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| Wednesday 25th April 2007 |
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| Financial Mutuals Arrangements Bill
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| Clause 1, page 1, line 1, leave out Clause 1 |
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| Clause 2, page 1, line 11, leave out Clause 2 |
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| Clause 3, page 3, line 18, leave out Clause 3 |
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| Clause 4, page 5, line 4, leave out ‘Financial Mutuals Arrangements’ and insert |
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| ‘Building Societies (Funding) and Mutual Societies (Transfers)’. |
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| Clause 4, page 5, line 7, leave out ‘different provisions or’. |
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| Clause 4, page 5, line 9, leave out subsection (3). |
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| | Clause, as amended, Agreed to. |
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| | Funding limit for building societies |
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| To move the following Clause:— |
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| | ‘(1) | In section 7 of the Building Societies Act 1986 (c. 53) (funding limit)— |
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| | (a) | after subsection (6) insert— |
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| | “(6A) | The Treasury may, by order— |
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| | (a) | provide for subsection (1) to have effect as if the |
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| | reference to 50 per cent were a reference to such greater |
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| | percentage (not exceeding 75) as they think appropriate; |
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| | (b) | prohibit a society from applying the increased |
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| | percentage unless a resolution of the society of such |
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| | description as the Treasury think appropriate is passed in |
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| | favour of applying the increased percentage. |
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| | (6B) | An order under subsection (6A) is of no effect at any time unless, |
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| | at the same time, there is also in force an order under section 90B |
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| | (power to alter priorities on dissolution and winding up). |
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| | (6C) | An order under subsection (6A)(a)— |
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| | (a) | may not be amended so as to reduce the percentage |
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| | (b) | may not be revoked, unless it is replaced by another such |
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| | order specifying the same or a greater percentage.”; |
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| | (b) | in subsection (8), after “subsection” insert “(6A) or”; |
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| | (c) | after subsection (8) insert— |
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| | “(8A) | The power to make an order under subsection (6A) is exercisable |
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| | by statutory instrument but no such order may be made unless a |
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| | draft of it has been laid before and approved by a resolution of |
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| | each House of Parliament.”. |
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| | (2) | In section 5 of that Act (establishment, constitution and powers), after |
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| | “(11) | The Treasury may by order amend subsection (1)(a) so as to alter the |
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| | extent to which the making of loans is required to be funded by a |
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| | (12) | An order under this section may make such consequential, saving, |
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| | supplementary or transitional provision as the Treasury think necessary |
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| | (13) | The consequential provision that may be made by virtue of subsection |
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| | (12) includes, in particular, provision amending any the following so far |
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| | as relating to funding by the members of a society— |
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| | (a) | section 1(1)(a) (functions of the Financial Services Authority in |
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| | relation to building societies); |
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| | (b) | section 93(2)(a) (amalgamations); |
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| | (c) | paragraph 2 of Schedule 2 to this Act (memorandum). |
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| | (14) | The power to make an order under this section is exercisable by statutory |
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| | instrument, but no such order may be made unless a draft of it has been |
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| | laid before and approved by a resolution of each House of Parliament.”.’. |
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| | Power to alter priorities on dissolution and winding up |
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| To move the following Clause:— |
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| | ‘After section 90A of the Building Societies Act 1986 (c. 53) insert— |
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| | “90B | Power to alter priorities on dissolution and winding up |
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| | (1) | The Treasury may by order make provision for the purpose of ensuring |
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| | that, on the winding up, or dissolution by consent, of a building society, |
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| | any assets available for satisfying the society’s liabilities to creditors or |
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| | to shareholders are applied in satisfying those liabilities pari passu. |
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| | (2) | Liabilities to creditors do not include— |
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| | (a) | liabilities in respect of subordinated deposits; |
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| | (b) | liabilities in respect of preferential debts; |
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| | (c) | any other category of liability which the Treasury specifies in the |
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| | order for the purposes of this paragraph. |
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| | (3) | Liabilities to shareholders do not include liabilities in respect of deferred |
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| | (4) | A preferential debt is a debt which constitutes a preferential debt for the |
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| | purposes of any of the enactments specified in paragraph 1 of Schedule |
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| | 15 to this Act (or which would constitute such a debt if the society were |
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| | (5) | An order under this section may— |
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| | (a) | make amendments of this Act; |
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| | (b) | make different provision for different purposes; |
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| | (c) | make such consequential, supplementary, transitional and saving |
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| | provision as appears to the Treasury to be necessary or |
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| | (6) | The power to make an order under this section is exercisable by statutory |
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| | instrument but no such order may be made unless a draft of it has been |
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| | laid before and approved by a resolution of each House of Parliament.”.’. |
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| | Transfers to subsidiaries of other mutuals |
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| To move the following Clause:— |
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| | ‘(1) | The Treasury may, by order, make such modifications of the transfer provisions |
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| | as it thinks appropriate to facilitate, or in consequence of, the transfer of the whole |
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| | of the business of a mutual society (the transferor) to a subsidiary of a mutual |
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| | society (whether or not of the same type) (the transferee). |
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| | (2) | An order under this section may make provision as to the rights (including rights |
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| | of and pertaining to membership) in relation to the mutual society of which the |
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| | transferee is a subsidiary— |
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| | (a) | of the members of the transferor; |
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| | (b) | of persons who, after the transfer, become customers of the transferee. |
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| | (3) | An order under this section may confer such functions on the Financial Services |
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| | Authority as the Treasury think appropriate. |
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| | (4) | An order under this section— |
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| | (a) | may make such consequential, saving, supplementary or transitional |
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| | provision as the Treasury think appropriate; |
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| | (b) | may make different provision for different purposes. |
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| | (5) | The power to make an order under this section is exercisable by statutory |
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| | (a) | makes modifications of a provision mentioned in paragraph (a), (b) or (c) |
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| | (b) | amends paragraph (a) or (b) of subsection (11), |
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| | | (whether or not it contains any other provision) must not be made unless a draft |
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| | of it has been laid before and approved by resolution of each House of Parliament. |
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| | (7) | Otherwise, an order is subject to annulment in pursuance of a resolution of either |
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| | (8) | Modifications include omissions, additions and alterations. |
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| | (a) | a building society incorporated or deemed to be incorporated under the |
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| | Building Societies Act 1986 (c. 53); |
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| | (b) | a friendly society within the meaning of the Friendly Societies Act 1992 |
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| | (c) | an industrial and provident society registered or deemed to be registered |
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| | under the Industrial and Provident Societies Act 1965 (c. 12). |
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| | (10) | The transfer provisions are— |
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| | (a) | sections 97 to 102D of the Building Societies Act 1986 (c. 53), paragraph |
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| | 30 of Schedule 2 to that Act and Schedule 17 to that Act; |
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| | (b) | sections 86 and 88 of and Schedule 15 to the Friendly Societies Act 1992 |
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| | (c) | section 52 of the Industrial and Provident Societies Act 1965 (c. 12); |
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| | (d) | provision contained in subordinate legislation (within the meaning of the |
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| | Interpretation Act 1978) made under any provision mentioned in |
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| | paragraph (a), (b) or (c). |
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| | (11) | A subsidiary of a mutual society is a company (within the meaning of the |
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| | Companies Act 2006 (c. 46) (or, before the commencement of Part 1 of that Act, |
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| | the Companies Act 1985 (c. 6)) or the Companies (Northern Ireland) Order 1986 |
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| | S.I. 1986/1032 (N.I. 6))— |
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| | (a) | in which the society holds a majority of the voting rights or of which the |
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| | society is a member and alone controls, pursuant to an agreement with |
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| | other shareholders or members, a majority of the voting rights, and |
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| | (b) | in relation to which the society has the right to appoint or remove a |
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| | majority of the company’s board of directors, |
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| | | but the Treasury may, by order, amend paragraphs (a) and (b) to make the degree |
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| | of control required more or less onerous.’. |
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| | Transfers to subsidiaries: distribution of funds |
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| To move the following Clause:— |
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| | ‘(1) | An order under section (Transfers to subsidiaries of other mutuals) may provide |
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| | for this section to have effect. |
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| | (2) | Subsection (3) applies if the terms of a transfer to which the order applies include |
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| | provision for part of the funds of the transferor or the mutual society of which the |
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| | transferee is a subsidiary (the holding mutual) to be distributed in consideration |
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| | of the transfer among the members of— |
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| | (b) | the holding mutual, or |
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| | (c) | both the transferor and the holding mutual. |
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| | (3) | The provision for the distribution must be authorised as follows— |
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| | (a) | it must not exceed the limits prescribed by order under subsection (4), |
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| | and the distribution must be approved (in the case of the transferor) by |
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| | the transfer resolution or (in the case of the holding mutual) by a |
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| | resolution of such description as the Treasury specifies by order; |
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| | (b) | if the provision for a distribution exceeds the prescribed limits, it must be |
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| | approved by each of the resolutions mentioned in paragraph (a). |
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| | (4) | The Treasury must by order authorise distributions of funds to members by |
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| | mutual societies participating (directly or through a subsidiary) in transfers to |
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| | which an order mentioned in subsection (1) applies, subject to limits specified by |
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| | or determined in accordance with the order. |
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| | (5) | A transfer resolution is— |
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| | (a) | in relation to a building society, each of the resolutions required pursuant |
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| | to paragraph 30 of Schedule 2 to the Building Societies Act 1986 (c. 53); |
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| | (b) | in relation to a friendly society, the resolution required by section |
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| | 86(2)(b) of the Friendly Societies Act 1992 (c. 40); |
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| | (c) | in relation to an industrial and provident society, the resolution required |
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| | by section 52 of the Industrial and Provident Societies Act 1965 (c. 12). |
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| | (6) | Expressions used in this section and in section (Transfers to subsidiaries of other |
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| | mutuals) have the same meaning as in that section. |
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| | (7) | Subsections (4) to (7) of that section apply to an order under this section as they |
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| | apply to an order under that section.’. |
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| | Channel Islands and Isle of Man |
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| To move the following Clause:— |
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| | ‘Her Majesty may by Order in Council provide for any of the provisions of this |
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| | Act (except sections (Funding limit for building societies) and (Power to alter |
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| | priorities on dissolution and winding up)) to extend, with or without |
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| | modifications, to any of the Channel Islands or to the Isle of Man.’. |
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| Title, line 1, leave out ‘Remove existing’ and insert ‘Make provision in relation to’. |
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| Title, line 1, leave out ‘subject to regulation by the Financial Services Authority’. |
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| Title, line 3, leave out from second ‘to’ to end of line 4 and insert ‘make provision in |
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| connection with the transfer of the business of certain mutual societies’. |
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| | Bill, as amended, to be reported. |
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