Friendly Societies Act 1992

• (2) Subject to the provisions of Part IV relating to preferential payments, an incorporated friendly society’s property in a voluntary winding up shall be applied in satisfaction of the society’s liabilities to creditors pari passu and, subject to that application, in accordance with the rules of the society.

17

Sections 110 and 111 (liquidator accepting shares, etc. as consideration for sale of company property) of the Act do not apply.

Winding up by the court

18

In sections 117 (High Court and county court jurisdiction) and 120 (Court of Session and sheriff court jurisdiction) of the Act, each reference to a company’s share capital paid up or credited as paid up shall have effect as a reference to the amount of the contribution or subscription income of an incorporated friendly society as shown by the latest balance sheet.

19

Section 122 (circumstances in which company may be wound up by the court) of the Act does not apply.

20

Section 124 (application for winding up) of the Act does not apply.

21

• (1) In section 125 (powers of court on hearing of petition) of the Act, subsection (1) applies with the omission of the words from “but the court" to the end of the subsection.

• (2) The conditions which the court may impose under section 125 of the Act include conditions for securing—

• (a) that the incorporated friendly society be dissolved by consent of its members under section 20 above; or

• (b) that the society amalgamates with, or transfers all or any of its engagements to, another friendly society under section 85 or 86 above, or

• (c) that the society converts itself into a company under section 91 above,

and may also include conditions for securing that any default which occasioned the petition be made good and that the costs, or in Scotland the expenses, of the proceedings on that petition be defrayed by the person or persons responsible for the default.

22

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

23

If, before the presentation of a petition for the winding up by the court of an incorporated friendly society, an instrument of dissolution under section 20 above is placed in the society’s public file, section 129(1) (commencement of winding up by the court) of the Act shall also apply in relation to the date on which the notice is so placed and to any proceedings in the course of the dissolution as it applies to the commencement date for, and proceedings in, a voluntary winding up.

24

• (1) Section 130 of the Act (consequences of winding-up order) shall have effect with the following modifications.

• (2) Subsections (1) and (3) shall be omitted.

• (3) An incorporated friendly society shall, within 15 days of a winding-up order being made in respect of it, give notice of the order to the FCA and, if the society is a PRA-authorised person, the PRA; and the FCA shall keep the notice in the public file of the society.

• (4) If an incorporated friendly society fails to comply with sub-paragraph (3) above, it shall be guilty of an offence and liable on summary conviction to a fine not exceeding level 3 on the standard scale.

25

Section 140 (appointment of liquidator by court in certain circumstances) of the Act does not apply.

26

In the application of sections 141(1) and 142(1) (liquidation committees), of the Act to incorporated friendly societies, the references to functions conferred on a liquidation committee by or under that Act shall have effect as references to its functions by or under that Act as so applied.

27

The conditions which the court may impose under section 147 (power to stay or sist winding up) of the Act shall include those specified in paragraph 21(2) above.

28

Section 154 (adjustment of rights of contributories) of the Act shall have effect with the modification that any surplus is to be distributed in accordance with the rules of the society.

29

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Winding up: general

30

Section 187 (power to make over assets to employees) of the Act does not apply.

31

• (1) In section 201 (dissolution: voluntary winding up) of the Act, subsection (2) applies without the words from “and on the expiration" to the end of the subsection and, in subsection (3), the word “However" shall be omitted.

• (2) Sections 202 to 204 (early dissolution) of the Act do not apply.

32

In section 205 (dissolution: winding up by the court) of the Act, subsection (2) applies with the omission of the words from “and, subject" to the end of the subsection; and in subsections (3) and (4) references to the Secretary of State shall have effect as references to the FCA.

Penal provisions

33

Sections 216 and 217 of the Act (restriction on re-use of name) do not apply.

34

• (1) Sections 218 and 219 (prosecution of delinquent officers) of the Act do not apply in relation to offences committed by members of an incorporated friendly society acting in that capacity.

• (2) Sections 218(5) of the Act and subsections (1) and (2) of section 219 of the Act do not apply.

• (3) The references in subsections (3) and (4) of section 219 of the Act to the Secretary of State shall have effect as references to the FCA; and the reference in subsection (3) to section 218 of the Act shall have effect as a reference to that section as supplemented by paragraph 35 below.

35

• (1) Where a report is made to the prosecuting authority (within the meaning of section 218) under section 218(4) of the Act, in relation to an officer of an incorporated friendly society, he may, if he thinks fit, refer the matter to the FCA for further enquiry.

• (2) On such a reference to it the FCA shall exercise its power under section 65(1) above to appoint one or more investigators to investigate and report on the matter.

• (3) An answer given by a person to a question put to him, in exercise of the powers conferred by section 65 above on a person so appointed, may be used in evidence against the person giving it.

Preferential debts

36

Section 387 (meaning in Schedule 6 of “the relevant date") of the Act applies with the omission of subsections (2) and (4) to (6).

Part III — Modified Application of Insolvency (Northern Ireland) Order 1989

Preliminary

37

In this Part of this Schedule, Part V of the Insolvency (Northern Ireland) Order 1989 is referred to as “Part V”; and that Order is referred to as “the Order”.

Members of a friendly society as contributories in winding up

38

• (1) Article 61 (liability of members) of the Order is modified as follows.

• (2) In paragraph (1), the reference to any past member shall be omitted.

• (3) Sub-paragraphs (a) to (d) of paragraph (2) shall be omitted; and so shall paragraph (3).

• (4) The extent of the liability of a member of an incorporated friendly society in a winding up shall not exceed the extent of his liability under paragraph 8 of Schedule 3 to this Act.

39

Articles 62 to 65 and 69 of the Order (miscellaneous provisions not relevant to incorporated friendly societies) do not apply.

40

• (1) Article 13 (meaning of “contributory") of the Order does not apply.

• (2) In the enactments as applied to an incorporated friendly society “contributory”—

• (a) means every person liable to contribute to the assets of the society in the event of its being wound up; and

• (b) for the purposes of all proceedings for determining, and all proceedings prior to the determination of, the persons who are to be deemed contributories, includes any person alleged to be a contributory; and

• (c) includes persons who are liable to pay or contribute to the payment of—

• (i) any debt or liability of the incorporated friendly society being wound up; or

• (ii) any sum for the adjustment of rights of members among themselves; or

• (iii) the expenses of the winding up;

but does not include persons liable to contribute by virtue of a declaration by the court under Article 177 (imputed responsibility for fraudulent trading) or Article 178 (wrongful trading) of the Order.

Voluntary winding up

41

• (1) Article 70 of the Order does not apply.

• (2) In the enactments as applied to an incorporated friendly society, the expression “resolution for voluntary winding up” means a resolution passed under section 21(1) above.

42

Article 74 shall have effect with the omission of the words from the beginning to “and".

43

• (1) Paragraph (1) of Article 75 shall have effect as if for the words from the beginning to “meeting" there were substituted the words—

(1) Where it is proposed to wind up an incorporated friendly society voluntarily, the committee of management (or, in the case of an incorporated friendly society whose committee of management has more than two members, the majority of them) may at a meeting of the committee

.

• (2) The reference to the directors in paragraph (2) shall be construed as a reference to members of the committee of management.

44

Article 76 shall have effect as if for the words “directors’ statutory declaration in accordance with Article 75" there were substituted the words “ statutory declaration made in accordance with Article 75 by members of the committee of management ”.

45

Article 81 (1) and 82 shall have effect as if the word “directors"' were omitted from each of them.

46

In paragraph (1) of Article 87 (appointment of liquidation committee) of the Order, the reference to functions conferred on a liquidation committee by or under that Order shall have effect as a reference to its functions by or under that Order as applied to incorporated friendly societies.

47

• (1) Article 93 (distribution of property) of the Order does not apply; and the following applies in its place.

• (2) Subject to the provisions of Part V relating to preferential payments, an incorporated friendly society’s property in a voluntary winding up shall be applied in satisfaction of the society’s liabilities to creditors pari passu and, subject to that application, in accordance with the rules of the society.

48

Articles 96 and 97 (liquidator accepting shares, etc. as consideration for sale of company property) of the Order do not apply.

Winding up by the High Court

49

Article 102 (circumstances in which company may be wound up by the High Court) of the Order does not apply.

50

Article 104 (application for winding up) of the Order does not apply.

51

• (1) In Article 105 (powers of High Court on hearing of petition) of the Order, paragraph (1) applies with the omission of the words from “but the Court" to the end of the paragraph.

• (2) The conditions which the Court may impose under Article 105 of the Order include conditions for securing—

• (a) that the incorporated friendly society be dissolved by consent of its members under section 20 above; or

• (b) that the society amalgamates with, or transfers its engagements to, another friendly society under section 85 or 86 above; or

• (c) that the society converts itself to a company under section 91 above,

and may also include conditions for securing that any default which occasioned the petition be made good and that the costs of the proceedings on that petition be defrayed by the person or persons responsible for the default.

52

Article 106 (power of court, between petition and winding-up order, to stay or restrain proceedings against company) of the Order has effect with the omission of paragraph (2).

53

If, before the presentation of a petition for the winding up by the High Court of an incorporated friendly society, an instrument of dissolution under section 20 is placed in the society’s public file, Article 109(1) (commencement of winding up by the High Court) of the Order shall also apply in relation to the date on which the notice is so placed and to any proceedings in the course of the dissolution as it applies to the commencement date for, and proceedings in, a voluntary winding up.

54

• (1) Article 110 of the Order (consequences of winding-up order) shall have effect with the following modifications.

• (2) Paragraphs (1) and (3) shall be omitted.

• (3) An incorporated friendly society shall, within 15 days of a winding-up order being made in respect of it, give notice of the order to the FCA and, if the society is a PRA-authorised person, the PRA; and the FCA shall keep the notice in the public file of the society.

• (4) If an incorporated friendly society fails to comply with sub-paragraph (3) above, it shall be guilty of an offence and liable on summary conviction to a fine not exceeding level 3 on the standard scale.

55

Article 119 (appointment of liquidator by High Court in certain circumstances) of the Order does not apply.

56

In the application of Article 120(1) (liquidation committees), of the Order to incorporated friendly societies, the references to functions conferred on a liquidation committee by or under that Order shall have effect as references to its functions by or under that Order as so applied.

57

The conditions which the High Court may impose under Article 125 (power to stay winding up) of the Order shall include those specified in paragraph 51(2) above.

58

Article 132 (adjustment of rights of contributories) of the Order shall have effect with the modification that any surplus is to be distributed in accordance with the rules of the society.

59

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Winding up: general

60

Article 158 (power to make over assets to employees) of the Order does not apply.

61

• (1) In Article 166 (dissolution: voluntary winding up) of the Order, paragraph (2) applies without the words from “and on the expiration" to the end of the paragraph and, in paragraph (3), the word “However" shall be omitted.

• (2) Articles 167 and 168 (early dissolution) of the Order do not apply.

62

In Article 169 (dissolution: winding up by the High Court) of the Order, paragraph (1) applies with the omission of the words from “and, subject" to the end of the paragraph; and in paragraphs (2) and (3) references to the Department shall have effect as references to the FCA and the PRA.

Penal provisions

63

Articles 180 and 181 of the Order (restriction on re-use of name) do not apply.

64

• (1) Articles 182 and 183 (prosecution of delinquent officers) of the Order do not apply in relation to offences committed by members of an incorporated friendly society acting in that capacity.

• (2) Articles 182(4) and 183(1) and (2) of the Order do not apply.

• (3) The references in paragraph (3) and (5) of Article 183 of the Order to the Department shall have effect as references to the FCA; and the reference in paragraph (3) to Article 182 of the Order shall have effect as a reference to that Article as supplemented by paragraph 65 below.

65

• (1) Where a report is made to the prosecuting authority (within the meaning of Article 182) under Article 182(5) of the Order, in relation to an officer of an incorporated friendly society, he may, if he thinks fit, refer the matter to the FCA for further enquiry.

• (2) On such a reference to it the FCA shall exercise its power under section 65(1) above to appoint one or more investigators to investigate and report on the matter.

• (3) An answer given by a person to a question put to him in exercise of the powers conferred by section 65 above on a person so appointed may be used in evidence against the person giving it.

Preferential debts

66

Article 347 (meaning in Schedule 4 of “the relevant date") of the Order applies with the omission of paragraphs (2) and (4) to (6).

Part IV — Supplementary

Dissolution of incorporated friendly society after winding up

67

• (1) Where an incorporated friendly society has been wound up voluntarily, it is dissolved as from 3 months from the date of the placing in the public file of the society of the return of the final meetings of the society and its creditors made by the liquidator under—

• (a) section 94 or 106 of the Insolvency Act 1986 (as applied to incorporated friendly societies), or on such other date as is determined in accordance with section 201 of that Act; or

• (b) Article 80 or 92 of the Insolvency (Northern Ireland) Order 1989 (as so applied), or on such other date as is determined in accordance with Article 166 of that Order.

• (2) Where an incorporated friendly society has been wound up by the court, it is dissolved as from 3 months from the date of the placing in the public file of the society of the liquidator’s notice under—

• (a) section 172(8) of the Insolvency Act 1986 (as applied to incorporated friendly societies) or on such other date as is determined in accordance with section 205 of that Act; or

• (b) Article 146(7) of the Insolvency (Northern Ireland) Order 1989 (as so applied) or on such other date as is determined in accordance with Article 169 of that Order.

68

• (1) Sections 1012 to 1023 and 1034 of the Companies Act 2006 (property of dissolved company) apply in relation to the property of a dissolved incorporated friendly society (whether dissolved under section 20 or following its winding up) as they apply in relation to the property of a dissolved company.

• (2) Paragraph 3(1) above shall apply to those sections for the purpose of their application to incorporated friendly societies.

• (3) Any reference in those sections to restoration to the register shall be read as a reference to the effect of an order under section 25 of this Act.

Insolvency rules and fees

69

• (1) Rules may be made under—

• (a) section 411 of the Insolvency Act 1986; or

• (b) Article 359 of the Insolvency (Northern Ireland) Order 1989,

for the purpose of giving effect, in relation to incorporated friendly societies, to the provisions of the applicable winding up legislation.

• (2) An order made by the competent authority under section 414 of the Insolvency Act 1986 may make provision for fees to be payable under that section in respect of proceedings under the applicable winding-up legislation and the performance by the official receiver or the Secretary of State of functions under it.

• (3) An order made by the competent authority under Article 361 of the Insolvency (Northern Ireland) Order 1989 may make provisions for fees to be payable under that section in respect of proceedings under the applicable winding-up legislation and the performance by the official receiver in Northern Ireland or the Department of Economic Development in Northern Ireland of functions under it.

SCHEDULE 11

Part I — Eligibility and Retirement of Committee Members

Preliminary

1

• (1) This Part of this Schedule applies in relation to members of the committee of management of a friendly society (“the society”); and in this Schedule—

• “the committee” means the committee of management of the society;

• “the compulsory retirement age”, where the rules of the society make the provision authorised by paragraph 3(1) below, means the age prescribed for that purpose in its rules;

• “the normal retirement age” means 70 years or such lesser age as the rules of the society may prescribe as the normal retirement age for members of its committee.

• (2) For the purposes of this Act the date of a person’s election to office as a member of the committee, where the rules of the society provide for election by ... ballot, is the date of the meeting at which the declaration of the result of the ballot is made.

Eligibility to be elected committee member

2

Subject to paragraph 3 below, paragraph 7 of Schedule 3 to this Act and to the rules of the society, any person is eligible to be elected as a member of the committee.

3

• (1) The rules of the society may require the members of the committee to retire at a prescribed age without eligibility for re-election or reappointment; and, if the age so prescribed is no greater than the age which is the normal retirement age for members of the committee, sub-paragraph (3) below shall have no application to the society.

• (2) If the rules of the society make the provision authorised by sub-paragraph (1) above, a person who has attained the age so prescribed shall not be eligible to be elected as a member of the committee.

• (3) Except in the case mentioned in sub-paragraph (1) above, if a person has attained the normal retirement age for the society, he shall not be eligible to be elected as a member of the committee unless—

• (a) he has been approved as eligible to be so elected by resolution of the committee; and

• (b) his age and the reasons for the committee’s approval of his eligibility have been notified to every person entitled to vote at the election.

• (3A) A friendly society is to be regarded as notifying a person for the purposes of sub-paragraph (3)(b) if it makes the information available to the person on a website; and the end date for the purposes of section 119AB(4)(b) is the day after the election.

• (4) If a friendly society, in a case where its committee has approved as eligible for election a person who has attained the normal retirement age, fails to notify every person entitled to vote at the election, the society shall be guilty of an offence and liable on summary conviction to a fine not exceeding level 4 on the standard scale; but no such failure shall invalidate the election.

Eligibility to be co-opted committee member

4

No person may be co-opted as a member of the committee who has attained the normal retirement age or the compulsory retirement age (where that age is less than the normal retirement age).

Notice to society of age of committee member

5

• (1) A person who holds office as, or is to his knowledge nominated for election or proposed for co-option to the committee as, a member of the committee shall, not later than 28 days before he attains the normal retirement age or, as the case may be, the compulsory retirement age for members of the committee, give the society notice of the date on which he will attain that age.

• (2) A person who fails to give to a friendly society a notice required, in relation to that society, by sub-paragraph (1) above shall be guilty of an offence and liable on summary conviction—

• (a) to a fine not exceeding level 3 on the standard scale; and

• (b) in the case of a continuing offence, to an additional fine not exceeding one-tenth of that level for every week during which the offence continues.

Retirement of elected committee members

6

• (1) A member of the committee shall retire from office—

• (a) in any case not provided for by paragraph (b) below, sub-paragraph (2) below or rules under sub-paragraph (3) below, at the fifth annual general meeting of the society following the date of his election; and

• (b) in a case where he had attained the normal retirement age at his election, at the next annual general meeting following that date.

• (2) A member of the committee attaining the normal retirement age or, as the case may be, the compulsory retirement age shall, subject to any provision of the rules for earlier retirement, retire from office at the next annual general meeting of the society.

• (3) The rules of the society, if they provide for the retirement by rotation of members of its committee, may provide that a person elected to fill a vacant seat on the committee must retire at the annual general meeting at which, in accordance with the rules for retirement by rotation, the seat is to fall vacant.

• (4) Sub-paragraph (3) above applies to any vacancy arising when an elected member ceases to hold office for any reason before the annual general meeting at which (disregarding his age) the seat is due to fall vacant.

Retirement of co-opted members

7

• (1) A person who is co-opted as a member of the committee shall cease to hold office at the end of the permitted period unless he is elected to office as a member of the committee within that period.

• (2) For the purposes of sub-paragraph (1) above “the permitted period”, with reference to the tenure of office of a co-opted member of the committee, is the period beginning with the date of his appointment and ending with the declaration of the next election of members of the committee conducted after his appointment or the expiration of the period of 16 months beginning with the date of his appointment, whichever first occurs.

Part II — Dealings with Members of Committee of Management

8

• (1) A friendly society or registered branch must not make any payment to a member of the committee of management of the society or branch—

• (a) by way of compensation for loss of office, or

• (b) as consideration for or in connection with the member's retirement from office,

unless particulars of the proposed payment (including its amount) have been disclosed to members of the society or branch and the proposal has been approved by the society or branch.

• (2) Sub-paragraph (1) does not apply to a bona fide payment by way of damages for breach of contract or by way of pension in respect of past services.“Pension” here includes any superannuation allowance, superannuation gratuity or similar payment.

9

• (1) The following provisions of the Building Societies Act 1986—

• (a) section 62 (prohibition of tax-free payments to directors);

• (b) section 63 (disclosure of interests in contracts and other transactions);

• (c) section 64 (substantial property transactions);

• (d) section 65 (restriction on loans etc);

• (e) section 66 (sanctions);

• (f) section 68 (records of loans etc) with Schedule 9;

• (g) section 69 (disclosure and record of related businesses); and

• (h) section 70 (interpretation),

shall have effect as if any reference to a director of a building society included a reference to a member of the committee of management of a friendly society or registered branch.

• (2) The provisions mentioned in sub-paragraph (1) above shall have effect in their application to such members with the substitution—

• (a) of a reference to a friendly society or registered branch for every reference to a building society; and

• (b) of a reference to the committee of management for every reference to the directors or board of directors.

• (3) Section 65 shall in addition have effect in its application to them—

• (a) with the omission of subsection (1)(c); and

• (b) with the substitution in subsection (1)(d) of the words “ loan or disposal of property ” for the words “loan, disposal of property or payment".

• (4) Section 69 shall in addition have effect with the substitution—

• (a) of the following subsection for subsection (3)—

(3) The following are relevant services— (a) legal services; (b) accountancy services; (c) services of a broker in respect of the society’s insurance business; (d) reinsurance of the society’s insurance business; (e) any other services designated as relevant services.

; and

• (b) of a reference to Part II of this Schedule for every reference in subsection (7) to Schedule 10 to the Building Societies Act.

• (6) The requisite particulars of the business of a business associate of a friendly society or registered branch are accordingly those set out in paragraphs 10 to 12 or 13 to 15 below.

Requisite particulars where no adoption of this Part

10

Where the business associate of the society or branch provides legal services the requisite particulars of its business in any financial year are the following—

• (a) the aggregate amount of the fees paid to it by the society or branch concerned for the provision of legal services; and

• (b) the aggregate amount of any fees paid to it by the society or branch in consideration of the provision of management services to the society or branch.

11

Where the business associate of the society or branch provides accountancy services the requisite particulars of its business in any financial year are the following—

• (a) the aggregate amount of the fees paid to it by the society or branch for the provision of accountancy services; and

• (b) the aggregate amount of any fees paid to it by the society or branch in consideration of the provision of management services to the society or branch.

12

Where the business associate of the society or branch arranges for the provision of insurance broking services, the requisite particulars of its business in any financial year are the following—

• (a) the aggregate of the amounts paid to it by the society or branch by way of commission; and

• (b) the aggregate amount of any fees paid to it by the society or branch in consideration of the provision of management services to the society or branch.

Requisite particulars on adoption of this Part

13

Where the business associate of the society or branch provides legal services, the requisite particulars of its business in any financial year are the following—

• (a) the prescribed band within which falls the estimated aggregate amount of the fees paid to it by the society or branch for the provision of legal services; and

• (b) the prescribed band within which falls the estimated aggregate amount of any fees paid to it by the society or branch in consideration of the provision of management services to the society or branch.

14

Where the business associate of the society or branch provides accountancy services the requisite particulars of its business in any financial year are the following—

• (a) the prescribed band within which falls the estimated aggregate amount of the fees paid to it by the society or branch for the provision of accountancy services; and

• (b) the prescribed band within which falls the estimated aggregate amount of any fees paid to it by the society or branch in consideration of the provision of management services to the society or branch.

15

Where the business associate of the society or branch provides insurance broking services the requisite particulars of its business in any financial year are the following—

• (a) the prescribed band within which falls the estimated aggregate of the amounts paid to it by or by way of commission; and

• (b) the prescribed band within which falls the estimated aggregate amount of any fees paid to it by the society or branch in consideration of the provision of management services to the society or branch.

Power to prescribe bands

16

• (1) The Treasury, with the consent of the Treasury, may by order prescribe, for the purposes of the provisions of this Part of this Schedule, series of monetary amounts by reference to limits specified in the order; and, in any such provision, “prescribed band” means, in relation to monetary amounts, any series of monetary amounts so prescribed for the purposes of that provision.

• (2) The power conferred by this paragraph includes power to prescribe different series of monetary amounts for the purposes of different provisions.

SCHEDULE 12

Annual general meeting

1

• (1) Every friendly society and registered branch shall in each year hold a general meeting as its annual general meeting (in addition to any other meetings in that year).

• (2) Not more than 15 months shall elapse between the date of one annual general meeting and that of the next.

• (3) If an incorporated friendly society holds its first annual general meeting within 18 months of its incorporation, it need not hold it in the year of its incorporation or in the following year.

• (4) If a registered friendly society or registered branch holds its first annual general meeting within 18 months of its registration under the 1974 Act, it need not hold it in the year of its registration or in the following year.

2

• (1) A meeting to be held as the annual general meeting of a friendly society or registered branch shall be specified as such in any notice calling it.

• (2) Notwithstanding anything in the rules of a friendly society or registered branch, the business which may be dealt with at the annual general meeting includes any resolution (whether a special resolution or not).

3

• (1) If a friendly society or registered branch fails to hold a meeting as its annual general meeting in accordance with paragraph 1 above, the society or branch shall be guilty of an offence and liable on summary conviction to a fine not exceeding level 4 on the standard scale.

• (2) If such default is made, the FCA may—

• (a) call, or direct the calling of, an annual general meeting, and

• (b) give such ancillary or consequential directions as it thinks expedient, including directions modifying or supplementing the operation of the rules of the society concerned in relation to the calling, holding and conducting of the meeting.

• (3) If default is made in complying with any directions of the FCA given under this paragraph, the society or branch concerned shall be guilty of an offence and liable on summary conviction to a fine not exceeding level 5 on the standard scale.

Notice for calling meetings

4

• (1) A meeting of a friendly society or registered branch must be called by not less than 14 days’ notice to members, or such longer period as the rules may require, expiring—

• (a) with the date of the meeting; or

• (b) where proxy voting is permitted, with such earlier date as may be specified by the society, under its rules, as the final date for the receipt of appointments of proxies to vote at the meeting;

and the notice to members of a meeting shall be given in such manner as is prescribed by the rules of the society or branch.

• (1A) Sending the notice by electronic means to an electronic address which the member has notified for that purpose, or making the notice available to a member on a website, is to be regarded as giving the member notice for the purposes of sub-paragraph (1), unless the rules of the society or branch make express provision to the contrary.

• (1B) The end date for the purposes of section 119AB(4)(b) is the date of the meeting.

• (1C) If a notice calling a meeting includes an electronic address for the society or registered branch, the address is to be regarded as one to which documents or information relating to the meeting may be sent; but that is subject to such conditions or restrictions as the notice specifies.

• (1D) Where notice of a meeting is given to a member by sending it to an electronic address, the notice is to be treated as given to that member on the day it is sent.

• (1E) Where a notice of a meeting is given to a member by making the notice available on a website, the notice is to be treated as given on the day the member is notified in accordance with section 119AB(3).

• (1F) If the notice is absent from the website for part of the period referred to in section 119AB(4), and the absence is disregarded for the purposes of section 119AB(5), that absence does not invalidate the proceedings of the meeting or resolutions passed.

• (2) Where the rules of a friendly society do not provide for the giving of individual notices to those entitled (when the notice is given) to vote at meetings of any description, the rules may provide for the giving of notice of such meetings by advertisement.

• (3) If the rules provide for the giving of notice of any meetings by advertisement, the rules must include provision requiring the necessary advertisements to be inserted—

• (a) in at least one newspaper circulating in the areas in which the members of the society reside; or

• (b) where the membership of the society is drawn from a professional body or wholly or mainly from persons who are or have been engaged in a particular trade, profession or vocation, in an appropriate professional journal,

as the rules may provide.

• (4) The rules of a friendly society or registered branch may provide—

• (a) for adjourned meetings to be called without notice or with such notice as the rules may require;

• (b) for meetings to be held at a specified time and place, on such dates as are prescribed by the rules, either without further notice or with such notice as the rules may require;

and sub-paragraphs (1) to (3) above shall not apply to meetings held by virtue of such provision.

• (5) This paragraph is without prejudice to any requirement under the rules of a friendly society or registered branch as to the giving of notice of special resolutions to be moved, or any other business to be transacted, at a meeting of the society or branch.

Members’ entitlement to vote on resolutions

5

• (1) Subject to sub-paragraph (2) below, any provision in the rules of a friendly society or registered branch is void to the extent that it would have the effect of making the voting rights conferred on members by the rules conditional upon the amount of their subscriptions.

• (2) Sub-paragraph (1) above shall not apply to any provision in the rules excluding or limiting the voting rights of members by reference to the amount of their subscriptions in such cases or circumstances as the Treasury may by regulations prescribe.

• (3) In this section “subscription” includes a contribution payment falling to be made by a member.

Right to demand a poll

6

• (1) Any provision contained in the rules of a friendly society or registered branch shall be void in so far as it would have the effect either—

• (a) of excluding the right to demand a poll at a meeting of the society on any question other than the election of a chairman of the meeting or the adjournment of the meeting; or

• (b) of making ineffective a demand for a poll on any such question which is made by not less than 10 members who are entitled to vote at the meeting or, in the case of a society whose rules provide for delegate voting, 5 delegates who are so entitled.

• (2) The reference in sub-paragraph (1)(b) above to members includes a reference, where the rules allow the appointment of proxies, to persons who are duly appointed on behalf of members entitled to attend and vote at the meeting.

Special resolutions

7

• (1) No resolution of a friendly society shall be passed as a special resolution unless—

• (a) it is required to be so passed by or under any provision of this Act or the 1974 Act or by the rules of the society;

• (b) at least 14 day’s notice, or such longer period as the rules may require, expiring—

• (i) with the date of the meeting at which the resolution is to be moved; or

• (ii) where proxy voting is permitted, with such earlier date as may be specified by the society, under its rules, as the final date for the receipt of appointments of proxies to vote at the meeting;

is given to members in such manner as is prescribed by the rules; and

• (c) any such notice (or, in the case of a postal ballot, the ballot papers or, in the case of an electronic ballot, the section of the website on which in which the facility for registering a vote may be used) includes a statement that the resolution will not be effective unless it is passed as a special resolution;

and, in this Act, “special resolution” means a resolution so passed.

• (2) Subject to sub-paragraph (3) below, a resolution of a friendly society shall not be effective as a special resolution unless it is passed by not less than three-quarters of the number of the members of the society entitled to vote on it and voting either (in person or by proxy) on a poll at a meeting of the society or in a ... ballot.

• (3) Where the rules of a friendly society provide for delegate voting, a resolution shall not be effective as a special resolution unless it is passed by not less than three quarters of the number of delegates entitled to vote on the resolution and voting on a poll at a meeting or in a ... ballot.

• (4) Where the rules of a friendly society do not provide for the giving of individual notices to those entitled (when the notice is given) to vote on special resolutions of any description, the rules may provide for the giving of notice by advertisement.

• (5) If the rules provide for the giving of notice of any special resolutions by advertisement, the rules must include provision requiring the necessary advertisements to be inserted—

• (a) in at least one newspaper circulating in the areas in which the members of the society reside; or

• (b) where the membership of the society is drawn from a professional body or wholly or mainly from persons who are or have been engaged in a particular trade, profession or vocation, in an appropriate professional journal,

as the rules may provide.

• (6) Proxy voting shall be permitted (notwithstanding anything to the contrary in a society’s rules) on any resolution which is to be moved as a special resolution at any meeting of a friendly society other than a meeting of delegates; and the procedure adopted by the society for such proxy voting shall comply with any requirements prescribed in regulations by the Treasury.

Postal ballots

8

• (1) The rules of a friendly society or registered branch may provide for the voting—

• (a) in an election of the committee of management or, where applicable, of the secretary, or

• (b) on any resolution (whether special or not),

to be conducted in all, or in any particular, circumstances by postal ballot; and ... “postal ballot” in relation to an election or a resolution of the society or branch, means a postal ballot taking place by virtue of those rules.

• (1A) The rules of a friendly society or registered branch may also make provision in relation to the use of electronic communications in the conduct of a postal ballot.

• (2) Where a postal ballot is to take place, the following provisions of this paragraph have effect.

• (3) Notice of a postal ballot shall be given not less than 14 nor more than 56 days before the date which the society or branch specifies as the final date for the receipt of completed ballot papers (referred to in this paragraph as “the voting date”).

• (4) Subject to the provisions of this Act, notice of a postal ballot shall be given to every member of the society or branch who would be entitled to vote in the election or on the resolution if the voting date for the election or the resolution fell on the date of the notice.

• (4A) A friendly society or registered branch is to be regarded as giving notice of a postal ballot for the purposes of this paragraph if it makes the notice available to a member on a website; and the end date for the purposes of section 119AB(4)(b) is the voting date.

• (4B) A notice given in accordance with sub-paragraph (4A) is to be treated as given to the member on the day the member is notified in accordance with section 119AB(3).

• (4C) If the notice of postal ballot is absent from the website for part of the period referred to in section 119AB(4), and the absence is disregarded for the purposes of section 119AB(5), that absence does not invalidate the postal ballot.

• (4D) If a notice of postal ballot includes an electronic address for the society or registered branch, the address is to be regarded as one to which a completed voting paper, or other documents or information relating to the ballot may be sent; but that is subject to such conditions or restrictions as the notice specifies, and any express provision to the contrary made in the rules of the society or branch.

• (5) Notice of a postal ballot—

• (a) shall contain such other notices relating to the election or resolution; and

• (b) shall be accompanied by such other documents,

as would be required to be given or sent to a member in connection with the election or resolution had it been intended to hold the election or vote on the resolution at a meeting instead of by postal ballot with the exception, however, of any notice relating to voting by proxy at a meeting.

Resolutions requiring special notice

9

• (1) Where by any provision of this Act special notice is required of a resolution, the resolution is not effective unless notice of the intention to move it has been given to the friendly society concerned at least 28 days before the meeting at which it is moved.

• (2) The friendly society concerned shall give its members notice of any such resolution at the same time and in the same manner as is required by its rules for notice of the meeting or, if that is not practicable, shall give them notice (either by advertisement in a newspaper having an appropriate circulation or in any other mode allowed by the society’s rules) at least 14 days before the meeting.

• (2A) Sending the notice by electronic means to an electronic address which the member has notified for that purpose, or making the notice available to a member on a website, is to be regarded as giving the member notice for the purposes of sub-paragraph (2), unless the rules of the society make express provision to the contrary.

• (2B) The end date for the purposes of section 119AB(4)(b) is the date of the meeting.

• (2C) If a notice calling a meeting includes an electronic address for the society, the address is to be regarded as one to which documents or information relating to the meeting may be sent; but that is subject to such conditions or restrictions as the notice specifies.

• (2D) Where notice of a meeting is given to a member by sending it to an electronic address, the notice is to be treated as given to that member on the day it is sent.

• (2E) Where a notice of a meeting is given to a member by making the notice available on a website, the notice is to be treated as given on the day the member is notified in accordance with section 119AB(3).

• (2F) If the notice is absent from the website for part of the period referred to in section 119AB(4), and the absence is disregarded for the purposes of section 119AB(5), that absence does not invalidate the proceedings of the meeting or resolutions passed.

• (3) If, after notice of the intention to move such a resolution has been given to the society, a meeting is called for a date 28 days or less after the notice has been given, the notice is deemed properly given, though not given within the time required.

SCHEDULE 13

Part I — Applications for Authorisation

Preliminary

1

• (1) In this Part of this Schedule “application” means an application by a friendly society for authorisation and, in relation to any application, “the society” means the friendly society making the application.

• (2) For the purposes of this Part of this Schedule “officer”, in relation to a registered friendly society, does not include a trustee of the society.

Procedure for granting authorisation

2

• (1) An application shall be made in such manner as the Commission may specify, either generally or in any particular case.

• (2) Subject to sub-paragraph (3) below, the society must submit to the Commission such proposals as to the manner in which it proposes to carry on business, such financial forecasts and such other information as may be required by or in accordance with regulations made by the Commission with the consent of the Treasury.

• (3) Where the application is made under section 33 above the society shall, instead of submitting the information mentioned in sub-paragraph (2) above, furnish the Commission with the documents referred to in sub-paragraph (4) below and such other information as the Commission may request.

• (4) The documents referred to in sub-paragraph (3) above are—

• (a) a statement by the society, signed by its secretary and certified by its appropriate actuary or some other independent person acceptable to the Commission, which describes—

• (i) the insurance business carried on by the society in the United Kingdom immediately before the commencement of section 32 above (and stating, in relation to each description of insurance business, the class specified in head A or B of Schedule 2 to this Act into which that description falls); and

• (ii) the non-insurance business carried on by it in the United Kingdom at that time;

• (b) where any solvency requirements imposed by or under this Act are applicable to the society, a statement by the society’s appropriate actuary that, in his opinion, the society complies with those requirements; and

• (c) a statement made jointly by each member of the committee of management, the secretary and the chief executive that the affairs of the society are directed in accordance with the criteria of prudent management and will continue to be so.

• (5) The Commission shall decide an application within 6 months of receiving the information referred to in sub-paragraph (2) above or, in the case of an application under section 33 above, the documents and other information mentioned in sub-paragraph (3) above.

3

• (1) If on an application the Commission proposes to impose conditions, the provisions of paragraphs 7 and 8 below shall apply.

• (2) If the Commission proposes to refuse to grant authorisation, it shall serve a notice on the society stating—

• (a) that it proposes to refuse to grant authorisation;

• (b) the grounds for the proposed refusal; and

• (c) that the society may make representations with respect to the proposed refusal within such period of not less than 28 days as may be specified in the notice and that, if the society so requests, the Commission will afford to it an opportunity of being heard by the Commission within that period.

• (3) If the grounds for the proposed refusal include the ground that a person is not a fit and proper person to hold office in the society, the Commission shall also serve the notice specified in sub-paragraph (2) above on the person concerned giving him the like right to make representations and to be heard with respect to his fitness and propriety for office.

• (4) If, on an application made by virtue of section 33 above, the grounds for the proposed refusal include the ground that the Commission is not satisfied that a statement referred to in paragraph 2(4)(b) or (c) above is accurate, it shall also serve the notice specified in sub-paragraph (2) above on the person or, as the case may be, each person who made the statement giving him the like right to make representations and to be heard with respect to the accuracy of his statement.

• (5) The Commission shall, before reaching a decision on the application, consider any representations made to it in accordance with sub-paragraph (2), (3) or (4) above.

• (6) If, on an application for authorisation, the Commission refuses to grant authorisation it shall serve—

• (a) on the society and each of its officers;

• (b) on any other person on whom a notice was served under sub-paragraph (4) above,

a notice stating the Commission’s decision and the grounds for it.

• (7) The non-receipt by an officer or other person of a notice of a matter under this paragraph does not affect the validity of any action on the part of the Commission.

Offences in connection with application

4

• (1) A friendly society which furnishes any information or makes any statement which is false or misleading in a material particular in connection with an application shall be guilty of an offence and liable—

• (a) on conviction on indictment, to a fine; and

• (b) on summary conviction, to a fine not exceeding the statutory maximum.

• (2) Any person who knowingly or recklessly furnishes any information or makes any statement which is false or misleading in a material particular in connection with an application shall be guilty of an offence and liable—

• (a) on conviction on indictment, to imprisonment for a term not exceeding two years or to a fine or both; and

• (b) on summary conviction, to a fine not exceeding the statutory maximum.

Terms of authorisation: supplementary

5

• (1) On granting authorisation to a friendly society the Commission shall send a copy of the terms of the authorisation—

• (a) to the secretary of the society; and

• (b) to the central office;

and the central office shall keep a copy of those terms in the public file of the society.

• (2) Where the terms of a society’s authorisation are superseded by the grant of authorisation—

• (a) on an application to which section 35 above applies, or

• (b) on an application required by a direction under section 39 above,

the central office shall, on placing the copy of the terms of the authorisation on the public file of the society under sub-paragraph (1) above, indicate on the copy of the previous terms kept on that file that they have been superseded.

Part II — Imposition of Conditions and Withdrawal of Authorisation

Preliminary

6

• (1) In this Part of this Schedule “the society” means—

• (a) in relation to the imposition of conditions on the grant of authorisation, the friendly society making the application for authorisation; and

• (b) in relation to the imposition of conditions on a current authorisation, the friendly society on whose authorisation the Commission proposes to impose conditions.

• (2) For the purposes of this Part of this Schedule “officer”, in relation to a registered friendly society, does not include a trustee of the society.

Imposition of conditions

7

• (1) If the Commission proposes to impose conditions, it shall serve on the society and on each of its officers a notice stating—

• (a) that the Commission proposes to impose conditions;

• (b) what conditions the Commission proposes to impose;

• (c) the grounds for their imposition; and

• (d) that the society may make representations with respect to the proposed imposition of the conditions within such period of not less than 14 days as may be specified in the notice and that, if it so requests, the Commission will afford to it an opportunity of being heard by the Commission within that period.

• (2) If any condition proposed to be imposed on the society includes a requirement for a person’s removal from office (whether an office in the society or in any registered branch of the society), the Commission shall also serve the notice specified in sub-paragraph (1) above on the person whose removal is proposed giving him the like right to make representations and to be heard with respect to his proposed removal from office.

• (3) The Commission shall, before reaching a decision on whether to impose conditions and, if so, what conditions, consider any representations made in accordance with sub-paragraph (1) or (2) above.

• (4) The Commission may not impose conditions on grounds other than those stated, or grounds included in those stated, in the notice served by it under sub-paragraph (1) above.

• (5) Except where paragraph 8 below applies, the Commission shall serve—

• (a) on the society and each of its officers; and

• (b) on every other person on whom a notice was served under sub-paragraph (2) above,

a notice stating its decision and, where it has decided to impose conditions, specifying the conditions and stating the grounds for imposing them.

• (6) Where conditions are imposed on an authorisation which is already subject to conditions, the notice served on the society under sub-paragraph (5) above shall be accompanied by a statement of all subsisting conditions to which the authorisation is subject (including any that were otherwise unaffected by the decision); and the Commission shall send a copy of that statement to the central office.

8

• (1) This paragraph applies where the Commission has decided to impose conditions but proposes to impose conditions different from and more onerous than those stated in the notice served by the Commission under paragraph 7(1) above.

• (2) The Commission shall serve on the society and on each of its officers a notice stating—

• (a) what conditions the Commission proposes to impose;

• (b) the grounds for their imposition instead of the conditions stated in the notice under paragraph 7(1) above; and

• (c) that the society may make representations with respect to the conditions the Commission proposes to impose within such period of not less than 7 days as may be specified in the notice and that, if the society so requests, the Commission will afford to it an opportunity of being heard by the Commission within that period.

• (3) If any new or different condition proposed to be imposed on the society includes a requirement for a person’s removal from office (whether an office in the society or in any registered branch of the society), the Commission shall also serve the notice specified in sub-paragraph (2) above on the person whose removal is proposed giving him the like right to make representations and to be heard with respect to his proposed removal from office.

• (4) The Commission shall, before reaching a decision on whether to impose conditions different from those stated in the notice served under paragraph 7(1) above and, if so, what conditions, consider any representations made in accordance with sub-paragraph (2) or (3) above.

• (5) The Commission may not impose conditions on grounds other than those stated, or grounds included in those stated, in the notice served by it under sub-paragraph (2) above.

• (6) The Commission shall serve-

• (a) on the society and each of its officers; and

• (b) on every other person on whom a notice was served under sub-paragraph (3) above,

a notice stating its decision and, where it has decided to impose conditions, specifying the conditions and stating the grounds for imposing them.

• (7) Where conditions are imposed on an authorisation which is already subject to conditions, the notice served on the society under sub-paragraph (6) above shall be accompanied by a statement of all subsisting conditions to which the authorisation is subject (including any that were otherwise unaffected by the decision); and the Commission shall send a copy of that statement to the central office.

• (8) The procedure in this paragraph may be repeated; and on any such repeat references in this paragraph to the notice under paragraph 7(1) above shall be construed as reference to the latest notice under sub-paragraph (2) of this paragraph.

Imposition of conditions on appeal

9

• (1) The modifications of the provisions of paragraphs 7 and 8 above in their application to the imposition of conditions by the Commission in pursuance of a direction of an appeal tribunal under section 59 above are as follows.

• (2) The notice under paragraph 7(1) above shall be served on the society and the other persons there specified within the period of 14 days beginning with the date on which the Commission received notice of the tribunal’s decision under subsection (10) of that section; and a copy shall also be sent within that period to the tribunal.

• (3) The notice under paragraph 7(1) above may specify, as the period within which representations may be made, a period of not less than 7 days.

• (4) If the Commission serves a notice under paragraph 8(2) above on the society and other persons there specified it shall send a copy of the notice to the tribunal.

Procedure for withdrawing authorisation

10

• (1) Subject to sub-paragraph (6) below, if the Commission proposes to give a direction under section 40 or section 41 above it shall serve on the society and on each of its officers a notice stating—

• (a) that the Commission proposes to give such a direction;

• (b) the grounds for the proposed direction; and

• (c) that the society may make representations with respect to the proposed direction within such period of not less than 14 days as may be specified in the notice and that, if the society so requests, it will be afforded an opportunity of being heard by the Commission within that period.

• (2) If the grounds for the proposed direction include the ground that a person is not a fit and proper person to hold office in the society, the Commission shall also serve the notice specified in sub-paragraph (1) above on the person concerned giving him the like right to make representations and to be heard with respect to his fitness and propriety for office.

• (3) Before reaching a decision on whether to give a direction, the Commission shall consider any representations made to it in accordance with sub-paragraph (1) or (2) above.

• (4) Except where the Commission proposes to impose conditions instead of giving a direction (in which case paragraphs 7 and 8 above apply), the Commission shall serve on the society and each of its officers a notice stating its decision and, where it has decided to give a direction, the grounds for the decision.

• (5) The Commission may not give a direction on grounds other than those stated, or grounds included in those stated, in the notice served under sub-paragraph (1) above.

• (6) Sub-paragraphs (1) to (5) above shall not apply in relation to a direction to a friendly society which is given at the request of the society or under section 40(2) or (3)(g) above; but the notice of any such direction sent to the secretary of the society shall state the grounds on which it is given.

11

• (1) On giving a direction in relation to a friendly society under section 40 or 41 above the Commission shall—

• (a) publish notice of it in one or more of the London, Edinburgh and Belfast Gazettes, and in any such other ways as the Commission considers appropriate for notifying the public;

• (b) send a copy of it to the secretary of the society concerned and to the central office;

• (c) where it relates only to part of the business covered by the society’s authorisation, send a copy of the terms of the authorisation, after taking account of the direction, to the secretary of the society and to the central office.

• (d) in the case of a direction given in relation to a society to which section 37(2) or (3) above applies which is or has been–

• (i) carrying on insurance business in an EEA State other than the United Kingdom through an overseas branch in that State, or

• (ii) providing insurance in an EEA State other than the United Kingdom through an establishment in another EEA State,

notify the supervisory authority in that State, or, as the case may be, in each of those States of the direction.

• (2) The central office—

• (a) shall keep the copy of a direction sent to it under sub-paragraph (1)(b) above on the public file of the society;

• (b) where a copy of the terms of the society’s authorisation is sent to it under sub-paragraph (1)(c) above, shall keep the copy on the public file of the society.

Non-receipt of notice by officer

12

The non-receipt by an officer of a friendly society or registered branch of a notice of a matter does not affect the validity of any action on the part of the Commission.

SCHEDULE 14

Appointment

1

• (1) The first auditor of a friendly society or registered branch may be appointed by the committee of management of the society or branch at any time before the first general meeting of the society or branch following the end of its initial financial year; and an auditor so appointed shall hold office until the conclusion of that meeting.

• (2) If the committee of management fails to exercise its powers under sub-paragraph (1) above, those powers may be exercised by the society or branch in general meeting.

2

The committee of management, or the society or branch in general meeting, may fill any casual vacancy in the office of auditor; but while any such vacancy continues, the surviving or continuing auditor or auditors (if any) may act.

3

• (1) If at any annual general meeting of a friendly society or registered branch no auditor is appointed or re-appointed, the appropriate authority may appoint a person to fill the vacancy; and the society or branch shall, within one week of the power of the appropriate authority becoming exercisable, give it notice of that fact.

• (2) If a society or branch fails to give the notice required by sub-paragraph (1) above, the society or branch shall be guilty of an offence and liable on summary conviction—

• (a) to a fine not exceeding level 3 on the standard scale; and

• (b) in the case of a continuing offence to an additional fine not exceeding one-tenth of that level for every day during which the offence continues.

Eligibility for appointment

4

• (1) Subject to paragraph 7 below, a person is eligible for appointment as the auditor of a friendly society or registered branch only if he—

• (a) is a member of a recognised supervisory body; and

• (b) is not ineligible for the appointment under the rules of that body.

• (2) An individual or a firm may be appointed as auditor of a friendly society or registered branch.

• (3) In this Schedule—

• ...

• “recognised supervisory body” means a body which is a recognised supervisory body for the purposes of Part 42 of the Companies Act 2006.

5

• (1) A person is ineligible for appointment as an auditor of a friendly society or a registered branch of the society under this Schedule if he is—

• (a) an officer or employee of the friendly society or any registered branch of the society;

• (b) a partner or employee of such a person or a partnership of which such a person is a partner,

or, in the case of an incorporated friendly society, if he is prohibited by section 1214(2) of the Companies Act 2006 (independence requirement) from acting as statutory auditor of a subsidiary of the society or of a body jointly controlled by the society and some other person.

• (2) For this purpose an auditor of a friendly society or branch shall not be regarded as an officer or employee of the society or branch.

• (3) A person is also ineligible for appointment as auditor of a friendly society or branch if there exists between him or any associate of his and the society or branch or, if it is an incorporated friendly society, any of its subsidiaries, a connection of any such description as may be specified by regulations made by the Treasury.

• (4) In this paragraph “associate” has the meaning given by section 1260 of the Companies Act 2006.

Appointment of partnerships

6

• (1) The following provisions apply to the appointment as auditor under this Schedule of a partnership constituted under the law of England and Wales or Northern Ireland, or under the law of any other country or territory in which a partnership is not a legal person.

• (2) The appointment is (unless a contrary intention appears) an appointment of the partnership as such and not of the partners.

• (3) Where the partnership ceases, the appointment shall be treated as extending to—

• (a) any partnership which succeeds to the practice of that partnership and is eligible for the appointment; and

• (b) any person who succeeds to that practice having previously carried it on in partnership and is eligible for the appointment.

• (4) For this purpose a partnership shall be regarded as succeeding to the practice of another partnership only if the members of the successor partnership are substantially the same as those of the former partnership; and a partnership or other person shall be regarded as succeeding to the practice of a partnership only if it or he succeeds to the whole or substantially the whole of the business of the former partnership.

• (5) Where the partnership ceases and no person succeeds to the appointment under sub-paragraph (3) above, the appointment may with the consent of the recognised supervisory body be treated as extending to a partnership or other person eligible for the appointment who succeeds to the business of the former partnership or to such part of it as is agreed by the body shall be treated as comprising the appointment.

Cases in which auditor need not be a member of a recognised supervisory body

7

• (1) A person who is not a member of a recognised supervisory body may be an auditor of a registered friendly society or of a registered branch if—

• (a) its receipts and payments in respect of the preceding financial year did not, in the aggregate, exceed £5,000; and

• (b) the number of its members at the end of that year did not exceed 500; and

• (c) the value of its assets at the end of that year did not, in the aggregate, exceed £5,000; . . .

• (d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (3) A person who is not a member of a recognised supervisory body may also be an auditor of a registered branch if—

• (a) the conditions mentioned in sub-paragraph (1)(a) and (b) and sub-paragraph (2)(b) above are satisfied; and

• (b) at the end of the preceding financial year at least 75 per cent of its assets had been transferred to the society of which it is a branch or to another registered branch of that society for the purpose of being invested, in accordance with the 1974 Act, by that society or other branch, and the value of its assets not so transferred did not, in the aggregate, exceed £5,000; and

• (c) an auditor of the society or branch to which the assets were transferred must be a member of a recognised supervisory body.

• (4) Regulations made by the Treasury may—

• (a) substitute for any sum or number for the time being specified in sub-paragraph (1) above, or for any sum or percentage for the time being specified in sub-paragraph (3) above, such sum, number or percentage as may be specified in the regulations; and

• (b) prescribe what receipts and payments of a body shall be taken into account for the purposes of those sub-paragraphs.

• (5) A registered friendly society or registered branch which, by virtue of this paragraph, may appoint a person who is not a member of a recognised supervisory body as an auditor in respect of any financial year is in this Schedule referred to as an exempt society or, as the case may be, an exempt branch, in respect of that financial year.

• (6) Subject to any direction given by the appropriate authority under sub-paragraph (7) below, a society or branch which in respect of any financial year is an exempt society or, as the case may be, an exempt branch shall in respect of that year appoint—

• (a) one or more qualified auditors; or

• (b) two or more persons who are not qualified auditors,

to audit its annual accounts for that year.

• (7) The appropriate authority may give a direction in the case of any particular society or branch which is an exempt society or branch in respect of any financial year that sub-paragraph (4) above shall apply to it in respect of that year as if it were not an exempt society or branch.

Effect of ineligibility

8