The Building Societies (Accounts and Related Provisions) Regulations 1998

Regulation 8

SCHEDULE 8 DIRECTORS' REPORT

Miscellaneous

1.  There shall be stated the names of the persons who, at any time during the financial year, were directors of the society.

2.  The directors' report shall contain—

(a) a statement of the business objectives and activities of the society and of any connected undertaking;

(b) particulars of the events during the financial year considered by the directors of the society to have an important effect on the society or any connected undertaking;

(c) particulars of any events which have occurred since the end of the financial year and which are considered by the directors of the society to have an important effect on the society or any connected undertaking; and

(d) an indication of the opinion of the directors of the society as to the developments which they consider likely to happen in the business of the society or any connected undertaking.

Land and buildings

3.  If, in the case of such of the fixed assets of the society or of any subsidiary undertaking as consist in interests in land and buildings, their market value (as at the end of the financial year) differs substantially from the amount at which they are included in the balance sheet, and the difference is, in the directors' opinion, of such significance as to require that the attention of members of the society should be drawn to it, the report shall indicate the difference with such degree of precision as is practicable.

Political and charitable gifts

4.—(1) The following applies if the society or any subsidiary undertaking of the society has in the financial year given money for political purposes or charitable purposes or both.

(2) If the money given exceeded £200 in amount, there shall be contained in the directors' report for the year—

(a) in the case of each of the purposes for which the money has been given, a statement of the amount of money given for that purpose; and

(b) in the case of political purposes for which money has been given, the following particulars (so far as is applicable)—

(i) the name of each person to whom money has been given for those purposes exceeding £200 in amount and the amount of money given; and

(ii) if money exceeding £200 in amount has been given by way of donation or subscription to a political party, the identity of the party and the amount of money given.

(3) For the purposes of this paragraph a society or a subsidiary undertaking is to be treated as giving money for political purposes if, directly or indirectly—

(a) it gives a donation or subscription to a political party of the United Kingdom or any part of it; or

(b) it gives a donation or subscription to a person who, to the society’s knowledge (or, as the case may be, that of the subsidiary undertaking), is carrying on, or proposing to carry on, any activities which can, at the time at which the donation or subscription was given, reasonably be regarded as likely to affect public support for such a political party as is mentioned.

(4) For the purposes of this paragraph money given for charitable purposes to a person who, when it was given, was ordinarily resident outside the United Kingdom shall be left out of account.

(5) In this paragraph, “charitable purposes” means purposes which are exclusively charitable; and, as respects Scotland, “charitable” is to be construed as if it were contained in the Income Tax Acts.

Directors' interests

5.—(1) Subject to sub-paragraphs (2) and (3), the directors' report shall state the following, with respect to each person who, at the end of the financial year, was a director of the society—

(a) whether or not he was at the end of that year interested in shares in, or debentures of, any connected undertaking of the society; and

(b) if he was so interested—

(i) the number and amount of shares in, and debentures of, each such undertaking (specifying it) in which he was then interested;

(ii) whether or not he was, at the beginning of that year (or, if he was not then a director, when he became one), interested in shares in, or debentures of, that or any other such undertaking; and

(iii) if he was, the number and amount of shares in, and debentures of, each undertaking (specifying it) in which he was interested at the beginning of the financial year or (as the case may be) when he became a director.

(2) The particulars required by sub-paragraph (1) may be given by way of notes to the society’s annual accounts in respect of the financial year, instead of being stated in the directors' report.

(3) Particulars required by sub-paragraph (1) are not required to be given in respect of directors' nominee shareholdings, held on behalf of the society.

(4) Any changes in the details disclosed under sub-paragraph (1) between the end of the year and the relevant date must be disclosed in the directors' report and any such change after that date may be so disclosed.

(5) For the purposes of sub-paragraph (4) “the relevant date” is—

(a) the date one month prior to the date of the notice of the society’s annual general meeting; or

(b) if earlier, the date on which approval, under section 80 of the Act, of components of the annual accounts is completed.

(6) In this paragraph, the interest of the wife, husband, infant son or infant daughter of a director of a society (not being himself or herself a director of the society) is to be treated as an interest of the director; and “son” includes step-son and “daughter” includes step-daughter and “infant” means, in relation to Scotland, a person under the age of 18 years.

(7) In this paragraph, any reference to an interest of a director, or any other person mentioned in sub-paragraph (6), in shares or debentures shall be interpreted in accordance with Part I of Schedule 13 to the Companies Act 1985.

Employee information

6.—(1) This paragraph applies to the directors' report where the average number of persons employed by the society in each month during the financial year exceeded 250.

(2) For the purposes of sub-paragraph (1) the average number is the quotient derived by dividing, by the number of complete calendar months in the financial year, the number derived by ascertaining, in relation to each of those months, the number of persons who, under contracts of service, were employed in the month (whether throughout it or not) by the society, and adding up the numbers ascertained.

(3) The directors' report shall where this paragraph applies contain a statement describing such policy as the society has applied during the financial year—

(a) for giving full and fair consideration to applications for employment by the society made by disabled persons, having regard to their particular aptitudes and abilities;

(b) for continuing the employment of, and for arranging appropriate training for, employees of the society who have become disabled persons during the period when they were employed by the society; and

(c) otherwise for the training, career development and promotion of disabled persons employed by the society.

(4) The directors' report shall where this paragraph applies also contain a statement describing the action that has been taken during the financial year to introduce, maintain or develop arrangements aimed at—

(a) providing employees systematically with information on matters of concern to them as employees;

(b) consulting employees or their representatives on a regular basis so that the views of employees can be taken into account in making decisions which are likely to affect their interests;

(c) encouraging the involvement of employees in the society’s performance; and

(d) achieving a common awareness on the part of all employees of the financial and economic factors affecting the performance of the society.

(5) In this paragraph—

(a) “employment” means employment other than employment to work wholly or mainly outside the United Kingdom, and “employed” and “employee” shall be construed accordingly; and

(b) “disabled person” has the same meaning as in the Disability Discrimination Act 1995(1).

Percentages

7.—(1) The directors' report shall disclose, in accordance with sub-paragraph (2)—

(a) free capital as a percentage of the total of Liability items A to D in Part I or II of Schedule 2; and

(b) gross capital as a percentage of the total of Liability items A to D in Part I or II of Schedule 2.

(2) The matters required to be disclosed by sub-paragraph (1) shall be disclosed—

(a) where the society is a single accounts society, in relation to the society; and

(b) where the society is a group accounts society, in relation to the society and its subsidiary undertakings.

Mortgage arrears

8.  The directors' report shall disclose in respect of mortgage accounts of the society and of any subsidiary undertaking twelve or more months in arrears at the balance sheet date—

(a) the number of such accounts;

(b) the total amount (before any provision for bad and doubtful debts or interest in suspense) outstanding on such accounts which is included in Asset item B in Part I or II of Schedule 2; and

(c) the total amount of arrears on such accounts.

Supplier payment policy

9.—(1) The directors' report shall state, with respect to the next following financial year—

(a) whether in respect of some or all of its suppliers it is the society’s policy to follow any code or standard on payment practice and, if so, the name of the code or standard and the place where information about, and copies of, the code or standard can be obtained,

(b) whether in respect of some or all of its suppliers it is the society’s policy—

(i) to settle the terms of payment with those suppliers when agreeing the terms of each transaction,

(ii) to ensure that those suppliers are made aware of the terms of payment, and

(iii) to abide by the terms of payment,

(c) where the society’s policy is not as mentioned in sub-paragraph (a) or (b) in respect of some or all of its suppliers, what its policy is with respect to the payment of those suppliers,

and if the society’s policy is different for different suppliers or classes of suppliers, the report shall identify the suppliers to which the different policies apply.

• In this sub-paragraph references to the society’s suppliers are references to persons who are or may become its suppliers.

(2) The report shall also state the number of days which bears to the number of days in the financial year the same proportion as

X bears to Y

where—

X

=

the aggregate of the amounts which were owed to trade creditors at the end of the year; and

Y

=

the aggregate of the amounts in which the society was invoiced by suppliers during the year.

(3) For the purposes of sub-paragraphs (1) and (2) a person is a supplier of the society at any time if—

(a) at that time, he is owed an amount in respect of goods or services supplied, and

(b) that amount would be included under the heading corresponding to liability item E.4 (trade creditors) in Format 1 of the balance sheet formats set out in Part I of Schedule 4 to the Companies Act 1985(2) if—

(i) the society’s accounts fell to be prepared as at that time,

(ii) those accounts were prepared in accordance with Schedule 4 to the Companies Act 1985, and

(iii) that Format were adopted.

(4) For the purposes of sub-paragraph (2), the aggregate of the amounts which at the end of the financial year were owed to trade creditors shall be taken to be the amounts which would be shown under the heading corresponding to liability item E.4 (trade creditors) in Format 1 of the balance sheet formats set out in Part I of Schedule 4 to the Companies Act 1985 if the society’s accounts were prepared in accordance with Schedule 4 and that Format were adopted.

New activities

10.  The directors' report shall describe any activities in which the society or any of its subsidiary undertakings has engaged during the financial year of a different nature from the activities in which it has previously engaged.

(1)

1995 c. 50.

(2)

1985 c. 6; Part I of Schedule 4 was amended by section 4(2) of and Schedule 1 to the Companies Act 1989 (c. 40) and by S.I. 1996/189.