(b) providing expressly that the existing auditor is not to be re-appointed,
or

(c) disapplying section 83 (duty to appoint auditors) in relation to the
current year of account.

(3) 5The existing auditor is not re-appointed if the auditor—

(a) has given the society notice in writing of the auditor’s unwillingness to
be appointed,

(b) is ineligible for appointment for the current year of account (see
subsection (5)), or

(c) 10has ceased to act as the society’s auditor by reason of incapacity.

(4) The existing auditor is not automatically re-appointed by virtue of subsection
(1) if—

(a) notice is given of a resolution to appoint a person in place of the existing
auditor, and

(b) 15the resolution cannot be proceeded with at the meeting—

(i) because of the death or incapacity of the person, or

(ii) because the person is ineligible for appointment for the current
year of account.

(5) For the purposes of this section a person is ineligible for appointment for the
20current year of account if—

(a) the person’s appointment in relation to the society is prohibited by
section 92, or

(b) the person is not a qualified auditor at the time when the question of the
person’s appointment falls to be considered, and the society is not a
25small society in respect of that year.

94 Resolutions relating to appointment or removal of auditors

(1) This section applies to a resolution at a general meeting of a registered
society—

(a) appointing another person as auditor in place of the existing auditor, or

(b) 30providing expressly that the existing auditor is not to be re-appointed.

“The existing auditor” has the same meaning as in section 93.

(2) The resolution is effective only if notice of the intention to move it is given to
the society at least 28 days before the meeting.

(3) Where notice under subsection (2) is given—

(a) 35the society must send a copy of the notice to the existing auditor as soon
as possible,

(b) if the society is required by its rules to give notice of the meeting to its
members, it must (if it is practicable to do so) give them notice of the
resolution at the same time and in the same way as it gives notice of the
40meeting, and

(c) if the society does not give notice under paragraph (b), it must give its
members notice of the resolution at least 14 days before the meeting
by—

(i) advertisement in a newspaper having an appropriate
45circulation, or

(ii) in any other way allowed by the society’s rules.

(4) Where—

(a) section 93(4) applies in relation to the resolution (resolution to appoint
a person in place of the existing auditor cannot be proceeded with), and

(b) the society’s rules provide that an auditor can be appointed by a
5resolution passed at a general meeting only if the society is given notice
of the intended resolution before the meeting,

a resolution passed at the meeting re-appointing the existing auditor or
appointing an auditor in place of that auditor is effective even though notice of
the resolution has not been given.

(5) 10Any provision of this section which requires notice to be given to the society’s
members or confers any right upon a member is to be read, in the case of a
meeting of delegates appointed by members, as requiring the notice to be given
to the delegates or conferring the right upon a delegate.

95 Resolutions relating to auditors: auditors’ representations

(1) 15This section applies where a registered society has given notice of a resolution
to which section 94 (resolutions relating to auditors) applies to the existing
auditor (within the meaning of that section).

(2) The auditor may—

(a) at any time before the date of the general meeting, make
20representations in writing to the society (not exceeding a reasonable
length) with respect to the intended resolution;

(b) notify the society that the auditor intends to make such representations;

(c) request that the society’s members are given notice of—

(i) the auditor’s intention to make representations, or

(ii) 25any representations made by the auditor and received by the
society before notice of the intended resolution is given to its
members.

(3) Where the society receives representations or a notification of intended
representations before the date when notice of the intended resolution is
30required by section 94(3) to be given to its members, the society must—

(a) in any notice of the resolution given to members, state—

(i) that it has received the representations or notification, and

(ii) that a copy of any representations received by the society before
the date of the general meeting will be given to any member
35who makes a request for them before that date, and

(b) send a copy of any such representations to any member who makes
such a request.

See section 96 for provisions about providing a copy of the representations by
placing them on a website.

(4) 40The auditor may require any representations made by the auditor before the
date of the general meeting to be read out at the meeting.

This does not affect the auditor’s right to be heard orally.

This does not affect the auditor’s right to be heard orally.

(5) But if, on the application of the society or any other person, the appropriate
45court is satisfied that the rights conferred by this section are being abused to
secure needless publicity for defamatory matter—

(a) copies of the representations need not be sent out, and

(b) the representations need not be read out at the meeting.

(6) The appropriate court may order the auditor to pay all or part of the society’s
costs (or, in Scotland, expenses) on an application under this section, even if the
auditor is not a party to the application.

(7) The “appropriate court” means—

(a) 5if the society’s registered office is in Scotland, the Court of Session;

(b) otherwise, the High Court.

(8) Any provision of this section which requires notice to be given to the society’s
members or confers any right upon a member is to be read, in the case of a
meeting of delegates appointed by members, as requiring the notice to be given
10to the delegates or conferring the right upon a delegate.

96 Section 95: provision of auditor’s representations by making available on
website

(1) This section applies where a society is required by section 95(3)(b) to send a
person a copy of the representations referred to there.

(2) 15The society is regarded as sending the person a copy of a document containing
the representations if the following conditions are met—

(a) the person has agreed (generally or specifically) that the society may
make the document available to the person on a website (and has not
revoked that agreement);

(b) 20the society has notified the person of the following—

(i) the website address;

(ii) the presence of the document on the website;

(iii) the place on the website where the document may be accessed;

(iv) how to access it;

(c) 25the document is present on the website for the whole of the period—

(i) beginning when the notification is sent (or, if later, when the
document first appears on the website), and

(ii) ending 28 days after the day the notification is sent (or, if later,
the day the document first appears on the website).

(3) 30If the document is absent from the website for part of the period referred to in
subsection (2)(c), the absence is to be disregarded if it is wholly attributable to
circumstances that it would not be reasonable to have expected the society to
prevent or avoid.

97 Remuneration of qualified auditors

(1) 35The Treasury may by regulations prescribe the maximum rates of
remuneration to be paid by registered societies for—

(a) the audit of their accounts and balance sheets by qualified auditors;

(b) the making of a report (a “relevant report”) for the purposes of—

(i) row 5 or 6 of the table in section 82, or

(ii) 40section 85(2)(a) or (b) (duty to obtain report in certain cases
where section 83 disapplied).

(2) The regulations may make different provision for different cases or
circumstances.

(3) An auditor or person appointed to make a relevant report—

(a) must not ask for or receive, and

(b) is not entitled to receive,

remuneration in excess of the rate prescribed by the regulations in respect of
the auditor’s or person’s service.

5Group accounts

98 Group accounts

(1) This section applies to a registered society (“the parent society”) which has
subsidiaries at the end of a year of account (“the relevant year”).

(2) The society must ensure that accounts (“group accounts”) are prepared for that
10year dealing with the state of affairs and income and expenditure of the society
and its subsidiaries.

(3) The group accounts must give a true and fair view of the state of affairs and
income and expenditure of the society and the subsidiaries dealt with as a
whole, so far as concerns members of the society.

(4) 15The group accounts must comprise such accounts and contain such particulars
as the Treasury may by regulations prescribe.

The regulations may make different provision for different cases or
circumstances.

The regulations may make different provision for different cases or
20circumstances.

(5) If a subsidiary’s year of account does not coincide with that of the parent
society, the group accounts must deal with—

(a) the subsidiary’s state of affairs as at the end of its year of account
ending with or last before the end of the relevant year, and

(b) 25its income and expenditure for that year of account.

This is subject to any direction made by the FCA, on the application of the
parent society’s committee or with the consent of that committee.

(6) The parent society must submit the group accounts for the relevant year for
audit to the auditors appointed to audit the society’s accounts and balance
30sheet for that year.

(7) The auditors must make a report to the society on the group accounts, stating—

(a) whether the accounts have been properly prepared in accordance with
the requirements of this Part and any regulations made under it;

(b) whether, in their opinion, the accounts give a true and fair view of the
35matters mentioned in subsection (3).

(8) The parent society must send the group accounts and a copy of the auditor’s
report on them to the FCA together with its annual return for the relevant year.

99 Section 98: exceptions

(1) This section supplements section 98.

(2) 40A registered society is not required to prepare group accounts for a year of
account if, at the end of the year, it is the wholly owned subsidiary of another
body corporate incorporated in Great Britain.

(3) Group accounts need not deal with a subsidiary if in the opinion of the parent
society’s committee, approved by the FCA—

(a) it is impracticable, or would be of no real value to the society’s
members, in view of the insignificant amounts involved,

(b) it would involve expense or delay out of proportion to the value to
those members,

(c) 5the result would be misleading, or harmful to the business of the society
or any of its subsidiaries, or

(d) the business of the society and that of the subsidiary are so different
that they cannot reasonably be treated as a single undertaking.

(4) A society is not required to prepare group accounts if, by virtue of subsection
10(3), the accounts would not need to deal with any of the society’s subsidiaries.

(5) For the purposes of section 98, no account is to be taken of a subsidiary in
relation to a year of account if—

(a) by virtue of subsection (3) or this subsection, there was no requirement
for the subsidiary to be dealt with in group accounts of the parent
15society for the previous year of account, and

(b) the society’s auditors include in the appropriate report, made on or
before the relevant date, a certificate to the effect that they agree with
the society’s committee that the following continued to apply
throughout the year of account—

(i) 20the reason given by the committee in its last opinion in respect
of the subsidiary to have been approved by the FCA under
subsection (3), and

(ii) the grounds given by the committee in that opinion for that
reason.

(6) 25For the purposes of subsection (5)(b)—

• the “appropriate report” is—

  (a)

  if the society is under a duty to ensure that group accounts are
  prepared for the year of account, the auditor’s report on those
  accounts;

  (b)

  30otherwise, the auditor’s report under section 87;

• the “relevant date” is the last date for making the annual return for the
  year of account.

(7) For the purposes of this section a registered society is a “wholly owned
subsidiary” of another body corporate if each of its members is—

(a) 35that other body corporate,

(b) a wholly owned subsidiary of that body, or

(c) a nominee of that body or such a subsidiary.

(8) If the society is a PRA-authorised person, the FCA must not give an approval
under this section unless it has consulted the PRA.

40Interpretation of Part 7

100 Meaning of company being a “subsidiary” of a society

(1) For the purposes of this Part, a company is a subsidiary of a registered society
if—

(a) the society is a member of the company and controls the composition
45of its board of directors, or

(b) the society holds more than half in nominal value of the company’s
equity share capital.

(2) For this purpose, a society is regarded as controlling the composition of a
company’s board of directors if the society, by exercising a power exercisable
5by it without the consent or concurrence of any other person, can appoint or
remove the holders of all or a majority of the directorships.

(3) For the purposes of subsection (2), a society is treated as having power to
appoint to a directorship if—

(a) a person can be appointed to it only if the society exercises a power of
10a kind mentioned in that subsection in favour of the person,

(b) a person’s appointment to it follows necessarily from the person’s
appointment as a member of the society’s committee, or

(c) the directorship is held by the society.

(4) In determining whether a company is a subsidiary of a registered society—

(a) 15any shares held or power exercisable by the society in a fiduciary
capacity are treated as not held or exercisable by it;

(b) subject to paragraphs (c) and (d), any shares held or power exercisable
by any person as a nominee for the society are treated as held or
exercisable by the society (but this does not apply where the society is
20concerned only in a fiduciary capacity);

(c) no account is to be taken of any shares held or power exercisable by any
person by virtue of the provisions of—

(i) any debentures of the company, or

(ii) a trust deed for securing any issue of such debentures;

(d) 25any shares held or power exercisable by the society or a nominee for the
society (not being held or exercisable as mentioned in paragraph (c))
are treated as not held or exercisable by the society if—

(i) the ordinary business of the society includes the lending of
money, and

(ii) 30the shares are held or power is exercisable by way of security
only for the purposes of a transaction entered into in the
ordinary course of that business.

(5) For the meaning of “company” and “equity share capital” see section 102.

101 Meaning of society being a “subsidiary” of another society

(1) 35For the purposes of this Part, a registered society (S) is a “subsidiary” of another
registered society (P) if—

(a) P is a member of S and controls the composition of its committee, or

(b) P can exercise a majority of the votes to which S’s members are entitled
under its rules.

(2) 40For this purpose P is regarded as controlling the composition of S’s committee
if—

(a) P can appoint and remove all or a majority of the committee’s
members, by exercising a power that is exercisable by it without the
consent or concurrence of any other person, or

(b) 45P is a member of the committee and, by exercising such a power, can
appoint and remove the remaining members or such number of
members as, together with itself, would constitute a majority.

(3) For the purposes of subsection (2) P is treated as having power to appoint a
person to membership of S’s committee if—

(a) the person can be appointed only if P exercises a power of a kind
mentioned in subsection (2)(a) in favour of the person, or

(b) 5the person’s appointment follows necessarily from the person’s
appointment as a member of P’s committee.

(4) Section 100(4) applies (with necessary modifications) for the purposes of this
section as it applies for the purposes of section 100.

102 Interpretation of Part 7

10In this Part—

• “company” includes any body corporate other than a registered society;

• “deposit” is to be read with—

  (a)

  section 22 of the Financial Services and Markets Act 2000,

  (b)

  any relevant order under that section, and

  (c)

  15Schedule 2 to that Act;

• “equity share capital”, in relation to a company, means its issued share
  capital excluding any part of it which (as regards dividends and
  capital) carries no right to participate beyond a specified amount in a
  distribution;

• 20“qualified auditor” has the meaning given by section 91;

• “small society” has the meaning given by section 83;

• “subsidiary” has the meaning given by sections 100 and 101;

• “turnover”, in relation to a society, means the amounts derived from the
  provision of goods and services falling within the society’s activities
  25after deduction of—

  (a)

  trade discounts,

  (b)

  value added tax, and

  (c)

  any other taxes based on the amounts so derived.

Part 8 30Inspection and investigations

Power to inspect books etc

103 Power of members etc to inspect own account and society’s register

(1) A member of a registered society, and any person having an interest in its
funds, must be allowed to inspect the following at all reasonable hours—

(a) 35the person’s own account, and

(b) all entries in the society’s duplicate register kept under section 30
(register of members and officers) or, if no duplicate register is kept, all
entries in its register kept under that section except those made under
section 30(2)(c) and (d) (shares and property of members).

(2) 40Subsection (1) is subject to any regulations as to the time and manner of
inspection which may from time to time be made by the society’s general
meetings.

104 Power of society to make rules authorising inspection of books

(1) A registered society may by its rules authorise the inspection of such of its
books upon such conditions as may be specified in the rules.

(2) The rules may not authorise a person to inspect another person’s loan or
5deposit account without that other person’s written consent.

(3) Subsection (2) does not apply to inspection by an officer of the society or a
person specially authorised by a resolution of the society.

105 Power of FCA to appoint accountant or actuary to inspect a society’s books

(1) The FCA may, on the application of at least 10 qualifying members of a
10registered society, appoint an accountant or actuary to inspect the society’s
books and to report on them; but this is subject to subsection (3).

(2) “Qualifying member” means a person who, immediately before the date of the
application, has been a member for at least one year.

(3) The members who make the application must deposit with the FCA as security
15for the costs of the proposed inspection such sum as the FCA may require.

(4) The expenses of and incidental to the inspection are to be met—

(a) by the applicants,

(b) out of the society’s funds, or

(c) by the society’s members, officers, former members or former officers,

20in such proportions as the FCA directs.

(5) A person appointed under this section has power to—

(a) make copies of any of the society’s books, and

(b) take extracts from those books,

at all reasonable hours at the society’s registered office or at any other place
25where the books are kept.

(6) The FCA must communicate the results of any inspection under this section to
the applicants and the society.

Inspectors and special meetings

106 Appointment of inspectors and calling of special meetings

(1) 30The FCA may, on the application of at least 10% of a registered society’s
members or (if less) 100 members—

(a) appoint one or more inspectors to examine into and report on the
society’s affairs, or

(b) call a special meeting of the society.

(2) 35The power of the FCA to call a special meeting under this section in the case of
a relevant society in respect of which a moratorium is in force under section 1A
of the Insolvency Act 1986 is subject to paragraph 12(1)(b) of Schedule A1 to
that Act as applied in relation to a relevant society by an order under section
118.

(3) 40An application under this section must be supported by such evidence for the
purpose of showing that the applicants have good reason for requiring the

examination or meeting (and do not have malicious motives) as the FCA
directs.

(4) The society must be given such notice of the application as the FCA directs.

(5) The FCA may require the applicants to give security for the costs of the
5proposed examination or meeting before exercising its powers under
subsection (1).

(6) The expenses of and incidental or preliminary to an examination or special
meeting are to be met—

(a) by the applicants,

(b) 10out of the society’s funds, or

(c) by the society’s members, officers, former members or former officers,

in such proportions as the FCA directs.

(7) In this section “relevant society” means a registered society which is not—

(a) a private registered provider of social housing, or

(b) 15registered as a social landlord under Part 1 of the Housing Act 1996 or
under Part 2 of the Housing (Scotland) Act 2010.

107 Section 106: examinations and special meetings

(1) This section supplements section 106.

(2) An inspector may—

(a) 20require the production of any (or all) of the society’s books, accounts,
securities and documents;

(b) examine on oath its officers, members, agents and employees in
relation to its business (and may for that purpose administer oaths).

(3) The FCA may direct—

(a) 25the time and place of a special meeting;

(b) the matters to be discussed and determined at the meeting.

(4) A special meeting has—

(a) all the powers of a meeting called in accordance with the society’s rules;

(b) the power to appoint its own chair (despite anything in the society’s
30rules).

General restriction on inspection

108 General restriction on inspection of books

Except as provided by this Act, no member or other person has a right to
inspect a registered society’s books.

Part 9 Amalgamations, conversions, dissolution etc

Amalgamations and transfers of engagements between societies

109 Amalgamation of societies

(1) 5Any two or more registered societies may, by special resolution of each of
them, become amalgamated together as one society.

(2) The amalgamation may involve the dissolution, or division of the funds, of any
of the societies.

(3) On the amalgamation, the property of each of the societies vests in the
10amalgamated society without the need for any form of conveyance other than
that contained in the special resolution.

(4) Section 111 contains provisions about special resolutions under this section.

(5) The amalgamation does not prejudice any right of a creditor of any of the
societies.

110 15Transfer of engagements between societies

(1) A registered society (society A) may by special resolution transfer its
engagements to any other registered society which undertakes to fulfil those
engagements (society B).

(2) If the resolution approves the transfer of all or part of society A’s property to
20society B, the property vests in society B without any conveyance or
assignment (or, in Scotland, assignation).

(3) Section 111 contains provisions about special resolutions under this section.

(4) The transfer of engagements does not prejudice any right of a creditor of either
society.

111 25Special resolutions under section 109 or 110

(1) This section supplements sections 109 and 110.

(2) A resolution is a “special resolution” if—

(a) the resolution is passed at a general meeting by at least two-thirds of
the eligible members who vote,

(b) 30notice of this meeting (“the first meeting”), specifying the intention to
propose the resolution, is duly given in accordance with the society’s
rules,

(c) the resolution is confirmed at a subsequent general meeting by over
half of the eligible members who vote,

(d) 35notice of this meeting (“the second meeting”) is duly given, and

(e) the second meeting is held at least 14 days, and no more than one
month, from the day of the first meeting.

(3) In subsection (2)—