol signed at Brussels on 17th March 1993(5);

“financial fixed asset” means securities held as fixed assets; participating interests and shareholdings in subsidiary undertakings shall always be regarded as financial fixed assets;

“fixed assets” means assets of a society which are intended for use on a continuing basis in the society’s activities, and “current assets” means assets not intended for such use;

“liquid assets” means an asset of a society which is shown under Asset item A in Part I or II of Schedule 2;

“sale and repurchase transaction” means a transaction which involves the transfer by a credit institution or a customer (the “transferor”) to another credit institution or customer (the “transferee”) of assets subject to an agreement that the same assets will subsequently be transferred back to the transferor at a specified price on a date specified or to be specified by the transferor; but forward exchange transactions, options, transactions involving the issue of fixed income securities with a commitment to repurchase all or part of the issue before maturity or any similar transactions shall not be regarded as sale and repurchase transactions; and

“third party” means a person who is neither the society nor a connected undertaking.

(1)

The list and the rules may be obtained from the Listing Department, Capital Markets Division, the London Stock Exchange Limited, London EC2N 1HP.

(2)

1985 c. 6; section 260 was inserted by section 22 of the Companies Act 1989 (c. 40).

(3)

1987 c. 22.

(4)

Cm. 2073.

(5)

Cm. 2183.