Co-operative and Community Benefit Societies Bill (HC Bill 181)

(a) to the making of a deed under the law of England and Wales, and

(b) to the undertaking of an obligation under the law of Scotland,

as they apply to the making of a contract.

(4) In subsection (1)—

(a) 5the reference to a registered society includes a Northern Ireland society,
and

(b) the reference to this Act includes the relevant Northern Ireland law.

“Northern Ireland society” and “the relevant Northern Ireland law” have the
same meaning as in section 142.

58 10Bills of exchange and promissory notes

A bill of exchange or promissory note is treated as made, accepted or endorsed
on behalf of a registered society if made, accepted or endorsed in the name of,
or by or on behalf or account of, the society by a person acting under its
authority.

15Part 5 Charges over a society’s assets

CHAPTER 1 Charges: England and Wales

59 Charges on assets of English and Welsh societies

(1) This section applies to an instrument executed by a registered society whose
20registered office is in England or Wales which creates or is evidence of a fixed
or floating charge on assets of the society.

(2) If an application for the recording of the charge is made in accordance with
subsection (3), the instrument is not a bill of sale for the purposes of the Bills of
Sale Acts 1878 and 1882 and is not invalidated by those Acts.

(3) 25An application is made by delivering to the FCA (by post or otherwise), within
the period of 21 days beginning with the date of execution of the instrument
(subject to any extension under section 60)—

(a) a copy of the instrument, authenticated in the manner directed by the
FCA,

(b) 30such additional particulars relating to the charge as may be required by
the FCA, authenticated in the manner directed by the FCA, and

(c) the appropriate fee.

(4) If an application is made in accordance with subsection (3), the FCA must—

(a) give the person who makes the application an acknowledgment of the
35application, bearing the FCA’s seal,

(b) place the copy of the instrument included in the application, a note of
any particulars included in it, and a copy of the acknowledgement on a
file kept by the FCA in respect of the society, and

(c) make the file available for inspection during office hours by members
40of the public on payment of the appropriate fee.

(5) “The appropriate fee” means the fee required by rules made in accordance with
paragraph 23 of Schedule 1ZA to the Financial Services and Markets Act 2000.

(6) This section does not apply to a debenture registered under section 14 of the
Agricultural Credits Act 1928 (debenture of registered society creating floating
5charge over farming stock).

60 Section 59: power to extend time for making application or to rectify errors

(1) This section applies where—

(a) a registered society has executed an instrument to which section 59
applies, and

(b) 10it appears to the FCA (on the application of the society or any other
person claiming the benefit of the instrument) that by reason of
inadvertence or other sufficient cause—

(i) an application for recording the charge was not made within the
period mentioned in section 59(3), or

(ii) 15any matters were omitted from, or mis-stated in, such an
application.

(2) The FCA may, on such terms as it considers appropriate, give a direction—

(a) extending the period for making such an application, or

(b) requiring the omission or mis-statement to be rectified.

61 20Notification of transactions relating to charges recorded under section 59

(1) The FCA may, under section 143, make provision for—

(a) the giving to the FCA of notice of any release, discharge or other
transaction relating to a charge in respect of which an application under
section 59 has been made;

(b) 25the inclusion in the file mentioned in that section of any such notice
appearing to the FCA to relate to the charge.

(2) Nothing in this section limits the generality of the power to give directions
conferred by section 143.

CHAPTER 2 Charges: Scotland

62 30Floating charges created by Scottish societies

(1) The relevant provisions (which relate to floating charges) apply to a registered
society as they apply to an incorporated company, subject to the general and
specific modifications mentioned below.

(2) In this Chapter “the relevant provisions” means—

(a) 35Chapter 1 of Part 18 of the Companies Act 1985 (“the 1985 Act”), and

(b) section 122(2) of the Insolvency Act 1986 (“the 1986 Act”).

(3) The general modifications are—

(a) a reference to a company or incorporated company is to be read as a
registered society;

(b) a reference to the registrar or the registrar of companies is to be read as
the FCA;

(c) a reference (however expressed) to—

(i) registration of a floating charge,

(ii) 5registration in accordance with Chapter 2 of Part 25 of the
Companies Act 2006, or

(iii) delivery to, or receipt by, the registrar of particulars for
registration,

is to be read as delivery to the FCA of any document required by section
1063(2) to be so delivered.

(4) The specific modifications are—

(a) in section 122(2) of the 1986 Act, a reference to the Court of Session is to
be read as any sheriff court;

(b) section 462(5) of the 1985 Act is subject only to such provisions of that
15Act as apply (by virtue of section 123) to registered societies;

(c) section 466 of that Act has effect as if subsections (4) and (5) and the
words “subsection (4) of” in subsection (6) were omitted.

(5) Subsection (6) applies where any assets of a registered society are subject to—

(a) a floating charge created under the relevant provisions as applied by
20this section, and

(b) an agricultural charge created under Part 2 of the Agricultural Credits
(Scotland) Act 1929 (“the 1929 Act”).

(6) Sections 463(1)(c) and 464(4)(b) of the 1985 Act have effect for the purpose of
determining the relative ranking of those charges as if the agricultural charge
25were a floating charge created under the relevant provisions and registered
under the 1985 Act at the same time as it was registered under Part 2 of the 1929
Act.

(7) This Chapter does not apply in relation to a registered society whose registered
office is in England or Wales.

63 30Filing of information relating to charges created by virtue of section 62

(1) This section applies in relation to a floating charge created by a registered
society under the relevant provisions as applied by section 62.

(2) The following must be delivered to the FCA (by post or otherwise) within the
period of 21 days beginning with the day of execution of the instrument
35creating the charge (or within any extended period allowed under subsection
(6))—

(a) a copy of the instrument, authenticated in the manner directed by the
FCA,

(b) a note, authenticated in the manner directed by the FCA, of such
40particulars relating to the charge as may be required by the FCA, and

(c) the appropriate fee.

(3) If subsection (2) is not complied with, the charge is void against any person
other than the society.

(4) Where a person delivers to the FCA a document within subsection (2)(a) or (b)
45together with the appropriate fee, the FCA must—

(a) give the person an acknowledgement, bearing the FCA’s seal, that
states the date and time of delivery,

(b) place the document and a copy of the acknowledgement on a file kept
by the FCA in respect of the society, and

(c) 5make the file available for inspection during office hours by members
of the public on payment of the appropriate fee.

(5) Subsection (6) applies if it appears to the FCA (on the application of the society
or any other person claiming the benefit of the instrument) that by reason of
inadvertence or other sufficient cause—

(a) 10a duly authenticated copy of the instrument was not delivered to the
FCA within the period of 21 days mentioned in subsection (2), or

(b) any matters were omitted from, or mis-stated in, the note under
subsection (2)(b).

(6) The FCA may, on such terms as it considers appropriate, give a direction—

(a) 15extending the period, or

(b) requiring the omission or mis-statement to be rectified.

(7) “The appropriate fee” means the fee required by rules made by the FCA (in
accordance with paragraph 23 of Schedule 1ZA to the Financial Services and
Markets Act 2000).

64 20Notification of charges etc: Scotland

(1) The FCA may, under section 143, make provision for—

(a) the giving to the FCA of notice of any release, discharge or other
transaction relating to a charge created by an instrument a copy of
which has been delivered to the FCA in pursuance of section 63;

(b) 25the giving to the FCA of notice of any security granted by a registered
society over any of its assets otherwise than under the relevant
provisions as applied by section 62;

(c) the inclusion in the file mentioned in section 63 of any notice within
paragraph (a) or (b) of this subsection.

30Nothing in this subsection limits the generality of the power to give directions
conferred by section 143.

(2) The Court of Session may by Act of Sederunt make rules prescribing the nature
of the documents with which, in relation to a charge of a kind mentioned in
subsection (1)(a), the creditor may require to be provided for identifying the
35assets affected by the charge and establishing the society’s title to them.

CHAPTER 3 Receiver or manager of society’s property

65 English and Welsh societies: restriction on appointment of administrative
receiver

(1) The holder of a qualifying floating charge in respect of the property of a
40relevant society whose registered office is situated in England and Wales may
not appoint an administrative receiver of the society.

(2) This section applies to a floating charge which is created by a relevant society
on or after 6th April 2014 and is either—

(a) a charge in respect of which an application under section 59 has been
made; or

(b) 5a charge created by a debenture registered under section 9 of the
Agricultural Credits Act 1928 as applied by section 14 of that Act.

(3) This section applies in spite of any provision of an agreement or instrument
which purports to empower a person to appoint an administrative receiver (by
whatever name).

(4) 10In this section—

• “administrative receiver”, in relation to a relevant society, means—

  (a)

  a receiver or manager of the whole (or substantially the whole)
  of the society’s property appointed by or on behalf of the holder
  of a floating charge, or by such a charge and one or more other
  15securities, or

  (b)

  a person who would be such a receiver or manager but for the
  appointment of some other person as the receiver of part of the
  society’s property;

• “holder of a qualifying floating charge in respect of the property of a
  20relevant society” has the meaning given in paragraph 14 of Schedule B1
  to the Insolvency Act 1986 as applied in relation to a relevant society by
  an order under section 118;

• “relevant society” means a registered society which is not—

  (a)

  a private registered provider of social housing; or

  (b)

  25registered as a social landlord under Part 1 of the Housing Act
  1996 or under Part 2 of the Housing (Scotland) Act 2010.

66 Duty to account etc of receiver or manager of a society’s property

(1) This section applies to a receiver or manager of a registered society’s property
who has been appointed under the powers contained in any instrument.

(2) 30The receiver or manager must—

(a) within one month from the date of appointment, notify the FCA of the
appointment;

(b) within one month (or such longer period as the FCA may allow) after
the end of each relevant period, deliver to the FCA a return showing
35receipts and payments in that relevant period;

(c) within one month after ceasing to act as receiver or manager, deliver to
the FCA a return showing—

(i) receipts and payments in the final period, and

(ii) the total amount of payments and receipts in all preceding
40relevant periods.

References here to receipts and payments are to receipts and payments of the
receiver or manager.

(3) For the purposes of subsection (2) the relevant periods are—

(a) the period of 6 months beginning with the date of appointment, and

(b) 45each subsequent period of 6 months for which the person is receiver or
manager.

(4) If the society is a PRA-authorised person—

(a) the receiver or manager must send to the PRA a copy of any notification
or return sent under subsection (2) to the FCA;

(b) the FCA must consult the PRA before allowing a period of more than
one month under subsection (2)(b).

5Part 6 Banking and lending by societies

Banking

67 Registered society with withdrawable share capital not to carry on banking
etc

(1) 10A registered society which has any withdrawable share capital must not carry
on the business of banking.

(2) For this purpose the taking of deposits of not more than £400 in any one
payment and not more than £400 for any one depositor, payable on not less
than 2 clear days’ notice, is not to be treated as carrying on the business of
15banking.

(3) A registered society which takes deposits must not make any payment of
withdrawable capital while any payment due on account of any deposit is
unsatisfied.

(4) A registered society which contravenes this section commits an offence and is
20liable on summary conviction to a fine not exceeding level 1 on the standard
scale.

68 Power to amend figures in section 67(2)

(1) The Treasury may by order substitute for the sums for the time being specified
in section 67(2) such other sums (being not less than the minimum sums) as
25they consider appropriate.

(2) The “minimum sums” are—

(a) in the case of the first sum specified in section 67(2) (the limit of
deposits that can be taken at any one time), £10;

(b) in the case of the second sum specified there (the maximum amount
30that can be taken from any one depositor), £250.

(3) The order may—

(a) make any such provision in connection with altering the limits for the
time being applicable under section 67(2) as was made by section 1 of
the Industrial and Provident Societies Act 1978 in connection with the
35alteration made by section 1(1) of that Act, and

(b) contain such other transitional, consequential, incidental or
supplementary provisions as appear to the Treasury to be necessary or
appropriate in that connection.

69 Society carrying on banking must display statement

(1) 40A registered society which carries on the business of banking must display a
statement complying with section 70 in a conspicuous position in—

(a) its registered office, and

(b) every other office or place of business belonging to the society where
the business of banking is carried on.

(2) Section 67(2) (taking of deposits below limits specified there not to be treated
5as carrying on the business of banking) applies for the purposes of this section.

(3) A registered society which fails to comply with this section commits an offence
and is liable on summary conviction to a fine not exceeding level 1 on the
standard scale.

70 Section 69: form of statement

(1) 10The statement required by section 69 is to be in the following form (or as near
to it as is possible in the circumstances)—

1 Capital of the society—

• nominal amount of each share;

• number of shares issued;

• 15amount paid up on shares.

2 Liabilities of the society on the relevant date—

• on judgments;

• on specialty;

• on notes or bills;

• 20on simple contract;

• on estimated liabilities.

3 Assets of the society on the relevant date—

• government securities (stating them);

• bills of exchange and promissory notes;

• 25cash at the bankers;

• other securities.

3 Assets of the society on the relevant date—

• government securities (stating them);

• bills of exchange and promissory notes;

• 30cash at the bankers;

• other securities.

(2) “The relevant date” is—

(a) 1 January (for the period beginning with the first Monday in the
following February and ending immediately before the first Monday in
35the following August);

(b) 1 July (for the period beginning with the first Monday in the following
August and ending immediately before the first Monday in the
following February).

Discharge of charges securing lending by a registered society

71 40Discharge of mortgages of property in England and Wales

(1) This section applies where—

(a) there is a mortgage or other assurance (“the charge”) of any property in
England or Wales to a registered society,

(b) a receipt in full for all moneys secured on the property by the charge is
45endorsed on, or annexed to, the charge,

(c) the receipt is in a form set out in Part 1 of Schedule 2 or is in any other
form specified in the society’s rules (or in a schedule to those rules), and

(d) the receipt is signed by 2 members of the society’s committee and
countersigned by its secretary (or, if the society is in liquidation, is
5signed by the liquidator or liquidators for the time being, described as
such).

(2) For the purposes of the provisions of section 115 of the Law of Property Act
1925 (reconveyances of mortgages by endorsed receipts) specified below, the
receipt is treated as meeting the requirements of subsection (1) of that section—

(a) 10subsection (1) so far as it relates to the operation of a receipt of a kind
mentioned in that subsection;

(b) if the receipt states the name of the person who pays the money,
subsection (2);

(c) subsections (3), (6), (8), (10) and (11);

(d) 15where consistent with the terms of the form used for the receipt,
subsection (7).

72 Discharge of securities: land in Scotland

(1) This section applies to land in Scotland that is held in security by a registered
society by virtue of a heritable security.

(2) 20If the heritable security is constituted by an ex facie absolute conveyance
(whether or not qualified by a back letter), a receipt in Form C in Part 2 of
Schedule 2 (or as nearly as may be in that form) that is endorsed on or annexed
to the conveyance has the following effect on being registered in the General
Register of Sasines—

(a) 25it effectually discharges the heritable security and disburdens the land
comprised in it, and

(b) it vests that land in the person entitled to it at the date the receipt is
granted, in the same way and to the same effect as if the society had
granted a conveyance containing all usual and necessary clauses and
30the conveyance had been duly registered in the General Register of
Sasines.

(3) In any other case—

(a) where the heritable security is recorded in the General Register of
Sasines, a receipt in Form D in Part 2 of Schedule 2 (or as nearly as may
35be in that form) that is endorsed on or annexed to the deed constituting
the heritable security, upon being recorded in the General Register of
Sasines, effectually discharges the heritable security and disburdens
the land comprised in it, in the same way and to the same effect as if the
society had granted a discharge and the discharge had been duly
40recorded in the General Register of Sasines, and

(b) where the heritable security is registered in the Land Register of
Scotland, a receipt in Form E in Part 2 of Schedule 2 (or as nearly as may
be in that form) that is endorsed on or annexed to the deed constituting
the heritable security, upon being registered in the Land Register of
45Scotland, effectually discharges the heritable security and disburdens
the land comprised in it, in the same way and to the same effect as if the
society had granted a discharge and the discharge had been duly
registered in the Land Register of Scotland.

(4) The fee payable in respect of the registration of the receipt may not exceed 25
pence.

(5) In this section—

• “a receipt”, in relation to any security, means a receipt for all moneys
  5advanced by the society on the security of the property comprised in
  the security;

• “conveyance” and “deed” have the meaning given by the Conveyancing
  (Scotland) Act 1924.

73 Discharge of securities: other property in Scotland

(1) 10This section applies to property other than land that is held in security by a
registered society in Scotland.

(2) A receipt in Form F in Part 2 of Schedule 2 (or as nearly as may be in that
form)—

(a) discharges the security, and

(b) 15vests the property comprised in it in the person entitled to it at the date
the receipt is granted without the necessity of any further deed.

(3) But where the original security was intimated to any person, a receipt has the
effect mentioned in subsection (2) only when it is duly intimated to that person.

(4) The fee payable in respect of the registration of the receipt may not exceed 25
20pence.

(5) In this section—

• “a receipt”, in relation to any security, means a receipt for all moneys
  advanced by the society on the security of the property comprised in
  the security;

• 25“deed” has the meaning given by the Conveyancing (Scotland) Act 1924.

74 Receipt on payment of moneys secured to a society

On payment of all moneys intended to be secured to a registered society on the
security of any property, the debtor is entitled (or the debtor’s successor is, or
the debtor’s representatives are, entitled) to a receipt in the appropriate form
30specified in Schedule 2.

Part 7 Accounts, audit and annual returns

Books of account

75 Duty to keep books of account etc

(1) 35A registered society must ensure that proper books of account are kept with
respect to its transactions and its assets and liabilities.

(2) The duty under subsection (1) includes a duty to ensure that there are kept
such books as are necessary to—

(a) give a true and fair view of the state of the society’s affairs, and

(b) 40explain its transactions.

(3) A registered society must establish and maintain a satisfactory system of
control of its—

(a) books of account,

(b) cash holdings, and

(c) 5receipts and remittances.

76 Form of books of account

(1) A registered society may keep a book of account by—

(a) making entries in bound books, or

(b) recording the matters in question in any other way.

(2) 10Where a book of account is kept otherwise than by making entries in a bound
book, the society must take adequate precautions for—

(a) guarding against falsification, and

(b) facilitating its discovery.

Year of account

77 15Year of account: societies registered on or after 8 January 2012

(1) This section applies to a registered society registered on or after 8 January 2012.

(2) The society’s first year of account is the period of more than 6 months but not
more than 18 months that—

(a) begins with the date of the society’s registration, and

(b) 20ends with its accounting reference date.

(3) Each subsequent year of account—

(a) begins immediately after the end of the previous year of account, and

(b) ends with its next accounting reference date.

(4) In each calendar year, the society’s “accounting reference date” is (subject to
25subsection (5)) the last day of the month in which the anniversary of the
society’s registration falls.

(5) The society may by notice to the FCA specify a new accounting reference date
having effect in relation to its current and subsequent years of account.

(6) A notice under subsection (5) must state whether the current year of account—

(a) 30is to be shortened, so as to come to an end on the first occasion on which
the new accounting reference date falls or fell after the beginning of the
year of account, or

(b) is to be extended, so as to come to an end on the second such occasion.

(7) A notice extending the current year of account has no effect if—

(a) 35it is given less than 5 years after the end of a year of account that was
extended under this section, or

(b) it would extend the year of account so that it would exceed 18 months.

(8) If the society is dissolved by an instrument of dissolution under section 119, its
last year of account ends with the date of the instrument of dissolution.