Building Societies Act 1997

(101) (1) No company specially formed by a building society to be its successor shall, at any time during the protective period— (a) offer for sale or invite subscription for any shares in the company or allot or agree to allot any such shares with a view to their being offered for sale, or (b) allot or agree to allot any share in the company, or (c) register a transfer of shares in the company, if the effect of the offer, the invitation, the allotment or the registration of the transfer would be that more shares than the permitted proportion would be held by any one person (other than the society), or by any two or more persons who are parties to a concert party agreement which relates to shares in the company. (2) The articles of association of the company shall include provision such as will secure that the company does not offer, invite subscription for, allot or register transfers of, shares in contravention of subsection (1) above and no alteration in those provisions may be made by the company during the protective period. (3) Any provision (including any altered provision) of the company’s articles of association which is to any extent inconsistent with subsection (1) above shall, to that extent, be void; and any allotment or registration of a transfer of shares in contravention of that subsection shall be void. (4) This section shall cease to apply to a company if— (a) a financial institution becomes a subsidiary undertaking of the company, or the company or such an undertaking acquires the whole, or substantially the whole, of the business of such an institution; (b) a special resolution to that effect is passed by the requisite majority of the members of the company; or (c) the Bank by notice to the company gives a direction to that effect; and the Bank shall not give such a direction unless it considers it desirable to do so in the interests of the depositors and potential depositors of the company. (5) If this section ceases to apply to a company, any provision included by virtue of subsection (2) above in its articles of association shall cease to have effect. (6) In this section— - “the Bank” means the Bank of England; - “concert party agreement” means an agreement to which section 204 of the Companies Act 1985 or Article 212 of the Companies (Northern Ireland) Order 1986 applies; - “EEA country or territory” has the same meaning as in sections 6A and 6B; - “financial institution” means any of the following, namely— a building society authorised under this Act; an institution authorised under section 3 or 4 of the Insurance Companies Act 1982 to carry on business of a class specified in Schedule 1 or 2 to that Act; a person authorised under Chapter III of Part I of the Financial Services Act 1986 or included in the list maintained by the Bank under section 43 of that Act; an institution authorised under section 9 of the Banking Act 1987; a friendly society authorised under section 32(9) of the Friendly Societies Act 1992; any body formed in or incorporated under the law of an EEA country or territory outside the United Kingdom and carrying on in the United Kingdom business of a kind which, if it were formed in or incorporated under the law of any part of the United Kingdom, it would be precluded from carrying on there without being authorised as mentioned in the preceding paragraphs; - “the permitted proportion”, in relation to shares in the company, is 15 per cent. of the company’s issued share capital; - “the protective period” is the period beginning with the date of the company’s incorporation and ending five years after the vesting date or, if this section ceases to apply to the company, ending on the date on which it so ceases; - “the requisite majority” means a majority of the members having the right to attend and vote at a general meeting of the company, being a majority together holding not less than 75 per cent in nominal value of the shares giving that right; - “transfer”, in relation to shares, does not include a transfer to a person to whom the right to any shares has been transmitted by operation of law; and any expression used in this section and in the Companies Act 1985 or, as regards Northern Ireland, the Companies (Northern Ireland) Order 1986 has the same meaning in this section as in that Act or that Order. (7) For the purposes of this section— (a) shares held by a person in a fiduciary capacity shall be treated as not held by him; (b) shares held by a person as nominee for another shall be treated as held by the other; and (c) shares shall be regarded as held as nominee for another if any voting rights attaching to them are exercisable only on his instructions or with his consent or concurrence. (8) Any reference in this section to shares includes a reference— (a) to any warrant or other instrument entitling the holder to subscribe for shares; and (b) to any certificate or other instrument issued by or on behalf of the company and conferring a right to acquire shares otherwise than by subscription; and for the purposes of subsection (1) above any shares to which any such instrument relates shall be deemed to be held by the holder of the instrument.

Registration of charges by building societies

42

After section 104 of the 1986 Act there shall be inserted the following section—

(104A) (1) For the purpose of securing the registration of charges created by building societies, the Secretary of State may, by order made with the concurrence of the Treasury and after consultation with the Commission, provide that such of the provisions of— (a) Part XII of the Companies Act 1985 (registration of charges); and (b) Part XIII of the Companies (Northern Ireland) Order 1986, as may be specified in the order shall apply in relation to building societies, and charges created by building societies, with such modifications as may be so specified. (2) An order under this section may make different provision for different cases or different areas and may contain such incidental, supplemental and transitional provisions as may appear to the Secretary of State to be necessary or expedient. (3) The power to make an order under this section is exercisable by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament.

Other amendments of 1986 Act

43

Schedule 7 to this Act (which contains other amendments of the 1986 Act including some that are minor amendments or amendments consequential on the foregoing provisions of this Act) shall have effect.

Supplemental

Financial provisions

44

There shall be paid out of money provided by Parliament any increase attributable to this Act in the sums payable out of money so provided under the 1986 Act.

Minor and consequential amendments

45

• (1) In section 10 of the Bankers' Books Evidence Act 1879 (interpretation of “legal proceeding” etc.), in the definition of “legal proceeding” for the words from “an arbitration” to the end there shall be substituted the following paragraphs—

(a) an arbitration; (b) an application to, or an inquiry or other proceeding before, the Solicitors Disciplinary Tribunal or any body exercising functions in relation to solicitors in Scotland or Northern Ireland corresponding to the functions of that Tribunal; and (c) an investigation of a complaint by the adjudicator of a recognised scheme for the purposes of section 83 of the Building Societies Act 1986.

• (2) In paragraph 2(3) of Schedule 12 to the Finance Act 1988 (meaning of “financial stock” in relation to a building society), for the words “by virtue of regulations under section 21(7) of the Building Societies Act 1986 (liquid assets etc.)” there shall be substituted the words “in liquid form (within the meaning given by section 45(7) of the Building Societies Act 1986)”.

Transitional provisions, savings and repeals etc

46

• (1) The transitional provisions and savings contained in Schedule 8 to this Act shall have effect; but those provisions and savings are without prejudice to sections 16 and 17 of the Interpretation Act 1978 (effect of repeals).

• (2) The enactments and instruments specified in Schedule 9 to this Act are hereby repealed or revoked to the extent specified in the third column of that Schedule.

Short title, interpretation, commencement and extent

47

• (1) This Act may be cited as the Building Societies Act 1997.

• (2) In this Act “the 1986 Act” means the Building Societies Act 1986 and expressions which are also used in that Act have the same meanings as in that Act.

• (3) This Act, except—

• (a) sections 40 and 41 above;

• (b) paragraphs 9 and 10 of Schedule 8 to this Act and section 46(1) above so far as relating to those paragraphs; and

• (c) section 46(2) above and Schedule 9 to this Act so far as relating to the repeals in section 100 of the 1986 Act and the revocations in the Building Societies (Transfer of Business) Regulations 1988,

shall come into force on such day as the Treasury may by order made by statutory instrument appoint, and different days may be appointed for different purposes or for building societies of different descriptions.

• (4) Where any enactment amended or repealed by this Act extends to any part of the United Kingdom, the amendment or repeal extends to that part.

• (5) Subject to subsection (4) above, this Act extends to Northern Ireland.

SCHEDULE 1

Capacity of society and power of directors to bind it

Capacity of society not limited by its memorandum

16

• (1) The validity of an act done by a building society shall not be called into question on the ground of lack of capacity by reason of anything included in the society’s memorandum.

• (2) A member of a building society may bring proceedings to restrain the doing of an act which but for sub-paragraph (1) above would be beyond the society’s capacity; but no such proceedings shall lie in respect of an act to be done in fulfilment of a legal obligation arising from a previous act of the society.

• (3) It remains the duty of the directors of a building society to observe any limitations on their powers flowing from the society’s memorandum; and action by the directors which but for sub-paragraph (1) above would be beyond the society’s capacity may only be ratified by the society by special resolution.

• (4) A resolution ratifying such action shall not affect any liability incurred by the directors or any other person; relief from any such liability must be agreed to separately by special resolution.

Power of directors to bind society

17

• (1) In favour of a person dealing with a building society in good faith, the power of the board of directors to bind the society, or authorise others to do so, shall not be limited by reason of anything included in the society’s constitution, that is to say, its memorandum and rules.

• (2) For this purpose—

• (a) a person deals with a building society if he is a party to any transaction or other act to which the society is a party;

• (b) a person shall not be regarded as acting in bad faith by reason only of his knowing that an act is beyond the powers of the directors under the society’s constitution; and

• (c) a person shall be presumed to have acted in good faith unless the contrary is proved.

• (3) The references above to limitations on the directors' powers under the society’s constitution include limitations deriving from a resolution of the society passed at a general meeting or special meeting or on a postal ballot, or from any agreement between the members of the society.

• (4) Notwithstanding anything in paragraph 3(2) above, sub-paragraph (1) above applies in relation to members of the society, and to persons claiming on account of members or under the rules of the society, as it applies in relation to other persons.

• (5) Sub-paragraph (1) above does not affect any right of a member of the society to bring proceedings to restrain the doing of an act which is beyond the powers of the directors; but no such proceedings shall lie in respect of an act to be done in fulfilment of a legal obligation arising from a previous act of the society.

• (6) Nor does that sub-paragraph affect any liability incurred by the directors, or any other person, by reason of the directors' exceeding their powers.

No duty to enquire as to capacity of society etc.

18

• (1) A party to a transaction with a building society is not bound to enquire as to whether it is permitted by the society’s constitution or as to any limitation on the powers of the board of directors to bind the society or authorise others to do so.

• (2) Notwithstanding anything in paragraph 3(2) above, sub-paragraph (1) above applies in relation to members of the society as it applies in relation to other persons.

SCHEDULE 2

Discharge of mortgages: supplementary provisions

Main provisions

1

• (1) When all money intended to be secured by a mortgage given to a building society has been fully paid or discharged, the society may endorse on or annex to the mortgage one or other of the following—

• (a) a receipt in the prescribed form signed by any person acting under the authority of the board of directors;

• (b) a reconveyance of the mortgaged property to the mortgagor;

• (c) a reconveyance of the mortgaged property to such person of full age, and on such trusts (if any), as the mortgagor may direct.

• (2) Where in pursuance of sub-paragraph (1) above a receipt is endorsed on or annexed to a mortgage, not being a charge or incumbrance registered under the Land Registration Act 1925, the receipt shall operate in accordance with section 115(1), (3), (6) and (8) of the Law of Property Act 1925 (discharge of mortgages by receipt) in the like manner as a receipt which fulfils all the requirements of subsection (1) of that section.

• (3) Section 115(9) of the Law of Property Act 1925 shall not apply to a receipt in the prescribed form endorsed or annexed by a building society in pursuance of sub-paragraph (1) above; and in the application of that subsection to a receipt so endorsed or annexed which is not in that form, the receipt shall be taken to be executed in the manner required by the statute relating to the society if it is signed as mentioned in sub-paragraph (1)(a) above.

• (4) The foregoing sub-paragraphs shall, in the case of a mortgage of registered land, have effect without prejudice to the operation of the Land Registration Act 1925 or any rules in force under it.

• (5) In this paragraph—

• “mortgage” includes a further charge;

• “the mortgagor”, in relation to a mortgage, means the person for the time being entitled to the equity of redemption; and

• “registered land” has the same meaning as in the Land Registration Act 1925.

• (6) This paragraph does not extend to Scotland.

Application of paragraph 1 to Northern Ireland

2

• (1) In its application to Northern Ireland, paragraph 1 above shall have effect with the following modifications.

• (2) In sub-paragraph (1) after the words “on such trusts” there shall be inserted the words “or uses”.

• (3) In sub-paragraph (2)—

• (a) for the words from “charge” to “Property Act 1925” there shall be substituted the words “charge on registered land, the receipt shall operate in accordance with Article 3(1), (7) and (9) of the Property (Discharge of Mortgage by Receipt) (Northern Ireland) Order 1983”; and

• (b) for the words “subsection (1) of that section” there shall be substituted the words “paragraph (1) of that Article”.

• (4) For sub-paragraphs (3) and (4) there shall be substituted the following sub-paragraphs—

(3) If the mortgage is registered in accordance with the Registration of Deeds Act (Northern Ireland) 1970, the registrar under that Act shall— (a) on production of the receipt mentioned in sub-paragraph (1) above make a note in the Abstract Book against the entry relating to the mortgage that the mortgage is satisfied; and (b) grant a certificate, either on the mortgage or separately, that the mortgage is satisfied. (4) The certificate granted under sub-paragraph (3)(b) above shall— (a) be received in all courts and proceedings without further proof; and (b) have the effect of clearing the register of the mortgage.

• (5) In sub-paragraph (5) for the definition of “registered land” there shall be substituted the following definition—

“registered land” means land the title to which is registered under Part III of the Land Registration Act (Northern Ireland) 1970.

Power to prescribe form of documents

3

• (1) The Chief Registrar may make rules for prescribing anything authorised or required by paragraph 1 above to be prescribed; and in this Schedule “prescribed” means prescribed by rules made under this paragraph.

• (2) The power to make rules under this paragraph shall be exercisable by statutory instrument.

SCHEDULE 3

Directions: supplementary provisions

Preliminary

1

In this Schedule “direction” means a direction under section 36(3), (5), (6), (7) or (10).

Procedure for giving proposed direction

2

• (1) If the Commission proposes to give a direction, it shall serve on the society and, subject to paragraph 5 below, on every director of the society and its chief executive a notice stating—

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

• (b) what the direction will be;

• (c) the grounds for giving it; and

• (d) 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, the Commission will afford to it an opportunity of being heard by the Commission within that period.

• (2) If a direction proposed to be given to the society includes a requirement for the removal from office of any officer of the society, the Commission shall also serve the notice specified in sub-paragraph (1) above on the officer 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—

• (a) before deciding whether to give a direction and, if so, what direction, consider any representations made in accordance with sub-paragraph (1) or (2) above; and

• (b) except where paragraph 3 below applies, serve on the society and, subject to paragraph 5 below, on every director of and the chief executive of the society and every other person on whom a notice was served under sub-paragraph (2) above, a notice stating its decision.

• (4) If the Commission decides to give a direction, the notice under sub-paragraph (3) above shall—

• (a) specify the direction, and

• (b) state the grounds for the decision to give it.

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

Procedure for giving different direction

3

• (1) This paragraph applies where the Commission has decided to give a direction but proposes to give a direction different from and more onerous than that stated in the notice served by the Commission under paragraph 2(1) above.

• (2) The Commission shall serve on the society and, subject to paragraph 5 below, on every director of the society and its chief executive, a notice stating—

• (a) what direction the Commission proposes to give;

• (b) the grounds for the giving of that direction instead of the direction stated in the notice under paragraph 2(1) above; and

• (c) that the society may make representations with respect to the direction the Commission proposes to give within such period of not less than seven 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 direction proposed to be given to the society includes a requirement for the removal from office of any officer of the society, the Commission shall also serve the notice specified in sub-paragraph (2) above on the officer 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—

• (a) before deciding whether to give a direction different from that stated in the notice served under paragraph 2(1) above and, if so, what direction, consider any representations made in accordance with sub-paragraph (2) or (3) above; and

• (b) serve on the society and, subject to paragraph 5 below, on every director of and the chief executive of the society and every other person on whom a notice was served under sub-paragraph (3) above, a notice stating its decision.

• (5) If the Commission decides to give a different direction, the notice under sub-paragraph (4) above shall—

• (a) specify the direction, and

• (b) state the grounds for the decision to give it.

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

Different directions on appeal

4

• (1) The modifications of the provisions of paragraph 2 and 3 above in their application to the giving of a different direction by the Commission in pursuance of a direction of an appeal tribunal under section 47(6) or (7A) are as follows.

• (2) The notice under paragraph 2(1) 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 section 47(10); and a copy shall also be sent within that period to the tribunal.

• (3) The notice under paragraph 2(1) 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 3(2) on the society and the other persons there specified it shall send a copy of the notice to the tribunal.

Notice to directors and chief executives

5

Where any provision of this Schedule requires notice of any matter to be served on every director of a building society, that requirement is satisfied by serving notice on each director whose appointment has been officially notified and the non-receipt of a notice of a matter by a director or the chief executive does not affect the validity of any action on the part of the Commission.

SCHEDULE 4

Part I — Directions under section 42B(3)

Preliminary

1

This Part of this Schedule applies where a direction is given under section 42B(3) (“the direction”).

Compensation for loss of office

2

• (1) The consent of the Commission shall be sufficient authority for the provision for any such compensation as is mentioned in section 96(1)(a).

• (2) A resolution of the board of directors passed in pursuance of the direction shall be sufficient authority for any such payments as are mentioned in section 96(1)(b).

Statements to members

3

• (1) The following provisions of this paragraph shall apply in place of paragraph 1 of Schedule 16.

• (2) The society shall send to every member entitled to notice of a meeting of the society, a statement containing—

• (a) the particulars required, in relation to prescribed matters, by regulations under section 42B(8); and

• (b) particulars of any other matters required by the Commission in the case of the particular transfer of engagements,

with or without other particulars regarding that transfer.

• (3) The statement shall be sent—

• (a) where the Commission has given the society a direction under section 42B(1)(a), within the period (not being less than 28 days) specified in the notice of confirmation under section 42C(2)(b);

• (b) where the Commission has not given the society such a direction, within 14 days of the board of directors passing a resolution in pursuance of the direction.

• (4) No statement shall be sent unless its contents, so far as they concern the prescribed matters or any matter of which particulars are required to be given under sub-paragraph (2)(b) above, have been approved by the Commission.

• (5) A failure to comply with a requirement of this paragraph shall not invalidate the transfer of engagements; but, if the society fails without reasonable excuse to comply with such a requirement the society shall be liable on summary conviction to a fine not exceeding level 4 on the standard scale and so shall any officer who is also guilty of the offence.

Application for confirmation

4

No application for confirmation by the Commission of the transfer of engagements may be made under Part III of Schedule 16 until after the society has complied with the requirements of paragraph 3 above.

Grounds for not confirming transfer

5

Section 95 shall apply as if—

• (a) for paragraphs (a) and (b) of subsection (4) there were substituted the following paragraph—

(a) the members or a proportion of them would be unreasonably prejudiced by the transfer;

; and

• (b) in subsection (6), for the words “paragraphs (a), (b) and (c)” there were substituted the words “paragraphs (a) and (c)” and, in paragraph (a), the words “, including the calling of a further meeting,” were omitted.

Part II — Directions under section 42B(4)

Preliminary

6

This Part of this Schedule applies where a direction is given under section 42B(4) (“the direction”).

Compensation for loss of office

7

• (1) The consent of the Commission shall be sufficient authority for the provision for any such compensation as is mentioned in section 99(2)(a).

• (2) A resolution of the board of directors passed in pursuance of the direction shall be sufficient authority for any such payments as are mentioned in section 99(2)(b).

Increased remuneration

8

If the Commission consents to the inclusion of any such provision as is mentioned in section 99A(1), it shall not be necessary for an ordinary resolution approving the provision to be put before a meeting of the society.

Statements to members

9

• (1) The following provisions of this paragraph shall apply in place of Part I of Schedule 17.

• (2) The society shall send to every member entitled to notice of a meeting of the society, a statement containing—

• (a) the particulars required, in relation to prescribed matters, by regulations under section 42B(8); and

• (b) particulars of any other matters required by the Commission in the case of the particular transfer of business,

with or without other particulars regarding that transfer.

• (3) The statement shall be sent—

• (a) where the Commission has given the society a direction under section 42B(1)(b), within the period (not being less than 28 days) specified in the notice of confirmation under section 42C(2)(b);

• (b) where the Commission has not given the society such a direction, within 14 days of the board of directors passing a resolution in pursuance of the direction.

• (4) No statement shall be sent unless its contents, so far as they concern the prescribed matters or any matter of which particulars are required to be given under sub-paragraph (2)(b) above, have been approved by the Commission.

• (5) A failure to comply with a requirement of this paragraph shall not invalidate the transfer of business; but, if the society fails without reasonable excuse to comply with such a requirement the society shall be liable on summary conviction to a fine not exceeding level 4 on the standard scale and so shall any officer who is also guilty of the offence.

Application for confirmation

10

No application for confirmation by the Commission of the transfer of business may be made under Part II of Schedule 17 until after the society has complied with the requirements of paragraph 9 above.

Grounds for not confirming transfer

11

Section 98 shall apply as if—

• (a) for paragraphs (a) and (b) of subsection (3) there were substituted the following paragraph—

(a) the members or a proportion of them would be unreasonably prejudiced by the transfer;

;

• (b) in subsection (5), for the words “paragraphs (a), (b), (c) and (d)” there were substituted the words “paragraphs (a), (c) and (d)”; and

• (c) in subsection (6), the words “the calling of a further meeting,” were omitted.

SCHEDULE 5

Part I — [Part I of Schedule 17 to 1986 Act]

Issue of statement or summary to members

Preliminary

1

In this Part of this Schedule—

• “prescribed matters” in relation to any transfer of the business of a building society to its successor, means the matters relating to the transfer, the society, its officers, members or depositors, or the successor, which are prescribed in regulations made under paragraph 5(1) below;

• “transfer statement”, in relation to a transfer of business by a building society, means the statement with respect to the transfer which may be sent or handed to members of the society under paragraph 2 below;

• “transfer summary”, in relation to a transfer of business by a building society, means the summary of the transfer statement which may be sent to members of the society under that paragraph.

Duty to send transfer statements or summaries to members

2

A building society which desires to transfer its business shall, in accordance with this Part of this Schedule, send a transfer statement, or a transfer summary, to every member entitled to notice of a meeting of the society.

3

• (1) A transfer statement, in relation to a transfer of business by a building society, shall contain—

• (a) the particulars required, in relation to the prescribed matters, by the regulations made under paragraph 5(1) below, and

• (b) particulars of any other matters required by the Commission in the case of the particular transfer,

with or without other particulars regarding the transfer.

• (2) A transfer summary, in relation to a transfer of business by a building society, shall contain—

• (a) the information required by the regulations made under paragraph 5(2) below, and

• (b) any other information required by the Commission in the case of the particular transfer,

with or without other particulars regarding the transfer.

4

• (1) Subject to sub-paragraph (3) below, a building society shall, in relation to a transfer of business, include a transfer statement, or a transfer summary, in or with the notice to be sent to its members of the meeting of the society at which the requisite transfer resolutions are to be moved.

• (2) Subject to sub-paragraph (3) below, where a building society sends a transfer summary, a transfer statement—

• (a) shall be handed forthwith and free of charge to any member to whom the summary was sent who asks for such a statement at an office or branch of the society; and

• (b) shall be sent forthwith and free of charge to any such member who asks for such a statement otherwise than at such an office or branch.

• (3) No transfer statement shall be sent or handed to a member unless its contents, so far as they concern the prescribed matters or any matter of which particulars are required to be given under paragraph 3(1)(b) above, have been approved by the Commission.

5

• (1) The Commission, with the consent of the Treasury, may make regulations for the purpose of specifying, as prescribed matters, the matters of which transfer statements are to give particulars; and the regulations may also require particulars to be given of any alternatives to the particular transfer which were available to the society making the transfer.

• (2) The Commission, with the consent of the Treasury, may make regulations for the purpose of specifying the information which transfer summaries are to give.

• (3) Any power to make regulations under this paragraph is exercisable by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament.

Part II — [Part IA of Schedule 17 to 1986 Act]

Notification of proposals for transfers of business

Preliminary

5A

In this Part of this Schedule—

• “requisite particulars”, in relation to a transfer proposal, means the particulars required by paragraph 5B(2) below to be given in a transfer proposal notification;

• “transfer”, in relation to a building society, means a transfer of the whole of its business to a company under section 97;

• “transfer proposal”, in relation to a building society, means a proposal in writing by a company for a transfer by the society to the company, with or without terms for the transfer; and “proposer” has a corresponding meaning;

• “transfer proposal notification” means a notification containing the requisite particulars of a transfer proposal;

• “transfer resolutions”, in relation to a building society, means the resolutions required for the approval of a transfer by the society under section 97.

Duty to notify members

5B

• (1) Subject to sub-paragraph (3) below, it shall be the duty of a building society receiving a transfer proposal to send, in accordance with this Part of this Schedule, a transfer proposal notification in respect of the proposal to every member entitled to notice of a meeting of the society.

• (2) A transfer proposal notification must contain the following particulars—

• (a) the fact that a transfer proposal has been made, and

• (b) the identity of the proposer;

with or without other particulars regarding the proposal.

• (3) Sub-paragraph (1) above does not require a transfer proposal notification to be sent to members if the proposer has requested in writing that the requisite particulars are to be treated as confidential; and, where such a request is made and is at a later date withdrawn in writing, the society receiving the proposal shall, for the purposes of this Part of this Schedule, treat the proposal as having been received on that date instead of any earlier date.

5C

A building society shall include in or with every notice of its annual general meeting a transfer proposal notification with respect to any transfer proposal, other than a proposal of which notice has already been given under this paragraph—

• (a) received by it during the period of 12 months ending with the ninth month of the last financial year of the society before that meeting; or

• (b) treated by paragraph 5B(3) above as having been received by it during the last three months of that financial year;

and the society may also include, under this paragraph, a transfer proposal notification with respect to any proposal received, or treated as received, by it after the end of either period.

Duty to notify central office

5D

• (1) Where a building society sends a transfer proposal notification to its members under paragraph 5C above in connection with a meeting of the society, it shall send a copy of the notification to the central office at least 14 days before the date of the meeting.

• (2) The central office shall keep the copy of a transfer proposal notification received by it from a building society in the public file of that society.

Penalty

5E

If default is made by a building society in complying with paragraph 5C or 5D above, the society shall be liable on summary conviction to a fine not exceeding level 4 on the standard scale; and so shall any officer who is also guilty of the offence.

SCHEDULE 6

Part I — General mode of application

1

• (1) Subject to the provisions of this Schedule, the enactments specified in sub-paragraph (2) below (referred to in this Schedule as “the enactments”) apply in relation to building societies as they apply in relation to companies limited by shares and registered under the Companies Act 1985 or (as the case may be) the Companies (Northern Ireland) Order 1986.

• (2) The enactments referred to in sub-paragraph (1) above are—

• (a) Parts I and II, Chapter I of Part III, Parts VI, VII, XII and XIII, section 434 and Part XVIII of the Insolvency Act 1986, or

• (b) Parts I to IV, VII, XI and XII and Article 378 of the Insolvency (Northern Ireland) Order 1989,

and, in so far as they relate to offences under any such enactment, sections 430 and 432 of, and Schedule 10 to, the Insolvency Act 1986 or Article 2(6) and 373 of, and Schedule 7 to, the Insolvency (Northern Ireland) Order 1989.

2

• (1) The enactments shall, in their application to building societies, have effect with the substitution—

• (a) for “company” of “building society”;

• (b) for “the registrar of companies” or “the registrar” of “the central office”;

• (c) for “the articles” of “the rules”; and

• (d) for “registered office” of “principal office”.

• (2) In the application of the enactments to building societies—

• (a) every reference to the officers, or to a particular officer, of a company shall have effect as a reference to the officers, or to the corresponding officer, of the building society and as including a person holding himself out as such an officer; and

• (b) every reference to an administrative receiver shall be omitted.

3

• (1) Where any of the enactments as applied to building societies requires a notice or other document to be sent to the central office, it shall have effect as if it required the central office to keep the notice or document in the public file of the society concerned and to record in that file the date on which the notice or document is placed in it.

• (2) Where any of the enactments, as so applied, refers to the registration, or to the date of registration, of such a notice or document, that enactment shall have effect as if it referred to the placing of the notice or document in the public file or (as the case may be) to the date on which it was placed there.

4

• (1) Rules may be made under section 411 of the Insolvency Act 1986 or, as the case may be, Article 359 of the Insolvency (Northern Ireland) Order 1989 for the purpose of giving effect, in relation to building societies, to the provisions of the enactments.

• (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 enactments and the performance by the official receiver or the Secretary of State of functions under them.

• (3) An order made by the Department of Economic Development under Article 361 of the Insolvency (Northern Ireland) Order 1989 may make provision for fees to be payable under that Article in respect of proceedings under the enactments and the performance by the official receiver or that Department of functions under them.

5

Any enactment which specifies a money sum altered by order under section 416 of the Insolvency Act 1986, or, as the case may be, Article 362 of the Insolvency (Northern Ireland) Order 1989, (powers to alter monetary limits) applies with the effect of the alteration.

Part II — Modified Application of Parts I and II and Chapter I of Part III of Insolvency Act 1986

Preliminary

6

In this Part of this Schedule, the Insolvency Act 1986 is referred to as “the Act”.

Voluntary arrangements

7

Section 1 of the Act (proposals for voluntary arrangements) has effect as if—

• (a) it required any proposal under Part I of the Act to be so framed as to enable a building society to comply with the requirements of this Act; and

• (b) any reference to debts included a reference to liabilities owed to the holders of shares in a building society.

8

In section 2 (procedure where nominee is not liquidator or administrator) and section 3 (summoning of meetings) of the Act as applied to a building society, any reference to a meeting of the society is a reference to—

• (a) a meeting of both shareholding and borrowing members of the society; and

• (b) a meeting of shareholding members alone.

9

In section 6 of the Act (challenge of decisions) as applied to a building 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 building 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 section 213 (imputed responsibility for fraudulent trading) or section 214 (wrongful trading) of the Act.

Administration orders

10

• (1) Section 8 of the Act (power of court to make administration order) has effect as if it included provision that, where—

• (a) an application for an administration order to be made in relation to a building society is made by the Commission (with or without other parties); and

• (b) the society has defaulted in an obligation to pay any sum due and payable in respect of any deposit or share,

the society shall be deemed for the purposes of subsection (1) to be unable to pay its debts.

• (2) In subsection (3) of that section, paragraph (c) and, in subsection (4) of that section, the words from “nor where” to the end are omitted.

11

• (1) Subsection (1) of section 9 of the Act (application for administration order) as applied to a building society has effect as if—

• (a) it enabled an application to the court for an administration order to be by petition presented, with or without other parties, by the Commission or by a shareholding member entitled under section 89(3) of this Act to petition for the winding up of the society; and

• (b) the words from “or by the clerk” to “on companies)” were omitted.

• (2) In subsection (2)(a) of that section as so applied, the reference to any person who has appointed, or is or may be entitled to appoint, an administrative receiver of the society is a reference to the Commission (unless it is a petitioner).

• (3) Subsection (3) of that section, and in subsection (4) of that section, the words “Subject to subsection (3),” are omitted.

12

In section 10 of the Act (effect of application for administration order), the following are omitted, namely—

• (a) in subsection (2), paragraphs (b) and (c); and

• (b) subsection (3).

13

In section 11 of the Act (effect of administration order), the following are omitted, namely—

• (a) in subsection (1), paragraph (b) and the word “and” immediately preceding that paragraph;

• (b) in subsection (3), paragraph (b);

• (c) in subsection (4), the words “an administrative receiver of the company has vacated office under subsection (1)(b), or”; and

• (d) subsection (5).

14

In subsection (1) of section 12 of the Act (notification of administration order), the reference to every invoice, order for goods or business letter is a reference to every statement of account, order for goods or services, business letter or advertisement.

15

Subsection (3) of section 13 of the Act (appointment of administrator) has effect as if it enabled an application for an order under subsection (2) of that section to be made by the Commission.

16

• (1) Subject to sub-paragraph (2) below, section 14 of the Act (general powers of administrator) has effect as if it required the administrator of a building society, in exercising his powers under that section—

• (a) to ensure compliance with the provisions of this Act; and

• (b) not to appoint to be a director any person who is not a fit and proper person to hold that position.

• (2) Sub-paragraph (1)(a) above does not apply in relation to section 5, 6 or 7 of this Act or paragraph (a) of the seventh criterion in section 45(3) of this Act.

• (3) In subsection (4) of that section as applied to a building society, the reference to any power conferred by the Act or the Companies Act 1985 or by the memorandum or articles of association is a reference to any power conferred by this Act or by the society’s memorandum or rules.

• (4) Subsection (8) of section 45 of this Act applies for the purposes of sub-paragraph (1)(b) above as it applies for the purposes of the seventh criterion in subsection (3) of that section.

17

• (1) Subject to sub-paragraph (3) below, paragraph 16 of Schedule 1 to the Act (powers of administrators) as applied to a building society has effect as if it conferred power to transfer liabilities in respect of deposits with or shares in the society.

• (2) No transfer under that paragraph shall be a transfer of engagements for the purposes of Part X of this Act.

• (3) No transfer under that paragraph which, apart from sub-paragraph (2) above, would be a transfer of engagements for the purposes of that Part shall be made unless it is approved by the court, or by meetings summoned under section 23(1) or 25(2) of the Act (as modified by paragraph 21 or 23 below).

18

In section 15 of the Act (power to deal with charged property etc.)—

• (a) subsection (1) is omitted; and

• (b) for subsections (3) and (4) there is substituted the following subsection—

(3) Subsection (2) applies to any security other than one which, as created, was a floating charge.

19

• (1) Section 17 of the Act (general duties of administrator) has effect as if, instead of the requirement imposed by subsection (3), it required the administrator of a building society to summon a meeting of the society’s creditors if—

• (a) he is requested, in accordance with the rules, to do so by 500 of the society’s creditors, or by one-tenth, in number or value, of those creditors, or

• (b) he is directed to do so by the court.

• (2) That section also has effect as if it required the administrator of a building society to summon a meeting of the society’s shareholding members if—

• (a) he is requested, in accordance with the rules, to do so by 500 of the society’s shareholding members, or by one-tenth, in number, of those members, or

• (b) he is directed to do so by the court.

20

In subsection (4) of section 19 of the Act (vacation of office) as applied to a building society, the words “in priority to any security to which section 15(1) then applies” are omitted.

21

• (1) Subsection (1) of section 23 of the Act (statement of proposals) as applied to a building society has effect as if—

• (a) the reference to the central office included a reference to the Commission and the Investor Protection Board;

• (b) the reference to all creditors included a reference to all holders of shares in the society; and

• (c) the reference to a meeting of the society’s creditors included a reference to a meeting of holders of shares in the society.

• (2) In subsection (2) of that section as so applied, references to members of the society do not include references to holders of shares in the society.

22

Section 24 of the Act (consideration of proposals by creditors' meeting) as applied to a building society has effect as if any reference to a meeting of creditors included a reference to a meeting of holders of shares in the society.

23

• (1) Section 25 of the Act (approval of substantial revisions) as applied to a building society has effect as if—

• (a) subsection (2) required the administrator to send a statement in the prescribed form of his proposed revisions to the Commission and to the Investor Protection Board; and

• (b) the reference in that subsection to a meeting of creditors included a reference to a meeting of holders of shares in the society.

• (2) In subsection (3) of that section as so applied, references to members of the society do not include references to holders of shares in the society.

24

Subsection (1) of section 27 of the Act (protection of interests of creditors and members) has effect—

• (a) as if it enabled the Commission or Investor Protection Board to apply to the court by petition for an order under that section; and

• (b) in relation to an application by the Commission or that Board, as if the words “(including at least himself)” were omitted.

Receivers and managers

25

In section 38 of the Act (receivership accounts), “prescribed” means prescribed by regulations made by statutory instrument by the Commission.

26

In subsection (1) of section 39 of the Act (notification that receiver or manager appointed), the reference to every invoice, order for goods or business letter is a reference to every statement of account, order for goods or services, business letter or advertisement.

27

Section 40 (payment of debts out of assets subject to floating charge) and sections 42 to 49 (administrative receivers) of the Act are omitted.

Part III — Modified Application of Parts II, III and IV of Insolvency (Northern Ireland) Order 1989

Preliminary

28

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

Voluntary arrangements

29

Article 14 of the Order (proposals for voluntary arrangements) has effect as if—

• (a) it required any proposal under Part II of the Order to be so framed as to enable a building society to comply with the requirements of this Act; and

• (b) any reference to debts included a reference to liabilities owed to the holders of shares in a building society.

30

In Article 15 (procedure where nominee is not liquidator or administrator) and Article 16 (summoning of meetings) of the Order as applied to a building society, any reference to meetings of the society is a reference to—

• (a) a meeting of both shareholding and borrowing members of the society; and

• (b) a meeting of shareholding members alone.

31

In Article 19 of the Order (challenge of decisions) as applied to a building 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 building 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 High Court under Article 177 (imputed responsibility for fraudulent trading) or Article 178 (wrongful trading) of the Order.

Administration orders

32

• (1) Article 21 of the Order (power of High Court to make administration order) has effect as if it included provision that, where—

• (a) an application for an administration order to be made in relation to a building society is made by the Commission (with or without other parties); and

• (b) the society has defaulted in an obligation to pay any sum due and payable in respect of any deposit or share,

the society shall be deemed for the purposes of paragraph (1) to be unable to pay its debts.

• (2) In paragraph (3) of that Article, sub-paragraph (c) and, in paragraph (4) of that Article, the words from “nor where” to the end are omitted.

33

• (1) Paragraph (1) of Article 22 of the Order (application for administration order) as applied to a building society has effect as if—

• (a) it enabled an application to the High Court for an administration order to be by petition presented, with or without other parties, by the Commission or by a shareholding member entitled under section 89(3) of this Act to petition for the winding up of the society; and

• (b) the words from “or by the chief clerk” to “on companies)”, in the second place where they occur, were omitted.

• (2) In paragraph (2)(a) of that Article as so applied, the reference to any person who has appointed, or is or may be entitled to appoint, an administrative receiver of the society is a reference to the Commission (unless it is a petitioner).

• (3) Paragraph (3) of that Article, and in paragraph (4) of that Article, the words “Subject to paragraph (3),” are omitted.

34

In Article 23 of the Order (effect of application for administration order), the following are omitted, namely—

• (a) in paragraph (2), sub-paragraphs (b) and (c); and

• (b) paragraph (3).

35

In Article 24 of the Order (effect of administration order), the following are omitted, namely—

• (a) in paragraph (1), sub-paragraph (b) and the word “and” immediately preceding that sub-paragraph;

• (b) in paragraph (3), sub-paragraph (b);

• (c) in paragraph (4), the words “an administrative receiver of the company has vacated office under paragraph (1)(b), or”; and

• (d) paragraph (5).

36

In paragraph (1) of Article 25 of the Order (notification of administration order), the reference to every invoice, order for goods or business letter is a reference to every statement of account, order for goods or services, business letter or advertisement.

37

Paragraph (3) of Article 26 of the Order (appointment of administrator) has effect as if it enabled an application for an order under paragraph (2) of that Article to be made by the Commission.

38

• (1) Subject to sub-paragraph (2) below, Article 27 of the Order (general powers of administrator) has effect as if it required the administrator of a building society, in exercising his powers under that Article—

• (a) to ensure compliance with the provisions of this Act; and

• (b) not to appoint to be a director any person who is not a fit and proper person to hold that position.

• (2) Sub-paragraph (1)(a) above does not apply in relation to section 5, 6 or 7 of this Act or paragraph (a) of the seventh criterion in section 45(3) of this Act.

• (3) In paragraph (4) of that Article as applied to a building society, the reference to any power conferred by the Order or the Companies (Northern Ireland) Order 1986 or by the memorandum or articles of association is a reference to any power conferred by this Act or by the society’s memorandum or rules.

• (4) Subsection (8) of section 45 of this Act applies for the purposes of sub-paragraph (1)(b) above as it applies for the purposes of the seventh criterion in subsection (3) of that section.

39

• (1) Subject to sub-paragraph (3) below, paragraph 17 of Schedule 1 to the Order (powers of administrators) as applied to a building society has effect as if it conferred power to transfer liabilities in respect of deposits with or shares in the society.

• (2) No transfer under that paragraph shall be a transfer of engagements for the purposes of Part X of this Act.

• (3) No transfer under that paragraph which, apart from sub-paragraph (2) above, would be a transfer of engagements for the purposes of that Part shall be made unless it is approved by the High Court, or by meetings summoned under Article 35(1) or 37(2) of the Order (as modified by paragraph 43 or 45 below).

40

In Article 28 of the Order (power to deal with charged property etc.)—

• (a) paragraph (1) is omitted; and

• (b) for paragraphs (3) and (4) there is substituted the following paragraph—

(3) Paragraph (2) applies to any security other than one which, as created, was a floating charge.

41

• (1) Article 29 of the Order (general duties of administrator) has effect as if, instead of the requirement imposed by paragraph (3), it required the administrator of a building society to summon a meeting of the society’s creditors if—

• (a) he is requested, in accordance with the rules, to do so by 500 of the society’s creditors, or by one-tenth, in number or value, of those creditors, or

• (b) he is directed to do so by the High Court.

• (2) That Article also has effect as if it required the administrator of a building society to summon a meeting of the society’s shareholding members if—

• (a) he is requested, in accordance with the rules, to do so by 500 of the society’s shareholding members, or by one-tenth, in number, of those members, or

• (b) he is directed to do so by the High Court.

42

In paragraph (4) of Article 31 of the Order (vacation of office) as applied to a building society, the words “in priority to any security to which Article 28(1) then applies” are omitted.

43

• (1) Paragraph (1) of Article 35 of the Order (statement of proposals) as applied to a building society has effect as if—

• (a) the reference to the central office included a reference to the Commission and the Investor Protection Board;

• (b) the reference to all creditors included a reference to all holders of shares in the society; and

• (c) the reference to a meeting of the society’s creditors included a reference to a meeting of holders of shares in the society.

• (2) In paragraph (2) of that Article as so applied, references to members of the society do not include references to holders of shares in the society.

44

Article 36 of the Order (consideration of proposals by creditors' meeting) as applied to a building society has effect as if any reference to a meeting of creditors included a reference to a meeting of holders of shares in the society.

45

• (1) Article 37 of the Order (approval of substantial revisions) as applied to a building society has effect as if—

• (a) paragraph (2) required the administrator to send a statement in the prescribed form of his proposed revisions to the Commission and to the Investor Protection Board; and

• (b) the reference in that paragraph to a meeting of creditors included a reference to a meeting of holders of shares in the society.

• (2) In paragraph (3) of that Article as so applied, references to members of the society do not include references to holders of shares in the society.

46

Paragraph (1) of Article 39 of the Order (protection of interests of creditors and members) has effect—

• (a) as if it enabled the Commission or Investor Protection Board to apply to the High Court by petition for an order under that section; and

• (b) in relation to an application by the Commission or that Board, as if the words “(including at least himself)” were omitted.

Receivers and managers

47

In Article 48 of the Order (receivership accounts), “prescribed” means prescribed by regulations made by statutory instrument by the Commission.

48

In paragraph (1) of Article 49 of the Order (notification that receiver or manager appointed), the reference to every invoice, order for goods or business letter is a reference to every statement of account, order for goods or services, business letter or advertisement.

49

Article 50 (payment of debts out of assets subject to floating charge) and Articles 52 to 59 (administrative receivers) of the Order are omitted.

SCHEDULE 7

The Building Societies Commission

1

In subsection (4) of section 1 of the 1986 Act (the Building Societies Commission), for paragraph (c) there shall be substituted the following paragraph—

(c) to secure that the principal purpose of building societies remains that of making loans which are secured on residential property and are funded substantially by their members;

.

Annual and other reports

2

In section 4 of the 1986 Act (annual and other reports), subsection (2) shall cease to have effect.

Authorisation to raise funds and borrow money

3

• (1) In subsection (3) of section 9 of the 1986 Act (authorisation to raise funds and borrow money), paragraph (d) and the word “or” immediately preceding that paragraph shall cease to have effect.

• (2) In subsection (7), for the words “subsidiary or associated body” there shall be substituted the words “connected undertaking”.

• (3) In subsection (13) of that section, for the definition of “qualifying deferred shares” there shall be substituted the following definition—

“qualifying deferred shares” means deferred shares which constitute own funds of the society,

.

• (4) After that subsection there shall be inserted the following subsection—

(13A) In determining for the purposes of subsection (4)(b) above whether a person is a fit and proper person to hold any particular office, regard shall be had, in particular— (a) to his probity; (b) to his competence and soundness of judgement for fulfilling the responsibilities of that office; (c) to the diligence with which he is fulfilling or likely to fulfil those responsibilities; and (d) to whether the interests of shareholders or depositors of the society are, or are likely to be, in any way threatened by his holding that office.

The Building Societies Investor Protection Board

4

In subsection (4) of section 24 of the 1986 Act (the Building Societies Investor Protection Board ), after the definition of the “1995 Regulations” there shall be inserted the following definition—

“administrator”, in relation to a participating institution, means an administrator of the institution under Part II of the Insolvency Act 1986 or Part III of the Insolvency (Northern Ireland) Order 1989;

.

The Investor Protection Fund

5

• (1) In subsection (5) of section 25 of the 1986 Act (the Investor Protection Fund), in the definition of “the expenses attributable to the insolvency” for the words “paragraphs (a) to (d)” there shall be substituted the words “paragraphs (a) to (c)”.

• (2) In subsection (7) of that section, after the word “authorises” there shall be inserted the words “the Bank of England or”.

Meaning of “insolvency” etc.

6

In subsection (2) of section 25A of the 1986 Act (meaning of “insolvency” etc.), for the word “society” there shall be substituted the word “institution”.

Payments to investors

7

• (1) In subsection (3) of section 27 of the 1986 Act (payments to investors), for the words “such other authorised institution or building society” there shall be substituted the words “such institution (whether the Bank of England, an authorised institution or a building society)”.

• (2) In subsection (4A) of that section, after the word “liquidator”, in each place where it occurs, there shall be inserted the words “or administrator”.

• (3) In subsection (9) of that section, after the word “liquidator”, in both places where it occurs, there shall be inserted the words “or administrator”.

• (4) In subsection (9A)(a) of that section, after the word “liquidator”, in both places where it occurs, there shall be inserted the words “or administrator”.

Membership of insolvency committees etc

8

After section 27 of the 1986 Act there shall be inserted the following section—

(27A) (1) The following provisions of this section have effect notwithstanding that the Board may not yet have made or become liable to make a payment under section 27(1) in relation to a participating institution which has become insolvent. (2) The Board shall at all times be entitled to receive any notice or other document required to be sent to a creditor of the institution whose debt has been proved. (3) A duly authorised representative of the Board shall be entitled— (a) to attend any meeting of creditors of the institution and to make representations as to any matter for decision at that meeting; (b) to be a member of any committee established under section 301 of the Insolvency Act 1986; (c) to be a commissioner under section 30 of the Bankruptcy (Scotland) Act 1985; (d) to be a member of a committee established for the purposes of Part IV or V of the Insolvency Act 1986 under section 101 of that Act or under section 141 or 142 of that Act; (e) to be a member of any committee established under Article 274 of the Insolvency (Northern Ireland) Order 1989; and (f) to be a member of a committee established for the purposes of Part V or VI of the Insolvency (Northern Ireland) Order 1989 under Article 87 or under Article 120 of that Order. (4) Where a representative of the Board exercises his right to be a member of such a committee as is mentioned in paragraph (b), (d), (e) or (f) of subsection (3) above, or to be a commissioner by virtue of paragraph (c) of that subsection— (a) he may not be removed except with the consent of the Board; and (b) his appointment under that subsection shall be disregarded for the purposes of any provision made by or under any enactment which specifies a minimum or maximum number of members of such a committee or commission.

Liability of insolvent society in respect of payments made by Board

9

For subsection (6) of section 28 of the 1986 Act (liability of insolvent society in respect of payments made by Board) there shall be substituted the following subsection—

(6) Where by virtue of paragraph 3 of Schedule 6 to this Act the insolvency payment is or is to be made by the Board to a person other than the person to whom the institution is liable in respect of the protected investment, any reference in the preceding provisions of this section to the liability to the investor shall be construed as a reference to the liability of the institution to the person to whom that payment would fall to be made by the Board apart from that paragraph.

Power to obtain information

10

In subsection (3) of section 29A of the 1986 Act (power to obtain information), after the word “liquidator” there shall be inserted the words “or administrator”.

Voluntary schemes

11

For subsections (1) to (3) of section 31 of the 1986 Act (voluntary schemes) there shall be substituted the following subsections—

(1) In this section “voluntary arrangements” means arrangements entered into by any two or more building societies for the purpose of making funds available to meet losses incurred by persons who have deposited money with, or who have shares in, an insolvent building society which is a party to the arrangements. (2) A building society shall not enter into any voluntary arrangements until the arrangements have been approved by the Commission and authorised by a resolution passed, at a general meeting of the society or on a postal ballot, as a special resolution. (3) The Commission shall not approve any voluntary arrangements unless it is satisfied that the arrangements comply with the Deposit Guarantee Schemes Directive (94/19/EC).

Power to direct application to renew authorisation

12

• (1) Section 41 of the 1986 Act (power to direct application to renew authorisation) shall become permanent; and accordingly subsections (14) to (16) of that section shall cease to have effect.

• (2) In subsection (6) of that section, for paragraph (b) there shall be substituted the following paragraph—

(b) the society has adequate reserves and other capital resources;

.

• (3) In subsection (7) of that section, for paragraphs (a) and (b) there shall be substituted the following paragraphs—

(a) if those matters include the matter specified in paragraph (a) of that subsection, refuse to grant authorisation; or (b) in any other case— (i) if it is satisfied that the imposition of conditions would secure the protection of the investments of shareholders and depositors, grant authorisation subject to such conditions to be complied with by the society (whether or not they correspond to any conditions in force as respects the current authorisation) as the Commission thinks fit to impose to secure that purpose; or (ii) if not so satisfied, refuse to grant the authorisation;

.

• (4) For subsection (13) of that section there shall be substituted the following subsection—

(13) Any expression used in this section to which a meaning is given by subsection (13) of section 9 has that meaning in this section; and for the purposes of this section subsection (13A) of that section shall apply as if the reference to subsection (4)(b) of that section were a reference to subsection (6)(c) of this section.

• (5) For subsection (17) of that section there shall be substituted the following subsection—

(17) In this section “adequate” means adequate having regard to the range and scale of the society’s business; and in this subsection— (a) “business” includes business the society proposes to carry on; and (b) the reference to the society’s business includes, where it has connected undertakings, a reference to the business of those undertakings.

Imposition of conditions on current authorisation

13

• (1) In subsection (5)(b) of section 42 of the 1986 Act (imposition of conditions on current authorisation), for the words “subsidiary or other associated body” there shall be substituted the words “connected undertaking”.

• (2) At the beginning of subsection (7) of that section there shall be inserted the words “Subject to section 42A”.

Revocation of authorisation

14

• (1) In subsection (1) of section 43 of the 1986 Act (revocation of authorisation), for the word “or” immediately following paragraph (c) there shall be substituted the following paragraphs—

(cc) the Commission is satisfied that a direction under section 42B(1) has not been complied with by the society; (cd) it appears to the Commission that— (i) a composition or arrangement with creditors has been made in respect of the society; (ii) a receiver or manager of the society’s undertaking has been appointed; (iii) possession has been taken, by or on behalf of the holders of any debenture secured by a charge, of any property of the society; or (iv) an administration order has been made in relation to the society under section 8 of the Insolvency Act 1986; or

.

• (2) For subsection (7) of that section there shall be substituted the following subsections—