Building Societies (Transfer Resolutions) Bill

House of Commons

Session 1999-2000
Internet Publications
Other Bills before Parliament

Building Societies (Transfer Resolutions) Bill

This is the text of the Building Societies (Transfer Resolutions) Bill, as presented to the House of Commons on 15th December 1999.

Building Societies (Transfer Resolutions) Bill

A
B I L L
TO
Amend the Building Societies Act 1986 in respect of resolutions at meetings of building societies relating to the transfer of the business of a building society to a commercial company or to another building society and in respect of share rights on transfer of business to a commercial company.
BE IT ENACTED by the Queen's most Excellent Majesty, by and with the advice and consent of the Lords Spiritual and Temporal, and Commons, in this present Parliament assembled, and by the authority of the same, as follows:-

Borrowing members' resolutions and transfer resolutions.     1. - (1) For sub-paragraph (1) of paragraph 29 of Schedule 2 to the Building Societies Act 1986 ("the 1986 Act") (borrowing members' resolutions) there shall be substituted the following sub-paragraph-

    "(1) A resolution of a building society shall be a borrowing members' resolution when it has been passed by not less than three-quarters of the number of the borrowing members of the society-

(a) qualified to vote on a borrowing members' resolution; and

(b) voting in person or by proxy on a poll on the resolution at a meeting of the society of which notice specifying the intention to move the resolution as a borrowing members' resolution has been duly given.".

    (2) For sub-paragraphs (1) to (3) of paragraph 30 of Schedule 2 to the 1986 Act (transfer resolutions) there shall be substituted the following sub-paragraphs-

    "(1) The transfer resolutions required for the purposes of section 97 for the approval by members of a building society of a transfer of its business are two resolutions, of which-

(a) one ("the requisite shareholders' resolution") is passed in accordance with sub-paragraph (2)(a) or (3)(a), and sub-paragraphs (4) and (5) below, and

(b) the other ("the requisite borrowers' resolution") is passed in accordance with sub-paragraph (2)(b) or (3)(b), and sub-paragraphs (4) and (5) below.

    (2) In a case where the successor is to be a specially formed company-

(a) the requisite shareholders' resolution-

(i) must be passed as a shareholding members' resolution, and

(ii) must be passed on a poll on which not less than 50 per cent of the members of the society eligible to vote on a shareholding members' resolution voted;

and the notice of the resolution required by paragraph 27A above must specify that the resolution will not be effective unless both of the above requirements are fulfilled;

(b) the requisite borrowers' resolution-

(i) must be passed as a borrowing members' resolution, and

(ii) must be passed on a poll on which not less than 50 per cent of the members of the society eligible to vote on a borrowing members' resolution voted;

and the notice of the resolution required by paragraph 29(1) above must specify that the resolution will not be effective unless both of the above requirements are fulfilled.

    (3) Subject to any direction under sub-paragraph (5) below, in a case where the successor is to be an existing company-

(a) the requisite shareholders' resolution must be passed as a shareholding members' resolution and either-

(i) must be passed by not less than 50 per cent of the members qualified to vote on a shareholding members' resolution, or

(ii) must be passed by the holders, being members qualified to vote on a shareholding members' resolution, of shares in the society to a value, on the voting date, representing not less than 90 per cent of the total value of the shares held on that date by the members so qualified to vote;

and, in either case, the resolution must be a resolution in relation to which the notice required by paragraph 27A above includes a statement specifying that the resolution will not be effective unless either of the above requirements is fulfilled;

(b) the requisite borrowers' resolution must be passed as a borrowing members' resolution and either-

(i) must be passed by not less than 50 per cent of the members qualified to vote on a borrowing members' resolution, or

(ii) must be passed by persons, being members qualified to vote on a borrowing members' resolution, whose mortgage debts on the voting date represent not less than 90 per cent of the total amount of the mortgage debts owing on that date from the members so qualified to vote;

and, in either case, the resolution must be a resolution in relation to which the notice required by paragraph 29(1) above includes a statement specifying that the resolution will not be effective unless either of the above requirements is fulfilled;".

    (3) At the end of sub-paragraph (5) of that paragraph there shall be added the words "and the requisite borrowers' resolution is to be effective if it is passed as a borrowing members' resolution.".

    (4) In sub-paragraph (6) of that paragraph, for the words "sub-paragraph (2)(b), (3)(a) or (3)(b)" there shall be substituted the words "sub-paragraph (2)(a)(ii), (2)(b)(ii), (3)(a)(i) or (3)(b)(i)".

Members' transfer resolutions.     2. After paragraph 32 of Schedule 2 to the 1986 Act there shall be inserted the following paragraph-

"Members' transfer resolutions

    32A.- (1) This paragraph applies to any resolution of a building society (in this paragraph called a members' transfer resolution) which satisfies the following conditions-

(a) the resolution is intended to be moved-

(i) by or on behalf of members of the society at a special meeting called on a members' requisition under paragraph 20A above; or

(ii) at an annual general meeting on behalf of members of the society who have given notice under paragraph 31(1) above;

and

(b) the resolution relates to the possibility of the society transferring its business to a commercial company.

    (2) A members' transfer resolution will not be effective unless it is put separately to the shareholding and borrowing members of the society and-

(a) when put to the shareholding members-

(i) it is passed by not less than three-quarters of the number of the shareholding members of the society who would be qualified to vote on a shareholding members' resolution and who vote in person or by proxy on a poll on the resolution at a meeting of the society; and

(ii) it is passed on a poll on which not less than 50 per cent of the members of the society who would be qualified to vote on a shareholding members' resolution voted;

and

(b) when put to the borrowing members-

(i) it is passed by not less than three-quarters of the number of the borrowing members of the society who would be qualified to vote on a borrowing members' resolution and who vote in person or by proxy on a poll on the resolution at a meeting of the society; and

(ii) it is passed on a poll on which not less than 50 per cent of the members of the society who would be qualified to vote on a borrowing members' resolution voted;

and the notice of the meeting at which the resolution is to be moved must specify the intention to move the resolution as a members' transfer resolution and must include a statement that the resolution will not be effective unless each of the above requirements is fulfilled.

    (3) The Treasury, after consultation with the Commission, may by order amend sub-paragraph (2)(a)(i), (2)(a)(ii), (2)(b)(i) or (2)(b)(ii) above so as to substitute for the percentage for the time being specified in the sub-paragraph such other percentage as it thinks appropriate.

    (4) The power to make orders under sub-paragraph (3) above is exercisable by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament.".

Share rights.     3. In subsection (8) of section 100 of the 1986 Act (regulated terms etc: distributions and share rights), the words "in priority to other subscribers" shall cease to have effect.

Short title and commencement.     4. - (1) This Act may be cited as the Building Societies (Transfer Resolutions) Act 2000.

    (2) This Act shall come into force on the expiration of a period of three months beginning with the day on which it is passed.

© Parliamentary copyright 1999
Prepared 29 February 2000