Legalize / United Kingdom / Public General Act

Building Societies Act 1986

Type Public General Act

Publication 1986-07-25

Last updated 2025-01-06

State In force

Department Statute Law Database

Source legislation.gov.uk

articles 16

Reform history JSON API

(i) the publication of the accounts on a web site,

(ii) the address of that web site, and

(iii) the place on that web site where the accounts may be accessed, and how they may be accessed; and

(d) the accounts are published on that web site throughout the period beginning on the date on which the member or depositor is notified in accordance with paragraph (c) and ending with the conclusion of the annual general meeting at which the accounts are to be considered.

(4) If default is made in complying with subsection (1) or (2) above, every person who was a director at any time during the relevant period shall be 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 £200 for every day during which the offence continues.

(5) If, on demand made of it under subsection (3) above, a building society fails, in accordance with that subsection, to make available or, as the case may be, within seven days of the demand, to send, to a person a copy of the annual accounts the society shall be 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 £40 for every day during which the offence continues,

and so shall any officer who is also guilty of the offence.

(5A) Where, in a case in which subsection (3A)(b) is relied on for compliance with a requirement under subsection (3)—

(a) a copy of the annual accounts is published for a part, but not all, of the period mentioned in subsection (3B)(d), but

(b) the failure to publish it throughout that period is wholly attributable to circumstances which it would not be reasonable to have expected the society or the officer to prevent or avoid,

no offence is committed under subsection (5) by reason of that failure.

(6) In subsection (4) 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.

(7) The FCA shall keep one of the copies of the annual accounts of a building society received by it under subsection (2) above in the public file of the society.

(8) In this section any reference to the annual accounts includes a reference to the documents annexed or attached to them under section 80.

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Part IX — . . . Disputes

Schemes for investigation of complaints

83

Investigation of complaints: supplementary provisions

84

Settlement of disputes

85

(1) Schedule 14 to this Act shall have effect for the settlement of certain disputes between a building society and a member, or representative of a member, of the society or, as provided by Part II of the Schedule, between a building society and one or more members of the society or a complainant.

(2) Nothing in that Schedule affects the jurisdiction of any court to hear and determine disputes arising out of any mortgage or any contract other than the rules of a society.

Part X — Dissolution, Winding Up, Mergers and Transfer of Business

Dissolution and winding up

Modes of dissolution and winding up

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(1) A building 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; and a building society may not, except where it is dissolved by virtue of section 93(5), 94(10) or 97(9), or following building society insolvency or building society special administration, be dissolved or wound up in any other manner.

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

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(1) A building society may be dissolved by an instrument of dissolution, with the consent (testified by their signature of that instrument) of three-quarters of the members of the society, holding not less than two-thirds of the number of shares in the society.

(2) An instrument of dissolution under this section shall set out—

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

(b) the number of members, and the amount standing to their credit in the accounting records of 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.

(3) An instrument of dissolution made with consent given and testified as mentioned in subsection (1) above may be altered with the like consent, testified in the like manner.

(4) The provisions of this Act shall continue to apply in relation to a building society as if the trustees appointed under the instrument of dissolution were the board of directors of the society.

(5) The trustees, within 15 days of the necessary consent being given and testified (in accordance with subsection (1) above) to—

(a) an instrument of dissolution, or

(b) any alteration to such an instrument,

shall give notice to the FCA and, if the society is a PRA-authorised person, the PRA of the fact and, except in the case of an alteration to an instrument, of the date of commencement of the dissolution, enclosing a copy of the instrument or altered instrument, as the case may be; and if the trustees fail to comply with this subsection they shall each be liable on summary conviction to a fine not exceeding level 3 on the standard scale.

(6) An instrument of dissolution under this section, 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 in the public file of the society under subsection (10) below.

(7) The trustees shall, within 28 days from the termination of the dissolution, give notice to the FCA and, if the society is a PRA-authorised person, the PRA of the fact and the date of the termination, enclosing an account and balance sheet signed and certified by them as correct, and showing the assets and liabilities of the society at the commencement of the dissolution, and the way in which those assets and liabilities have been applied and discharged; and, if they fail to do so they shall each be 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 £10 for every day during which the offence continues.

(8) Except with the consent of the appropriate authority , no instrument of dissolution, or alteration of 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 society or the transfer of its business to a company.

(9) Any provision in a resolution or document that members of a building society proposed to be dissolved shall accept investments in a company or another society (whether in shares, deposits or any other form) in or towards satisfaction of their rights in the dissolution shall be conclusive evidence of such a purpose as is mentioned in subsection (8) above.

(10) The FCA shall keep in the public file of the society any notice or other document received by it under subsection (5) or (7) above and shall record in that file the date on which the notice or document is placed in it.

Voluntary winding up

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(1) A building society may be wound up voluntarily under the applicable winding up legislation if it resolves by special resolution that it be wound up voluntarily, but a resolution may not be passed if—

(a) the conditions in section 90D are not satisfied, or

(b) the society is in building society insolvency or building society special administration.

(1A) A resolution under subsection (1) shall have no effect without the prior approval of the court.

(2) A copy of any special resolution passed for the voluntary winding up of a building society"shall be sent by the society to the FCA and, if the society is a PRA-authorised person, the PRA within 15 days after it is passed; and the FCA must keep a 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 a building society fails to comply with subsection (2) or (3) above the society shall be liable on summary conviction to a fine not exceeding level 3 on the standard scale and so shall any officer who is also guilty of the offence.

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

Winding up by court: grounds and petitioners

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(1) A building society may be wound up under the applicable winding up legislation by the court on any of the followng grounds in addition to the grounds referred to or specified in section 37(1), 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 ten;

(d) being a society registered as a building society under this Act or the repealed enactments, the society has not been given permission under Part 4A of the Financial Services and Markets Act 2000 to accept deposits and more than three years has expired since it was so registered;

(e) the society’s permission under Part 4A of the Financial Services and Markets Act 2000 to accept deposits has been cancelled (and no such permission has subsequently been given to it);

(f) the society exists for an illegal purpose;

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

(h) 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, section 37 or the applicable winding up legislation, a petition for the winding up of a building society may be presented by—

(a) the FCA, after consulting the PRA if the society is a PRA-authorised person,

(aa) if the society is a PRA-authorised person, the PRA, after consulting the FCA,

(b) the building society or its directors,

(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 either—

(a) the number of members is reduced below ten, or

(b) the share in respect of which he is a contributory has been held by him, or has devolved to him on the death of a former holder and between them been held, for at least six months before the commencement of the winding up.

(4) For the purposes of this section, in relation to a building society,

(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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

(5) In this section, “contributory” has the same meaning as in paragraph 9(2) or, as the case may be, paragraph 37(2) of Schedule 15 to this Act.

Application of winding up legislation to building societies

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(1) In this section “the companies winding up legislation” means the enactments applicable in relation to England and Wales, Scotland or Northern Ireland which are specified in paragraph 1 of Schedule 15 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 a building society, by virtue of section 88(1) or 89(1), the companies winding up legislation shall have effect with the modifications effected by Parts I to III of Schedule 15 to this Act; and the supplementary provisions of Part IV of that Schedule shall also have effect in relation to such a winding up.

(3) In sections 37, 88, 89 and 103, “the applicable winding up legislation” means the companies winding up legislation as so modified.

Power of court to declare dissolution of building society void

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(1) Where a building society has been dissolved under section 87 or following a winding up, building society insolvency or building society special administration, the High Court or, in relation to a society whose principal office was in Scotland, the Court of Session, 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 87 or the liquidator, building society liquidator or building society special administrator, 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 has not been dissolved.

(4) The person on whose application the order is made shall, within seven days of its being so made, or such further time as the Court may allow, furnish the FCA and, if the society is a PRA-authorised person, the PRA with a copy of the order; and the FCA must keep a copy in the public file of the society.

(5) If a person fails to comply with subsection (4) above, he shall be 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 £40 for every day during which the offence continues.

Supplementary

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

Mergers

Amalgamations

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(1) Any two or more buildings societies desiring to amalgamate may do so by establishing a building society as their successor in accordance with this section and Schedule 16 to this Act

(2) In order to establish a building society as their successor the societies desiring to amalgamate must—

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

(b) agree upon the rules for the regulation of their successor which comply with the requirements of that Schedule;

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

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

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

in accordance with the applicable provisions of that Schedule;

(d) make a joint application to the appropriate authority for confirmation of the amalgamation and send to the FCA and, if the society is a PRA-authorised person, the PRA three copies of the rules and of the memorandum, each copy signed by the secretary of each of the societies.

(3) If the appropriate authority confirms the amalgamation under section 95, and the FCA is satisfied, as regards the proposed successor, of the matters relating to its rules, its purpose and powers and its name as to which it must, under paragraph 1 of Schedule 2 to this Act, be satisfied before it registers a society, the FCA must —

(a) register the successor society,

(b) issue to it a certificate of incorporation, specifying a date (“the specified date”) as from which the incorporation takes effect,

(d) return another copy to the secretary of the successor, together with a certificate of registration, and

(e) keep another copy, together with a copy of the certificate of incorporation and of the certificate of registration of the memorandum and the rules, in the public file of the successor society.

(4) On the specified date all the property, rights and liabilities of each of the societies whose amalgamation was confirmed by the appropriate authority (whether or not capable of being transferred or assigned) shall by virtue of this subsection be transferred to and vested in the society so incorporated as their successor.

(5) On the specified date, each of the societies to which the successor succeeds shall be dissolved by virtue of this subsection; but the transfer effected by subsection (4) above shall be deemed to have been effected immediately before the dissolution.

(6) If, on the specified date, each of the societies whose amalgamation was confirmed by the appropriate authority has permission under Part 4A of the Financial Services and Markets Act 2000 to accept deposits, the appropriate authority shall, with effect from that date, give their successor such permission under that Part as it considers appropriate, and shall notify the successor of the permission by giving the successor a decision notice.

(6A) Part XXVI of the Financial Services and Markets Act 2000 applies to a decision notice given under this section as it applies to a decision notice given under subsection (5) of section 55V of that Act by virtue of paragraph (a) or (b) of that subsection , except that—

(a) section 390 (final notices) does not apply, and

(b) for the purposes of section 391 (publication) the decision notice is to be treated as if it were a final notice rather than a decision notice.

(6B) The giving of permission pursuant to subsection (6) above is to be treated for the purposes of section 55Z3 of the Financial Services and Markets Act 2000 (right to refer matters to the Upper Tribunal) as if it were the determination of an application made by the successor under Part 4A of that Act, and Part IX of that Act (hearings and appeals) applies accordingly (but subject to subsection (6C) below).

(6C) In the application of Part IX of that Act by virtue of subsection (6B) above, section 133A(4) (which prevents ... action specified in a decision notice from being taken until after any reference and appeal) is omitted.

(7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Transfer of engagements

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(1) A building society may, in accordance with this section and Schedule 16 to this Act, transfer its engagements to any extent to another building society which, in accordance with this section and that Schedule, undertakes to fulfil the engagements.

(2) A building society, in order to transfer its engagements, must resolve to do so by two resolutions, of which one is passed as a shareholding members’ resolution and the other as a borrowing members’ resolution in accordance with the applicable provisions of Schedule 2.

(3) A building society, in order to transfer some but not all of its engagements to its members in respect of shares held by them (with or without other engagements) must, in addition to resolving to transfer the engagements by the two resolutions required by subsection (2) above, resolve to do so by an affected shareholders’ resolution.

(4) For the purposes of this section in its application to a transfer by a society of engagements in respect of some shares in the society, an “affected shareholders’ resolution” is a resolution passed by a majority of the holders of those shares who, under the rules of the society, would be entitled to vote on a shareholding members’ resolution, disregarding for this purpose any shares of theirs in respect of which the society’s engagements are not to be transferred.

(5) A building society, in order to undertake to fulfil the engagements of another society, must resolve to do so—

(a) by two resolutions, of which one is passed as a shareholding members’ resolution and the other as a borrowing members’ resolution in accordance with the applicable provisions of Schedule 2; or

(b) by a resolution of the board of directors, if the appropriate authority consents to that mode of proceeding.

(6) The extent of the transfer, as so resolved by the society making and the society taking the transfer, shall be recorded in an instrument of transfer of engagements.

(7) A transfer of engagements between building societies shall be of no effect unless—

(a) the transfer is confirmed by the appropriate authority under section 95; and

(b) a registration certificate is issued in respect of the transfer under subsection (8) below.

(8) Where the appropriate authority confirms a transfer of engagements between building societies, the FCA must —

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

(b) issue a registration certificate to the building society taking the transfer;

and, on such date as is specified in the certificate, the property, rights and liabilities of the society transferring its engagements (whether or not capable of being transferred or assigned) shall, by virtue of this subsection, be transferred to and vested in the society taking the transfer to the extent provided in the instrument of transfer of engagements.

(9) The FCA shall keep a copy of the instrument and of the registration certificate issued under subsection (8) above in the public file of the building society taking the transfer.

(10) Where all its engagements have been transferred, the society shall, by virtue of this subsection, be dissolved on the date specified in the registration certificate; but the transfer effected by subsection (8) above shall be deemed to have been effected immediately before the dissolution.

Mergers: provisions supplementing ss. 93 and 94

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(1) Part I of Schedule 16 to this Act shall have effect for imposing on building societies proposing to amalgamate or to transfer or undertake engagements requirements to issue statements to their members relating to the proposed amalgamation or transfer.

(2) Part II of Schedule 16 to this Act shall have effect for imposing requirements for notification by a building society, to its members and to the appropriate authority of the receipt by the society of proposals for a transfer of engagements or an amalgamation.

(3) Where application is made to the appropriate authority for confirmation of an amalgamation or transfer of engagements it shall, except as provided in subsections (4) to (6) below, confirm the amalgamation or transfer; and Part III of Schedule 16 to this Act shall have effect with respect to the procedure on an application for such confirmation.

(4) Subject to subsection (5) below, the appropriate authority shall not confirm an amalgamation or transfer of engagements if it considers that—

(a) some information material to the members’ decision about the amalgamation or transfer was not made available to all the members eligible to vote; or

(b) the vote on any resolution approving the amalgamation or transfer does not represent the views of the members eligible to vote; or

(c) some relevant requirement of this Act or the rules of any of the societies participating in the amalgamation or transfer was not fulfilled or not fulfilled as regards that society.

(5) The appropriate authority shall not be precluded from confirming an amalgamation or transfer of engagements by virtue only of the non-fulfilment of some relevant requirement of this Act or the rules of a society if it appears to the appropriate authority that it could not have been material to the members’ decision about the amalgamation or transfer and the appropriate authority gives a direction that the failure is to be disregarded for the purposes of this section.

(6) Where the appropriate authority would be precluded from confirming an amalgamation or transfer of engagements by reason of any of the defects specified in paragraphs (a), (b) and (c) of subsection (4) above, it may direct any building society concerned—

(a) to take such steps to remedy the defect or defects, including the calling of a further meeting, as it specifies in the direction; and

(b) to furnish the appropriate authority with evidence satisfying it that it has done so;

and, if the appropriate authority is satisfied that the steps have been taken and the defect or defects has or have been substantially remedied; the appropriate authority shall confirm the amalgamation or transfer; but, if it is not so satisfied, it shall refuse its confirmation.

(6A) The PRA must consult the FCA before confirming an amalgamation or transfer, or giving a direction, under this section.

(6B) The PRA must—

(a) notify the FCA it if confirms an amalgamation or transfer; and

(b) send the FCA a copy of any direction it gives.

(7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(10) A failure to comply with a relevant requirement of this Act or any rules of a society shall not invalidate an amalgamation or transfer of engagements; but, if a society fails without reasonable excuse to comply with such a requirement the society shall be liable on summary conviction to a fine not exceeding level 4 on the standard scale and so shall any officer who is also guilty of the offence.

(11) In this section “relevant requirement”, with reference to this Act or the rules of a society, means a requirement of section 93 or 94 or this section or of Schedule 16 to this Act or of any rules prescribing the procedure to be followed by the society in approving or effecting an amalgamation or transfer of engagements.

Mergers: compensation for loss of office and bonuses to members

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(1) The terms of an amalgamation of or transfer of engagements between building societies may include provision for compensation to be paid by a society to or in respect of any director or other officer of that or any other society for loss of office or diminution of emoluments attributable to the amalgamation or transfer, but the provision must be authorised as follows that is to say—

(a) except in so far as paragraph (b) below applies, the provision for such compensation to be paid by a society must be approved by the society by a resolution passed as a special resolution, not being one of the two resolutions required by section 93(2)(c) or 94(2) for the approval of the other terms of the amalgamation or transfer;

(b) if regulations are made under subsection (2) below authorising payments of such compensation within prescribed limits and the provision for such compensation includes only payments of amounts not exceeding the prescribed limits, the passing of the two resolutions approving the terms of the amalgamation or transfer is sufficient authority for their payment.

(2) The Treasury may by regulations authorise payments by building societies of compensation to directors or other officers for loss of office or diminution of emoluments attributable to amalgamations of, or transfers of engagements between, societies subject to limits specified in or determinable under the regulations and the regulations may make different provision for different classes of person.

(3) Nothing in subsection (1) or (2) above prevents a director or other officer from receiving payments from societies which, in the aggregate, exceed any limit applicable to him under subsection (2) above if the excess payment is included in provision approved as required by subsection (1)(a) above; but if any payment is received which has not been authorised under paragraph (a) or (b) of that subsection it shall be repaid.

(4) The terms of an amalgamation of, or transfer of engagements between, building societies may include provision for part of the funds of one or more of the participating societies to be distributed in consideration of the amalgamation or transfer among any of the members of the participating societies, but the provision must be authorised as follows, that is to say—

(a) subject to paragraph (b) below, the provision for such a distribution by a society shall not exceed the limits prescribed by regulations under subsection (5) below and the distribution must be approved by each of the two resolutions giving the approval of the society to the terms of the amalgamation or transfer;

(b) if the provision for such a distribution by a society exceeds the prescribed limits, it must be approved by each of the two resolutions of that society and each of the other societies particpating in the amalgamation or transfer by which each approved the terms of the amalgamation or transfer.

(5) The Treasury shall by regulations authorise distributions of funds to members by building societies particpating in amalgamations or transfers of engagements subject to limits specified in or determinable under the regulations and the regulations may make different provision for different circumstances.

(6) Where the terms of a transfer of engagements include provision for a distribution of the funds of the society transferring or the society undertaking the engagements and the society undertaking the engagements applies to the appropriate authority for its consent to the society’s approving the transfer by a resolution of the board of directors instead of the two resolutions required by section 94(5)(a), the appropriate authority shall not give its consent unless it is satisfied that the distribution proposed to be made by each society will not exceed the prescribed limits.

(7) The power to make regulations under subsection (2) or (5) above is exercisable by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament.

(8) In this section—

“compensation” includes the provision of benefits in kind;

“distribution of funds” with reference to bonuses paid to members, includes distribution by means of a special rate of interest available to members for a limited period;

“loss of office” includes, in relation to a director or other officer of a building society holding office in any other body by virtue of his position in that society, the loss of that office;

“prescribed” with reference to limits on compensation or on distributions of assets, means prescribed by regulations under subsection (2) or (5) above, as the case may be.

Transfer of business to commercial company

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(1) A building society may, in accordance with this section and the other applicable provisions of this Act, transfer the whole of its business to a company (its “successor”).

(2) The applicable provisions of this Act other than this section are section 98, section 99, section 99A, section 100, section 101, section 102 sections 102B, 102C and 102D, paragraph 30 of Schedule 2 and Schedule 17.

(3) The successor may be a company formed by the society wholly or partly" for the purpose of assuming and conducting the society’s business in its place or an existing company which is to assume and conduct the society’s business in its place; and for the purposes of the transfer the society may, notwithstanding anything in section 18, form, or acquire and hold shares in, a company whose objects extend to the carrying on of activities which the building society has no power to carry on.

(4) In order to transfer its business to its successor a building society must—

(a) in the case of a specially formed company, secure that it is formed having articles of association with the requisite protective provisions;

(b) agree conditionally with its successor in a transfer agreement on the terms of the transfer which, in so far as they are regulated terms, comply with section 99, section 100 and transfer regulations;

(c) approve the transfer and the terms of the transfer by the requisite transfer resolutions, that is to say, resolutions passed by the members of the society in accordance with paragraph 30 of Schedule 2 to this Act; and

(d) obtain the confirmation of the appropriate authority of the transfer and its terms.

(5) In so far as the transfer agreement made between the society and its successor provides for rights to be conferred on members or officers of the society, whether or not in pursuance of regulated terms, the members or officers shall, in relation to those provisions, be treated as if they had been parties to the agreement and the rights shall be enforceable accordingly.

(6) If the appropriate authority confirms the transfer under section 98 then, on the vesting date, all the property, rights and liabilities of the society making the transfer (whether or not capable of being transferred or assigned), except any shares in its successor, shall by virtue of this subsection and in accordance with transfer regulations be transferred to and vested in the successor.

(7) Where a building society continues to hold shares in its successor after the vesting date, the consideration (if any) for the disposal of the shares together with any other property, rights or liabilities of the society acquired or incurred after that date shall, by virtue of this subsection, be transferred to and vested in its successor on the date specified for its dissolution under subsection (10) below.

(8) A building society which has obtained confirmation of the transfer of its business shall send to each of the FCA and, if the society is a PRA-authorised person, the PRA notice of the date which is to be the vesting date and shall do so not later than seven days before that date; and the FCA must record the date and, if a later date is notified under subsection (10) below, that date, in the public file of the society.

(9) Except where notice is given under subsection (10) below, a building society which, under this section, transfers its business to its successor shall, by virtue of this subsection, be dissolved on the vesting date; but the transfer effected by subsection (6) above shall be deemed to have been effected immediately before the dissolution.

(10) A building society may, for the purpose of facilitating the disposal of shares in its successor, include in the notice of the vesting date under subsection (8) above notice of a later date for the dissolution of the society; and if it does so, the society shall by virtue of this subsection be dissolved on that date instead of the vesting date, but the transfer effected by subsection (7) above shall be deemed to have been effected immediately before the dissolution.

(11) As from the vesting date, a society which has given notice under subsection (10) above shall cease to transact any business except such as is necessary for the purpose of securing the disposal of the society’s holding of shares in its successor.

(12) In this section, and the other applicable provisions of this Act—

“company” means a company as defined in section 1(1) of the Companies Act 2006 which is a public company limited by shares; and a company is a “specially formed” company if it is formed by a building society (and by no others than its nominees) for the purpose of assuming and conducting its business in its place and is an “existing” company if it is a company carrying on business as a going concern on the date of the transfer agreement;

“confirmation”, in relation to a transfer, means the confirmation of the appropriate authority required by subsection (4)(d) above;

“regulated terms” means any terms of a transfer agreement which are regulated terms under section 99, section 100 or section 102;

“the requisite protective provisions” means the provisions required to be made by section 101(2);

“the requisite shareholders” resolution’ has the meaning given by paragraph 30(1) of Schedule 2;

“the requisite transfer resolutions” has the meaning given by subsection (4)(c) above;

“successor”, in relation to a building society, has the meaning given by subsection (1) above;

“transfer agreement” means the agreement required by subsection (4)(b) above and, in relation to it, “conditionally” means conditional on the approval of the transfer by the requisite transfer resolutions and on confirmation of the transfer;

“transfer of business” means the transfer of the business of a building society to its successor under this section and “transfer” has a corresponding meaning;

“transfer regulations” means regulations under section 102; and

“the vesting date” means the date specified in or determined under the transfer agreement as the vesting date for the purposes of subsection (6) above.

(13) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Transfers of business: supplementary provisions

98

(1) Part I of Schedule 17 to this Act shall have effect for imposing on a building society proposing to transfer its business to a company an obligation to issue statements or summaries to its members relating to the proposed transfer.

(1A) Part IA of that Schedule shall have effect for imposing requirements for notification by a building society, to its members and to the FCA and, if the society is a PRA-authorised person, the PRA , of the receipt by the society of a proposal for the transfer of the whole of its business to a company.

(2) Where application is made to the appropriate authority for confirmation of a transfer of business to a company it shall, except as provided in subsections (3) to (5) below, confirm the transfer; and Part II of that Schedule shall have effect with respect to the procedure on an application for such confirmation.

(3) Subject to subsection (4) below, the appropriate authority shall not confirm a transfer of business if it considers that—

(a) some information material to the members’ decision about the transfer was not made available to all the members eligible to vote; or

(b) the vote on any resolution approving the transfer does not represent the views of the members eligible to vote; or

(i) such permission under Part 4A of the Financial Services and Markets Act 2000, ...

(ii) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

as will enable it to carry on the business which it will have as a result of the transfer without being taken (by virtue of section 20 of that Act) to have contravened a requirement imposed on it by the appropriate authority under that Act; or

(d) some relevant requirement of this Act or the rules of the society was not fulfilled.

(4) The appropriate authority shall not be precluded from confirming a transfer of business by virtue only of the non-fulfilment of some relevant requirement of this Act or the rules of the society if it appears to the appropriate authority that it could not have been material to the members’ decision about the transfer and the appropriate authority gives a direction that the failure is to be disregarded for the purposes of this section.

(5) Where the appropriate authority would be precluded from confirming a transfer of business by reason of any of the defects specified in paragraphs (a), (b), (c) and (d) of subsection (3) above, it may direct the society making the transfer—

(a) to take such steps to remedy the defect or defects as it specifies in the direction; and

(b) to furnish the appropriate authority with evidence satisfying it that it has been done so;

and, if the appropriate authority is satisfied that the steps have been taken and the defect or defects has or have been substantially remedied, the appropriate authority shall confirm the transfer; but, if it is not so satisfied, it shall refuse its confirmation.

(6) The steps that a society may be required under subsection (5)(a) above to include the calling of a further meeting, securing the variation of the transfer agreement or securing the alteration of the approved protective provisions of the articles of association of its successor.

(7) A failure to comply with a relevant requirement of this Act or the rules of a building society shall not invalidate a transfer of the business of the society; but, if a society fails without reasonable excuse to comply with such a requirement, the society shall be liable on summary conviction to a fine not exceeding level 4 on the standard scale and so shall any officer who is also guilty of the offence.

(8) In this section “relevant requirement", with reference to this Act or the rules of a society, means a requirement of the applicable provisions of this Act or of any rules prescribing the procedure to be followed by the society in approving the transfer and its terms.

(9) The PRA must consult the FCA before confirming a transfer or giving a direction under this section.

(10) The PRA must—

(a) notify the FCA it if confirms a transfer; and

(b) send the FCA a copy of any direction it gives.

Regulated terms: compensation for loss of office, etc.

99

(1) Subject to subsections (2) and (3) below, the terms of a transfer of business by a building society to the company which is to be its successor may include provision for compensation to be paid by the society or the company to or in respect of any director or other officer of the society for loss of office or diminution of emoluments attributable to the transfer.

(2) Any such provision must be authorised so far as the society is concerned as follows, that is to say—

(a) except in so far as paragraph (b) below applies, the provision must be approved by a resolution passed as a special resolution, not being one of the requisite transfer resolutions;

(b) if regulations are made under subsection (3) below authorising payments of such compensation within prescribed limits and the provision for such compensation includes only payments of amounts not exceeding the prescribed limits, the passing of the requisite transfer resolutions is sufficient authority for their payment.

(3) The Treasury may by regulations authorise payments of compensation to directors or other officers attributable to transfers of business under section 97 subject to limits specified in or determinable under the regulations and the regulations may make different provision for different classes of person.

(4) Nothing in subsection (2) or (3) above prevents a director or other officer from receiving payments which, in the aggregate, exceed any limit applicable to him under either of those subsections if the excess payment is included in provision approved as required by subsection (2)(a) above; but if any payment is received which has not been authorised under paragraph (a) or (b) of that subsection it shall be repaid.

(5) The power to make regulations under subsection (3) above is exercisable by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament.

(6) In this section—

“compensation” includes the provision of benefits in kind;

“loss of office” includes, in relation to a director or other officer of a building society holding office in any other body by virtue of his position in that society, the loss of that office; and

“prescribed”, with reference to limits on compensation, means prescribed by regulations under subsection (3) above;

and any terms of a transfer of business to which subsection (2) or regulations under subsection (3) above apply are regulated terms for the purposes of section 97.

100

(1) Subject to subsections (2) to (10) below, the terms of a transfer of business by a building society to the company which is to be its successor may include provision for part of the funds of the society or its successor to be distributed among, or other rights in relation to shares in the successor conferred on, members of the society in consideration of the transfer.

(2) The terms of a transfer of a society’s business must—

(a) require its successor to assume as from the vesting date a liability to every qualifying member of the society as in respect of a deposit made with the successor corresponding in amount to the value of the qualifying shares held by him in the society; and

(b) confer a right, subject to subsection (7) below, to a distribution of funds, whether of the society or its successor, by way of bonus on every qualifying member of the society equal to the relevant proportion of the value of the qualifying shares held by him in the society; . . .

(3) For the purposes of the liabilities assumed under subsection (2)(a) above by the society’s successor, a member is a qualifying member if he held shares in the society on the day immediately preceding the vesting date and his qualifying shares are those held by him on that day.

(4) For the purposes of the rights conferred under subsection (2)(b) above on members of the society, a member is a qualifying member is he held shares in the society on the qualifying day and was not eligible to vote on the requisite shareholders’ resolution, his qualifying shares are those held by him on that day and the relevant proportion is the portion which (as shown in the latest balance sheet of the society) the society’s reserves bear to its total liability to its members in respect of shares.

(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(7) The appropriate authority may, where it confirms a transfer of a society’s business to an existing company, as it thinks fit having regard to what is equitable between the members of the society, direct that no bonus distribution of funds in pursuance of subsection (2)(b) above shall be made or that the amount distributed shall be such lesser amount as it provides for in the direction; and where the appropriate authority gives a direction under this subsection no liability to make such a distribution shall arise or, as the case may be, that liability shall be discharged by payment of the lesser amount.

(8) The terms of a transfer of a society's business may confer a right to acquire shares in the successor on a member of the society only if the member—

(a) held shares in the society throughout the period of two years ending with the qualifying day, or

(b) on that day, holds deferred shares in the society that are of a class described in the transfer agreement;

and it is unlawful for any right in relation to shares to be conferred in contravention of this subsection.

(9) Where the successor is an existing company, any distribution of funds to members of the society, except for the distribution required by subsection (2)(b) above, shall only be made to those members who held shares in the society throughout the period of two years which expired with the qualifying day; and it is unlawful for any distribution to be made in contravention of the provisions of this subsection.

(10) The following restrictions apply to any distribution of funds, or any conferring of rights in relation to shares, in connection with the transfer of its business from the society to its successor where the successor is a company specially formed by the society, that is to say—

(a) no distribution shall be made except that required by subsection (2)(b) above; and

(b) where negotiable instruments acknowledging rights to shares are issued by the successor within the period of two years beginning with the vesting date, no such instruments shall be issued to former members of the society unless they are also issued, and on the same terms, to all other members of the company;

and it is unlawful for any distribution of funds to be made in contravention of the provisions of this subsection.

(11) Where the successor is a specially formed company, the terms of the transfer must include provision to secure that the society ceases to hold any shares in the successor by the date on which the society is to dissolve.

(12) Any terms of a transfer of business to which subsection (2), (8), (9), (10) or (11) above apply are regulated terms for the purposes of section 97.

(13) In subsections (4), (5), (8) and (9) above, “qualifying day” means the day specified in the transfer agreement as the qualifying day for the purposes of this subsection.

Protective provisions for specially formed successors

101

(1) No company specially formed by a building society to be its successor shall, at any time during the protective period—

(a) offer for sale or invite subscription for any shares in the company or allot or agree to allot any such shares with a view to their being offered for sale, or

(b) allot or agree to allot any share in the company, or

if the effect of the offer, the invitation, the allotment or the registration of the transfer would be that more shares than the permitted proportion would be held by any one person (other than the society), or by any two or more persons who are parties to a concert party agreement which relates to shares in the company.

(2) The articles of association of the company shall include provision such as will secure that the company does not offer, invite subscription for, allot or register transfers of, shares in contravention of subsection (1) above and no alteration in those provisions may be made by the company during the protective period.

(3) Any provision (including any altered provision) of the company’s articles of association which is to any extent inconsistent with subsection (1) above shall, to that extent, be void; and any allotment or registration of a transfer of shares in contravention of that subsection shall be void.

(4) This section shall cease to apply to a company if—

(a) a person who is an authorised person within the meaning of section 31 of the Financial Services and Markets Act 2000 becomes a subsidiary undertaking of the company, or the company or such an undertaking acquires the whole, or substantially the whole, of the business of such a person;

(b) a special resolution to that effect is passed by the requisite majority of the members of the company; or

and the appropriate authority shall not give such a direction unless it considers it desirable to do so in the interests of the depositors and potential depositors of the company.

(4A) The PRA must consult the FCA before giving a direction under this section.

(5) If this section ceases to apply to a company, any provision included by virtue of subsection (2) above in its articles of association shall cease to have effect.

(6) In this section—

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

“concert party agreement” means an agreement to which section 824 of the Companies Act 2006 applies;

“EEA country or territory” has the same meaning as in sections 6A and 6B;

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

“the permitted proportion”, in relation to shares in the company, is 15 per cent. of the company’s issued share capital;

“the protective period” is the period beginning with the date of the company’s incorporation and ending five years after the vesting date or, if this section ceases to apply to the company, ending on the date on which it so ceases;

“the requisite majority” means a majority of the members having the right to attend and vote at a general meeting of the company, being a majority together holding not less than 75 per cent in nominal value of the shares giving that right;

“transfer”, in relation to shares, does not include a transfer to a person to whom the right to any shares has been transmitted by operation of law;

and any expression used in this section and in the Companies Acts (as defined in section 2 of the Companies Act 2006) has the same meaning in this section as in those Acts.

(7) For the purposes of this section—

(a) shares held by a person in a fiduciary capacity shall be treated as not held by him;

(b) shares held by a person as nominee for another shall be treated as held by the other; and

(c) shares shall be regarded as held as nominee for another if any voting rights attaching to them are exercisable only on his instructions or with his consent or concurrence.

(8) Any reference in this section to shares includes a reference—

(a) to any warrant or other instrument entitling the holder to subscribe for shares; and

(b) to any certificate or other instrument issued by or on behalf of the company and conferring a right to acquire shares otherwise than by subscription;

and for the purposes of subsection (1) above any shares to which any such instrument relates shall be deemed to be held by the holder of the instrument.

Transfer regulations

102

(1) The Treasury may, by transfer regulations under this section, make provision regulating transfers of business under section 97.

(2) Transfer regulations may, in particular—

(a) make provision for and in connection with the transition from regulation by and under this Act to regulation by and under the Companies Acts . . .

(b) make provision for the treatment, in the hands of companies taking such transfers, of the property, rights and liabilities transferred and for the modification of any enactment in its application to property, rights and liabilities so transferred;

(3) The power to make transfer regulations is exercisable by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament.

(4) Any terms of a transfer of business to which transfer regulations apply are regulated terms for the purposes of section 97.

Cancellation of registration

103

(1) Where , having consulted the PRA, the FCA is satisfied, with respect to a building society—

(a) that the society has been dissolved by virtue of section 93(5), 94(10), 97(9) or 97(10), or

(b) that the society has been wound up under the applicable winding up legislation and dissolved, or

(c) that the society has been dissolved following building society insolvency or building society special administration.

the FCA shall cancel the registration of the society.

(2) Where , having consulted the PRA, the FCA is satisfied, with respect to a building society—

(a) that a certificate of incorporation has been obtained for the society by fraud or mistake and that the society does not have permission under Part 4A of the Financial Services and Markets Act 2000 to accept deposits, or

(b) that the society has ceased to exist,

the FCA may cancel the registration of the society.

(3) Without prejudice to subsection (2) above, the FCA may, if it thinks fit after consulting the PRA, cancel the registration of a building society at the request of the society, evidenced in such manner as the FCA may direct.

(4) Before cancelling the registration of a building society under subsection (2) above, the FCA 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 a building society is cancelled under subsection (2) above, the society may appeal to—

(a) the High Court, where the principal office of the society is situated in England and Wales or in Northern Ireland, or

(b) the Court of Session, where that office is situated in Scotland.

and on any such appeal the High Court or the Court of Session, as the case may be, if it thinks it just to do so, may set aside the cancellation.

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

(7) Subsection (6) above shall have effect in relation to a building society without prejudice to any liability actually incurred by the 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 a building society under this section shall be effected in writing signed by the FCA .

(9) As soon as practicable after the cancellation of the registration of a society under this section the FCA 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 principal office, and if it thinks fit, in one or more newspapers.

Part XI — Miscellaneous and Supplementary and Conveyancing Services

Miscellaneous and supplementary

Power to amend, etc. to assimilate to company law

104

(1) If, on any modification of the statutory provisions in force in Great Britain or Northern Ireland relating to companies, it appears to the Treasury to be expedient to modify the relevant provisions of this Act for the purpose of assimilating the law relating to companies and the law relating to building societies, the Treasury may, by order, make such modifications of the relevant provisions of this Act as they think appropriate for that purpose.

(2) The “relevant provisions of this Act” are the following provisions as for the time being in force, that is to say—

(za) the provisions of Part 2 (but see subsection (3A));

(a) so much of Part VI as relates to investigations or inspections;

(b) the provisions of Part VII (management);

(d) so much of Part X as relates to winding up or insolvency ; and

(e) section 110 (provisions exempting officers and auditors from liability)..

(3) The power conferred by subsection (1) above includes power to modify the relevant provisions of this Act so as to—

(a) confer power to make orders, regulations, rules or other subordinate legislation;

(b) create criminal offences; or

(3A) The power conferred by subsection (1) by virtue of subsection (2)(za) is exercisable only for the purpose of making provision in relation to common seals and the execution of documents.

(4) An order under this section may—

(a) make consequential amendments of or appeals in other provisions of this Act; or

(b) make such transitional or saving provisions as appear to the Treasury to be necessary or expedient.

(5) The power to make an order under this section is exercisable by statutory instrument but no such order shall be made unless a draft of it has been laid before and approved by a resolution of each House of Parliament.

(6) In this section—

“modification” includes any additions and, as regards modifications of the statutory provisions relating to companies, any modification whether effected by any future Act or by an instrument made after the passing of this Act under an Act whenever passed; and

“statutory provisions” includes the provisions of any instrument made under this Act.

Limited power to anticipate future statutory instrument powers

105

(1) This section has effect as regards any power conferred under any provision of this Act on building societies or building societies of any description by—

(a) an instrument a draft of which has to be approved by a resolution of each House of Parliament before it can be made, or

(b) an instrument which is subject to annulment in pursuance of a resolution of either House of Parliament and which defers its operation until a future date;

and in this section “the anticipation date” is, in the case of an instrument falling within paragraph (a), the date on which either House approves the draft and, in the case of an instrument falling within paragraph (b), the date on which it was laid before Parliament.

(2) Every building society or, as the case may be, every building society of the description to which the instrument applies, has, as from the anticipation date, power, for the purposes of the power conferred by the instrument, to do such things, subject to subsection (3) below, as are reasonably necessary to enable it—

(a) to decide whether or not, and to what extent, to exercise (and in the case of an adoptable power to adopt) the power, and

(b) if it decides to exericse the power, to exercise it as from the date when it becomes exercisable by the society.

(3) Subsection (2)(b) above does not authorise a society—

(a) to make contracts, other than conditional contracts, for the acquisition of land, the acquisition of a business or the acquisition of shares in any company if that company offers the public any service or facility within the power,

(b) to issue invitations to members of the society or the public to apply for any power to be exercised for their benefit, or

and, in this subsection, “conditional”, in relation to contracts with respect to the exercise of a power, means conditional on the power’s becoming exercisable by the society.

(4) The power conferred by this paragraph, and activities carried on under it, for the purposes of an adoptable power are not to be treated as included in, or in activities comprised in, that adoptable power for the purposes of paragraph 16 of Schedule 2 to this Act.

Public file of the society

106

(1) The FCA shall prepare and maintain a file relating to each building society (to be known as the public file) and the file shall—

(a) contain the documents or, as the case may be, the copies of the documents and the records of the matters directed by or under any provision of this Act to be kept in the public file of the society; and

(b) be available for inspection on reasonable notice by members of the public subject to subsection (3) below.

(2) Any member of the public shall be entitled, subject to subsection (3) below, to be furnished with a copy of all or any of the documents or records kept in the public file of a building society.

(3) The FCA may charge a reasonable fee for making the public file available to any person for inspection under subsection (1)(b) above, or for furnishing any person with a copy of any documents or records under subsection (2) above.

Restriction of use of certain names and descriptions

107

(1) Subject to subsections (2) to (9) below, no person carrying on in the United Kingdom a business of any description shall, unless that person is a building society, use any name or in any other way so describe himself or hold himself out so as to indicate, or reasonably be understood to indicate—

(a) that he is a building society,

(b) that he, or his business, is connected with one or more building societies, or

(2) Subsection (1) does not prohibit the use by an institution carrying on the business of taking deposits and making loans secured on land which has its principal place of business in a country or territory outside the United Kingdom, of the name under which the institution carries on business in that country or territory if—

(a) the name is used in immediate conjunction with a description distinguishing the institution from a building society, being a description which has been approved for the purposes of this subsection by the FCA and the approval has not been revoked under subsection (7) below, and

(b) where the name appears in writing, that description is sufficiently prominent to secure that a person who reads the name will also read the description.

(3) For a description to distinguish an institution from a building society for the purposes of subsection (2) above it must distinguish it by reference to all or any of the following matters,—

(a) the situation of its principal place of business,

(b) its legal status or constitution, and

as the FCA determines in its case, but need not indicate any other distinction.

(4) Subsection (1) above does not prohibit a person from carrying on a business under a name which indicates a connection between—

(a) that person, or his business, and one or more building societies, or

(b) that person, or his business, and building societies generally,

if the name has been approved for the purposes of this subsection by the FCA and the approval has not been revoked under subsection (7) below.

(5) No name shall be approved for the purposes of subsection (4) above unless the FCA , having regard to—

(a) the true connection (if any) in fact existing between the person using, or proposing to use, the name and the particular society or societies in question or with building societies generally, as the case may be, and

(b) in the cases referred to in subsection (4)(a) above, the respective natures of the business of that person and the society or societies in question,

is satisfied that the connection indicated by the name is not misleading; and, in so far as the name indicates investment or other financial support on the part of a building society the FCA shall not approve the use of the name unless it is satisfied that the name indicates no more investment or support than is the case and than is, in the opinion of the FCA , within the financial capacity of the building society to provide.

(6) An application for approval under subsection (2) or (4) above shall be made to the FCA in such form as it directs and accompanied by such information or evidence as it requires generally or in the particular case.

(7) The FCA may revoke any approval under subsection (2) or (4) above of a distinguishing description or a name, as the case may be, if it is of the opinion—

(a) in the case of a distinguishing description, that, by reason of any change in the matters by reference to which the distinction is made, the description does not or does not any longer distinguish the institution as required by subsection (2) above, or

(b) in the case of a name.

(i) that the name has proved to be misleading to the public,

(ii) that the approval has been obtained by fraud or mistake, or

(iii) that there has been a change in the facts to which the FCA had regard in giving its approval,

but it shall not do so without first giving the person to whom the approval was given an opportunity of making representations with respect to the proposed revocation of that approval.

(8) Subsection (1) above does not prohibit a person from using a description (other than his name) which, or from holding himself out in a way that, indicates a connection between himself or his business and one or more building societies if and to the extent he has been authorised to do so in writing by the society or societies in question.

(9) Subsection (1) above does not prohibit a person from using a description (other than his name) which, or from holding himself out in a way that, indicates a connection between himself or his business and building societies generally where the connection indicated is not misleading.

(10) Where on an application for—

(a) the first registration of a company, or the registration of a company by a new name, by the registrar of companies under the Companies Act 2006, or

(b) approval by the Secretary of State of words or expressions for inclusion in a business name under section 1194 of the Companies Act 2006,

it appears to the registrar, or the Secretary of State, as the case may be, that the use of the name or the words or expressions by the person seeking to register with it would contravene subsection (1) above, the registration shall not be made or the approval given.

(11) A person who contravenes subsection (1) above shall be liable on summary conviction to a fine not exceeding level 5 on the standard scale; and where the contravention involves a public display or exhibition of the offending name, description or other matter, there shall be a fresh contravention of the subsection on each day during which that person causes or permits the display or exhibition to continue for which that person shall be liable on summary conviction to a fine not exceeding £200.

(12) In this section—

“deposit” must be read with—section 22 of the Financial Services and Markets Act 2000;any relevant order under that section; andSchedule 2 to that Act;

“institution” means—a body corporate wherever incorporated;a partnership formed under the law of any part of the United Kingdom;...

Power to require building society to change misleading name

108

Exemption from stamp duty

109

(1) The following instruments shall be exempted from all such stamp duties (if any) as apart from this section would be chargeable on them, that is to say—

(a) any copy of the rules of a building society;

(b) any transfer of a share in a building society;

(c) any bond or other security to be given to, or on account of, a building society or by an officer of a building society;

(d) any instrument appointing an agent of a building society or revoking such an appointment; and

(e) any other instrument whatsoever which is required or authorised to be given, issued, signed, made or produced in pursuance of this Act or of the rules of a building society.

(2) No transfer effected by subsection (6) or (7) of section 97 shall give rise to any liability to stamp duty

Officers and auditors not to be exempted from liability

110

(1) Subject to subsection (3) below, any provision to which this section applies, whether contained in the rules of a building society or in any contract with a building society or otherwise, shall be void.

(2) This section applies to any provision for—

(a) exempting any director, other officer or person employed as auditor of a building society from any liability which, by virtue of any rule of law, would otherwise attach to him in respect of the negligence, default, breach of duty or breach of trust of which he may be guilty in relation to the society, or

(b) indemnifying any such person against any such liability.

(3) Subsection (1) above shall not prevent a building society from

(a) purchasing and maintaining for a person insurance against any such liability, or

(b) indemnifying a person against any liability incurred by him in defending any proceedings (whether civil or criminal) in which judgment is given in his favour or he is acquitted.

(4) Section 1157 of the Companies Act 2006 (power of court to grant relief in certain cases of negligence, default, breach of duty or breach of trust) shall apply in relation to officers and auditors of a building society as it applies in relation to officers and auditors a company.

Time limit for commencing proceedings

111

(1) Notwithstanding any limitation on the time for the taking of proceedings contained in any Act, summary proceedings for any offence under this Act , other than an offence in relation to which provision is made in subsection (1A), may, subject to subsection (2) below, be commenced by the FCA at any time within the period of one year beginning with the date of which evidence sufficient in its opinion to justify a prosecution for the offence, comes to its knowledge.

(1A) Notwithstanding any limitation on the time for taking proceedings contained in any Act, summary proceedings for the offences under the provisions listed in subsection (1B), in the circumstances specified in that subsection in relation to those provisions, may be commenced by the PRA, after notifying the FCA, or by the FCA, after notifying the PRA, at any time within the period mentioned in subsection (1C).

(1B) The provisions and the circumstances are—

(a) section 52 (powers to obtain information and documents etc.), if—

(i) the failure referred to in subsection (10) of that section is a failure to furnish any information or accountant’s report, to produce any documents or material, or to provide any explanation or make any statement to the PRA, or

(ii) the information, explanation or statement referred to in subsection (11) or (12) of that section is furnished, provided or made to the PRA;

(b) section 55 (investigations), if the person appointed under subsection (1) of that section was appointed by the PRA;

(c) section 81 (laying and furnishing accounts), if the default referred to in subsection (4) of that section relates to a failure to send a copy of the accounts to the PRA in accordance with subsection (2) of that section;

(d) section 87 (dissolution by consent), if the failure referred to in subsection (5) or (7) of that section relates to a failure to give notice to the PRA;

(e) section 88 (voluntary winding up), if the failure referred to in subsection (4) of that section relates to a failure to send a copy of the resolution to the PRA in accordance with subsection (2) of that section;

(f) section 91 (power of court to declare dissolution of building society void), if the failure referred to in subsection (5) of that section relates to a failure to send a copy of an order to the PRA in accordance with subsection (4) of that section;

(g) section 95 (mergers: provisions supplementing sections 93 and 94), if the application referred to subsection (3) of that section was made, or should have been made, to the PRA;

(h) section 98 (transfers of business: supplementary provisions), if the application referred to subsection (2) of that section was made, or should have been made, to the PRA;

(i) Schedule 8A, paragraph 3(5) (directions under section 42B(3)), if the PRA has given a direction under section 42B(3);

(j) Schedule 8A, paragraph 9(5) (directions under section 42B(4)), if the PRA has given a direction under section 42B(4);

(k) Schedule 11, paragraph 3 (auditors: appointment), if the failure referred to in sub-paragraph (2) of that paragraph relates to a failure to give notice to the PRA in accordance with sub-paragraph (1) of that paragraph;

(l) Schedule 11, paragraph 6 (auditors: removal), if the failure referred to in sub-paragraph (3) of that paragraph relates to a failure to give notice to the PRA in accordance with sub-paragraph (2) of that paragraph;

(m) Schedule 11, paragraph 7 (auditors: resignation), if the default referred to in sub-paragraph (8) of that paragraph relates to a failure to send any notice or statement to the PRA in accordance with sub-paragraph (3) or (7) of that paragraph;

(n) Schedule 15, paragraph 21 (application of companies winding up legislation to building societies: winding up by the court), if the failure referred to in sub-paragraph (4) of that paragraph relates to a failure to give notice to the PRA in accordance with sub-paragraph (3) of that paragraph;

(o) Schedule 15, paragraph 48 (modified application of Insolvency (Northern Ireland) Order 1989: winding up by the High Court), if the failure referred to in sub-paragraph (4) of that paragraph relates to a failure to give notice to the PRA in accordance with sub-paragraph (3) of that paragraph; and

(p) Schedule 16, paragraph 6 (mergers: penalty), if the default referred to in sub-paragraph (1) of that paragraph relates to a failure to send a copy of a statement or notification to the PRA in accordance with paragraph 5(1) of that Schedule.

(1C) The period is one year beginning with the date on which evidence comes to the knowledge of one or both of the FCA and the PRA, being evidence sufficient in the opinion of the FCA or the PRA (as the case may be) to justify a prosecution.

(2) Nothing in subsection (1) or (1A) above shall authorise the commencement of proceedings for any offence at a time more than three years after the date on which the offence was committed.

(3) For the purposes of subsection (1) and subsection (1C) of this section a certificate, purporting to be signed by or on behalf of the FCA or the PRA , as to the date on which such evidence as is mentioned in the relevant subsection came to its knowledge, shall be conclusive evidence of that date.

(4) In the application of this section to Scotland—

(a) for subsection (1), substitute—

(1) Notwithstanding any limitation on the time for the taking of proceedings contained in any Act, summary proceedings for any offence under this Act may, subject to subsection (2), be commenced by the Lord Advocate at any time within the period of one year beginning with the date on which evidence sufficient in the opinion of the Lord Advocate to justify a prosecution for the offence, comes to the knowledge of the Lord Advocate

;

(b) omit subsections (1A), (1B) and (1C); and

(3) For the purposes of subsection (1) of this section a certificate, purporting to be signed by or on behalf of the Lord Advocate, as to the date on which such evidence as is mentioned in that subsection came to the knowledge of the Lord Advocate, shall be conclusive evidence of that date.

(5) In the application of this section to Scotland, section 136(3) of the Criminal Procedure (Scotland) Act 1995 shall apply for the purposes of this section as it applies for the purposes of that section.

Offences: liability of officers and defence of due diligence

112

(1) Where an offence under any provision of this Act committed by a building society is proved to have been committed with the consent or connivance of, or to be attributable to any neglect on the part of, any officer of the society he, as well as the society, shall be guilty of that offence and liable to be proceeded against and punished in accordance with that provision.

(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3) Where an offence under any provision of this Act committed by a body corporate other than a building society is proved to have been committed with the consent or connivance, or to be attributable to any neglect on the part of, any officer of the body corporate he, as well as the body corporate, shall be guilty of that offence and liable to be proceeded against and punished accordingly.

(4) In any proceedings for an offence under this Act, it shall be a defence for a person charged to prove that he took all reasonable precautions and exercised all due diligence to avoid the commission of such an offence by himself or any person under his control

Evidence

113

(1) Any document bearing the seal or stamp of the FCA shall be received in evidence without further proof.

(1A) Any document purporting to have been signed by a person authorised to do so on behalf of the FCA or the PRA shall, in the absence of any evidence to the contrary, be received in evidence without proof of the signature.

(1B) In subsections (1) and (1A), “document” means any document issued, received or created by the FCA or the PRA for the purposes of or in connection with this Act.

(2) Any printed document purporting to be a copy of the rules or memorandum of a building society, and certified by the secretary or other officer of the society to be a true copy of its rules or memorandum as registered, shall be received in evidence and shall, in the absence of any evidence to the contrary, be deemed to be a true copy of its rules or memorandum.

Records

114

(1) Subject to any other provision of this Act or regulations under it, any record to be kept by a building society may be kept in any manner.

(2) Where any such record is not kept by making entries in a bound book, but by some other means, adequate precautions shall be taken for guarding against falsification and facilitating its discovery.

(3) The power in subsection (1) above includes power to keep the record by recording matters otherwise than in legible form so long as the recording is capable of being reproduced in a legible form; and any duty imposed by or under this Act to allow inspection of, or to furnish a copy of, the record or any part of it is to be treated as a duty to allow inspection of, or to furnish, a reproduction of the recording or of the relevant part of it in a legible form.

(4) The Treasury may by regulations, make such provision in addition to subsection (3) above as they consider appropriate in connecton with such records as are kept otherwise than in legible form; and the regulations may make modifications of this Act so far as it relates to the records of building societies.

(5) If default is made in complying with this section the building society shall be liable on summary conviction—

(a) to a fine not exceeding level 4 on the standard scale, and

(b) in the case of a continuing offence, to an additional fine not exceeding £100 for every day during which the offence continues,

and so shall any officer who is also guilty of the offence.

Service of notices

115

(1) This section has effect in relation to any notice, directions or other document required or authorised by or under any provision of this Act or by the rules of a building society to be served on any person other than the FCA and the PRA but subject, in the case of notices or other documents to be given or sent to members of a building society, to any provision of its rules.

(1A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(2) Any such document may be served on the person in question—

(a) by delivering it to him;

(b) by leaving it at his proper address; or

(2A) The reference in subsection (2)(a) to delivering a document to a person includes a reference to sending it electronically to an electronic address which that person has notified for the purpose in accordance with express provision made by this Act.

(3) Any such document may—

(a) in the case of a building society, be served on the secretary of the society;

(b) in the case of a body corporate (other than a building society), be served on the secretary or clerk of that body;

(d) in the case of an unincorporated association other than a partnership, be served on any member of its governing body.

(4) For the purposes of this section and section 7 of the Interpretation Act 1978 (service of documents) in its application to this section, the proper address of any person is—

(a) in the case of a building society or its secretary, the address of its principal office;

(b) in the case of a member of a building society, his registered address;

(d) in the case of a body corporate (other than a building society) its secretary or clerk, the address of its registered or principal office in the United Kingdom;

(e) in the case of an unincorporated association (other than a partnership) or a member of its governing body, its principal office in the United Kingdom;

and, in any other case, his last-known address (whether of his residence or of a place where he carries on business or is employed).

Form of documents and power to prescribe fees

116

(1) The FCA and the PRA may each , by directions under this section, make provision with respect to the form of, and the particulars to be included in, any document to be sent to it under this Act.

(1A) The PRA and the FCA must each consult the other before issuing a direction under this section if the document in question is required to be sent to both of them.

(2) The directions have effect subject to any other provision of or made under this Act.

Financial year of building societies

117

(1) A building society's financial years (apart from its final financial year) are determined according to its year-end date in each calendar year.

(1A) The year-end date of a building society established before 25th August 1894 is—

(a) the date up to which, as at 1st January 1987, the accounts of the society were annually made up, or

(b) if the society has, at any time before the day on which subsection (1) comes into force (“the relevant day”), altered its financial year in exercise of a power within subsection (1B), 31st December.

(1B) The powers referred to in subsection (1A)(b) are—

(a) the power conferred by section 70(2) of the Building Societies Act 1960,

(b) the power conferred by section 128(2) of the Building Societies Act 1962, and

(1C) The year-end date of a building society established on or after 25th August 1894 and before the relevant day is 31st December.

(1D) The year-end date of a building society established on or after the relevant day is the last day of the month in which the anniversary of its establishment falls.

(1E) The financial year of a building society established before the relevant day is the period of 12 months ending with the year-end date of the society (but see subsection (1G)).

(1F) In the case of a building society established on or after the relevant day—

(a) the initial financial year of the society shall be the period of more than 6 months, but not more than 18 months, beginning with the date of its establishment and ending with its year-end date, and

(b) its subsequent financial years are successive periods of 12 months beginning immediately after the end of the previous financial year and ending with its year-end date (but see subsection (1G)).

(1G) The final financial year of a building society is a period of less than 12 months that begins immediately after the end of the previous financial year and ends with the date as at which the society makes up its final accounts.

(1H) This section has effect subject to section 117A (alteration of financial year).

(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Qualifying asset holding for certain powers

118

(1) This section has effect for determining for the purposes of this Act whether, in any financial year, a building society has a “qualifying asset holding”.

(2) A building society has a qualifying asset holding in any financial year, if, and only if, the aggregate value of its total commercial assets, as shown in its annual accounts for the previous year, is not less than £100 million or such other amount as may be substituted for it under subsection (3) below.

(3) The Commission, with the consent of the Treasury, may by order made by statutory instrument substitute for the amount for the time being specified in subsection (2) above such other amount as the Commission considers appropriate.

(4) An order under subsection (3) above may contain such transitional provisions as the Commission considers necessary or expedient.

(5) An instrument containing an order under subsection (3) above shall be subject to annulment in pursuance of a resolution of either House of Parliament.

Interpretation

119

(1) In this Act, except where the context otherwise requires—

“adopt” and “adopted”, in relation to powers, and “adoptable powers” have the meaning given by paragraph 1 of Schedule 2 of this Act;

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Building Societies Act 1986

Auditors' duties to Commission and related rights

82

Part IX — . . . Disputes

Schemes for investigation of complaints

83

Investigation of complaints: supplementary provisions

84

Settlement of disputes

85

Part X — Dissolution, Winding Up, Mergers and Transfer of Business

Dissolution and winding up

Modes of dissolution and winding up

86

Dissolution by consent

87

Voluntary winding up

88

Winding up by court: grounds and petitioners

89

Application of winding up legislation to building societies

90

Power of court to declare dissolution of building society void

91

Supplementary

92

Mergers

Amalgamations

93

Transfer of engagements

94

Mergers: provisions supplementing ss. 93 and 94

95

Mergers: compensation for loss of office and bonuses to members

96

Transfer of business to commercial company

Transfer of business to commercial company

97

Transfers of business: supplementary provisions

98

Regulated terms: compensation for loss of office, etc.

99

Regulated terms: distributions and share rights

100

Protective provisions for specially formed successors

101

Transfer regulations

102

Cancellation of registration

Cancellation of registration

103

Part XI — Miscellaneous and Supplementary and Conveyancing Services

Miscellaneous and supplementary

Power to amend, etc. to assimilate to company law

104

Limited power to anticipate future statutory instrument powers

105

Public file of the society

106

Restriction of use of certain names and descriptions

107

Power to require building society to change misleading name

108

Exemption from stamp duty

109

Officers and auditors not to be exempted from liability

110

Time limit for commencing proceedings

111

Offences: liability of officers and defence of due diligence

112

Evidence

113

Records

114

Service of notices

115

Form of documents and power to prescribe fees

116

Financial year of building societies