Mutuals' Redeemable Shares Bill (HL Bill 43)

1 Power to permit the use of a new class of redeemable shares

(1) The Secretary of State may, by regulations, amend the Industrial and Provident
Societies Act 1965, hereafter called “the 1965 Act”, the Friendly Societies Act
1992, hereafter called “the 1992 Act”, the Companies Act 2006 and any
5legislation governing a mutual insurer to permit and facilitate the use of a new
and additional class of redeemable share in a society or mutual insurer.

(2) This subsection applies to redeemable shares referred to in subsection (1)—

(a) a redeemable share in a society registered under the 1965 Act may be
transferable but may not be withdrawable;

(b) 10a redeemable share in a society registered under the 1992 Act shall have
such characteristics as may be provided by amendments made to that
Act by regulations made under this section but shall not be
withdrawable;

(c) a redeemable share in a mutual insurer shall have such characteristics
15as are specified in regulations made under this Act and shall be subject
to such provisions of the Companies Act 2006 (whether or not they are
amended or inserted by regulations under this Act) as are applied to
them by such regulations;

(d) regulations made under this Act shall ensure, in respect of redeemable
20shares whose use is permitted or facilitated by any such regulations,
that every holder of such shares is or becomes—

(i) a member of the society or mutual insurer;

(ii) entitled to only one vote as a member regardless of the value or
number of shares that they hold and regardless of any
entitlement they may have as a result of their participation in
the society or mutual insurer otherwise than as a holder of such
5shares;

(iii) entitled to only the level of remuneration payable under the
rules of the society or the constitution of the mutual insurer;

(iv) entitled to repayment of the nominal value of the share on
redemption of the share, or the earlier solvent liquidation of the
10society or the mutual insurer and to no other bonus or part of
any surplus.

(3) The power to make regulations under this Act is exercisable by statutory
instrument and must not be made unless a draft of it has been laid before and
approved by resolution of each House of Parliament.

2 15Redeemable shares

(1) Regulations made under section 1(1) may provide for a society or mutual
insurer to issue either—

(a) shares that will be redeemed on a fixed or ascertainable date stated in
the terms of issue of the share, or

(b) 20shares that can be redeemed on a date chosen either by the society or
mutual insurer or by the member who holds the share in accordance
with the terms of issue of the share.

(2) The memorandum or rules of any society or constitution of any mutual insurer
may exclude or restrict the issue of redeemable shares.

(3) 25A society or mutual insurer may only issue redeemable shares if it is authorised
to do so by its memorandum or rules.

(4) A society or mutual insurer with share capital may only redeem a redeemable
share if it has, at the time of redemption, at least one issued share which is
neither redeemable nor withdrawable.

3 30Terms and manner of redemption

(1) Regulations made under section 1 may permit the directors or committee of a
society or mutual insurer to determine the terms, conditions and manner of
redemption of shares if they are authorised to do so—

(a) by the society’s or mutual insurer’s rules or other constitutional
35document, or

(b) by a resolution of the society or mutual insurer.

(2) Regulations made under section 1 may provide that, notwithstanding any
provision of any legislation or of the society’s rules or the mutual insurer’s
constitution, a resolution under subsection (1)(b) may be an ordinary
40resolution, even if it amends the society’s rules or the mutual insurer’s
constitution.

(3) Where the directors, committee or committee of management can be
authorised by regulations, in accordance with subsection (1), to determine the
terms, conditions and manner of redemption of shares, regulations shall
45provide—

(a) that they must do so before the shares are allotted, and

(b) that any obligation of the society or mutual insurer to state in a
statement of capital the rights attached to the shares extends to the
terms, conditions and manner of redemption.

(4) Where directors, committee or committee of management are not so
5authorised, the terms, conditions and manner of redemption of any
redeemable shares must be stated in the society’s rules or the mutual insurer’s
constitution.

(5) Regulations made under section 1 may apply sections 658 to 737 of the
Companies Act 2006, with such modifications as the Treasury may think fit, to
10any society or mutual insurer to be permitted by those regulations to issue
redeemable shares.

4 Restriction on voting rights

No holder of a redeemable share, who is a member of a society or mutual
insurer only by virtue of holding such a share, shall be entitled to propose, or
15vote in respect of, any resolution under section 50, 51 or 52 of the Industrial and
Provident Societies Act 1965, or section 85, 86 or 91 of the Friendly Societies Act
1992 (amalgamation, transfer of engagements or conversion into a company) or
any resolution or proposal to similar effect in the case of a mutual insurer,
including a compromise or arrangement proposed at a meeting called under
20section 896 of the Companies Act 2006 or, in any case, a proposed transfer or
sale of business or property under section 110 of the Insolvency Act 1986.

5 Definitions

In this Act—

• a “society” is—

  (a)

  25a society registered under the 1965 Act other than a credit union
  registered under that Act by virtue of the Credit Unions Act
  1979; or

  (b)

  a friendly society incorporated and registered under the
  Friendly Societies Act 1992; or

  (c)

  30a body which is a co-operative or mutual undertaking of such
  description as HM Treasury may specify by order and which is
  established or operates in accordance with the laws of an EEA
  State or any of the Channel Islands or the Isle of Man;

• a “mutual insurer” is a body corporate, other than a society, which has no
  35share capital and which has permission to effect or carry out contracts
  of insurance pursuant to the Financial Services and Markets Act 2000;

• “the 1965 Act” includes the Industrial and Provident Societies Acts 1965
  to 2003, all later Acts amending or replacing them and any secondary
  legislation made under any such Acts;

• 40“the 1992 Act” includes the Friendly Societies Act, all later Acts amending
  or replacing it, and any secondary legislation made under any such
  Acts.

6 Short title, commencement and extent

(1) This Act may be cited as the Mutuals’ Redeemable Shares Act 2013.

(2) This Act shall come into force on such day as the Secretary of State may by
order made by statutory instrument appoint, and different days may be
appointed for different purposes.

(3) This Act extends to England and Wales, Scotland and Northern Ireland.