FRIENDLY SOCIETIES ACT 1992 (c. 40)

(The document as of February, 2008)

-- Back --

Page 2

Pages: P.1 | P.2 | P.3 | P.4 | P.5 | P.6 | P.7 | P.8 | P.9 | P.10 | P.11 | P.12 | P.13 | P.14 | P.15 | P.16

(3) A company or other body corporate is not a qualifying body if its objects or purposes enable it to form or take part in forming or otherwise to acquire control or joint control of bodies corporate.

(4) An incorporated friendly society may not take part in forming or acquire control of a body corporate jointly with any person other than another incorporated friendly society without the consent of the Commission.

(5) The Commission may give consent without conditions or subject to such conditions as it thinks fit.

(6) Any alteration of the memorandum of an incorporated friendly society to include among its purposes and powers the carrying on of any activity such as is mentioned in subsection (1) above must be adopted by a special resolution of the society in general meeting; and any amendment of a provision in its memorandum which permits it to do so must also be so adopted.

(7) A registered friendly society may not include in a memorandum adopted for the purposes of paragraph 2(1)(c) of Schedule 3 to this Act any provision enabling it on incorporation to carry on any activity such as is mentioned in subsection (1) above unless its inclusion has been authorised by a special resolution of the society in general meeting.

(8) The Commission may by order made with the consent of the Treasury vary Schedule 7 to this Act by adding to or deleting from it any activity or by varying the description of any activity for the time being specified in it.

(9) For the purposes of this Act--

(a) an incorporated friendly society has control of a body corporate if the society--

(i) holds a majority of the voting rights in it; or

(ii) is a member of it and has the right to appoint or remove a majority of its board of directors; or

(iii) is a member of it and controls alone, pursuant to an agreement with other shareholders or members, a majority of the voting rights in it;

(b) a body corporate is a subsidiary of an incorporated friendly society if the society has control of it.

(c) an incorporated friendly society has joint control of a body corporate if, in pursuance of an agreement or other arrangement between them, the society and another person--

(i) hold a majority of the voting rights in that body; or

(ii) are members of it and together have the right to appoint or remove a majority of its board of directors; or

(iii) are members of it and alone control, pursuant to an agreement with other shareholders or members, a majority of the voting rights in it;

(d) a body corporate is a body jointly controlled by an incorporated friendly society if the society has joint control of it;

and a society acquires joint control whenever any of the conditions mentioned in paragraph (c) above are satisfied with respect to a body corporate, notwithstanding that it may already be a subsidiary of the society.

(10) Schedule 8 to this Act shall have effect for supplementing this section.

(11) In this section "company" means a company within the meaning of the [1985 c. 6.] Companies Act 1985 or the [S.I. 1986/1032 (N.I.6).] Companies (Northern Ireland) Order 1986.

Powers of incorporated friendly societies

14 Investment of funds

(1) An incorporated friendly society may invest its funds--

(a) in the purchase of land, or in the erection of offices or other buildings thereon;

(b) upon any other security expressly directed by the rules of the society, other than personal security (but without prejudice to any provision of this Act relating to loans); or

(2) An incorporated friendly society which falls within subsection (3) or (4) below may also invest the funds of the society in any other manner authorised by its constitution.

(3) An incorporated friendly society falls within this subsection if--

(a) it is a society to which section 48 below applies; and

(b) it maintains the margin of solvency which it is required to maintain by virtue of that section.

(4) An incorporated friendly society falls within this subsection if--

(a) it carries on insurance business in the United Kingdom;

(b) section 48 below does not apply to it; and

(c) it maintains a margin of solvency of such amount as may be prescribed by or determined in accordance with regulations made for the purposes of this section.

(5) Once a society falls within subsection (3) or (4) above, it shall be treated as continuing to do so for the purposes of subsection (2) above unless the Commission serves a notice under subsection (6) below on it.

(6) Where it appears to the Commission that an incorporated friendly society has ceased to fall within subsection (3) or (4) above, it shall serve on the society a notice stating that fact.

(7) The powers of investment of a society on which a notice is served under subsection (6) above shall accordingly, until the notice is revoked under subsection (10) below, be limited to investment falling within subsection (1) above.

(8) A notice under subsection (6) above may direct a society to dispose of an investment which it could not have acquired except under subsection (2) above.

(9) Subject to subsection (8) above, a society may retain any investment which it could only have acquired under subsection (2) above.

(10) The Commission may, by a subsequent notice to the society, revoke a notice under this section at any time when it appears to it that the society again falls within subsection (3) or (4) above.

(11) On serving a notice under subsection (6) or (10) above on a society the Commission shall send a copy of it to the central office.

(12) The central office shall keep a copy of such a notice in the public file of the society.

15 Holding of land for purposes other than investment

An incorporated friendly society may acquire and hold land--

(a) for the purpose of carrying on any of its activities; or

(b) for the purpose of enabling a subsidiary of the society, or a body jointly controlled by it, to conduct its business;

and may dispose of, or otherwise deal with, any land so held by it.

16 Assistance to subsidiaries and jointly controlled bodies

(1) An incorporated friendly society may provide its subsidiaries or bodies which it jointly controls with any of the following services--

(a) loans of money, with or without security and whether or not at interest;

(b) the use of services or property, whether or not for payment;

(d) guarantees of the discharge of their liabilities.

(2) An incorporated friendly society may make payments towards the discharge of the liabilities of any of its subsidiaries.

17 Loans to assured members

(1) An incorporated friendly society may advance to a member of at least one full year's standing any sum not exceeding one half of the amount of an assurance of his life, on the written security of himself and two satisfactory sureties or, in Scotland, cautioners for repayment.

(2) The amount so advanced, with all interest on it, may be deducted from the sum assured, without prejudice in the meantime to the operation of the security.

(3) A person's membership of a registered friendly society before the society's incorporation is to be taken into account in calculating his standing for the purposes of this section.

Benefit terms

18 Terms on which benefits are available

(1) The terms on which an incorporated friendly society provides any benefit shall be--

(a) specified in its rules; or

(b) determined in a manner specified in its rules.

(2) If the terms on which a benefit is provided are not specified in the society's rules, the society--

(a) shall make copies of them available free of charge to members of the society at every office of the society; and

(b) shall send, free of charge, copies of them to any member of the society who demands them.

(3) If, on demand made of it under subsection (2) above, a society fails, in accordance with that subsection, to make available or, as the case may be, within 7 days of the demand, to send to a person a copy of the terms on which a benefit is provided, the society shall be guilty of an offence and liable on summary conviction to a fine not exceeding level 3 on the standard scale.

(4) Schedule 9 to this Act shall have effect in relation to nominations by members of incorporated friendly societies and related matters.

Dissolution and winding up

19 Modes of dissolution and winding up

(1) An incorporated friendly society--

(a) may be dissolved by consent of the members; or

(b) may be wound up voluntarily or by the court,

in accordance with this Part of this Act; and an incorporated friendly society may not, except where it is dissolved by virtue of section 85(4), 86(5) or 90(9) below, be dissolved or wound up in any other manner.

(2) An incorporated friendly society which is in the course of dissolution by consent, or is being wound up voluntarily, may be wound up by the court.

20 Dissolution by consent

(1) An incorporated friendly society may be dissolved by an instrument of dissolution.

(2) An instrument of dissolution shall only have effect if it is approved by special resolution.

(3) An instrument of dissolution shall set out--

(a) the liabilities and assets of the society in detail;

(b) the number of members, and the nature of their interests in the society;

(d) the intended appropriation or division of the funds and property of the society;

(e) the names of one or more persons to be appointed as trustees for the purposes of the dissolution, and their remuneration.

(4) An instrument of dissolution may be altered, but the alteration shall only have effect if it is approved by special resolution.

(5) The provisions of this Act shall continue to apply in relation to an incorporated friendly society as if the trustees appointed under the instrument of dissolution were the committee of management of the society.

(6) The trustees shall--

(a) within 15 days of the passing of a special resolution approving an instrument of dissolution, give notice to the central office of the fact and the date of commencement of the dissolution, enclosing a copy of the instrument; and

(b) within 15 days of the passing of a special resolution approving an alteration of such an instrument, give notice to the central office of the fact, enclosing a copy of the altered instrument;

and if the trustees fail to comply with this subsection, they shall each be guilty of an offence and liable on summary conviction to a fine not exceeding level 3 on the standard scale.

(7) An instrument of dissolution or an alteration to such an instrument shall be binding on all members of the society as from the date on which the copy of the instrument or altered instrument, as the case may be, is placed on the public file of the society under subsection (12) below.

(8) The trustees shall, within 28 days from the termination of the dissolution, give notice to the central office of the fact and the date of the termination, enclosing an account and balance sheet signed and certified by them as correct, and showing--

(a) the assets and liabilities of the society at the commencement of the dissolution; and

(b) the way in which those assets and liabilities have been applied and discharged.

(9) If the trustees fail to comply with subsection (8) above they shall each be guilty of an offence and liable on summary conviction--

(a) to a fine not exceeding level 2 on the standard scale; and

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

(10) Except with the consent of the Commission, no instrument of dissolution or alteration to such an instrument shall be of any effect if the purpose of the proposed dissolution or alteration is to effect or facilitate the transfer of the society's engagements to any other friendly society or to a company.

(11) Any provision in a resolution or document that members of an incorporated friendly society proposed to be dissolved shall accept membership of some other body in or towards satisfaction of their rights in the dissolution shall be conclusive evidence of such purpose as is mentioned in subsection (10) above.

(12) The central office shall keep in the public file of the society any notice or other document received by it under subsection (6) or (8) above and shall record in that file the date on which the notice or document is placed in it.

21 Voluntary winding up

(1) An incorporated friendly society may be wound up voluntarily under the applicable winding up legislation if it resolves by special resolution that it be wound up voluntarily.

(2) A copy of any special resolution passed for the voluntary winding up of an incorporated friendly society shall be sent by the society to the central office within 15 days after it is passed; and the central office shall keep the copy in the public file of the society.

(3) A copy of any such resolution shall be annexed to every copy of the memorandum or of the rules issued after the passing of the resolution.

(4) If an incorporated friendly society fails to comply with subsection (2) or (3) above, the society shall be guilty of an offence and liable on summary conviction to a fine not exceeding level 3 on the standard scale.

(5) For the purposes of this section, a liquidator of the society shall be treated as an officer of it.

22 Winding up by court: grounds and petitioners

(1) An incorporated friendly society may be wound up under the applicable winding up legislation by the court on any of the following grounds, that is to say, if--

(a) the society has by special resolution resolved that it be wound up by the court;

(b) the number of members is reduced below 7;

(d) the society has not commenced business within a year from its incorporation or has suspended its business for a whole year;

(e) the society exists for an illegal purpose;

(f) the society is unable to pay its debts; or

(g) the court is of the opinion that it is just and equitable that the society should be wound up.

(2) Except as provided by subsection (3) below or the applicable winding up legislation, a petition for the winding up of an incorporated friendly society may be presented by--

(a) the Commission;

(b) the society or its committee of management;

(d) any contributory or contributories,

or by all or any of those parties, together or separately.

(3) A contributory may not present a petition unless the number of members is reduced below 7 or he has been a contributory for at least six months before the winding up.

(4) In this section "contributory" has the meaning assigned to it by paragraph 9 of Schedule 10 to this Act.

23 Application of winding up legislation to incorporated friendly societies

(1) In this section "the companies winding up legislation" means the enactments applicable in relation to England and Wales, Scotland and Northern Ireland which are specified in paragraph 1 of Schedule 10 to this Act (including any enactment which creates an offence by any person arising out of acts or omissions occurring before the commencement of the winding up).

(2) In its application to the winding up of an incorporated friendly society, by virtue of section 21(1) or 22(1) above, the companies winding up legislation shall have effect with the modifications effected by Parts I to III of Schedule 10 to this Act; and the supplementary provisions of Part IV of that Schedule also have effect in relation to such a winding up and in relation to a dissolution by consent.

(3) In section 21 and 22 above "the applicable winding up legislation" means the companies winding up legislation as so modified.

24 Continuation of long term business

(1) This section has effect in relation to the winding up of an incorporated friendly society which carries on long term business (including any reinsurance business).

(2) The liquidator shall, unless the court otherwise orders, carry on the long term business of the society with a view to its being transferred as a going concern under this Act; and, in carrying on that business, the liquidator may agree to the variation of any contracts of insurance in existence when the winding up order is made but shall not effect any new contracts of insurance.

(3) If the liquidator is satisfied that the interests of the creditors in respect of liabilities of the society attributable to its long term business require the appointment of a special manager of the society's long term business, he may apply to the court, and the court may on such application appoint a special manager of that business to act during such time as the court may direct, with such powers (including any of the powers of a receiver or manager) as may be entrusted to him by the court.

(4) Section 177(5) of the [1986 c. 45.] Insolvency Act 1986 or, as the case may be, Article 151 of the [S.I.1989/2405 (N.I.19).] Insolvency (Northern Ireland) Order 1989 shall apply to a special manager appointed under subsection (3) above as it applies to a special manager appointed under that section or that Article.

(5) The court may, if it thinks fit and subject to such conditions (if any) as it may determine, reduce the amount of the contracts made by the society in the course of carrying on its long term business.

(6) The court may, on the application of the liquidator, a special manager appointed under subsection (3) above or the Commission appoint an independent actuary to investigate the long term business of the society and to report to the liquidator, the special manager or the Commission, as the case may be, on the desirability or otherwise of that business being continued and on any reduction in the contracts made in the course of carrying on that business that may be necessary for its successful continuation.

25 Power of court to declare dissolution void

(1) Where an incorporated friendly society has been dissolved under section 20 above or following a winding up, the court may, at any time within 12 years after the date on which the society was dissolved, make an order under this section declaring the dissolution to have been void.

(2) An order under this section may be made, on such terms as the court thinks fit, on an application by the trustees under section 20 above or the liquidator, as the case may be, or by any other person appearing to the court to be interested.

(3) When an order under this section is made, such proceedings may be taken as might have been taken if the society had not been dissolved.

(4) The person on whose application the order is made shall, within 7 days of its being so made, or such further time as the court may allow, furnish the central office with a copy of the order; and the central office shall keep the copy in the public file of the society.

(5) If a person fails to comply with subsection (4) above, he shall be guilty of an offence and liable on summary conviction--

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

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

(6) In this section "the court" means--

(a) in relation to a society whose registered office is in England and Wales, the High Court;

(b) in relation to a society whose registered office is in Scotland, the Court of Session; and

26 Cancellation of registration

(1) Where the central office is satisfied that an incorporated friendly society has been dissolved under section 20 above or following a winding up, the central office shall cancel the society's registration under this Act.

(2) Where the central office is satisfied, with respect to an incorporated friendly society--

(a) that a certificate of incorporation has been obtained for the society by fraud or mistake; or

(b) that the society has ceased to exist,

the central office may cancel the registration of the society.

(3) Without prejudice to subsection (2) above, the central office may, if it thinks fit, cancel the registration of an incorporated friendly society at the request of the society, evidenced in such manner as the central office may direct.

(4) Before cancelling the registration of an incorporated friendly society under subsection (2) above, the central office shall give to the society not less than two months' previous notice, specifying briefly the grounds of the proposed cancellation.

(5) Where the registration of an incorporated friendly society is cancelled under subsection (2) above, the society may appeal--

(a) where the registered office of the society is situated in England and Wales, to the High Court;

(b) where that office is situated in Scotland, to the Court of Session; or

and on any such appeal the court may, if it thinks it just to do so, set aside the cancellation.

(6) Where the registration of a society is cancelled under subsection (2) or (3) above, then, subject to the right of appeal under subsection (5) above, the society, so far as it continues to exist, shall cease to be a society incorporated under this Act.

(7) Subsection (6) above shall not affect any liability actually incurred by an incorporated friendly society; and any such liability may be enforced against the society as if the cancellation had not taken place.

(8) Any cancellation of the registration of an incorporated friendly society under this section shall be effected in writing signed by the central office.

(9) As soon as practicable after the cancellation of the registration of an incorporated friendly society under this section the central office shall cause notice thereof to be published in the London Gazette, the Edinburgh Gazette or the Belfast Gazette according to the situation of the society's registered office, and if it thinks fit, in one or more newspapers.

Part III Management and Administration

Committee of management and other officers

27 Committee of management

(1) Every friendly society shall have a committee of management with at least 2 members.

(2) The committee of management shall appoint one of its members to be chairman of the committee.

(3) Members of the committee of management shall (unless co-opted on to the committee) be elected to office in accordance with the rules of the society.

(4) The committee of management may co-opt as a member of the committee (whether as an additional member or to fill any vacancy) any person--

(a) who appears to the committee to be fit and proper to be a member, and

(b) who has not failed, having been nominated at an election held within the preceding 12 months, to be elected as a member of the committee;

and such a person may be co-opted notwithstanding that he is not a member of the society.

(5) Part I of Schedule 11 to this Act shall have effect in relation to committees of management and Part II shall have effect with regard to dealings with members of committees of management of friendly societies and registered branches.

28 Chief executive and secretary

(1) Every friendly society shall have a chief executive and a secretary.

(2) The chief executive of a friendly society shall be a person appointed by the committee of management who (whether alone or jointly with one or more other persons) is responsible under the immediate authority of the committee for the conduct of the business of the society.

(3) The secretary of a friendly society shall be appointed by the committee of management or, if the rules of the society so provide, elected to office in accordance with the rules.

(4) The committee of management of a friendly society shall take all reasonable steps to secure that the person appointed as chief executive has the requisite knowledge and experience to discharge the functions of his office.

(5) The offices of chief executive and secretary may be held by the same person.

(6) Anything required or authorised to be done by or to the secretary or chief executive of a friendly society may, if the office is vacant or there is for any other reason no secretary or chief executive capable of acting, be done by or to--

(a) any assistant or deputy secretary or assistant or deputy chief executive, as the case may be; or

(b) if there is no assistant or deputy capable of acting, any member of the society's staff who is authorised generally or specially for that purpose by the committee of management.

29 Notification of officers to central office

(1) Where a person becomes or ceases to be a member of the committee of management of a friendly society, the society shall within one month give notice of that fact, including the information specified in subsection (2) below, to the central office.

(2) The notice shall state the person's full name and address and the date on which he became, or ceased to be, a member of the committee and, in the case of a person becoming a member, the date of his birth.

(3) Where a person becomes or ceases to be the chief executive or the secretary of a friendly society, the society shall within one month give notice of that fact to the central office, stating the person's full name and address and the date on which he became, or ceased to be, chief executive or secretary.

(4) If a friendly society fails to comply with subsection (1) or (3) above, it shall be guilty of an offence and liable on summary conviction to a fine not exceeding level 4 on the standard scale.

(5) On receipt of a notice under this section, the central office shall record the name of the person to whom the notice relates and the date on which he began to hold, or, as the case may be, ceased to hold office, in the public file of the society.

Meetings and resolutions

30 Meetings and resolutions

Schedule 12 to this Act shall have effect with respect to meetings and resolutions of friendly societies and registered branches.

Part IV Authorisation of Friendly Societies' Business

Restriction on carrying on unauthorised business

31 Restriction on carrying on unauthorised insurance or non-insurance business

(1) Subject to subsections (2) and (3) below, a friendly society shall not carry on in the United Kingdom any insurance business or non-insurance business unless it is authorised by the Commission to do so.

(2) A friendly society which--

(a) carried on, before the commencement of this section--

(i) insurance business of any description that did not require to be authorised under the 1987 Regulations; or

(ii) non-insurance business of any description; and

(b) is not authorised by the Commission to carry on business of that description after that commencement,

may carry on without authorisation business of that description consisting of the carrying out of contracts effected by the society before that commencement.

(3) A friendly society may without authorisation effect an insurance contract, or a contract for non-insurance benefits, in pursuance of a term in a subsisting contract which the society may, by virtue of subsection (2) above, carry out without authorisation.

(4) A friendly society which carries on any business in contravention of subsection (1) above shall be guilty of an offence and liable--

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

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

Authorisation to carry on business

32 Grant of authorisation by Commission: general

(1) The Commission may, subject to this Part of this Act, authorise friendly societies to carry on in the United Kingdom any class, or any part of a class, of insurance business and any description of non-insurance business.

(2) Where, on an application duly made under this section or section 33 below, the Commission determines to grant authorisation to a friendly society, it shall do so in writing in terms specifying--

(a) each class of insurance business,

(b) in relation to any class of such business the whole of which is not covered, each part of the class, and

the carrying on of which is covered by the authorisation.

(3) Authorisation may be restricted to industrial assurance business; and a friendly society is not authorised to carry on industrial assurance business unless the terms of its authorisation expressly specify such business.

(4) Authorisation entitles a friendly society to carry on business anywhere in the United Kingdom unless, at the request of the society, the terms of its authorisation are expressly restricted to a part of the United Kingdom.

(5) Authorisation may be granted to a friendly society unconditionally or subject to written conditions to be complied with by the society as provided by section 34 below.

(6) Schedule 13 to this Act shall have effect in relation to the making and determination of applications for authorisation, the imposition of conditions and the withdrawal of authorisation.

(7) An authorisation granted to a friendly society by the Chief Registrar under regulation 5 or 6 of the 1987 Regulations which is in force immediately before the commencement of section 31 above shall have effect as if it were an authorisation granted by the Commission under this section which authorised the society to carry on insurance business of such classes (or such parts of classes) as correspond to the business specified in the authorisation.

(8) Where an application for authorisation under the 1987 Regulations has not been decided before the commencement of subsection (1) above, the Chief Registrar shall send to the Commission the information submitted by the society or otherwise received by him in relation to the application; and the application shall be treated as being an application under this section.

(9) In this Part of this Act "authorisation" (except where the context otherwise requires) means an authorisation which is granted by the Commission under this section or deemed by this section to have been so granted; and "authorise" and "authorised" shall be construed accordingly.

33 Applications from certain existing friendly societies

(1) A friendly society which--

(a) is not authorised and has not made any previous application for authorisation;

(b) was, before the commencement of section 32 above, carrying on in the United Kingdom any insurance or non-insurance business; and

(c) was, immediately before that commencement, neither required to be authorised under the 1987 Regulations nor subject to an order under section 88(1) of the 1974 Act (power of Chief Registrar to suspend business of friendly societies);

may apply under this section for authorisation to continue to carry on any business it was carrying on before that commencement.

(2) If the Commission is satisfied, on an application duly made under this section--

(a) that it has received adequate information about the society; and

(b) that there is no reason to believe that the interests of the members of the society require refusal of the application;

it shall, subject to section 37 below, authorise the society to carry on any class (or part of a class) of insurance business, and any description of non-insurance business, which corresponds to any business carried on by the society immediately before the commencement of section 32 above.

34 Grant of unconditional or conditional authorisation

(1) On an application duly made by a friendly society ("the society"), the Commission shall, subject to section 37 below, grant unconditional or conditional authorisation, or refuse to grant authorisation, in accordance with the following provisions of this section.

(2) The Commission shall grant unconditional authorisation if it is satisfied that--

(a) the chairman of the committee of management, the secretary and the chief executive of the society are each fit and proper persons to hold their respective offices;

(b) the members of the committee of management, with the secretary and chief executive, have the capacity and intention to direct the affairs of the society in accordance with the criteria of prudent management;

(c) the society is likely to comply with any requirements of this Act which relate to the business to be covered by the authorisation; and

(d) the interests of the members of the society will be adequately protected without the imposition of conditions.

(3) Subject to subsection (4) below, if the Commission is not satisfied as mentioned in subsection (2) above, it shall refuse to grant authorisation.

(4) Where the Commission is not satisfied as mentioned in subsection (2)(b), (c) and (d) above but is satisfied that the imposition of conditions will secure--

(a) the direction of the affairs of the society in accordance with the criteria of prudent management;

(b) the likelihood of compliance by the society with any requirements of this Act which relate to the business to be covered by the authorisation; and

it shall grant authorisation subject to such conditions as it thinks fit for securing those objects.

Pages: P.1 | P.2 | P.3 | P.4 | P.5 | P.6 | P.7 | P.8 | P.9 | P.10 | P.11 | P.12 | P.13 | P.14 | P.15 | P.16

-- Back --

Stat