BUILDING SOCIETIES ACT, 1989

Type Act

Publication 1989-07-12

Last updated 2021-01-05

State Partially repealed superseded text

Text As published

Source Irish Statute Book

articles 127

This is the act as published. Later amendments are not folded into the text below: each one is a separate act in this repository and an entry in this law's history.

36 amending acts · 2021-01-05, S.I. No. 710/2020 - European Union (Capital Requirements) (Amendment) Regulations 2020

Reform history JSON API

(2)
(a) The Revenue Commissioners shall grant to a society which applies in accordance with this section a licence to carry on the business of an auctioneer in accordance with the Act of 1947.

(b) An application by a society under paragraph (a) for an auctioneer's licence shall be accompanied by—

(i) a copy of the approval granted by the Central Bank under section 36 to the exercise by the society of the power referred to in subsection (1) (a),

(ii) a certificate of the Accountant of the Courts of Justice, granted not more than 28 days before the date of the application, that the society maintains in the High Court a deposit as required by the Act of 1947 and, where the deposit is a guarantee bond, that it covers the whole of the period for which the licence is to be granted, and

(iii) the excise duty payable on an auctioneer's licence.

(c) An application by a society for a renewal of an auctioneer's licence shall be accompanied by an accountant's certificate in accordance with section 12 of the Act of 1947 (as inserted by section 12 of the Auctioneers and House Agents Act, 1967) in addition to the certificate and excise duty required by paragraph (b).

(d) Section 8 (2) of the Act of 1947 shall not apply to an application under this subsection.

(3)
(a) Regulations may be made—

(i) by the Minister for Justice, after consultation with the Minister and the Central Bank, in respect of the provision by societies or their subsidiaries of auctioneering services, and

(ii) by the Minister, after consultation with the Central Bank, in respect of the provision by societies or their subsidiaries of other services relating to land.

(b) Without prejudice to the generality of paragraph (a), regulations under this subsection may include provisions for—

(i) the protection of persons for whom the services are provided by societies from conflicts of interest that might otherwise arise in connection with the provision of the services;

(ii) securing that adequate compensation is available to such persons in respect of negligence, fraud or other dishonesty on the part of officers or employees of societies in connection with the provision of the services;

(iii) the extent to which and the manner in which the services would require the involvement of persons with relevant qualifications and experience;

(iv) the class or classes of persons to whom the services may be provided;

(v) the restriction of the power to provide the services to societies of a prescribed class or classes; or

(vi) amending, restricting or extending the definition of services that may be provided under this section.

(4) No employee of a society, a subsidiary or other associated body of which provides services under this section, shall act as agent for the subsidiary or body.

(5)
(a) A society or a subsidiary of a society providing auctioneering services or other services in relation to land shall maintain separate accounting records and prepare accounts in respect of each year showing—

(i) the costs of providing each service, and

(ii) the income accruing from the charges made for the services,

and shall so provide and charge for each service that the income from the provision of the service is not less than sufficient to meet all costs properly attributable to the provision of the service taking one year with another.

(b) A statement attesting the correctness of the accounts prepared in accordance with paragraph (a) and confirming that such accounts have not been distorted as a result of any arrangement which would affect the apportionment of costs and income associated with the provision of each service and that such apportionments as have been made have been properly made shall be signed by the chief executive and 2 directors and attached to the annual accounts.

(6) In this section—

(a) “auctioneering service” means any business to which the Act of 1947 relates, including the business of a house agent within the meaning of that Act;

(b) “services relating to land” means any service relating to the acquisition, disposition, management or development of land (including valuation, surveying, the collection of rent and the removal and storage of moveable property) or other services of a similar nature (including advisory services) that appear to the Central Bank to be services relating to such matters.

33 Power to operate outside the State.

33.—(1) Subject to section 36, a building society may exercise its powers under this Act outside the State.

(2) In the exercise of any of its functions under this Act the Central Bank shall not be required to treat assets or liabilities of societies held outside the State as if they were held in the State.

34 Power to hedge.

34.—(1) A building society may, subject to subsection (2), effect contracts for the purpose of reducing the risk of loss arising from changes in interest rates, currency exchange rates or other factors of a similar nature affecting its business.

(2) The Central Bank may specify requirements as to the type or types of contract that may be effected under subsection (1) and the terms on and conditions under which such contracts may be effected, and a contract may only be effected under this section if it complies with such a specification or is otherwise approved by the Bank.

35 Prohibition on linking services.

35.—(1) A building society shall not make or offer to make a housing loan to any person subject to a condition that any services to which section 29, 31 or 32 applies, and which that person may require, whether or not in connection with the loan, shall be provided by or through the society or a subsidiary or other associated body of the society.

(2) Where, in connection with a housing loan by a society, several services are made available by the society or by the society and one or more of its subsidiaries or by one or more of its subsidiaries, the society shall not, and shall secure that each of its subsidiaries does not, make the services available on terms other than terms which distinguish the consideration payable for each service so made available; nor shall any of its subsidiaries make the services available on terms other than terms which make that distinction.

36 Exercise of powers.

36.—(1) This section applies to the exercise by a building society or a subsidiary or other associated body of a power under any of the following sections—

(a) section 21 (holding and developing land);

(b) section 23 (1) (e) and (f) (unsecured loans or loans secured to any extent);

(d) section 29 (financial services);

(e) section 31 (conveyancing services);

(f) section 32 (auctioneering services and services relating to land); and

(g) section 33 (power to operate abroad).

(2) Each power to which this section relates must, in order to be exercisable, be adopted by the society by special resolution and recorded in its memorandum.

(3) Notice of a special resolution under subsection (2) shall contain or be accompanied by a statement giving—

(a) a description of the activity in relation to which the power is to be exercised,

(b) the reasons for the adoption of each power, and

(4) Having adopted a power a society shall not, subject to subsection (5), exercise that power except with the approval of the Central Bank and in accordance with the terms and conditions of such approval.

(5) The Central Bank may specify, in relation to any power, circumstances in and conditions under which a power may be exercised by a society without a specific approval under subsection (4).

(6) Before a special resolution for the adoption of a power is proposed the society may consult with the Central Bank and the Bank may give a preliminary view (without prejudice to any decision under subsection (10)) as to whether and to what extent the exercise of the power would be approved by it.

(7) The Central Bank may specify such requirements as it considers necessary for societies exercising any power to which this section applies and it may specify different requirements as respects different powers.

(8) The powers in respect of which requirements are specified under subsection (7) shall not or, as the case may be, shall cease to be available to a society that does not satisfy the requirements but the cessation of compliance with such requirements by a society does not of itself impose an obligation to dispose of any property or right acquired in the exercise of the power.

(9) An application for approval under subsection (4)—

(a) shall be made in such manner as the Central Bank may specify either generally or in any particular case; and

(b) shall be accompanied by such information as the Central Bank may require, either generally or in any particular case.

(10)
(a) Having considered an application made in accordance with subsection (9) the Central Bank may, as it thinks proper—

(i) grant approval,

(ii) refuse to grant approval, or

(iii) grant approval subject to whatever conditions, restrictions or exclusions it considers appropriate.

(b) The Central Bank shall, within 6 months of the date of receipt of the application or of the date of the receipt of such additional information as it may require, notify the society making the application of its decision.

(11) Without prejudice to the generality of subsection (10) (a) (iii), the conditions imposed by the Central Bank may, in particular, include provisions as to—

(a) the class or classes of persons for whom a service may be provided;

(b) whether the activity may be undertaken by the society itself or by a subsidiary or other associated body;

(d) whether the society may act as principal or agent in undertaking the activity;

(e) the period during which the activity may be undertaken;

(f) limits on any guarantees, bonds, contracts of suretyship or indemnities given or entered into by the society;

(g) whether and to what extent the approval of the Bank is to be obtained in respect of particular proposals, investments or undertakings;

(h) conditions which must be fulfilled as regards any subsidiary or other associated body of a society undertaking the activity;

(i) the qualifications required to be held by employees of the society or its subsidiary or other associated body undertaking the activity;

(j) the avoidance of conflicts of interest;

(k) charges to be made in relation to the provision of any service;

(l) the maintenance by the society of separate accounting records and the preparation of accounts in respect of the service being provided.

(12) As respects the exercise of powers outside the State, the conditions imposed by the Central Bank, in addition to any imposed under subsection (11), may, in particular, and without prejudice to the generality of subsection (10) (a) (iii), include provisions as to—

(a) the countries in which the power may be exercised,

(b) the forms of security which in any particular country correspond in the opinion of the Bank to the kinds of security referred to in sections 22 and 23,

(c) the application of any provision of this Act affecting loans to loans made outside the State with such modifications as appear to the Bank to be appropriate,

(d) requirements relating to currencies.

(13) The Central Bank shall not grant approval to an application unless it is satisfied that the relevant power has been adopted by the society in accordance with this Act.

(14) The Central Bank may at any time withdraw an approval it has granted under this section, impose conditions on an approval or revoke, vary or add to any conditions imposed but any such action by the Bank shall not require the disposal of any property or right already acquired.

(15) The Central Bank may commission an independent assessment of the capacity of a society to exercise a power for which it has sought approval and the society shall, if so directed by the Bank, defray the cost of such assessment.

(16) Where this Act, or the Central Bank in the exercise of its functions under this Act, requires that a power to provide a service may be exercised only through a subsidiary or other associated body the power to undertake that activity is to be treated as a power of the society for the purpose of section 28.

PART IV Control and Supervision of Building Societies by Central Bank

37 Duty of the Central Bank as respects building societies.

37.—(1) Subject to the general function and duty of the Central Bank under section 6 of the Central Bank Act, 1942, the Bank shall administer the system of regulation and supervision of building societies provided for by or under this Act with a view to—

(a) the protection by each society of the funds of its shareholders and depositors, and

(b) the maintenance of the financial stability and well being of societies generally.

(2) The Central Bank shall have power to do anything which, in its opinion, is calculated to facilitate the exercise of its functions or is incidental or consequential to their exercise.

(3) The report of the Central Bank under section 36 of the Currency Act, 1927, shall contain a report on the exercise of its functions under this Act.

38 Supply of mortgage finance.

38.—(1) The Minister may, from time to time as he considers necessary, review, in consultation with the Minister for Finance, the adequacy of the supply of mortgage finance for the provision or improvement of housing and communicate to the Central Bank his assessment of the need for such finance.

(2) Without prejudice to the provisions of section 6 of the Central Bank Act, 1942, the Central Bank shall, as soon as reasonably practicable, convey its views to the Minister on this assessment together with an indication of any action it considers necessary or desirable.

(3) Every building society shall submit to the Minister such information and returns within such period as the Minister may require from time to time for the purposes of his functions in relation to the national housing programme.

39 Asset and liability ratios and structures.

39.—(1) A building society shall at all times keep such a proportion of its total assets in liquid form (hereinafter referred to as “liquid assets”) having such a composition as to enable the society to meet its liabilities as they arise.

(2) For the purposes of complying with subsection (1), a society shall have regard to the range and scale of its business and that of any subsidiary or other associated body and the composition and character of its assets and liabilities and those of any such body.

(3) A society may keep liquid assets in addition to those required for the purpose of complying with subsection (1).

(4) The Central Bank may from time to time require a society to maintain—

(a) a specified ratio,

(b) a ratio which does not exceed a specified ratio, or

between its assets and its liabilities and the specified ratio may be expressed as a percentage of the assets or liabilities concerned.

(5) A requirement of the Central Bank under subsection (4) may be expressed to apply—

(a) in relation to all societies or to societies of a specified category or specified categories,

(b) in relation to the total assets or total liabilities of the societies concerned or to specified assets or assets of a specified kind or specified liabilities or liabilities of a specified kind of those societies,

and shall have effect in accordance with its terms.

(6) A requirement under subsection (4) which is in force may be revoked by the Central Bank or may be amended by a subsequent requirement under that subsection.

(7) The Central Bank may, from time to time, specify as respects a society requirements as to the composition of its assets and, subject to section 18 (3), requirements as to the composition of its liabilities.

(8) In determining for the purposes of this section the assets and liabilities of a society with which another body corporate is associated, there shall be attributed to the society, in a manner acceptable to or as may be specified by the Central Bank, the whole or part of the assets and liabilities of whatever description of the associated body.

(9)
(a) Subject to paragraph (b), “liquid assets” means assets specified as such for the purposes of this section by the Central Bank including deposits with the Bank.

(b) Pending a specification by the Central Bank under paragraph (a), “liquid assets” includes assets held in a form provided for by section 38 of the Building Societies Act, 1976, notwithstanding the repeal of that Act.

(10) In this section—

(a) “specified” means specified by the Central Bank under this section,

(b) “liabilities” include such contingent liabilities as may be specified by the Central Bank from time to time for the purposes of this section.

40 Revocation of authorisation and giving of direction by Central Bank.

40.—(1) The Central Bank shall revoke a building society's authorisation if—

(a) the society has requested the Bank to revoke its authorisation,

(b) the society has requested the Bank to cancel its registration,

(c) the society has, under section 95 or 96, amalgamated with or transferred all its engagements to another society, or

(d) proceedings have been commenced for the winding up of the society under section 109.

(2) Where the Central Bank is satisfied that—

(a) a society has not made use of the authorisation within 12 months of the date on which it was granted,

(b) a society has ceased to engage in the business of a building society for more than 6 months,

(d) a society has ceased to pursue as one of its objects the making of housing loans,

(e) a society has become or is likely to become unable to meet its obligations to its creditors and shareholders or suspends payments lawfully due by it,

(f) a society has failed to send to the Bank copies of its annual accounts as required by section 82,

(g) a condition attached to a society's authorisation or to an approval to exercise a power under section 36 has not been complied with by the society,

(h) a society has failed to comply with a requirement of this Act or a requirement or condition of, or notice from, the Bank in the exercise of its powers under this Act,

(i) a society has been convicted on indictment of an offence under any provision of this Act or an offence involving fraud, dishonesty or breach of trust,

(j) a society no longer possesses or is not maintaining and is unlikely to be in a position to maintain adequate capital resources and in particular no longer provides security for the funds entrusted to it,

(k) since the authorisation was granted or deemed to be granted under section 17, the circumstances relevant to the grant have changed and are such that, if an application for an authorisation were made in the changed circumstances, it would be refused, or

(l) a society obtained the authorisation through false statements or any other irregular means,

the Bank may, as it thinks proper, revoke an authorisation granted or deemed to be granted to a society under section 17, or give a direction in writing to the society to suspend for such period, not exceeding 6 months, as shall be specified in the direction all or any of the following, that is to say—

(i) the raising of funds,

(ii) the making of payments,

(iii) the acquisition or disposal of other assets or liabilities,

which have not been authorised by the Bank.

(3) The Fourth Schedule shall apply as respects the revocation of an authorisation.

(4) The Fifth Schedule shall apply as respects a direction by the Central Bank under subsection (2).

(5) While a direction under this section is in force, no winding up proceedings in relation to the society may be commenced or resolution for winding up passed in relation to the society, no receiver over the property or over any part of the property or the undertaking of the society may be appointed and the property of the society shall not be attached, sequestered or otherwise distrained except with the prior sanction of the Court.

(6) Where the Court is satisfied, because of the nature or circumstances of the case or otherwise in the interests of justice, that it is desirable, the whole or any part of proceedings under this section may be heard otherwise than in public.

41 Inspections, information, etc.

41.—(1) The Governor of the Central Bank may authorise in writing a person (an “authorised person”) being an officer of the Bank, or any other person possessing appropriate qualifications or experience, to inspect or investigate the state and conduct of the business of a building society or other body corporate which is, or was at the relevant time, a subsidiary or other associated body of a society or any particular aspect of such business and report to the Bank thereon.

(2) The Central Bank, or an authorised person, may require a society or other body as is mentioned in subsection (1) to furnish it with—

(a) such information, documents, or other material or explanation of matters, which relate to the business or the plans for the future development of the society and its subsidiary or other associated bodies, as may be specified, within a specified period or at a specified time or place; and

(b) a report by a person approved by the Bank, or the authorised person on, or on specified aspects of, information or documents, or other material so furnished.

(3) An authorised person may, on production of his authorisation if so required, at all reasonable times enter the premises of a society or other corporate body as is mentioned in subsection (1) and inspect and take copies of, or extracts from, any documents or material.

(4) A requirement under this section may be imposed on a society in relation to information, documents or other material in the possession or control of a subsidiary or associated body outside the State.

(5) The duty to produce or provide any information, document, material or explanation extends to a liquidator or any person who is or has been an officer or employee or agent of the society or other body, as the case may be, or appears to the Central Bank or the authorised person to have the information, document, material or explanation in his possession or under his control.

(6) Where any person from whom production of a document or material is required claims a lien on the document or material, the production of it shall be without prejudice to the lien.

(7) Nothing in this section shall compel the production by a barrister or solicitor of a document or material containing a privileged communication made by him or to him in that capacity or the furnishing of information contained in a privileged communication so made.

(8) The Central Bank or an authorised person may take copies of or extracts from any document or material produced in compliance with this section and require the person who produced it or any other person who is a present or past director or officer of, or is or was at any time employed by, the society or other body to provide an explanation of the document or material, and if the document or material is not produced, require the person who was required to produce it to state, to the best of his knowledge and belief, where the document or material is.

(9) In this section—

(a) “specified” means specified in a notice under this section,

(b) “agent”, in relation to a society, or any subsidiary or other body associated with it whose business is under investigation, includes its bankers, accountants, solicitors, auditors and its financial and other advisers,

(c) any reference to an officer, employee or agent of a society or other body includes a reference to a person who has been but no longer is an officer, employee or agent of that society or body.

42 Control of advertising.

42.—(1) If, with respect to any building society, the Central Bank considers it expedient to do so, it may give the society a direction in relation to the matter and form of any advertisement or other means of soliciting deposits or subscriptions for shares in the society or in relation to the matter and form of any advertisement relating to any service provided or business being undertaken by the society and may direct the society to withdraw an advertisement or to cease advertising.

(2) Without prejudice to the generality of subsection (1), a direction under this section may do all or any of the following—

(a) prohibit the issue by the society of advertisements of all descriptions or any specified description,

(b) require the society to modify advertisements of a specified description in a specified manner,

(c) prohibit the issue by the society of any advertisements which are, or are substantially, repetitions of a specified advertisement,

(d) require the society to withdraw any specified advertisement or any advertisement of a specified description, or

(e) require the society to include specified information in any advertisement to be published by it or on its behalf or in any statement to the public to be made by it or on its behalf.

(3) In this section—

(a) “advertisement” includes every form of recommendation of any matter to which this section relates, including in particular the display or publication of any such matter by way of leaflet, notice, circular, pamphlet, brochure, photograph, film, video, sound broadcasting, television, electronic communication or personal canvassing and references to the issue of advertisements shall be construed accordingly; and

(b) “specified” means specified in a direction under this section.

43 Power of Court to prohibit certain contraventions of Act.

43.—(1) Where, on an application made in a summary manner by the Central Bank, the Court is of the opinion that there has occurred or is occurring—

(a) a contravention of this Act,

(b) a failure to comply with a condition imposed in relation to an authorisation by virtue of section 17, or with a direction under section 40 or 42, or

the Court may, by order, prohibit the continuance of the contravention or failure by the person or persons concerned, or in the case of paragraph (c), require the cessation of the exercise of the adoptable power.

(2) The Court when considering the application may make such interim or interlocutory order as it considers appropriate.

(3) The foregoing provisions of this section are without prejudice to the general functions of the Central Bank.

(4) Where the Court is satisfied, because of the nature or circumstances of the case or otherwise in the interests of justice, that it is desirable, the whole or any part of proceedings under this section may be held otherwise than in public.

44 Disclosure of information.

44.—(1) A person, who at the commencement of this section is, or at any time thereafter is appointed, Governor, or a Director, officer or servant of the Central Bank, or who is employed by the Bank in any other capacity, shall not disclose, during his term of office or employment or at any time thereafter, any information concerning the business of any building society or any of its subsidiaries or other associated bodies which may come to his knowledge by virtue of his office or employment unless such disclosure is to enable the Bank to carry out its functions.

(2) The provisions as to non-disclosure contained in subsection (1) shall not apply to any disclosure—

(a) required by a court in connection with any criminal proceedings,

(b) made with the consent of the person to whom the information relates and, where not the same person, of the person from whom that information was obtained,

(c) where the Central Bank is acting or has acted in the capacity of an agent for a person, made to the person in respect of that capacity,

(d) where the Bank considers it necessary for the common good, made to any person charged by law with the supervision of financial institutions (whether or not entitled to take money on deposit from the public) and who, in the opinion of the Bank, has obligations duly imposed in respect of non-disclosure of information and corresponding to obligations under this section,

(e) made to an authority in a foreign jurisdiction duly authorised to exercise functions in that jurisdiction which correspond to the functions of the Bank under this Part and section 17 and which, in the opinion of the Bank, has obligations duly imposed in respect of non-disclosure of information and corresponding to obligations under this section,

(f) made to any institution of the European Communities for the purpose of the State's membership of any of those Communities,

(g) in the form of a summary or collection of information so framed as not to enable information relating to any particular body or person to be ascertained from it,

(h) which, in the opinion of the Bank, is necessary for the protection of the funds of shareholders in or depositors with a building society or to safeguard the interests of the Bank,

(i) made to the Minister, for the purposes of his functions in relation to the national housing programme.

(3) After the commencement of this section, every person who is appointed as Governor, or a Director, officer or servant of the Central Bank, or who is employed by the Bank in any other capacity, shall—

(a) before entering into the office or employment, be informed by the Bank of his obligations under this section, and

(b) acknowledge that he has been so informed and understands his obligations,

in such manner as the Bank shall determine.

(4) A person who contravenes subsection (1) shall be guilty of an offence and shall be liable—

(a) on summary conviction to a fine not exceeding £1,000 or, at the discretion of the court, to imprisonment for a term not exceeding 12 months, or to both, or

(b) on conviction on indictment to a fine not exceeding £25,000 or, at the discretion of the court, to imprisonment for a term not exceeding 5 years, or to both.

(5) In any proceedings for an offence under this section, it shall not be necessary to prove that the provisions of subsection (2) do not apply and the onus of proving that any of those provisions do apply shall be on the person seeking to avail himself thereof.

45 Appointment of inspector and calling of special meeting.

45.—(1) Where—

(a) an application is made to the Central Bank by not less than one-tenth of the total number of members of a building society entitled to vote pursuant to section 69 (1) (a) or 200 such members, whichever is the lesser; or

(b) the Central Bank is of the opinion that an investigation should be held into the affairs of a society or that the affairs of the society call for consideration by a meeting of the members of the society;

the Bank, as it thinks proper, may appoint one or more inspectors to investigate the affairs of the society and, where necessary, any subsidiary or other associated body and to report thereon in such manner as it directs, or may call a special meeting of the society.

(2) The Central Bank may, either on the same or on different occasions, both appoint an inspector and call a meeting under subsection (1).

(3)
(a) An application under this section shall be supported by such evidence as the Central Bank may direct, for the purposes of showing that the applicants have good reason for requiring the investigation to be made or the meeting to be called and that they are not actuated by malicious motives in their application.

(b) Such notice of the application shall be given to the society and, in a case where the investigation is to extend to its affairs also, to the subsidiary or associated body of the society, as the Central Bank may direct.

(c) The Central Bank may require the applicants to give security for payment of the costs of the investigation or meeting before the inspector is appointed or the meeting is called subject, in the case of the costs of an investigation, to an amount not exceeding £200,000.

(d) As regards the expenses of and incidental to the investigation or meeting, the expenses shall be defrayed by the applicants or out of the funds of the society or by the members or officers or former members or officers of the society in such proportions as the Central Bank may direct but, in the case of an investigation (in whichever way instituted), the expenses may be defrayed in the first instance by the Bank but without prejudice to its rights to contribution under section 46.

(4)
(a) The Central Bank may give such directions as it thinks fit in relation to the calling, holding and conduct of a meeting held under this section (including the time and place of the meeting and the matters to be discussed and determined at the meeting).

(b) The Central Bank shall appoint a person to be chairman of the meeting.

(d) This subsection shall have effect notwithstanding anything in the rules of the society.

(5) Before appointing an inspector or calling a meeting under this section the Central Bank may, if it is of the opinion that it would not be prejudicial to the interests of members or creditors, notify the society in writing of the action which it proposes to take and of the grounds on which it proposes to take it and, in such a case, the society shall, within 14 days of the receipt of the notification, be entitled to give to the Bank an explanatory statement in writing.

(6) Where an inspector appointed under this section thinks it necessary for the purposes of his investigation to investigate also the affairs of any other society or any body corporate which is or has at any relevant time been a subsidiary of, or associated with, the first-mentioned society, he shall, with the approval of the Central Bank, have power to do so, and shall report on the affairs of the other society or body corporate so far as he thinks the results of his investigation thereof are relevant to the investigation of the affairs of the first-mentioned society.

46 Provisions supplemental to section 45.

46.—(1) It shall be the duty—

(a) of all officers, members and agents of a society or other body the affairs of which are being investigated under section 45, and

(b) of any other person who the inspector considers is or may be in possession of any information concerning the affairs of the society or body,

to produce to him all books, accounts, deeds, records or other documents of, or relating to, the society or body which are in their power, possession or procurement, to attend before the inspector when required to do so and otherwise to give to him all assistance in connection with the investigation which they are reasonably able to give.

(2) The inspector may examine on oath the officers, members and agents of the society or other body being investigated and any such person as is mentioned in subsection (1) in relation to its affairs and may administer an oath accordingly.

(3) If an inspector has reasonable grounds for believing that a director or past director of the society whose affairs the inspector is investigating maintains or has maintained a bank account of any description, whether alone or jointly with another person and whether in the State or elsewhere, into or out of which there has been paid—

(a) any money which has resulted from or been used in the financing of any transaction, arrangement or agreement particulars of which were not included in the register of certain transactions and arrangements as required by section 59; or

(b) any money which has been in any way connected with any act or omission, or series of acts or omissions, which on the part of that director constituted misconduct (whether fraudulent or not) towards that society or its members;

the inspector may require the director or past director to produce to him all documents in the director's possession, or under his control, relating to that bank account and in this subsection “bank account” includes an account with any person exempt by virtue of section 7 (4) of the Act of 1971 from the requirement of holding a licence under section 9 of that Act.

(4) If any officer, member or agent of the society or other body or any such person as is mentioned in subsection (1) refuses to produce to the inspector any book or document which it is his duty under this section to produce, refuses to attend before the inspector when required to do so, or refuses to answer any question put to him by the inspector with respect to the affairs of the society, or other body, as the case may be, he shall be guilty of an offence.

(5) Nothing in this section—

(a) shall compel the production by a barrister or solicitor of a document or material containing a privileged communication made by him or to him in that capacity or the furnishing of information contained in a privileged communication so made, or

(b) shall require the disclosure by a bank or a building society of any information as to the affairs of any of its customers other than the society or body the affairs of which are being investigated.

(6) In this section any reference to officers or to agents shall include past as well as present officers and agents, as the case may be, and “agents”, in relation to a society or other body, shall include the bankers, accountants, solicitors, auditors and the financial and other advisors of the society or other body.

(7) The Central Bank shall be entitled to be repaid the expenses of the investigation defrayed by it under section 45 (3) (d) as follows, that is to say—

(a) by the applicants for the investigation to such extent (if any) as the Bank may direct;

(b) by any body whose affairs were the subject of the investigation to such extent (if any) as the Bank may direct; or

(c) by a person convicted of an offence in proceedings instituted as a result of the investigation to such extent (if any) as the court by or before which he was convicted may order; and a person liable under any one of paragraphs (a) to (c) is entitled to contribution from any other person liable under the same paragraph according to the amount of their respective liabilities under it.

47 Inspectors' reports and proceedings thereon.

47.—(1) An inspector appointed under section 45 may, and shall if the Central Bank so requires, make an interim report to the Bank and, on conclusion of the investigation, shall make a final report to the Bank, but he may at any time in the course of the investigation, without making an interim report, inform the Bank of matters coming to his knowledge as a result of the investigation.

(2) The Central Bank shall—

(a) forward a copy of any report made by an inspector under this section to the Minister, and the Minister for Finance;

(b) if it thinks fit, furnish a copy thereof to the society and its auditors;

(c) if it thinks fit, furnish a copy thereof, on request and on payment of such fee as it may fix, to any other person who is a member of the society or of any other body corporate dealt with in the report by virtue of section 45 or whose interests as a creditor of the society or of any such other body corporate appear to the Bank to be affected;

(d) if it thinks fit, at the request of the applicants for the investigation, furnish a copy to them on payment of such fee as may be fixed by the Bank.

(3) The Minister may lay the report under subsection (1) before each House of the Oireachtas and such publication shall be privileged and a report not so laid may be printed and published by the Central Bank.

(4)
(a) Where it appears to the Central Bank that any person has, in relation to the society or any body corporate the affairs of which have been investigated under section 45, been guilty of any offence for which he is criminally liable, the Bank shall refer the matter to the Director of Public Prosecutions.

(b) Where the Director of Public Prosecutions institutes proceedings consequent on the receipt by him of a report under paragraph (a), it shall be the duty of all officers, members and agents of the society or any body corporate (other than the defendants in the proceedings) to give him all assistance in connection with the prosecution which they are reasonably able to give.

(5) Where it appears to the Central Bank after consideration of an inspector's report under subsection (1) that it is expedient to do so it may, unless the society is being wound up by the Court, petition the Court for an order to wind up the society under section 109.

(6) Where it appears to the Central Bank after consideration of an inspector's report under subsection (1) that proceedings ought in the public interest to be brought by the society for damages, in respect of any fraud, misfeasance or other misconduct in connection with the promotion or formation of the society or the management of its affairs, or for the recovery of any property misapplied or wrongfully retained, the Bank may itself bring proceedings for that purpose in the name of the society.

(7) The Central Bank may indemnify the society against any costs or expenses incurred by it in, or in connection with, any proceedings brought under subsection (6).

(8) A copy of any report of an inspector appointed under section 45 shall be admissible in any legal proceedings as evidence of the opinion of the inspector in relation to any matter contained in the report.

PART V Management of Building Societies

48 Directors.

48.—(1) A building society shall have at least 3 directors.

(2) A society shall not have as a director a body corporate.

(3) The directors shall appoint from among their number a chairman of the board of directors.

(4) The chairman of the board of directors shall not also be the chief executive of the society except with the consent of the Central Bank.

49 Chief executive and secretary.

49.—(1) A building society shall have—

(a) a chief executive who, either alone or jointly with one or more other officers of the society, shall be responsible, under the immediate authority of the board of directors, for the conduct of the business of the society; and

(b) a secretary.

(2) The offices of chief executive and secretary may not be held by the same person except with the consent of the Central Bank.

(3) The chief executive and the secretary of a society shall be appointed by the board of directors of the society who shall take all reasonable steps to ensure that the persons appointed are persons who have the knowledge and experience to discharge the functions of those offices.

(4) The board of directors of a society shall give to the Central Bank prior notice of a proposal to appoint a person as chief executive stating the person's full name and address, the date on which he is to take office and such other information as the Bank may require and the Bank shall record the person's name and the date on which he begins to hold office in the public file of the society.

(5) Where a person ceases to hold office as chief executive the board shall, as soon as may be, give notice of that fact to the Central Bank which shall record it in the public file of the society.

(6) Anything required or authorised to be done by or in respect of the chief executive or secretary may, if the office is vacant or there is for any other reason no chief executive or secretary capable of acting, be done by or in respect of any deputy or assistant chief executive or secretary, as the case may be, or if there is no deputy or assistant capable of acting, by or in respect of any officer of the society authorised generally or specially for that purpose by the directors.

(7) Where the chief executive is also a director he may be referred to as the managing director.

50 Directors: appointment and retirement.

50.—(1) Subject to subsections (11) and (16), the directors of a building society must be elected to office either—

(a) at an annual general meeting of the society, or

(b) by postal ballot conducted during the period of 3 months preceding the date on which the annual general meeting is held,

as the rules provide.

(2) Where subsection (1) (a) applies and the number of candidates for the office of director exceeds the number of vacancies, the election of directors shall be by poll.

(3) The persons entitled to vote in an election of directors are those members of the society who in accordance with section 69 and under the rules are entitled to vote on an ordinary resolution.

(4) A person entitled to vote in an election of directors cannot be required to cast all or any of his votes.

(5) A person who is not a member of a society may, if its rules so provide, be a director.

(6) The rules of a society may impose, as a condition of a person's eligibility to be or to be nominated for election as a director of the society, a requirement that he shall hold beneficially shares in the society not less in value than the amount specified by the rules, but the maximum holding that may be required shall not exceed £500, or such other amount as may be substituted for it in regulations made by the Central Bank.

(7) The rules of a society shall not require, as conditions of the validity of a person's nomination for election as a director, that—

(a) more than 20 members join in nominating him;

(b) a nominating member be a member for more than 2 years before the date of the nomination or hold, or have at any time during that period held, shares in the society to a value greater than £250; or

(8) The rules of a society shall not impose, as conditions of the validity of a person's nomination for election as a director, conditions in relation to matters other than those in subsections (6) and (7) except as may be approved by the Central Bank as being reasonable.

(9) The Central Bank may, by regulation, substitute for the number, the maximum period of membership, the maximum value of shares, and the maximum amount of the deposit referred to in subsection (7), such other number, period, value, or amount as it thinks appropriate.

(10) A director, other than a director who is also the chief executive of a society, shall retire from office not later than the end of the third annual general meeting of the society following the date of his election, subject to any provision in this Act or in the rules of the society for his earlier retirement and such director shall be eligible for election without nomination, subject to the rules.

(11) If the rules of a society so provide, the directors for the time being may co-opt as director to fill any vacancy on the board of directors any person who—

(a) appears to them to be fit and proper to be a director, and

(b) is not disqualified under section 64 to be a director of a building society,

not being a person who, having stood for election as a director at any election held within the preceding 16 months, was not elected as a director.

(12) A person who is co-opted under subsection (11) shall cease to hold office at the end of the next annual general meeting following his appointment, but a general meeting shall be disregarded for the purposes of this subsection if the closing date for the nomination of candidates falls before the date of the co-opted director's appointment, but he shall retire as a co-opted director at the next annual general meeting following that which is disregarded and shall be eligible for election without nomination, subject to the rules.

(13) Where in an election of directors there is a poll, whether conducted at a meeting or by way of postal ballot, the papers issued by the society for the purposes of or relating to the poll shall—

(a) show with equal prominence the name of each candidate, and

(b) arrange the names alphabetically in the order of the surnames, or if there are 2 or more candidates bearing the same surname, in the alphabetical order of their other names together with such information as will distinguish such candidates.

(14) The acts of a director shall be valid notwithstanding any defects which may afterwards be discovered in his appointment or qualification.

(15) A society shall notify the Central Bank—

(a) of all valid nominations of persons for election as directors, as soon as possible after the closing date for nominations; and

(b) of the proposed co-option of persons as directors at least 14 days before the date of the appointment;

giving in each case the information referred to in section 66 (1) and such other information as the Bank may require.

(16) The persons mentioned in section 10 (2) or a majority of them may appoint as directors to hold office until the conclusion of the first annual general meeting persons not disqualified under section 64.

(17) In this section, “ordinary resolution”, means a resolution which will be effective without being passed as a special resolution or a conversion resolution.

51 Directors: supplementary provisions as to elections, etc.

51.—(1) A building society shall give notice of the latest date for the receipt of nominations for election as a director in either of the following ways—

(a) by publishing it in at least 2 daily newspapers published in the State and circulating in the area in which the chief office of the society is situated and such notice shall be published not earlier than 42 days before such date; or

(b) by sending it, not earlier than the date on which notices are issued for the preceding year's annual general meeting to all members who would at the date of the notice be entitled to notice of an election of directors,

as the rules provide, and in either case the notice shall be published or sent, as the case may be, not later than 21 days before the latest date for the receipt of nominations.

(2) If a duly nominated candidate for election as a director of a society furnishes the society with an election address of not more than 300 words before the closing date for nominations, then, subject to subsection (3)—

(a) it shall be the duty of the society, at its expense, to send a copy of the address to each member of the society who is entitled to notice of the election; and

(b) each member's copy shall be sent in the same manner and, so far as practicable, at the same time as the notice of the meeting at which the election is to be conducted or the ballot papers are sent out, as the case may be;

but failure to comply with a requirement of this subsection shall not of itself invalidate the election.

(3) Subsection (2) does not require a society to send copies of an address to members of the society in any case where—

(a) the contents of the address would be likely to diminish substantially public confidence in the society, or

(b) the rights conferred by that subsection are being abused to seek needless publicity for defamatory matter or for frivolous or vexatious purposes,

and that subsection shall not be taken to confer any rights on members, or to impose any duties on a society, in respect of an address which does not relate directly to the affairs of the society.

(4) Where the society refuses, or proposes to refuse, to circulate an election address, the society shall, within 7 days after the receipt of the address, notify the member who furnished it of such refusal and the grounds for the refusal and the said member may, within 7 days of the refusal, refer the refusal to the Central Bank who may direct the society to comply with the request subject to such conditions as the Bank may require.

(5)
(a) The person appointed under the rules of a society to supervise the conduct of an election of directors shall prepare and submit to the Central Bank a report on the conduct of the election—

(i) stating whether in his opinion the election was conducted in accordance with the provisions of this Act, regulations made thereunder and the rules and otherwise with fairness and integrity;

(ii) containing details of the number of proxy instruments received, the number declared invalid categorised by cause of invalidation and the number of votes attributable to valid instruments; and

(iii) containing such other information as may be required by the Bank.

(b) The Central Bank may, as it thinks proper, disclose some or all of the contents of a report under paragraph (a) to a duly nominated candidate.

(6) A society shall retain for a period of one year from the date of the election all ballot papers and all its documents and records relating to an election of directors.

(7) The Central Bank may, following consideration of the report made to it under subsection (5), if it thinks proper, apply to the Court for an order setting aside the result of an election of directors and directing the society to hold another election.

(8) An employee, other than an officer, of a society, not being himself a candidate, who, at the place of his employment or of a meeting of the society, solicits support for a candidate for election as a director or invites a member of the society to appoint as his proxy any particular person to vote in an election shall be guilty of an offence and shall be liable on conviction to a fine not exceeding £300.

52 Connected persons.

52.—(1) For the purposes of this Part, a person is connected with a director of a building society if, but only if, he is—

(a) that director's spouse, parent, brother, sister or child; or

(b) a body corporate with which the director is associated; or

(c) a person acting in his capacity as the trustee (other than as trustee under an employees' share scheme or a pension scheme) of any trust the beneficiaries of which include the director, his spouse or any of his children or a body corporate with which he is associated or the terms of which confer a power on the trustees that may be exercised for the benefit of the director, his spouse or any of his children or any such body corporate; or

(d) a person acting in his capacity as partner of that director or of any person who, by virtue of paragraph (a), (b) or (c) is connected with that director;

unless that person is also a director of the society.

(2) A director of a society is associated with a body corporate if he and his spouse, parent, brother, sister or child or a person acting in his capacity as trustee of any trust the beneficiaries of which include the director, his spouse or any of his children between them either—

(a) own at least one-fifth of that body's equity share capital within the meaning of the Companies Act, 1963, or

(b) are entitled to exercise or control the exercise of more than one-fifth of the voting power of that body at any general meeting.

(3) In subsection (1) “child” includes a step-child and “son”, “daughter” and “parent” shall be construed accordingly.

53 Disclosure by directors of interests in contracts.

53.—(1) It shall be the duty of a director of a building society who is in any way, whether directly or indirectly, interested in a contract or proposed contract with the society to declare the nature of his interest at a meeting of the directors of the society.

(2) In a case of a proposed contract, the declaration shall be made—

(a) at the meeting of the directors at which the question of entering into the contract is first considered; or

(b) if the director was not at the date of that meeting interested in the proposed contract, at the next meeting of the directors held after he becomes so interested.

(3) Where the director becomes interested in a contract after it is made, the declaration shall be made at the first meeting of the directors held after the director becomes so interested.

(4) If the contract is not one that will be considered at a meeting of the directors, the declaration shall be made as soon as may be.

(5) Subject to subsection (6), for the purposes of this section, a general notice given to the directors of a society by a director to the effect that—

(a) he is a member of a specified company or firm and is to be regarded as interested in any contract which may, after the date of the notice, be made with that company or firm; or

(b) he is to be regarded as interested in any contract which may after the date of the notice be made with a specified person who is connected with him,

shall be deemed to be sufficient declaration of interest in relation to any such contract.

(6) A notice under subsection (5) shall not be of effect unless either it is given at a meeting of the directors or the director takes reasonable steps to secure that it is brought up and read at the next meeting of the directors after it is given.

(7) A copy of every declaration made and notice given under this section shall, within 3 days (not including a Saturday, a Sunday or a public holiday) after being made or given, be entered in a register kept for the purpose and this register shall be open for inspection without charge by any officer, auditor or member of the society at the chief office of the society and shall be available at every general meeting of the society, and at any meeting of the directors if any director so requests in sufficient time to enable the register to be available at the meeting.

(8) The provisions of this section apply in relation to any transaction or arrangement as they apply to a contract and, for the purposes of this section, a transaction or arrangement of a kind described in section 57 made by a society for a director of the society or a person connected with such a director shall, if it would not otherwise be so treated (and whether or not prohibited by that section), be treated as a transaction or arrangement in which that director is interested.

(9) Nothing in this section shall affect the operation of any rule of law restricting directors of a society from having any interest in contracts with the society.

54 Contracts of employment of directors.

54.—(1) A building society shall not incorporate in any agreement a term to which this section applies unless the term is first approved by a resolution of the society in general meeting.

(2) This section applies to any term by which a director's employment with the society of which he is a director is to continue, or may be continued, otherwise than at the instance of the society, (whether under the original agreement or under a new agreement entered into in pursuance of the original agreement) for a period exceeding 5 years during which the employment—

(a) cannot be terminated by the society by notice, or

(b) can be so terminated only in specified circumstances.

(3) In any case where—

(a) a person is or is to be employed with a society under an agreement which cannot be terminated by the society by notice or can be so terminated only in specified circumstances, and

(b) more than 6 months before the expiration of the period for which he is or is to be so employed, the society enters into a further agreement (otherwise than in pursuance of a right conferred by or by virtue of the original agreement on the other party thereto) under which he is to be employed with the society,

subsection (2) shall apply as if to the period for which he is to be employed under that further agreement there were added a further period equal to the unexpired period of the original agreement.

(4) A resolution of a society approving a term to which this section applies shall not be passed at a general meeting of the society unless a written memorandum setting out the proposed agreement incorporating the term is available for inspection by members of the society both—

(a) at its chief office during the period of 15 days expiring on the date of the meeting, and

(b) at the meeting itself.

(5) A term incorporated in an agreement in contravention of this section shall to the extent that it contravenes this section be void and that agreement and, in a case where subsection (3) applies, the original agreement shall be deemed to contain a term entitling the society to terminate it at any time by the giving of reasonable notice.

(6) In this section, “employment” includes employment under a contract for services.

55 Inspection of directors' service contracts.

55.—(1) Subject to this section, a building society shall keep at its chief office a register containing—

(a) in the case of each director who has a contract of service with the society, a copy of that contract if in writing;

(b) in the case of each director whose contract of service with the society is not in writing, a written memorandum setting out the terms of that contract;

(c) in the case of a director who has a contract of service with a subsidiary of the society, a copy of that contract or, if it is not in writing, a written memorandum setting out its terms.

(2) Subsection (1) shall not apply in relation to a director's contract of service with the society or with a subsidiary of the society if that contract required him to work wholly or mainly outside the State, but the society shall keep at its chief office a memorandum—

(a) in the case of a contract of service with the society, setting out the name of the director and the provisions of the contract relating to its duration;

(b) in the case of a contract of service with a subsidiary of the society, setting out the name of the director, the name and place of incorporation of the subsidiary and the provisions of the contract relating to its duration.

(3) Every copy and memorandum required to be kept by subsections (1) and (2) shall, during business hours (subject to such reasonable restrictions as the society may in general meeting impose, so that not less than 2 hours in each day be allowed for inspection), be open to the inspection of any member of the society without charge.

(4) If default is made in complying with subsection (1) or (2) or if an inspection required under subsection (3) is refused, the society and every officer of the society who is in default shall be liable on summary conviction to a fine not exceeding £1,000, and, for continued contraventions, to a daily default fine not exceeding £50.

(5) Subsections (1) and (2) shall apply to a variation of a director's contract of service with a society and a contract of service with a subsidiary of a society as it applies to the contract.

(6) This section shall not require to be kept a copy of, or memorandum setting out the terms of, a contract or a copy of, or memorandum setting out the terms of, a variation of a contract at a time at which the unexpired portion of the term for which the contract is to be in force is less than 3 years or at a time at which the contract can, within the next ensuing 3 years, be terminated by the society without payment of compensation.

56 Substantial property transactions involving directors and connected persons.

56.—(1) A building society shall not enter into an arrangement—

(a) whereby a director of the society or a person connected with such a director acquires or is to acquire one or more non-cash assets of the requisite value from the society; or

(b) whereby the society acquires or is to acquire one or more non-cash assets of the requisite value from such a director or a person so connected;

unless the arrangement is first approved by a resolution of the society in general meeting.

(2) For the purposes of this section a non-cash asset is of the requisite value if at the time the arrangement in question is entered into its value is not less than £50,000 or, in the case of a society with reserves of less than £500,000, is not less than 10 per cent. of the reserves.

(3) In this section “non-cash asset” means any property or interest in property other than cash and for this purpose “cash” includes foreign currency; and a reference to the acquisition of a non-cash asset includes a reference to the creation or extinction of an estate or interest in, or a right over, any property and also a reference to the discharge of any person's liability other than a liability for a liquidated sum.

(4) An arrangement entered into by a society in contravention of this section and any transaction entered into in pursuance of the arrangement (whether by the society or any other person) shall be voidable at the instance of the society unless—

(a) restitution of any money or any other asset which is the subject matter of the arrangement or transaction is no longer possible or the society has been indemnified in pursuance of subsection (5) (b) by any other person for the loss or damage suffered by it;

(b) any rights acquired bona fide for value and without actual notice of the contravention by any person who is not a party to the arrangement or transaction would be affected by its avoidance; or

(5) Without prejudice to any liability imposed otherwise than by this subsection, but subject to subsection (6), where an arrangement is entered into with a society by a director of the society or a person connected with him in contravention of this section, that director and the person so connected, and any other director of the society who authorised the arrangement or any transaction entered into in pursuance of such an arrangement, shall (whether or not it has been avoided in pursuance of subsection (4)) be liable—

(a) to account to the society for any gain which he had made directly or indirectly by the arrangement or transaction; and

(b) jointly and severally with any other person liable under this subsection, to indemnify the society for any loss or damage resulting from the arrangement or transaction.

(6) Where an arrangement is entered into by a society and a person connected with a director of the society in contravention of this section, that director shall not be liable under subsection (5) if he shows that he took all reasonable steps to secure the society's compliance with this section and, in any case, a person so connected and any such other director as is mentioned in that subsection shall not be so liable if he shows that, at the time the arrangement was entered into, he did not know the relevant circumstances constituting the contravention.

57 Restrictions on loans etc. to directors and connected persons.

57.—(1) Subject to this section, a building society shall not—

(a) make a loan to a director or a person connected with a director of the society;

(b) dispose of property by way of lease or hire to a director or a person connected with a director of the society;

(c) make a payment on behalf of a director or a person connected with a director of the society in connection with the provision of any services under Part III;

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