FRIENDLY SOCIETIES ACT 1992 (c. 40)

(The document as of February, 2008)

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(3) Every copy of the auditors' report which is laid before the society or branch in general meeting, sent to the Commission or the central office or is otherwise circulated, published or issued shall state the names of the auditors.

(4) If a copy of the auditors' report--

(a) is laid before the society or branch, sent to the Commission or central office or otherwise circulated, published or issued, without the required statement of the auditors' names; or

(b) is sent to the Commission or the central office without being signed as required by this section,

the society or branch and every officer of it who is in default is guilty of an offence and liable on conviction on indictment to a fine.

(5) References in this section to signature by the auditors are, where the office of auditor is held by a body corporate or partnership, to signature in the name of the body corporate or partnership by a person authorised to sign on its behalf.

75 Auditors' rights to information and to attend meetings

(1) The auditors of a friendly society are entitled--

(a) to access at all times to the books, accounts and vouchers of the society;

(b) to require from the officers of the society such information and explanations as they think necessary for the performance of their duties as auditors;

(i) notice of any general meeting of the society and of any matter relating to the business of such a meeting of which notice is given (by whatever means) to the society's members; and

(ii) copies of any communications sent to the society's members with respect to any such meeting; and

(d) to attend any general meeting of the society and to be heard on any part of the business of the meeting which concerns them as auditors;

and the auditors of a registered branch have the corresponding rights to those specified in paragraphs (a) to (d) above, with the substitution for references to the society of references to the branch.

(2) The right to attend or be heard at a meeting is exercisable in the case of a body corporate or partnership by an individual authorised by it in writing to act as its representative at the meeting.

(3) An officer of a friendly society is guilty of an offence if he knowingly or recklessly makes to the society's auditors a statement (whether written or oral) which--

(a) conveys or purports to convey any information or explanations which the auditors require, or are entitled to require, as auditors of the society; and

(b) is misleading, false or deceptive in a material particular.

(4) An officer of a registered branch is guilty of an offence if he knowingly or recklessly makes to the auditors of the branch a statement (whether written or oral) which--

(a) conveys or purports to convey any information or explanations which the auditors require, or are entitled to require, as auditors of the branch; and

(b) is misleading, false or deceptive in a material particular.

(5) A person guilty of an offence under subsection (3) or (4) above is liable --

(a) on conviction on indictment, to imprisonment for a term not exceeding 2 years, or to a fine, or to both; and

(b) on summary conviction, to imprisonment for a term not exceeding 6 months or to a fine not exceeding the statutory maximum, or to both.

(6) It shall be the duty of a subsidiary of a friendly society which is--

(a) a company within the meaning of the [1985 c. 6.] Companies Act 1985 incorporated in Great Britain; or

(b) a company within the meaning of the [S.I. 1986/1032 (N.I.6).] Companies (Northern Ireland) Order 1986 incorporated in Northern Ireland,

and of the auditors of such a subsidiary to give to the auditors of the society such information and explanations as those auditors may reasonably require for the purposes of their duties as auditors of that society.

(7) If--

(a) a subsidiary to which subsection (6) above applies fails to comply with that subsection; or

(b) an auditor of such a subsidiary fails without reasonable excuse to comply with that subsection,

the subsidiary or auditor is guilty of an offence and liable on summary conviction to a fine not exceeding level 5 on the standard scale.

(8) An incorporated friendly society having a subsidiary to which subsection (6) above does not apply shall, if required by its auditors to do so, take all such steps as are reasonably open to it to obtain from the subsidiary such information and explanations as they may reasonably require for the purposes of their duties as auditors of that society.

(9) If an incorporated friendly society fails to comply with subsection (8) above, it is guilty of an offence and liable on summary conviction to a fine not exceeding level 5 on the standard scale.

76 Approval and signing of accounts

(1) The annual accounts of a friendly society or a registered branch shall be approved by the committee of management.

(2) The accounts so approved shall be signed by the secretary of the society or branch; and the signature shall be on the balance sheet.

(3) Every copy of the balance sheet which is laid before the society or branch in general meeting, or is otherwise circulated, published or issued, shall state the name of the secretary of the society or branch.

(4) The copy of the balance sheet of a friendly society or a registered branch which is sent to the Commission or to the central office under section 78 below shall be signed by the secretary of the society or branch.

(5) If annual accounts of a society or branch are approved which do not comply with the requirements of this Act, every member of the committee of management who is party to their approval and who knows that they do not comply or is reckless as to whether they comply is guilty of an offence and liable on summary conviction to a fine not exceeding level 5 on the standard scale.

For this purpose every member of the committee at the time the accounts are approved shall be taken to be a party to their approval unless he shows that he took all reasonable steps to prevent their being approved.

(6) If a copy of the balance sheet of a society or branch--

(a) is laid before the society or branch, or otherwise circulated, published or issued, without the balance sheet having been signed as required by this section or without the required statement of the signatory's name being included; or

(b) is sent to the Commission or to the central office without being signed as required by this section,

the society or branch and every officer of it who is in default is guilty of an offence and liable on summary conviction to a fine not exceeding level 3 on the standard scale.

77 Information on appointed actuary to be annexed to balance sheet

(1) This section applies to any copy of a friendly society's balance sheet which--

(a) is furnished to the Commission or the central office under section 78 below or at its or their request;

(b) is laid before the society at its annual general meeting; or

(2) Subject to the provisions of this section, a friendly society shall annex to each copy of its balance sheet to which this section applies as respects every person who, at any time during the financial year to which the balance sheet relates, was its appointed actuary, a statement of the following information--

(a) whether the actuary was a member of the society or any subsidiary of the society at any time during that year;

(b) particulars of any pecuniary interest of the actuary in any transaction between the actuary and the society or any subsidiary of the society and subsisting at any time during that year or, in the case of transactions of a minor character, a general description of such interests;

(c) the aggregate amount of any remuneration and the value of any other benefits other than a pension or other future or contingent benefit under any contract of service of the actuary with, or contract for services by the actuary to, the society or any subsidiary of the society, receivable by the actuary in respect of any period in that year; and

(d) a general description of any other pecuniary benefit (including any pension and other future contingent benefit) received by the actuary from the society or any subsidiary of the society in that year or receivable by him from the society or any such subsidiary,

together with a statement that the society has made a request to the actuary to furnish to it the particulars specified in this subsection and identifying any particulars furnished pursuant to the request.

(3) Subsection (2) above applies in relation--

(a) to the actuary's spouse;

(b) to a partner of the actuary;

(d) to any person (other than the society concerned or any subsidiary of that society) of whom the actuary is an employee; and

(e) to any body corporate (other than the society concerned or any subsidiary of that society) of which the actuary is a director or which is controlled by him,

as it applies in relation to the actuary.

(4) For the purposes of subsection (3) above, an actuary shall be taken to control a body corporate if he is a person--

(a) in accordance with whose directions or instructions the directors of that body corporate or of a body corporate of which it is a subsidiary are accustomed to act; or

(b) who, either alone or with any other person falling within that subsection, is entitled to exercise or controls the exercise of, one-third or more of the voting power at any general meeting of the body corporate or of a body corporate of which it is a subsidiary.

(5) If a friendly society fails to annex the statement required by subsection (2) above to a copy of its balance sheet to which this section applies, the society concerned shall be guilty of an offence and liable on summary conviction to a fine not exceeding level 3 on the standard scale.

Laying and furnishing of accounts and reports

78 Laying and furnishing of accounts and reports

(1) The committee of management of a friendly society shall in each year--

(a) lay before the society at the annual general meeting; and

(b) send to the Commission and to the central office not later than 30th June or 14 days before that meeting, whichever is earlier,

copies of the annual accounts for the last financial year, the report of the committee of management for that year and the auditors' report on those accounts.

(2) The committee of management of a registered branch shall in each year--

(a) lay before the branch at the annual general meeting; and

(b) send to the Commission and to the central office not later than 30th June or 14 days before that meeting, whichever is earlier,

copies of the annual accounts for the last financial year and the auditors' report on those accounts.

(3) Every friendly society shall, as from the date by which at the latest its committee of management is required by subsection (1) above to send them to the Commission--

(a) make copies of the annual accounts, the report of the committee of management and the auditors' report available free of charge to members of the society at every office of the society; and

(b) send, free of charge, copies of those documents to any member of the society who demands them;

and that duty shall cease, as respects those accounts, when the society comes to be under the same duty in respect of the accounts for the next financial year.

(4) Every registered branch shall, as from the date by which at the latest its committee of management is required by subsection (2) above to send them to the Commission--

(a) make copies of the annual accounts and the auditors' report available free of charge to members of the branch at every office of the branch; and

(b) send, free of charge, copies of those documents to any member of the branch who demands them;

and that duty shall cease, as respects those accounts, when the branch comes to be under the same duty in respect of the accounts for the next financial year.

(5) If default is made in complying with subsection (1) or (2) above, every person who was a member of the committee of management of the society or, as the case may be, the branch, at any time during the relevant period shall be guilty of an offence and liable on summary conviction--

(a) to a fine not exceeding level 5 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) If, on demand made of it under subsection (3) or (4) above, a friendly society or registered branch 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 annual accounts, the society or branch 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.

(7) In subsection (5) above "the relevant period" means the period beginning at the end of the last financial year and ending with the date which falls 14 days before the annual general meeting following the end of that year.

(8) The central office shall keep the copies of documents received by it from a friendly society under subsection (1) above in the public file of the society.

79 Auditors' duties to Commission and related rights

(1) The auditors of a friendly society shall, unless they are exempt from the requirements of this section, make a report to the Commission, as respects each financial year of the society, on the conduct of the activities of the society in that year in relation to the matters specified in subsection (2) below.

(2) The auditors' report shall deal with--

(a) the accounting records kept by the society under section 68 above; and

(b) the systems of control of its business and records and of inspection and report maintained under that section.

(3) The report shall state the auditors' opinion as respects the matters specified in subsection (2) above as follows, that is to say--

(a) as regards the accounting records of the society, whether or not they comply with the requirements of section 68 above and, if not, specifying each requirement not complied with and the respects in which it was not complied with;

(b) as regards the system of control of its business and records, whether or not the system complies with the requirements of section 68 above and, if not, specifying each requirement not complied with and the respects in which it was not complied with;

(c) as regards the system of inspection and report, whether or not the system complies with the requirements of section 68 above and, if not, specifying each requirement not complied with and the respects in which it was not complied with.

(4) Where an incorporated friendly society had, at any time during the year to which the report relates, subsidiaries or jointly controlled other bodies, the auditors' report shall deal also with and contain corresponding statements of their opinion as to compliance with the requirements of section 68 above in its application to incorporated friendly societies having subsidiaries or jointly controlling other bodies.

(5) The auditors of a friendly society shall send their report under this section to the society and, subject to subsection (6) below, shall do so within the period of 6 months beginning with the end of the financial year to which it relates, and the society shall, within the period of 9 months so beginning, send the report to the Commission together with such comments as the committee of management thinks fit to make.

(6) A friendly society may allow its auditors a longer period in which to send their report than that specified in subsection (5) above, but not so as to prevent the society from complying with the duty imposed on it by that subsection as regards the Commission.

(7) If the committee of management of a friendly society makes any comments to the Commission under subsection (5) above, the committee shall cause a copy of the comments to be sent to the auditors before they send them to the Commission with the report under that subsection.

(8) The auditors of a friendly society, if they are satisfied that it is expedient to do so in order to protect the interests of members of the society or if they are requested to do so by the Commission on its being so satisfied, shall be entitled, notwithstanding any obligation of confidence incumbent on them and whether or not to do so would be contrary to the interests of the society, to furnish information to the Commission relating to the conduct of the activities of the society or, in the case of an incorporated friendly society, the business of any of its subsidiaries or any body of which it has joint control.

(9) The Treasury may by order impose on the auditors of friendly societies an obligation to furnish to the Commission, in such circumstances as may be prescribed in the order, relevant information available to them of such descriptions as may be prescribed in the order; and it shall be the duty of any auditor to furnish information to which the obligation extends notwithstanding any obligation of confidence incumbent on him.

(10) In subsection (9) above, "relevant information" means information relating to the conduct of the business of friendly societies or their subsidiaries or bodies of which they have joint control.

(11) Subject to subsection (12) below, the auditors of a friendly society are exempt from the requirements of this section if the auditors of that society do not need to be members of a recognised supervisory body.

(12) The Commission may direct that the auditors of a society specified in the direction whose auditors would otherwise be exempt from the requirements of this section shall not be exempt from those requirements.

Part VII Disputes

Disputes relating to friendly societies

80 Determination of certain disputes by arbitration

(1) Subject to the following provisions of this section, any dispute between--

(a) a member or person claiming through a member or under the rules of a friendly society or registered branch and the society or branch;

(b) a person aggrieved who has ceased to be a member of a friendly society or registered branch, or a person claiming through such a person, and the society or branch or an officer of the society or branch;

(d) an officer of a registered branch and the society of which it is a registered branch; or

(e) two or more registered branches, or any of their officers,

shall be determined by arbitration in the manner directed by the rules of the society or branch.

(2) An application for the enforcement of an award on an arbitration under this section may be made to the county court.

(3) An award made in such an arbitration shall, in Scotland--

(a) subject to subsection (4) below, be final; and

(b) be enforceable as if it were an extract registered decree arbitral bearing a warrant for execution issued by the sheriff.

(4) An arbiter who has made an award in an arbitration under this section shall, on the application of a party to such arbitration, state a case for the opinion of the Court of Session on any question of law.

(5) If the parties to a dispute of a description specified in subsection (1) above agree that it shall be determined by the county court or, in Scotland, the sheriff, it may be so determined instead of being determined by arbitration under this section.

(6) If--

(a) a party to a dispute of a description specified in subsection (1) above applies to the society or branch in accordance with the rules for determination of the dispute by arbitration;

(b) no such determination has been made within the period of 40 days beginning with the day on which the application was made; and

the dispute may be so determined.

(7) If the society has registered branches--

(a) the period of 40 days shall not begin to run until application has been made in succession to all the bodies entitled to determine the dispute by arbitration in accordance with the rules; but

(b) the rules may not require a greater delay than 3 months between each successive determination by such a body.

(8) In this section "dispute"--

(a) includes any dispute arising on the question whether a member or person aggrieved is entitled to be, or to continue to be, a member or to be reinstated as a member; but

(b) in the case of a person who has ceased to be a member does not (except as provided in paragraph (a) above) include any dispute other than one on a question which arose while he was a member, or arises out of his membership; and

(c) does not include a dispute between parties mentioned in subsection (1)(a) or (b) above which has arisen as a result of and incidentally to a dispute between a member, or person aggrieved who has ceased to be a member and a person claiming through him or under the rules of a society or branch.

81 Complaints by members of friendly societies

(1) Nothing in section 80 above shall affect the power of a friendly society or registered branch--

(a) to establish internal procedures for the resolution of complaints; or

(b) to make, to join with any other persons in making, or to accede to, schemes for the investigation and settlement by an adjudicator of complaints;

but a society or branch may not prevent a member from referring any dispute to arbitration under that section by purporting to require instead the making of a complaint or the acceptance of any determination of a complaint.

(2) The Commission shall have the function of promoting the establishment by friendly societies and registered branches of--

(a) internal complaints procedures; and

(b) schemes for the investigation and settlement of complaints;

and, in particular, the Commission may issue such guidance on those matters to friendly societies and registered branches as it thinks fit.

(3) In this section--

"accede", in relation to a scheme, means assume the obligations and rights of membership of the scheme;
"complaint" includes any complaint made by a member about action of a friendly society or branch which constitutes (in relation to that member) unfair treatment, maladministration or breach of any contractual or other duty and causes him pecuniary loss or inconvenience;
"member" in relation to a friendly society or branch includes any person who is or was a member of the society or branch or is claiming through a member or under the rules; and
"action" includes omissions.

82 Disputes arising out of loans of surplus funds to societies of different description

(1) Where--

(a) a registered friendly society or a registered branch ("the lender") has made or agreed to make advances under section 50 of the 1974 Act to another society or branch ("the borrower"); and

(b) the lender is by reason of this empowered by the rules of the borrower to take part in the government or control of the borrower,

subject to subsection (3) below, section 80 above shall apply in relation to the determination of a dispute between the lender and the borrower relating to such an advance or agreement or to the rights of the lender or an officer of the lender under the rules of the borrower, as if the borrower were a branch of the lender.

(2) In the application of section 80 above to any such dispute, references in that section to the rules of the society are references to the rules of the borrower.

(3) Section 80 above shall not prevent the bringing of legal proceedings for the determination of any such dispute unless, before the commencement of the proceedings, application has been made for a reference under the rules of the borrower.

(4) Proceedings for the determination of any such dispute may be brought in a county court or, in Scotland, before the sheriff, whether or not the court would apart from this subsection have jurisdiction to entertain them.

(5) The reference in subsection (1) above to advances under section 50 of the 1974 Act includes, in the case of a society formerly registered in Northern Ireland, a reference to advances made under section 42 of the [1970 c. 31 (N.I.).] Friendly Societies Act (Northern Ireland) 1970.

Disputes relating to industrial and provident societies

83 Disputes relating to industrial and provident societies

The following subsection shall be substituted for subsection (2) of section 60 of the [1965 c. 12.] Industrial and Provident Societies Act 1965 (decision of dispute)--

" (2) The county court or, in Scotland, the sheriff may determine a dispute in a registered society if--

(a) both parties to the dispute consent; or

(b) the rules of the society concerned contain no directions as to disputes. " .

Disputes under National Savings Bank Act 1971 and National Debt Act 1972

84 Disputes under the National Savings Bank Act 1971 and National Debt Act 1972

(1) The jurisdiction as to disputes such as are mentioned--

(a) in subsection (1) of section 10 of the [1971 c. 29.] National Savings Bank Act 1971 (disputes between the Director of Savings and depositors etc); and

(b) in subsection (1) of section 5 of the [1972 c. 65.] National Debt Act 1972 (disputes between the Director and the holder of any stock registered in the National Savings Stock Register or a person claiming to be entitled to any such stock),

shall be exercisable by a person ("the adjudicator") appointed by the Treasury.

(2) The adjudicator shall be a person who--

(a) has a seven year general qualification, within the meaning of the [1990 c. 41.] Courts and Legal Services Act 1990;

(b) is an advocate or solicitor in Scotland of at least seven years' standing; or

(c) is a member of the bar of Northern Ireland or solicitor of the Supreme Court of Northern Ireland of at least seven years' standing.

(3) Subject to subsections (4) and (5) below, the adjudicator shall hold and vacate office in accordance with the terms of his appointment.

(4) A person may at any time resign office as adjudicator by giving the Treasury a signed notice stating that he resigns that office.

(5) The adjudicator may be removed from office by the Chancellor of the Exchequer on the ground of incapacity or misbehaviour.

(6) The Treasury may pay, or make such payments towards the provision of, such remuneration, pensions, allowances or gratuities to the adjudicator as the Treasury may determine.

(7) The Chancellor of the Exchequer may appoint for the adjudicator such staff as he thinks fit with such remuneration and other terms and conditions of service as he thinks fit.

(8) Payments under this section shall be made out of money provided by Parliament.

Part VIII Amalgamations, Transfers of Engagements and Conversion of Friendly Societies into Companies

Amalgamations

85 Amalgamation of friendly societies

(1) Any two or more friendly societies may, in accordance with this Part of this Act, amalgamate by establishing an incorporated friendly society as their successor.

(2) In order to establish a society as their successor, friendly societies proposing to amalgamate must--

(a) comply with the applicable requirements of Part I of Schedule 15 to this Act;

(b) take the steps required by paragraph 1(2) of Schedule 3 to this Act;

(d) obtain the confirmation of the Commission of the amalgamation;

and, on obtaining that confirmation, the successor may be registered and incorporated under this Act.

(3) If the Commission confirms the amalgamation and the successor society is registered under this Act, the certificate of incorporation issued by the central office shall specify a date as the transfer date for that amalgamation.

(4) On the transfer date--

(a) all the property, rights and liabilities of each society participating in the amalgamation shall become by virtue of this subsection the property, rights and liabilities of the successor society; and

(b) each such society shall be dissolved;

but the transfer from each such society effected by paragraph (a) above shall be deemed to have been effected immediately before the dissolution of that society.

(5) Where a friendly society is dissolved by subsection (4)(b) above, its registration under this Act or the 1974 Act shall be cancelled by the central office.

(6) Schedule 15 to this Act has effect for supplementing this section.

Transfers of engagements

86 Transfer of engagements by or to friendly society

(1) A friendly society may, in accordance with this Part of this Act, transfer its engagements to any extent to any of the following persons, that is to say--

(a) to another friendly society;

(b) to an industrial and provident society;

(c) to 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 incorporated in Great Britain or Northern Ireland;

(d) in relation to engagements the fulfilment of which will constitute the carrying on of insurance business, to any other person who is an insurance company (within the meaning of the [1982 c. 50.] Insurance Companies Act 1982);

(e) in relation to engagements the fulfilment of which will not constitute the carrying on of insurance business, to a person (or body of persons) who is not of a description specified in paragraph (a), (b) or (c) above.

(2) A friendly society, in order to transfer any of its engagements, must--

(a) comply with the applicable requirements of Part I of Schedule 15 to this Act;

(b) resolve to transfer the engagements by special resolution;

(d) record the extent of the transfer as so resolved in an instrument of transfer of engagements; and

(e) obtain the confirmation of the Commission of the transfer;

and, on obtaining that confirmation, the instrument of transfer of engagements may be registered under subsection (4) below.

(3) Where it is proposed to transfer the engagements of one friendly society to another friendly society, the proposed transferee, in order to undertake to fulfil them, must--

(a) comply with the applicable requirements of Part I of Schedule 15 to this Act and, if required, with sections 87 and 88 below; and

(b) resolve to undertake to fulfil the engagements by special resolution or, if the Commission consents to that mode of proceeding, by resolution of the committee of management.

(4) Where the Commission confirms a transfer of engagements, the central office shall, on the application of the society proposing to transfer them and the proposed transferee--

(a) register a copy of the instrument of transfer of engagements; and

(b) issue a registration certificate to the transferee,

and a registration certificate shall specify a date as the transfer date for that transfer.

(5) On the transfer date--

(a) the property, rights and liabilities of the society transferring its engagements shall by virtue of this subsection become, to the extent provided in the instrument of transfer of engagements, the property, rights and liabilities of the transferee; and

(b) if the transfer is of all the society's engagements, the society shall be dissolved;

but the transfer shall be deemed to have been effected immediately before any such dissolution.

(6) The central office shall keep a copy of the instrument and of the registration certificate issued under subsection (4) above--

(a) where the transferee is a friendly society, in the public file of that society;

(b) in any other case, in the public file of the society transferring the engagements.

(7) Where a friendly society is dissolved by subsection (5)(b) above, its registration under this Act or the 1974 Act shall be cancelled by the central office.

(8) Where it is proposed that any engagements of a person other than a friendly society should be transferred to a friendly society, the proposed transferee, in order to undertake to fulfil them, must resolve to do so by special resolution.

(9) For the purposes of this section--

(a) an "affected members' resolution" is a resolution approving a transfer of engagements which is passed by the appropriate majority of those members whose contracts with the society are included in the transfer and who are entitled to vote on the resolution; and

(b) the "appropriate majority" means a majority consisting of not less than three quarters of those who vote on the resolution (in person or by proxy) at a meeting of the society or in a postal ballot;

and sub-paragraphs (1)(b) and (c), (4), (5) and (6) of paragraph 7 of Schedule 12 to this Act shall apply to an affected members' resolution as they apply to a special resolution.

(10) Delegate voting may not take place on an affected members' resolution; and where the rules of a friendly society provide for delegate voting on any matter, they must provide for voting by individual members on such resolutions.

(11) Schedule 15 to this Act has effect for supplementing this section.

87 Actuary's report as to margin of solvency

(1) This section applies where a friendly society ("the transferor") proposes to transfer any of its engagements under section 86 above to another friendly society ("the transferee").

(2) Where--

(a) the fulfilment of any of the engagements to be transferred will constitute the carrying on of insurance business in the United Kingdom, and

(b) the transferee will, after taking the proposed transfer into account, be under a duty to maintain the margin of solvency required by section 48 above;,

the transferee shall furnish the Commission with a report by the appropriate actuary as to whether it will immediately after the proposed transfer, possess that margin of solvency.

(3) Where--

(a) the fulfilment of any of the engagements will constitute the carrying on of long-term business, and

(b) a report is not required to be furnished under subsection (2) above,

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