Building Societies Act 1997 (c. 32)

(The document as of February, 2008)

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there shall be substituted the words "connected undertakings".

(4) Subsection (10A) of that section shall cease to have effect.

Contents and form of annual accounts

30 In subsection (8)(c) of section 73 of the 1986 Act (contents and form of annual accounts), for the words "bodies associated with them" there shall be substituted the words "their associated undertakings".

Duty of directors to prepare annual business statement

31 In subsection (2) of section 74 of the 1986 Act (duty of directors to prepare annual business statement), for the words "subsidiary undertakings or associated bodies", in both places where they occur, there shall be substituted the words "connected undertakings".

Directors' report

32 (1) In subsection (1) of section 75 (directors' report)--

(a) in paragraph (b), for the words "subsidiary undertakings or other bodies associated with it" there shall be substituted the words "connected undertakings"; and

(b) for paragraph (c) there shall be substituted the following paragraph--

" (c) a statement as to the matters mentioned in subsection (1A) below. "

(2) After that subsection there shall be inserted the following subsection--

" (1A) The said matters are--

(a) whether the society has acquired or established, or allowed a subsidiary undertaking to acquire or establish, a business to which subsection (3) and subsection (4) or, as the case may be, subsection (5) of section 92A applied;

(b) if the society has acquired or established, or allowed such an undertaking to acquire or establish, such a business, what the business is and whether the society complied with the requirements of subsection (1) of that section; and

(c) if the society did not comply with those requirements, why the society nevertheless proceeded, or allowed the undertaking to proceed, with the acquisition or establishment. "

(3) In subsection (2) of that section--

(a) for the words "subsidiary undertakings or other associated bodies" there shall be substituted the words "connected undertakings"; and

(b) for the words "subsidiary undertakings and associated bodies" there shall be substituted the words "connected undertakings".

(4) In subsection (4) of that section, for the words from "the prescribed information" to "regulations" there shall be substituted the words "the review, information and statement required by subsection (1) above and, where applicable, the review required by subsection (2) above".

Summary financial statement for members and depositors

33 (1) In subsection (2) of section 76 of the 1986 Act (summary financial statement for members and depositors)--

(a) for the words "subsidiary undertakings or other associated bodies" there shall be substituted the words "connected undertakings"; and

(b) for the words "subsidiary undertakings and other associated bodies" there shall be substituted the words "connected undertakings".

(2) In subsection (9)(a) of that section, for paragraph (a) there shall be substituted the following paragraph--

" (a) any individual who for the first time subscribes for shares in the society, on his first subscribing for the shares, and " .

Auditor's report and powers

34 (1) In subsection (4) of section 79 of the 1986 Act (auditor's report and powers), for the words "subsidiary undertaking", in each place where they occur, there shall be substituted the words "connected undertaking".

(2) Subsection (5) of that section shall cease to have effect.

(3) In subsection (9) of that section, for the words "subsidiary undertaking of or is associated with" there shall be substituted the words "connected undertaking of".

Auditor's duties to Commission and related rights

35 (1) In subsection (2) of section 82 of the 1986 Act (auditor's duties to Commission and related rights)--

(a) after paragraph (a) there shall be inserted the word "and"; and

(b) paragraph (c) and the word "and" immediately preceding that paragraph shall cease to have effect.

(2) In subsection (3) of that section, paragraph (d) shall cease to have effect.

(3) In subsection (4) of that section, for the words "subsidiary undertakings or other associated bodies linked by resolution", in both places where they occur, there shall be substituted the words "connected undertakings".

(4) In subsection (8) of that section, for the words "subsidiary undertakings or other associated bodies" there shall be substituted the words "connected undertakings".

Investigation of complaints: supplementary provisions

36 (1) Subsection (1) of section 84 of the 1986 Act (investigation of complaints: supplementary provisions) shall cease to have effect.

(2) In subsections (2), (3), (4) and (5) of that section, for the words "associated body" there shall be substituted the words "connected undertaking".

(3) In subsection (9) of that section, for the words "section 83(5)" there shall be substituted the words "section 83(4)".

(4) In subsection (10) of that section, for the words "section 83(3) or (5)" there shall be substituted the words "section 83(3) or (4)".

(5) In subsection (11) of that section, for the words "associated body's" there shall be substituted the words "connected undertaking's".

Settlement of disputes

37 In subsection (1) of section 85 of the 1986 Act (settlement of disputes), for the words "a depositor with the society" there shall be substituted the words "one or more members of the society or a complainant".

Dissolution by consent

38 In subsection (8) of section 87 of the 1986 Act (dissolution by consent), for the words "or to a company" there shall be substituted the words "or the transfer of its business to a company".

Winding up: grounds and petitioners

39 In subsection (4) of section 89 of the 1986 Act (winding up: grounds and petitioners), for paragraph (b) there shall be substituted the following paragraph--

" (b) the reference to its existing for an illegal purpose includes a reference to its existing after it has ceased to comply with the requirement imposed by section 5(1)(a) (purpose or principal purpose). "

Winding up or dissolution: supplementary

40 For section 92 of the 1986 Act there shall be substituted the following section--

" 92 Supplementary

Where at any time a building society is being wound up or dissolved by consent, a borrowing member shall not be liable to pay any amount other than one which, at that time, is payable under the mortgage or other security by which his indebtedness to the society in respect of the loan is secured. "

Amalgamations

41 In subsection (2) of section 93 of the 1986 Act (amalgamations)--

(a) for paragraph (a) there shall be substituted the following paragraph--

" (a) agree the purpose or principal purpose of their successor to be that of making loans which are secured on residential property and are funded substantially by its members, and agree upon the extent of its powers, in a memorandum which complies with the requirements of Schedule 2 to this Act; " ; and

(b) for paragraph (c) there shall be substituted the following paragraph--

" (c) each approve the terms of the amalgamation by two resolutions which also approve the memorandum and the rules of their successor and of which--

(i) one is passed as a shareholding members' resolution, and

(ii) the other is passed as a borrowing members' resolution,

in accordance with the applicable provisions of that Schedule; " .

Transfer of engagements

42 In subsections (2), (4) and (5) of section 94 of the 1986 Act (transfer of engagements), for the words "special resolution" there shall be substituted the words "shareholding members' resolution".

Mergers: provisions supplementing sections 93 and 94

43 (1) In subsection (3) of section 95 of the 1986 Act (mergers: provisions supplementing sections 93 and 94), for the words "subsections (4) to (9)" there shall be substituted the words "subsections (4) to (6)".

(2) Subsections (7) to (9) of that section shall cease to have effect.

Mergers: compensation for loss of office etc.

44 (1) In subsection (1) of section 96 (mergers: compensation for loss of office etc.)--

(a) in paragraph (a), for the words "the resolution" there shall be substituted the words "one of the two resolutions"; and

(b) in paragraph (b), for the words "the special resolution" there shall be substituted the words "the two resolutions".

(2) In subsection (4) of that section, for the words "the special resolution", in both places where they occur, there shall be substituted the words "each of the two resolutions".

(3) In subsection (6) of that section, for the words "a special resolution of the society" there shall be substituted the words "the two resolutions required by section 94(5)(a)".

(4) In subsection (8) of that section, in the definition of "loss of office", for the words "a subsidiary of that society or in an associated body" there shall be substituted the words "any other body".

Transfer of business to commercial company

45 (1) In subsection (2) of section 97 of the 1986 Act (transfer of business to commercial company), after the words "section 99," there shall be inserted the words "section 99A,".

(2) In subsection (3) of that section, the words from "and for the purposes" to the end shall cease to have effect.

(3) In subsection (12) of that section, after the definition of "the requisite protective provisions" there shall be inserted the following definition--

" "the requisite shareholders" resolution' has the meaning given by paragraph 30(1) of Schedule 2; " .

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

" (13) References in this section, and the other applicable provisions of this Act, to a company include references to a body corporate which--

(a) is incorporated in an EEA State other than the United Kingdom; and

(b) has power under its constitution to offer its shares or debentures to the public;

and in this subsection "EEA State" means a Contracting Party to the Agreement on the European Economic Area signed at Oporto on 2nd May 1992 as adjusted by the Protocol signed at Brussels on 17th March 1993. "

Regulated terms: compensation for loss of office etc.

46 In subsection (6) of section 99 of the 1986 Act (regulated terms: compensation for loss of office etc.), in the definition of "loss of office", for the words "a subsidiary of that society or in an associated body" there shall be substituted the words "any other body".

Distribution and share rights

47 In subsection (4) of section 100 of the 1986 Act (distribution and share rights), for the words "requisite transfer resolution" there shall be substituted the words "requisite shareholders' resolution".

Power to amend etc. to assimilate to company law

48 In subsection (2) of section 104 of the 1986 Act (power to amend etc. to assimilate to company law), at the end of paragraph (d) there shall be inserted the words "or insolvency".

Limited power to anticipate future statutory instrument powers

49 Section 105 of the 1986 Act (limited power to anticipate future statutory instrument powers) shall cease to have effect.

Power to require building society to change misleading name

50 Section 108 of the 1986 Act (power to require building society to change misleading name) shall cease to have effect.

Offences: liability of officers etc.

51 In subsection (2) of section 112 of the 1986 Act (offences: liability of officers etc.), after the words "section 9(11)," there shall be inserted the words "section 43A(7),".

Qualifying asset holding for certain powers

52 Section 118 of the 1986 Act (qualifying asset holding for certain powers) shall cease to have effect.

Interpretation

53 (1) In subsection (1) of section 119 of the 1986 Act (interpretation)--

(a) the definitions of "adopt", "adopted", "adoptable powers", "advance secured on land", "advance fully secured on land", "advance secured on third party land", "mobile home loan", "qualifying asset holding", "subsidiary" and "total commercial assets" shall cease to have effect;

(b) for the definitions of "associated body", "associated" and "linked by resolution" there shall be substituted the following definition--

" "associated undertaking" shall be construed in accordance with paragraph 20 of Schedule 4A to the [1986 c. 6.] Companies Act 1985 read--

(a) in conjunction with sections 259 and 260 of, and paragraphs 5 to 11 of Schedule 10A to, that Act; and

(b) as if the reference to an undertaking included in the consolidation were a reference to an undertaking which would be so included if consolidated accounts were being prepared at the material time; " ;

(c) for the definitions of "borrowing members' resolution" and "borrowing member" there shall be substituted the following definitions--

" "borrowing members" resolution' has the meaning given by paragraph 29(1) of Schedule 2 to this Act and, subject to paragraph 29(2), "borrowing member" has the meaning given by paragraph 5 of that Schedule; " ;

(d) after the definition of "the Commission" there shall be inserted the following definition--

" "connected undertaking" means a subsidiary undertaking or an associated undertaking; " ;

(e) for the definition of "the court" there shall be substituted the following definition--

" "the court", in relation to a building society, means the court which has jurisdiction under the applicable winding up legislation to wind up the society; " ;

(f) after the definition of "the criteria of prudent management" there shall be inserted the following definition--

" "currency" includes ecus; " ;

(g) for the definition of "deposit" there shall be substituted the following definition--

" "deposit" includes--

(a) a loan; and

(b) a subordinated deposit, that is to say, a deposit which, on a winding up, would fall to be repaid only after repayment in full had been made to the holders of shares in the society other than deferred shares,

and cognate expressions shall be construed accordingly; " ;

(h) after the definition of "heritable security" there shall be inserted the following definition--

" "interest", in relation to shares, includes dividends; " ;

(i) after the definition of "Investor Protection Board" there shall be inserted the following definitions--

" "land", in the expression "loan secured on land", has the meaning given by section 6A(8);

"loan secured on land" and "loan fully secured on land" shall be construed in accordance with sections 6A and 6B respectively; " ;

(j) for the definition of "member" there shall be substituted the following definition--

" "member" shall be construed in accordance with paragraph 5 of Schedule 2 to this Act; " ;

(k) for the definition of "mortgage debt" there shall be substituted the following definition--

" "mortgage debt", in relation to a loan secured on land and any time, means the total amount outstanding at that time in respect of--

(a) the principal of the loan;

(b) interest on the loan; and

(l) after the definition of "officially notified" there shall be inserted the following definition--

" "ordinary resolution" means a resolution which will be effective without being passed as a special resolution, shareholding members' resolution or borrowing members' resolution; "

(m) after the definition of "the repealed enactments" there shall be inserted the following definition--

" "residential property" has the meaning given by section 5(10); " ;

(n) for the definition of "share" there shall be substituted the following definition--

" "share", in relation to a building society, shall be construed in accordance with section 8; " ; and

(o) after the definition of "shareholder and depositor" there shall be inserted the following definitions--

" "shareholding member" has the meaning given by paragraph 5 of Schedule 2 to this Act;

"shareholding members" resolution' has the meaning given by paragraph 27A of that Schedule; " .

(2) In subsection (2) of that section, for the word "advances" there shall be substituted the word "loans".

(3) In subsection (3) of that section--

(a) in paragraph (a), the words "by him" and "to him" shall cease to have effect; and

(b) in paragraph (b), for the words "an advance" there shall be substituted the words "a loan".

(4) After subsection (3) of that section there shall be inserted the following subsection--

" (3A) Any reference in this Act (however expressed) to loans being owed to a building society or a subsidiary undertaking of a building society is a reference to their being so owed either at law or in equity. "

(5) For subsection (4) of that section there shall be substituted the following subsection--

" (4) Subject to sections 9A(7) and 83A(7), the value in sterling of--

(a) any transaction effected by or with a building society or connected undertaking in another currency, or

(b) any assets or liabilities of a building society or connected undertaking denominated in another currency,

shall be determined for any purpose of this Act in accordance with directions given by the Commission under this subsection. "

Northern Ireland

54 In subsection (1) of section 122 of the 1986 Act (Northern Ireland), the words "section 15," shall cease to have effect.

The Commission

55 In paragraph 11(1) of Schedule 1 to the 1986 Act (performance of functions), for the words "any member or members of the Commission" there shall be substituted the following paragraphs--

" (a) any member or members of the Commission,

(b) any committee or sub-committee of the Commission, or

Establishment, incorporation and constitution

56 (1) Part I of Schedule 2 to the 1986 Act (establishment, incorporation and constitution) shall be amended as follows.

(2) For sub-paragraph (4) of paragraph 1 (requirements for establishment) there shall be substituted the following sub-paragraph--

" (4) In this Act "memorandum", in relation to a building society, means the memorandum of the purpose and the extent of the powers of the society including the record of any alteration under paragraph 4 below. "

(3) For sub-paragraphs (1) to (3) of paragraph 2 (the memorandum) there shall be substituted the following sub-paragraphs--

" (1) The memorandum of a building society shall state the purpose or principal purpose of the society to be that of making loans which are secured on residential property and are funded substantially by its members.

(2) The memorandum of a building society shall specify--

(a) the name of the society and the address of its principal office;

(b) any purposes of the society other than that mentioned in sub-paragraph (1) above; and

(4) Sub-paragraph (5) of that paragraph shall cease to have effect.

(5) In sub-paragraph (4) of paragraph 3 (the rules)--

(a) in item 2 of the Table, for the words "stock or funds of the society is or are" there shall be substituted the words "funds of the society are"; and

(b) in item 5 of the Table, for the word "advances" there shall be substituted the word "loans" and for the word "advance" there shall be substituted the word "loan".

(6) For sub-paragraph (1) of paragraph 4 (requirements for alteration of purpose, powers and rules) there shall be substituted the following sub-paragraph--

" (1) A building society may by special resolution alter its purposes, alter its powers or alter its rules. "

(7) In sub-paragraph (4) of that paragraph, the words "subject to paragraph 19 below" shall cease to have effect.

(8) In sub-paragraph (1) of paragraph 8 (joint borrowers), for the words "an advance" there shall be substituted the words "a loan".

(9) In sub-paragraph (1)(b) of paragraph 11 (change of principal office), for the words "then at a general meeting specially called for the purpose in accordance with the rules" there shall be substituted the words "by an ordinary resolution".

(10) For sub-paragraph (1) of paragraph 13 (register of members) there shall be substituted the following sub-paragraph--

" (1) Every building society shall maintain a register of members showing--

(a) the name and address of each member; and

(b) whether each member is a shareholding member or a borrowing member or both. "

Meetings, resolutions and postal ballots

57 (1) Part III of Schedule 2 to the 1986 Act (meetings, resolutions and postal ballots) shall be amended as follows.

(2) For sub-paragraph (2) of paragraph 22 (persons entitled to notice of meetings) there shall be substituted the following sub-paragraphs--

" (2) Notice of the meeting shall, subject to those provisions, be given also to every person--

(a) who becomes a shareholding or borrowing member of the society after the date of the notice under sub-paragraph (1) above and before the specified date; or

(b) who, being such a member at the date of that notice, attains the age of 18 after that date and on or before the date of the meeting,

and who would (in either case) be eligible to vote at the meeting if he remained such a member until the date of the meeting.

(2A) In sub-paragraph (2) above "the specified date" means the date specified by the society as the final date for the receipt of instruments appointing proxies to vote at the meeting. "

(3) For sub-paragraph (1) of paragraph 23 (members' entitlement to vote on resolutions) there shall be substituted the following sub-paragraph--

" (1) A member of a building society is entitled to vote--

(a) on an ordinary resolution or a special resolution if he was, at the end of the last financial year before the voting date, and is, on that date, a shareholding or borrowing member of the society;

(b) on a shareholding members' resolution, if he was, at the end of that year, and is, on that date, a shareholding member of the society; and

(c) on a borrowing members' resolution if he was, at the end of that year, and is, on that date, a borrowing member of the society,

but subject, in either case, to paragraphs 5(3), 7(4) and 8(4) above and, in the case of paragraphs (a) and (b), to sub-paragraph (3) below. "

(4) For sub-paragraphs (3) and (4) of that paragraph there shall be substituted the following sub-paragraphs--

" (3) If the rules of the society so provide, a shareholding member is not entitled to vote on an ordinary resolution or a special resolution as such a member, or to vote on a shareholding members' resolution--

(a) if he did not have a qualifying shareholding at the qualifying shareholding date; or

(b) if he ceased to hold shares at some time between that date and the voting date.

(4) Where a building society's rules make such provision as is mentioned in sub-paragraph (3)(a) above, a shareholding member shall be taken to have had a qualifying shareholding at the qualifying shareholding date if he had such a holding--

(a) at the end of the last financial year before the voting date, except where paragraph (b) below applies; or

(b) in a case where the voting date falls during that part of a financial year which follows the conclusion of the annual general meeting commenced in that year, at the beginning of the period of 56 days immediately preceding the voting date for members voting in person at a meeting or, as the case may be, on a postal ballot. "

(5) After sub-paragraph (4) of paragraph 24 (proxies) there shall be inserted the following sub-paragraph--

" (4A) Every form for the appointment of a proxy sent by a building society to persons entitled to notice of a meeting of the society must contain provision enabling that person to direct the proxy how to vote at the meeting. "

(6) In sub-paragraph (5) of that paragraph, after the words "building society," there shall be inserted the words "or in complying with sub-paragraph (4A) above in respect of a form of appointment of a proxy,".

(7) In paragraph 26 (special resolutions), after the words "as a special resolution" there shall be inserted the words ", or as a shareholding members' resolution,".

(8) After paragraph 27 there shall be inserted the following paragraph--

" 27A A resolution of a building society shall be a shareholding members' resolution when it has been passed by not less than three-quarters of the number of the shareholding members of the society--

(a) qualified to vote on a shareholding members' resolution; and

(b) voting in person or by proxy on a poll on the resolution at a meeting of the society of which notice specifying the intention to move the resolution as a shareholding members' resolution has been duly given. "

(9) For sub-paragraph (1) of paragraph 29 (borrowing members' resolutions) there shall be substituted the following sub-paragraph--

" (1) A resolution of a building society shall be a borrowing members' resolution when it has been passed by a majority of the borrowing members of the society voting in person or by proxy on a poll on the resolution at a meeting of the society of which notice specifying the intention to move the resolution as a borrowing members' resolution has been duly given. "

(10) In sub-paragraph (2) of paragraph 30 (transfer resolutions)--

(a) for the words "special resolution", in both places where they occur, there shall be substituted the words "shareholding members' resolution"; and

(b) for the words "sub-paragraph (a) or sub-paragraph (b) of paragraph 27(1) above, as the case may be," there shall be substituted the words "paragraph 27A above".

(11) In sub-paragraph (3) of that paragraph--

(a) for the words "special resolution", in each place where they occur, there shall be substituted the words "shareholding members' resolution";

(b) for the words "paragraph 27" there shall be substituted the words "paragraph 27A"; and

(12) In sub-paragraph (5) of that paragraph, for the words "special resolution" there shall be substituted the words "shareholding members' resolution".

(13) In sub-paragraph (1) of paragraph 31 (members' rights to propose and circulate resolutions)--

(a) after the words "other than" there shall be inserted the words "a shareholding members' resolution or"; and

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