FRIENDLY SOCIETIES ACT 1992 (c. 40)

(The document as of February, 2008)

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

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

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

Section 27.

SCHEDULE 11 Committee of Management: Supplementary

Part I Eligibility and Retirement of Committee Members

Preliminary

1 (1) This Part of this Schedule applies in relation to members of the committee of management of a friendly society ("the society"); and in this Schedule--

"the committee" means the committee of management of the society;
"the compulsory retirement age", where the rules of the society make the provision authorised by paragraph 3(1) below, means the age prescribed for that purpose in its rules;
"the normal retirement age" means 70 years or such lesser age as the rules of the society may prescribe as the normal retirement age for members of its committee.

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

Eligibility to be elected committee member

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

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

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

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

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

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

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

Eligibility to be co-opted committee member

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

Notice to society of age of committee member

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

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

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

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

Retirement of elected committee members

6 (1) A member of the committee shall retire from office--

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

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

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

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

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

Retirement of co-opted members

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

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

Part II Dealings with Members of Committee of Management

8 (1) Sections 312 (payment for loss of office etc) and 316(3) (supplementary) of the [1985 c. 6.] Companies Act 1985 shall have effect as if any reference in them to a director of a company included a reference to a member of the committee of management of a friendly society or a registered branch but with the substitution in section 316(3) of a reference to section 312 for the reference to sections 312 to 315.

(2) Articles 320 (payment for loss of office etc) and 324(3) (supplementary) of the [S.I.1986/1032 (N.I.6).] Companies (Northern Ireland) Order 1986 shall have effect as if any reference in them to a director of a company included a reference to a member of the committee of management of a friendly society or a registered branch but with the substitution in Article 324(3) of a reference to Article 320 for the reference to Articles 320 to 323.

9 (1) The following provisions of the [1986 c. 53.] Building Societies Act 1986--

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

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

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

(e) section 66 (sanctions);

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

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

(h) section 70 (interpretation),

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

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

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

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

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

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

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

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

(a) of the following subsection for subsection (3)--

" (3) The following are relevant services--

(a) legal services;

(b) accountancy services;

(d) reinsurance of the society's insurance business;

(e) any other services designated as relevant services. " ; and

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

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

Requisite particulars where no adoption of this Part

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

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

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

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

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

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

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

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

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

Requisite particulars on adoption of this Part

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

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

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

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

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

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

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

Power to prescribe bands

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

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

Section 30.

SCHEDULE 12 Meetings and Resolutions

Annual general meeting

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

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

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

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

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

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

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

(2) If such default is made, the Commission may--

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

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

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

Notice for calling meetings

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

(a) with the date of the meeting; or

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

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

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

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

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

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

as the rules may provide.

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

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

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

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

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

Members' entitlement to vote on resolutions

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

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

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

Right to demand a poll

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

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

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

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

Special resolutions

7 (1) No resolution of a friendly society shall be passed as a special resolution unless--

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

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

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

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

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

(c) any such notice (or, in the case of a postal ballot, the ballot papers) includes a statement that the resolution will not be effective unless it is passed as a special resolution;

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

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

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

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

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

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

as the rules may provide.

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

Postal ballots

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

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

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

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

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

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

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

(5) Notice of a postal ballot--

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

(b) shall be accompanied by such other documents,

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

Resolutions requiring special notice

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

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

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

Section 32.

SCHEDULE 13 Authorisation: Supplementary Provisions

Part I Applications for Authorisation

Preliminary

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

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

Procedure for granting authorisation

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

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

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

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

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

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

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

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

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

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

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

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

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

(b) the grounds for the proposed refusal; and

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

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

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

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

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

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

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

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

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

Offences in connection with application

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

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

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

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

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

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

Terms of authorisation: supplementary

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

(a) to the secretary of the society; and

(b) to the central office;

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

(2) Where the terms of a society's authorisation are superseded by the grant of authorisation--

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

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

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

Part II Imposition of Conditions and Withdrawal of Authorisation

Preliminary

6 (1) In this Part of this Schedule "the society" means--

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

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

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

Imposition of conditions

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

(a) that the Commission proposes to impose conditions;

(b) what conditions the Commission proposes to impose;

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

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

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

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

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

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

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

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

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

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

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