New
Clause
2
Power
to alter priorities on dissolution and winding
up
‘After section 90A of the
Building Societies Act 1986 (c. 53)
insert—
“90B
Power to alter priorities on dissolution and winding
up
(1) The Treasury may by
order make provision for the purpose of ensuring that, on the winding
up, or dissolution by consent, of a building society, any assets
available for satisfying the society’s liabilities to creditors
or to shareholders are applied in satisfying those liabilities pari
passu.
(2) Liabilities to
creditors do not
include—
(a) liabilities
in respect of subordinated
deposits;
(b) liabilities in
respect of preferential
debts;
(c) any other category
of liability which the Treasury specifies in the order for the purposes
of this paragraph.
(3)
Liabilities to shareholders do not include liabilities in respect of
deferred shares.
(4) A
preferential debt is a debt which constitutes a preferential debt for
the purposes of any of the enactments specified in paragraph 1 of
Schedule 15 to this Act (or which would constitute such a debt if the
society were being wound
up).
(5) An order under this
section may—
(a) make
amendments of this Act;
(b)
make different provision for different
purposes;
(c) make such
consequential, supplementary, transitional and saving provision as
appears to the Treasury to be necessary or
expedient.
(6) The power to
make an order under this section is exercisable by statutory instrument
but no such order may be made unless a draft of it has been laid before
and approved by a resolution of each House of
Parliament.”.’.—[Ed
Balls.]
Brought
up, read the First and Second time, and added to the
Bill.
New
Clause
3
Transfers
to subsidiaries of other
mutuals
‘(1) The Treasury
may, by order, make such modifications of the transfer provisions as it
thinks appropriate to facilitate, or in consequence of, the transfer of
the whole of the business of a mutual society (the transferor) to a
subsidiary of a mutual society (whether or not of the same type) (the
transferee).
(2) An order under this section may make provision
as to the rights (including rights of and pertaining to membership) in
relation to the mutual society of which the transferee is a
subsidiary—
(a) of the
members of the transferor;
(b)
of persons who, after the transfer, become customers of the
transferee.
(3) An order under
this section may confer such functions on the Financial Services
Authority as the Treasury think
appropriate.
(4) An order under
this section—
(a) may
make such consequential, saving, supplementary or transitional
provision as the Treasury think
appropriate;
(b) may make
different provision for different
purposes.
(5) The power to make
an order under this section is exercisable by statutory
instrument.
(6) An order
which—
(a) makes
modifications of a provision mentioned in paragraph (a), (b) or (c) of
subsection (10), or
(b) amends
paragraph (a) or (b) of subsection
(11),
(whether or not it
contains any other provision) must not be made unless a draft of it has
been laid before and approved by resolution of each House of
Parliament.
(7) Otherwise, an
order is subject to annulment in pursuance of a resolution of either
House of Parliament.
(8)
Modifications include omissions, additions and
alterations.
(9) A mutual
society is—
(a) a
building society incorporated or deemed to be incorporated under the
Building Societies Act 1986 (c.
53);
(b) a friendly society
within the meaning of the Friendly Societies Act 1992
(c. 40);
(c) an
industrial and provident society registered or deemed to be registered
under the Industrial and Provident Societies Act 1965
(c. 12).
(10) The
transfer provisions
are—
(a) sections 97 to
102D of the Building Societies Act 1986 (c. 53), paragraph 30 of
Schedule 2 to that Act and Schedule 17 to that
Act;
(b) sections 86 and 88 of
and Schedule 15 to the Friendly Societies Act 1992
(c. 40);
(c) section 52
of the Industrial and Provident Societies Act 1965
(c. 12);
(d) provision
contained in subordinate legislation (within the meaning of the
Interpretation Act 1978) made under any provision mentioned in
paragraph (a), (b) or (c).
(11)
A subsidiary of a mutual society is a company (within the meaning of
the Companies Act 2006 (c. 46) (or, before the commencement of
Part 1 of that Act, the Companies Act 1985 (c. 6)) or the
Companies (Northern Ireland) Order 1986 S.I. 1986/1032
(N.I. 6))—
(a) in
which the society holds a majority of the voting rights or of which the
society is a member and alone controls, pursuant to an agreement with
other shareholders or members, a majority of the voting rights,
and
(b) in relation to which
the society has the right to appoint or remove a majority of the
company’s board of
directors,
but the Treasury
may, by order, amend paragraphs (a) and (b) to make the degree of
control required more or less onerous.’.—[Ed
Balls.]
Brought
up, read the First and Second time, and added to the
Bill.
New Clause
4
Transfers
to subsidiaries: distribution of
funds
‘(1) An order under
section (Transfers to subsidiaries of other mutuals) may provide for
this section to have
effect.
(2) Subsection (3)
applies if the terms of a transfer to which the order applies include
provision for part of the funds of the transferor or the mutual society
of which the transferee is a subsidiary (the holding mutual) to be
distributed in consideration of the transfer among the members
of—
(a) the
transferor,
(b) the holding
mutual, or
(c) both the
transferor and the holding
mutual.
(3) The provision for
the distribution must be authorised as
follows—
(a) it must not
exceed the limits prescribed by order under subsection (4), and the
distribution must be approved (in the case of the transferor) by the
transfer resolution or (in the case of the holding mutual) by a
resolution of such description as the Treasury specifies by
order;
(b) if the provision for
a distribution exceeds the prescribed limits, it must be approved by
each of the resolutions mentioned in paragraph
(a).
(4) The Treasury must by
order authorise distributions of funds to members by mutual societies
participating (directly or through a subsidiary) in transfers to which
an order mentioned in subsection (1) applies, subject to limits
specified by or determined in accordance with the
order.
(5) A transfer
resolution is—
(a) in
relation to a building society, each of the resolutions required
pursuant to paragraph 30 of Schedule 2 to the Building Societies Act
1986 (c. 53);
(b) in
relation to a friendly society, the resolution required by section
86(2)(b) of the Friendly Societies Act 1992
(c. 40);
(c) in relation
to an industrial and provident society, the resolution required by
section 52 of the Industrial and Provident Societies Act 1965
(c. 12).
(6) Expressions
used in this section and in section (Transfers to subsidiaries of other
mutuals) have the same meaning as in that
section.
(7) Subsections (4) to
(7) of that section apply to an order under this section as they apply
to an order under that section.’.—[Ed
Balls.]
Brought
up, read the First and Second time, and added to the
Bill.
The
Chairman:
We come now to Government new clause
5.
Ed
Balls:
It was our intention to consult the Channel Islands
and the Isle of Man about new clause 5 before exercising the power, but
given the time available, it has not been possible to complete those
consultations satisfactorily. The new clause would not have a material
impact on the Bill or the sector, so it is not my intention to move
it.
Title
Amendments
made: No. 7, in title, line 1, leave out
‘Remove existing’ and insert ‘Make provision in
relation
to’.
No. 8, in
title, line 1, leave out ‘subject to
regulation by the Financial Services Authority’.
No. 9, in
title, line 3, leave out from second
‘to’ to end of line 4 and insert
‘make provision in connection with
the transfer of the business of certain mutual
societies’.—[Ed
Balls.]
Question
proposed, That the Chairman do report the Bill, as amended, to the
House.
Sir
Nicholas Winterton:
May I congratulate my hon. Friend the
Member for Bournemouth, West on introducing the Bill and on the huge
amount of work that he and his advisers have put in? At the same time,
may I pay tribute to the Treasury and the Government for accepting the
merits of the Bill? My hon. Friend might have been the fuse that
activated the Government to produce this legislation, which is long
overdue and very beneficial to the mutual movement. I have discussed
the matter with him and I am truly amazed at the amount of work that he
has put in. I also thank the Treasury for the way in which it has
co-operated with him in putting the basis of good legislation on the
statute
book.
The
Chairman:
I intend to treat that as a point of
order.
Ed
Balls:
Further to that point of order, Mr.
Taylor. From the Government Benches, may I echo the comments of the
hon. Member for Macclesfield? In essence, the legislation, which we
will report to the House following today’s debate, takes forward
the original proposals of the hon. Member for Bournemouth, West, and it
follows a great deal of detailed consultation and discussion. We are
very grateful to the hon. Gentleman and his advisers, Mutuo and the
Co-operative party, and to the Treasury and Financial Services
Authority advisers who have worked with us to translate the principles,
concepts and intention into legislation that we will take forward if
the House supports it on Report and Third Reading, and through the work
of subsequent Committees and secondary legislation. We are very
grateful for the hon. Gentleman’s work and leadership.
In reply to
the hon. Member for Macclesfield, let me say that we are currently
undertaking a broad-based review of the legislation in this field.
There are necessarily limits to the amount of parliamentary time that
the Government can make available in these areas. Where we have had
time, we have used it, but we rely on the ability of private Members to
make proposals, when they have the opportunity to do so, that we can
support. There have been a number of private Members’ Bills in
recent years that have substantially improved the legislative
environment for mutuals and co-operatives in our country. This Bill is
in that tradition, and the Government have not been brought reluctantly
to the table. On the contrary, this is an established way of
legislating and one that we fully support and encourage. However,
success depends on the leadership and hard work of Members of this
House. We are very grateful indeed to the hon. Member for Bournemouth,
West for the leadership he has shown, which has enabled us to take
forward a substantial improvement in the legislative framework for
mutuals across our country.
Sir
John Butterfill:
Further to that point of order,
Mr. Taylor. I wish to reiterate my gratitude for all the
co-operation received from members of the industry, the Building
Societies Association and friendly societies.
I am especially grateful to the Treasury, which has, as the Minister
said, done a great deal of work and research on the matter before us,
and really put itself out to deal with it expeditiously. It did not
have a great deal of time in which to produce such complex legislation,
and I am very grateful to it, as I am to the Committee members who have
turned out to support me. Indeed, I am grateful to all the parties in
the House for supporting the Bill. It is rare that one gets every party
in the House supporting a Bill, and I am very grateful to them for it.
It pleases not only me, but the Portman building society in my
constituency, which is one of our largest employers, and the Liverpool
Victoria friendly society, which is the largest friendly society in my
constituency. Both are exemplars of involvement in the community and
support for community organisations, including at least two charities
with which I am personally involved. I am very grateful to
them.
10.15
am
Sir
Nicholas Winterton (Macclesfield) (Con): Further to that
point of order, Mr. Taylor, may I say on behalf of the
Committee how much we appreciate the courteous and quiet way in which
you have administered the Committee and managed our affairs? It has
gone very smoothly, much due to your diligence and
courtesy.
The
Chairman:
I am most grateful for those remarks.
Question put and
agreed
to.
Bill,
as amended, to be
reported.
Committee
rose at sixteen minutes past Ten
o’clock.
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