Building Societies Act 1997 (c. 32)

(The document as of February, 2008)

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(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

Section 30(3).

SCHEDULE 5 Information about transfers or proposed transfers of business

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.

Section 39(2).

SCHEDULE 6 [Schedule 15a to 1986 Act] Application of other companies insolvency legislation to building societies

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 [1985 c. 6.] Companies Act 1985 or (as the case may be) the [S.I. 1986/1032 (N.I.6).] 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 [1986 c. 45.] Insolvency Act 1986, or

(b) Parts I to IV, VII, XI and XII and Article 378 of the [S.I. 1989/2405 (N.I.19).] 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 [1986 c. 45.] Insolvency Act 1986 or Article 2(6) and 373 of, and Schedule 7 to, the [S.I. 1989/2405 (N.I.19).] 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";

(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 [1986 c. 45.] Insolvency Act 1986 or, as the case may be, Article 359 of the [S.I. 1989/2405 (N.I.19).] 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 [1986 c. 45.] 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

(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 [1985 c. 6.] 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 [S.I. 1989/2405 (N.I.19).] 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

(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 [S.I. 1986/1032 (N.I.6).] 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

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