Friendly Societies Act 1992

Part I — Functions of the Financial Conduct Authority and the Prudential Regulation Authority

The Friendly Societies Commission

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• (1) The Financial Conduct Authority (“the FCA”) has the following functions under this Act and the 1974 Act in relation to friendly societies—

• (a) to secure that the purposes of each friendly society are inconformity with this Act and any other enactment regulating the purposes of friendly societies;

• (b) to administer the system of regulation of the activities of friendly societies provided for by or under this Act and the 1974 Act; and

• (c) to advise and make recommendations to the Treasury and other government departments on any matter relating to friendly societies.

• (1A) The function in subsection (1)(c) is also a function of the Prudential Regulation Authority (“the PRA”).

• (2) The FCA and the PRA also have, in relation to such societies, the other functions conferred on them respectively by or under this Act or any other enactment.

Financial provision for Commission

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• (1) There shall be charged on friendly societies such a general charge towards the expenses of the Commission and such fees in respect of the exercise of its functions as are authorised under this section.

• (2) The Treasury may, by regulations, make provision for—

• (a) a general charge to be levied on friendly societies with respect to each accounting year of the Commission and to be paid at such rate computed by reference to such criteria, at such time and in such manner as may be prescribed by the regulations; and

• (b) fees of such amounts as may be so prescribed to be paid by friendly societies in respect of the exercise of the Commission’s functions in relation to them.

• (3) The provision to be made from time to time under subsection (2) above, by way of the general charge and fees, shall be such as to produce an annual revenue of the Commission sufficient to meet its expenses properly chargeable to revenue account, taking one year with another.

• (4) Regulations under subsection (2) above may include provision for any fees payable by societies to be reduced or for payment of any fees to be waived by the Commission in circumstances determined by or under the regulations.

• (5) The amounts received by the Commission under this section shall be applied as an appropriation in aid of money provided by Parliament for the expenses of the Commission, and in so far as not so applied, shall be paid into the Consolidated Fund.

• (6) In this Part of this Act “accounting year”, in relation to the Commission, means the period of 12 months ending with 31st March in any year, except that the Commission’s first accounting year shall end on 31st March 1993.

Accounts of Commission and audit

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• (1) The Commission shall keep proper accounts and proper accounting records and shall prepare in respect of each accounting year a statement of accounts in such form as the Treasury may direct.

• (2) The statement of the accounts required by subsection (1) above may be combined with the statement of the accounts of the Chief Registrar which he is required to prepare as regards his functions.

• (3) The Commission shall send to the Treasury and to the Comptroller and Auditor General, before the end of the period of seven months after the end of each accounting year, a copy of the statement of accounts for that year.

• (4) The Comptroller and Auditor General shall examine, certify and report on every statement of accounts received by him from the Commission and shall lay a copy of the statement and of his report thereon before each House of Parliament.

Annual and other reports

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• (1) It shall be the duty of the Commission to lay before the Treasury and before Parliament as soon as possible after the end of each accounting year a report on the discharge of its functions during that year.

• (2) The Commission may lay before Parliament from time to time such other reports relating to the discharge of its functions, whether in relation to friendly societies generally or a particular friendly society, as it thinks fit.

Part II — Incorporated Friendly Societies

Constitution and purposes of incorporated friendly societies

Establishment of incorporated friendly societies

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• (1) This Part of this Act has effect—

• (a) to enable societies to be established in accordance with this Act and to be registered and incorporated under it; and

• (b) to enable friendly societies registered under the 1974 Act to be registered and incorporated under this Act.

• (2) A society may be established under this Act if under its proposed memorandum—

• (a) its purposes are to include the carrying on of one or more activities falling within Head A, B, C or D of Schedule 2 to this Act;

• (b) any such activity—

• (i) is to be carried on by the society with a view to the provision, for its members and such persons connected with its members as may be prescribed in its rules, of insurance or other benefits; and

• (ii) is to be funded by voluntary subscriptions from members of the society, with or without donations; and

• (c) any other purposes which it is to have are within the permitted capacity of incorporated friendly societies under this Act.

• (3) A society established under this Act is incorporated as from the date of its registration under this Act by the FCA.

• (4) The Treasury may by order vary Schedule 2 to this Act by adding to or deleting, or by varying the description of, any activity for the time being specified in it.

• (5) No such order shall be made unless a draft of the order has been laid before and approved by a resolution of each House of Parliament.

• (6) Schedule 3 to this Act shall have effect in relation to—

• (a) the procedure for registration of societies as societies incorporated under this Act (in this Act referred to as “incorporated friendly societies”);

• (b) the memorandum of the purposes and extent of the powers of, and the rules for the regulation of, such societies,

• (c) the name and registered office of such societies,

and certain incidents of membership of incorporated friendly societies.

• (7) In this Part of this Act references to the permitted capacity of incorporated friendly societies under this Act are to the capacity to carry on all the activities mentioned in section 7(2) below.

Incorporation of registered friendly societies

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• (1) A registered friendly society may be registered and incorporated under this Act if—

• (a) the conditions mentioned in section 5(2) above are satisfied by reference to the society’s proposed memorandum; and

• (b) the society complies with the requirements in Schedule 3 to this Act which are applicable to its registration under this Act;

and such a society is so incorporated as from the date of its registration by the FCA.

• (2) On the incorporation of a registered friendly society all property held immediately before incorporation by any person in trust for the society shall become by virtue of this subsection the property of the society after incorporation.

• (3) After its incorporation the society shall continue to be entitled to all rights and subject to all liabilities to which it was entitled or subject immediately before incorporation.

• (4) On the incorporation of a registered society with registered or unregistered branches—

• (a) all property held immediately before incorporation by any person in trust for any branch of the society, and

• (b) all rights and liabilities to which any such branch was then entitled or subject,

shall, subject to subsection (5) below, become by virtue of this subsection property, rights and liabilities of the society.

• (5) A registered friendly society may (in accordance with paragraph 2 of Schedule 4 to this Act) make a scheme identifying any property, rights or liabilities of any branch of the society which are not to be transferred to the society on its incorporation; and any such property, rights or liabilities shall be excluded from transfer under subsection (4) above.

• (6) On the incorporation of a registered friendly society, its registration under the 1974 Act and that of any registered branch of the society shall be cancelled by the FCA.

• (7) Schedule 4 to this Act shall have effect for supplementing this section.

Purposes and powers of an incorporated friendly society

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• (1) The purposes of an incorporated friendly society shall be those provided for by the society’s memorandum.

• (2) The purposes for which an incorporated friendly society may exist are—

• (a) the carrying on, subject to section 5(2)(b) above, of—

• (i) any business of any description falling within a class specified in Head A or B or within Head C of Schedule 2 to this Act, or

• (ii) any activity falling within Head D of that Schedule; and

• (b) the carrying on, in addition to any business or activity falling within paragraph (a) above, of any of the following, namely—

• (i) social or benevolent activities in accordance with section 10 below;

• (ii) group insurance business in accordance with section 11 below;

• (iii) reinsurance, in accordance with section 12 below, of risks insured by other friendly societies;

• (iv) control or joint control of bodies corporate in accordance with section 13 below;

and the memorandum of an incorporated friendly society may also confer on the society power to do anything falling within Schedule 5 to this Act.

• (3) The memorandum of an incorporated friendly society may confer on it any other power specified in this Part of this Act, but no such power may be exercised except for carrying out the society’s purposes.

• (4) An incorporated friendly society shall, subject to the provisions of this Act, its memorandum and its rules, have any other power which is incidental or conducive to the carrying out of its purposes or for doing anything falling within Schedule 5 to this Act.

• (5) Nothing in this Act shall be taken as preventing an incorporated friendly society from providing in its rules—

• (a) for such system of representation of the members in the making of decisions by the society as the society may think fit;

• (b) for the division of the society’s members into groups under the control of the society and bound to contribute to the funds of the society but, subject to that, having funds and property of their own vested in trustees and administered by themselves or through their own trustees, officers or committees (and in accordance with their own rules);

• (c) for the delegation of authority to any such group (or to its committee or any of its officers) to act, within such limits as the society may set, on the society’s behalf;

but no such group may do anything on its own account which does not fall within section 10 below or within Head D of Schedule 2 or within Schedule 5 to this Act.

• (6) Schedule 6 to this Act shall have effect in relation to the making of contracts and execution of documents by incorporated friendly societies.

Effect of the memorandum of an incorporated society

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• (1) The provisions of the memorandum of an incorporated friendly society are binding upon—

• (a) each of the members and officers of the society,

• (b) all persons claiming on account of a member or under its rules,

and all such members, officers and persons (but no others) shall be taken to have notice of the provisions of the memorandum.

• (2) A person not of a description mentioned in subsection (1)(a) or (b) above who is a party to a transaction with an incorporated friendly society which is within the permitted capacity of such societies under this Act is not bound to enquire as to whether the transaction is within the capacity of the society in question.

• (3) Subsection (4) below applies to any act of an incorporated society which is within the permitted capacity of such societies under this Act but is beyond the capacity of the society in question.

• (4) In favour of a person who—

• (a) is not a person mentioned in subsection (1) above;

• (b) gives valuable consideration for the act; and

• (c) does not know that the act is beyond the capacity of the society,

any act to which this subsection applies is deemed to be one which is within the capacity of the society to enter into, notwithstanding the provisions of the memorandum.

• (5) Where an incorporated friendly society purports to transfer or grant an interest in property, the fact that the act was beyond the capacity of the society does not affect the title of a person who in good faith subsequently acquires the property or an interest in it for valuable consideration and without actual notice of the circumstances affecting the validity of the society’s act.

• (6) Subsection (4) above does not affect—

• (a) the right of a member of an incorporated friendly society to bring proceedings to restrain the doing of an act (other than an act done in fulfilment of a legal obligation arising from a previous act of the society) which is beyond the capacity of the society;

• (b) the duty of the committee of management to observe any limitation on their powers flowing from the society’s memorandum; or

• (c) any liability incurred by any person by reason of the society acting beyond its capacity.

• (7) Relief from any liability mentioned in subsection (6)(c) above must be agreed to by special resolution.

• (8) In any proceedings arising out of subsection (4) above, the burden of proving that a person knew that an act was beyond the capacity of the society in question lies on the person making the allegation.

• (9) In this section “transaction” includes any act.

Effect of the rules of an incorporated society

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• (1) The provisions of the rules of an incorporated friendly society are binding upon—

• (a) each of the members and officers of the society,

• (b) all persons claiming on account of a member or under its rules,

and all such members, officers and persons (but no others) shall be taken to have notice of the provisions of the rules.

• (2) A party to a transaction with an incorporated friendly society who is not of a description mentioned in subsection (1)(a) or (b) above is not bound to enquire as to any limitation on the powers of the committee of management to bind the society.

• (3) Subsection (4) below applies in relation to any act of an incorporated friendly society which is, or is deemed by section 8(4) above to be, within the capacity of the society and is decided upon by the committee of management acting beyond their powers under the constitution of the society.

• (4) In favour of a person who—

• (a) is not a person mentioned in subsection (1) above;

• (b) gives valuable consideration for an act to which this subsection applies; and

• (c) does not know that the act is beyond the powers of the committee of management;

the power of the committee of management to bind the society shall be deemed free of any limitation in the society’s constitution.

• (5) Where an incorporated friendly society purports to transfer or grant an interest in property, the fact that the committee of management acted beyond their powers under the society’s constitution does not affect the title of a person who in good faith subsequently acquires the property or an interest in it for valuable consideration and without actual notice of the circumstances (if any) affecting the validity of the society’s act.

• (6) Subsection (4) above does not affect—

• (a) the right of a member of an incorporated friendly society to bring proceedings to restrain the doing of an act (other than an act done in fulfilment of a legal obligation arising from a previous act of the society) which is beyond the powers of the committee of management;

• (b) the duty of the committee of management to act within their powers under the constitution of the society;

• (c) any liability incurred by any person by reason of the committee of management exceeding their powers.

• (7) Action by the committee of management of an incorporated friendly society which is beyond their powers under the society’s constitution but is within its capacity may be ratified by the society in general meeting in such manner as its rules may provide; but relief from any liability mentioned in subsection (6)(c) above must be agreed to by special resolution separate from any resolution ratifying the committee’s action.

• (8) In this section—

• (a) references to limitations on the committee’s powers under the constitution of the society include limitations deriving from a resolution of the society in general meeting or any agreement between the members of the society; and

• (b) “transaction” includes any act.

• (9) In any proceedings arising out of subsection (4) above, the burden of proving that a person knew that an act was beyond the powers of the committee of management lies on the person making the allegation.

• (10) This section shall not affect the application, in relation to an incorporated friendly society, of any rule of law relating to the validity of acts which are within the capacity of a body corporate but may have been affected by defects arising from its internal management under its constitution.

Social and benevolent activities

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• (1) An incorporated friendly society may include among its purposes the carrying on of any social or benevolent activity which is not inconsistent with the other purposes of the society.

• (2) For the purposes of this section “benevolent activity” means the making of donations, the raising of funds or any other activity carried on for a charitable purpose or for any other benevolent purpose.

Group insurance

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• (1) An incorporated friendly society may include among its purposes the carrying on of any group insurance business.

• (2) In this Act “group insurance business” means business (carried on in accordance with the society’s rules) which—

• (a) is of a description falling within Head A, or class 2 of Head B, of Schedule 2 to this Act; and