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remove
existing funding limits in respect of building societies, subject
to |
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regulation by the Financial
Services Authority; to provide consequential rights |
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to building society members;
and to enable specified categories of mutual |
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organisations to transfer
engagements to one another or to a company. |
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Be
it enacted by the Queen’s most Excellent Majesty,
by and with the advice and |
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consent of the Lords Spiritual
and Temporal, and Commons, in this present |
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Parliament assembled,
and by the authority of the same, as follows:— |
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1 |
Removal
of the funding limit for building societies |
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(1) |
In subsection (1)(a) of
section 1 (functions of the Financial Services Authority |
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in relation to building
societies) of the Building Societies
Act 1986 (c. 53) (“the |
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1986 Act”), for the
words “remains that of making loans which are secured
on |
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residential property and
funded substantially by their members” substitute “is
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5 |
that of making loans which
are secured on residential property”. |
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(2) |
In subsection (1)(a) of
section 5 of the 1986 Act (establishment, constitution and |
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powers) the words “and
are funded substantially by its members” shall cease |
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(3) |
Section 7 of the 1986 Act
(the funding limit) shall cease to have effect. |
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2 |
Power
to amend etc, to alter priorities on dissolution and winding
up of |
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(1) |
After section 90A of the
1986 Act (application of other companies insolvency |
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legislation to building
societies) insert— |
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“90B |
Power
to amend etc, to alter priorities on dissolution and winding
up |
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(1) |
The Treasury may by order
make such modifications to the relevant |
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provisions
of this Act and to the applicable company enactments as |
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appear
to them to be expedient to secure that— |
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(a) |
on a dissolution or winding
up of a building society, the assets |
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of
the society are applied in the following order— |
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(i) |
in
paying debts of the society which constitute |
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preferential
debts under the applicable company |
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enactments
(or, where the society is being dissolved by |
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consent,
which would have constituted such debts if the |
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society
were being wound up); |
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(ii) |
in satisfying the society's
remaining liabilities to |
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depositors
and other creditors (other than liabilities in |
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respect
of subordinated deposits) and its liabilities to |
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holders
of shares (other than liabilities in respect of |
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deferred
shares) pari passu; |
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(iii) |
in satisfying the society's
liabilities in respect of |
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(iv) |
in satisfying the society's
liabilities in respect of deferred |
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(v) |
in paying any surplus
to the persons entitled to it under |
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15 |
the
society's rules (as supplemented, in the case of a |
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dissolution
by consent, by the instrument of |
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(b) |
in relation to the approval
of voluntary arrangements, the |
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making
of administration orders and the appointment of |
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receivers
and managers, the rights of holders of shares in a |
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society
are so far as the Treasury thinks practicable assimilated |
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with
the rights of the society's depositors and other creditors. |
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(2) |
The power conferred by
subsection (1) above includes power to modify |
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the
relevant provisions of this Act so as to confer power to make
orders, |
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regulations,
rules or other subordinate legislation. |
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(3) |
An order under this section
may— |
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(a) |
make consequential amendments
of or repeals in other |
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(b) |
include provision that
it shall take immediate effect in relation |
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to
a building society notwithstanding anything to the contrary
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in
the society's rules; or |
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(c) |
make such transitional
or saving provisions as appear to the |
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Treasury
to be necessary or expedient including, in particular, |
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provisions
to secure that the order does not prejudice— |
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(i) |
the rights of holders
of any preferential shares issued by |
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a
society before the date on which the order comes into |
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(ii) |
the rights of depositors
or other creditors to payment of |
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any
deposit made or debt incurred before that date. |
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(4) |
A statutory instrument
containing an order made under subsection (1) |
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above
shall be subject to annulment in pursuance of a resolution of
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either
House of Parliament. |
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(a) |
the “applicable
company enactments” are the following |
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enactments
as for the time being in force, that is to say— |
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(i) |
the enactments specified
in paragraph 1 of Schedule 15 |
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to
this Act, as applied to building societies by section |
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(ii) |
the
enactments specified in paragraph 1(2) of Schedule |
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15A
to this Act, as applied to building societies by |
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(b) |
“modification”
includes any additions; |
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(c) |
the “relevant provisions
of this Act” are the following |
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provisions
as for the time being in force, that is to say— |
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(i) |
so much of this Part
as relates to dissolution by consent, |
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winding
up or insolvency; |
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(ii) |
paragraph 3 of Schedule
2 to this Act (the rules); and |
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(iii) |
Schedules 15 and 15A
to this Act; and |
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(d) |
a “subordinated
deposit” is a deposit which, on a winding up, |
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would
fall to be repaid only after repayment in full has been |
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(i) |
the holders of shares
in the society (other than deferred |
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15 |
(ii) |
depositors and other
creditors who rank in priority to or |
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pari
passu with such holders.” |
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3 |
Transfers
between mutuals |
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(1) |
The Treasury may by regulations
make provision for enabling any specified |
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(a) |
transfer its engagements
to, or receive a transfer of engagements from, |
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any other type of specified
mutual; or |
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(b) |
otherwise transfer the
whole or part of its undertaking to, receive such |
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a transfer from, or engage
in any type of reorganisation, restructuring, |
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scheme or arrangement with
any other type of specified mutual, |
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using
the same procedures and complying with the same requirements
as |
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would apply if the transfer,
reorganisation, restructuring, scheme or |
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arrangement, as the case
may be, referred to in paragraph (a) or (b) were being |
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undertaken with, to, from,
or in respect of, a specified mutual of the same type. |
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(2) |
The regulations under this
section may, in particular, make provision— |
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(a) |
to deal with any transfer,
reorganisation, restructuring, scheme or |
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arrangement referred to
in subsection (1) of this section in which one of |
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the parties is a corporate
body other than a society of a type specified in |
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subparagraphs (i), (ii)
or (iii) of subsection (5)(a) of this section; |
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(b) |
for the definition of the
term “mutual insurer”, for the purpose of the |
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(c) |
for the protection of the
voting, financial, or other rights of the members |
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of any specified mutual
using powers conferred by subsection (1); or |
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(d) |
to ensure the continuation
of the mutual nature of such a specified |
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mutual unless procedures
applicable to a transfer of engagements by a |
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specified mutual to a corporate
body other than a specified mutual are |
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followed, including but
not limited to— |
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(i) |
conferring power on
any body to limit further disposals of |
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businesses or reorganisations
during a specified period, or to |
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impose conditions on,
or to require consent before, any such |
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disposals or reorganisations;
and |
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(ii) |
conferring power on
any body to require such procedures for |
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member decision-making
to be followed on any disposal of a |
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business or reorganisation
as would apply in the case of a |
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transfer of engagements
to a corporate body which was not a |
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specified mutual, including
power to decide ancillary matters, |
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such as which groups
of members should be entitled to |
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participate in any such
procedure, the information to be |
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provided to them and
the method of voting. |
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(3) |
Regulations under this
section may— |
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(a) |
modify, exclude or apply
(with or without modifications) any |
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enactments or rules of law; |
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(b) |
contain such incidental,
consequential and supplemental provision as |
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the Treasury consider appropriate; |
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(c) |
make different provision
for different cases or circumstances; or |
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(d) |
make transitional provision
or savings. |
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(4) |
A statutory instrument
containing regulations made under this section shall be |
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subject to annulment in
pursuance of a resolution of either House of |
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15 |
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(a) |
a “specified mutual”
is— |
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(i) |
a society registered
under the Industrial and Provident Societies |
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Acts 1965 to 2003 other
than a credit union registered under |
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those Acts by virtue
of the Credit Unions Act 1979
(c. 34); |
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(ii) |
a friendly society registered
under the Friendly Societies Act
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(iii) |
a building society registered
under the 1986 Act; |
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(iv) |
a mutual insurer as
defined in regulations made under this |
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(v) |
a subsidiary of a society
referred to in subparagraphs (i) to (iii) |
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or of a mutual insurer
within the meaning of paragraph (iv) of |
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(b) |
a “specified mutual
of the same type” is any society or mutual insurer, |
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as the case may be, within
the same particular subparagraph of |
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paragraph (a) of this subsection
as the specified mutual seeking to |
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transfer or receive engagements,
or otherwise transfer the whole or part |
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of its undertaking to, receive
such a transfer from, or engage in any type |
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of reorganisation, restructuring,
scheme or arrangement as |
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contemplated in subsection
(1). |
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(i) |
in the case of an industrial
and provident society a subsidiary |
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within the meaning of
section 15 of the Friendly and Industrial
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and
Provident Societies Act 1968 (c. 55) (meaning of
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40 |
(ii) |
in the case of a friendly
society a subsidiary within the meaning |
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of section 13 of the
Friendly Societies Act 1992
(control of |
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subsidiaries and other
bodies corporate); |
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(iii) |
in the case of a building
society a subsidiary undertaking within |
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the meaning of section
119 of the 1986 Act (interpretation); |
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(iv) |
in the case of a company
registered under the Companies Act
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2006
(c. 46) a subsidiary undertaking within the meaning of
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section 1162 of the Companies
Act 2006, read in conjunction |
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with sections 1161 and
1173 of, and Schedule 7 to, that Act; and |
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(v) |
in
the case of any other corporate body, as defined in |
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regulations made under
this section. |
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4 |
Short
title, commencement and extent |
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(1) |
This Act may be cited as
the Financial Mutuals Arrangements Act 2007. |
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(2) |
Subject to subsection
(3) below, the preceding sections of this Act shall come |
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into force on such day
as the Treasury may by order made by statutory |
|
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instrument appoint, and
different days may be appointed for different |
|
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provisions or different
purposes. |
|
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(3) |
Section 2 of this Act
shall not be brought into force before the coming into force
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10 |
(4) |
This Act extends to the
whole of the United Kingdom. |
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