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Clause 143 - Proposals: procedure
370. Subsection (1) requires the regulator to consult the following before making proposals:
- the registered provider (replaces section 44(2)(a) of the 1996 Act),
- its tenants as far as it is reasonably practicable (replaces section 44(2)(a) of the 1996 Act),
- the Financial Services Authority, if the registered provider is an industrial and provident society (replaces section 44(3)(a) of the 1996 Act),
- the Charity Commission, if the registered provider is a registered charity (replaces section 44(3)(b) of the 1996 Act).
371. Subsection (2) requires the regulator to send a copy of its proposals to-
- its secured creditors, and
- any liquidator, administrator, administrative receiver or receiver appointed in respect of the registered provider or its land.
372. Subsection (3) requires the regulator to make arrangements for the proposals to be brought to the attention of -
- the members and officers of the registered provider,
373. Subsections (2) and (3) replace the provisions of section 44(7) of the 1996 Act.
374. Subsection (4) specifies that the regulator's proposals have effect if all of the registered provider's secured creditors agree to those proposals by giving written notice to that effect to the regulator.
375. Subsection (5) provides that further modifications to the proposals may be made by the regulator and that these shall also have effect if all of the registered provider's secured creditors agree to those modifications by giving written notice to that effect to the regulator.
376. Subsections (4) and (5) replace the provisions of section 45(1) of the 1996 Act.
377. Subsection (6) requires the regulator to send a copy of the proposals agreed under subsections (4) or (5) to the following:
- any liquidator, administrator, administrative receiver or receiver appointed in respect of the registered provider or its land,
- the Financial Services Authority, if the registered provider is an industrial and provident society,
- the Charity Commission, if the registered provider is a registered charity.
378. Subsection (7) requires the regulator to make arrangements for bringing the agreed proposals to the attention of the following:
- the members and officers of the registered provider,
379. Subsections (6) and (7) replace the provisions of section 45(4) of the 1996 Act.
380. Subsection (8) allows for the proposals to be amended by agreement between the regulator and the secured creditors. Where such amendments are made and agreed, the provisions of clauses 142 and 143 apply to the amended proposals as they did to the original proposals. This replaces section 45(5) of the 1996 Act.
Clause 144 - Proposals: effect
381. Subsection (1) lists those who are obliged to implement the proposals agreed under clause 143. This replaces section 45(2) of the 1996 Act. The list is as follows:
- any liquidator, administrator, administrative receiver or receiver appointed in respect of the registered provider or its land.
382. Subsection (2) lists those who are obliged to co-operate with the implementation of the agreed proposals. They are the members of the governing body of the registered providers as follows:
- for a registered charity, its trustees,
- for an industrial and provident society, its committee members, and
- for a registered company, its directors.
383. Subsection (3) provides that subsection (2) does not oblige or permit those who are expected to co-operate to breach a fiduciary duty to the registered provider or other duty.
384. Subsections (2) and (3) replace the provisions of sections 45(2) and 45(3) of the 1996 Act.
Clause 145 - Manager: appointment
385. This clause replaces the provisions of section 46 of the 1996 Act.
386. Subsection (1) provides that this clause applies where proposals made under clause 142 and 143 provide for the appointment of a manager.
387. Subsection (2) specifies that the proposals must provide for the manager to be paid reasonable remuneration and expenses.
388. Subsection (3) provides that the regulator will appoint the manager.
389. Subsection (4) provides that the regulator may give directions to the manager which may be general or specific in nature, or both.
390. Subsection (5) provides that the manager may apply to the High Court for directions, and that the directions of the regulator under subsection (4) are subject to directions of the High Court.
391. Subsection (6) provides that the regulator must notify the Charity Commission that a manager has been appointed, if the registered provider is a charity.
392. Subsection (7) provides that the regulator may appoint a new manager in place of a person who ceases to be a manager under this clause for whatever reason, and that the new manager's terms of appointment will be as specified in the proposals, or as determined by the regulator.
Clause 146 - Manager: powers
393. This clause replaces the provisions of section 47 of the 1996 Act.
394. Subsection (1) expresses the manager's general powers as follows:
- the manager may do anything necessary for the purpose of the appointment,
- the manager acts as the registered provider's agent, and is not personally liable on a contract, and
- the manager has ostensible authority to act for the registered provider with the effect that a person dealing with the manager in good faith and for value does not need to further inquire into the manager's powers.
395. Subsection (2) sets out a list of the specific powers that the terms of a manager's appointment may confer as follows:
a) to sell or otherwise dispose of land by public auction or private contract;
b) to raise or borrow money;
c) to grant security over land;
d) to grant or accept surrender of a lease;
f) to take possession of property;
g) to appoint a solicitor, accountant or other professional to assist the manager;
h) to appoint agents and staff (and to dismiss them);
j) to bring or defend legal proceedings;
k) to refer a question to arbitration;
l) to make any arrangement or compromise;
m) to carry on the business of the registered provider;
n) to carry out works and do other things in connection with the management or transfer of land;
o) to take out insurance;
p) to use the registered body's seal
q) to execute in the name and on behalf of the registered provider any deed, receipt, or other document;
r) to do anything incidental to a power in paragraphs (a) to (q).
396. Subsection (3) requires the manager to consult and inform the registered provider's tenants as far as it is reasonably practicable to do so about any exercise of power that is likely to affect them.
Clause 147 - Manager of industrial and provident society: extra powers
397. This clause replaces the provisions of section 48 of the 1996 Act.
398. Subsection (1) specifies that this clause applies to a manager appointed under clause 145 to implement proposals where the registered provider is an industrial and provident society.
399. Subsection (2) specifies that the appointment of the manager may include the power to make and execute on behalf of the registered provider an instrument that has the effect of transferring its engagements.
400. Subsection (3) provides that such an instrument for transferring engagements has the same effect as a transfer of engagements under sections 51 and 52 of the Industrial and Provident Societies Act 1965.
401. Subsection (4) requires a copy of the resolution in subsection (2) to be sent to and registered by the Financial Services Authority, and specifies that the instrument takes effect when it is registered.
402. Subsection (5) specifies that the copy in subsection (4) must be sent to the Financial Services Authority for registration within 14 days of the execution of the instrument in subsection (2), but that the copy registered is not invalid if it is registered after that time.
Clause 148 - Assistance by regulator
403. This clause replaces the provisions of section 49 of the 1996 Act.
404. Subsection (1) gives the regulator the power to give financial or other assistance to a registered provider for the purpose of maintaining its position while the regulator develops proposals under clause 142.
405. Subsection (2) gives the regulator the power to give financial or other assistance either to a registered provider or to a manager appointed under clause 145 to assist or facilitate the implementation of proposals agreed in accordance with clause 143.
406. Subsection (3) specifies that such assistance under subsections (1) and (2) may include the regulator lending staff or arranging the payment of a manager's remuneration and expenses.
407. Subsection (4) specifies a list of things that the regulator may do by way of giving assistance that require the consent of the Secretary of State. Those things are:
- making payments in connection with secured loans, and
- guaranteeing payments in connection with secured loans.
Clause 149 - Applications to court
408. This clause replaces the provisions of section 50 of the 1996 Act.
409. Subsection (1) gives the registered provider the right to apply to the High Court where it thinks that an action taken by a manager appointed under clause 145 is not in accordance with proposals agreed in accordance with clause 143.
410. Subsection (2) gives a similar right to a creditor of a registered provider.
411. Subsection (3) provides that where an application is made to the High Court under subsection (1) or (2), the High Court can:
- confirm, annul, or modify an act of the manager
- give the manager directions,
412. Subsection (4) gives a person who is bound by proposals as defined in clause 144 the right to apply to the High Court if that person thinks that another person bound by the same provisions in clause 144 has breached the requirements of that clause.
413. Subsection (5) provides that where an application is made to the High Court under subsection (4), the High Court can:
- confirm the action, modify the action or annul it,
- grant relief by way of injunction, damages or otherwise.
Restructuring and dissolution
Clauses 150 to 156
414. These clauses re-enact the powers of the Housing Corporation in paragraphs 12 to 14 of Schedule 1 to the 1996 Act as powers of the regulator. These powers relate to the restructuring and dissolution of non-profit registered providers of social housing.
Clause 150 - Company: arrangements and reconstructions
415. Subsection (1) specifies that the effect of this clause is restricted to non-profit registered providers that are companies.
416. The effect of subsections (2) to (4) is to render the arrangements under various statutory provisions ineffective without the consent of the regulator. Subsections (2) to (4) specify that the regulator's consent must be in writing.
417. The arrangements in this clause for which the regulator's consent is required are:
- voluntary arrangements made by the directors of a company with its creditors under Part 1 of the Insolvency Act 1986. (This re-enacts section 13(5) of Schedule 1 to the 1996 Act).
- an agreement or compromise with creditors that has been sanctioned by a court order in accordance with section 899 of the Companies Act 2006 (this replaces paragraph 13(2) of Schedule 1 to the 1996 Act which relates to the such arrangements made under section 425 of the Companies Act 1985). Subsection (3)(b) also requires that a copy of the consent should be delivered to the registrar of companies before the court order is effective.
- an agreement under section 900 of the Companies Act 2006 where the application to the court for an order sanctioning an agreement under section 899 Companies Act 2006 is in respect of an agreement to reconstruct a company or amalgamate two or more companies and it provides for the transfer of the whole or part of the undertaking or property of one or more of the companies involved in the scheme (this replaces the first sentence of paragraph 13(3) of Schedule 1 to the 1996 Act which related to the such arrangements made under section 427 of the Companies Act 1985).
418. Subsection (5) provides that a court order for the arrangements in subsection (4), and which section 900(6) of the Companies Act 2006 requires to be sent to the registrar of companies, must also be accompanied by a copy of the regulator's consent (this replaces the second sentence of paragraph 13(3) of Schedule 1 to the 1996 Act which related to the such arrangements made under section 427 of the Companies Act 1985).
Clause 151 - Company: conversion into industrial and provident society
419. Subsection (1) specifies that the effect of this clause is restricted to non-profit registered providers that are companies.
420. Subsection (2) specifies that where there is a resolution to convert a company into an industrial and provident society under section 53 of the Industrial and Provident Societies Act 1965, the registrar of companies may only register that resolution if the regulator has consented in writing to the resolution and a copy of that consent accompanies the resolution sent to the registrar of companies. This re-enacts paragraph 13(4) of Schedule 1 to the 1996 Act.
421. Subsection (3) requires that where an industrial and provident society is created by such a resolution, the regulator must register the body created and designate it as a non-profit organisation on the register as provided for in clause 111(1).
422. Subsection (4) further provides that the effects of subsection (3) will be immediate for the purposes of the regulator's functions and powers, pending the completion of the registration process by the regulator. This re-enacts paragraph 13(8) of Schedule 1 to the 1996 Act.
Clause 152 - Company: winding up
423. Subsection (1) specifies that the effect of this clause is restricted to non-profit registered providers that are companies.
424. Subsection (2) provides that the regulator must first consent in writing before a special resolution for the voluntary winding up of a company under the Insolvency Act 1986 is effective. This replaces paragraph 13(6)(a) of Schedule 1 to the 1996 Act.
425. Subsection (3) provides that the requirement to send a copy of the special resolution to the registrar of companies under section 30 of the Companies Act 2006 is satisfied only if a copy of the regulator's consent accompanies the special resolution. Failure to comply with section 30 of the Companies Act 2006 is an offence. Subsection (3) replaces paragraph 13(6)(b) of Schedule 1 to the 1996 Act which referred to the earlier equivalent provision in section 380 of the Companies Act 1985.
Clause 153 - Industrial and provident society: restructuring
426. Subsection (1) specifies that the effect of this clause is restricted to non-profit registered providers that are industrial and provident societies.
427. Subsections (2) and (3) re-enact paragraph 12(2) of Schedule 1 to the 1996 Act.
428. Subsection (2) provides that the Financial Services Authority, which is the registrar for industrial and provident societies, may register resolutions passed by an industrial provident society for the purposes of the restructuring provisions identified in subsection (3), only if the regulator has consented in writing to the dissolution, and a copy of that consent accompanies the resolution sent to the Financial Services Authority.
429. Subsection (3) identifies the restructuring provisions for industrial and provident societies for the purposes of this clause as the following sections of the Industrial and Provident Societies Act 1965:
- section 50 which is for the amalgamation of two or more societies,
- section 51 which is for the transfer of engagements from one society to another,
- section 52 which is for the conversion into, amalgamation with or transfer of engagements to, a company by an industrial and provident society.
430. Subsection (4) re-enacts paragraph 12(3) of Schedule 1 to the 1996 Act. It provides that where a resolution is registered by the Financial Services Authority, any body that is created by the resolution, or to which there is a transfer of engagements as a result of the resolution, will be:
- registered by the regulator as a registered provider, and be designated as a non-profit provider in accordance with clause 111, and that
- for the purposes of the regulator's functions and powers, pending the completion of the registration process by the regulator of the new body, the new body will be treated as if it were registered already as a non-profit organisation.
Clause 154 - Industrial and provident society: winding up
431. Subsection (1) specifies that the effect of this clause is restricted to non-profit registered providers that are industrial and provident societies.
432. Subsections (2) and (3) re-enact paragraph 12(4) of Schedule 1 to the 1996 Act.
433. Subsection (2) provides that the regulator must first consent in writing before a resolution for the voluntary winding up of a company under the Insolvency Act 1986 is effective.
434. Subsection (3) refers to the requirement to send a copy of a winding up resolution to the Financial Services Authority under section 30 of the Companies Act 2006. It specifies that this requirement is only satisfied if the resolution is accompanied by a copy of the regulator's consent. This requirement of the Companies Act 2006 is applied to industrial and provident societies by section 55 of the Industrial and Provident Societies Act 1965, and section 84(3) of the Insolvency Act 1986. Failure to comply with section 30 of the Companies Act 2006 is an offence.
Clause 155 - Industrial and provident society: dissolution
435. This clause re-enacts the provisions in paragraph 12(5) of Part II of Schedule 1 to the 1996 Act.
436. Subsection (1) specifies that the effect of this clause is restricted to non-profit registered providers that are both industrial and provident societies and are to be dissolved by an instrument of dissolution as defined in section 58 of the Industrial and Provident Societies Act 1965.
437. Subsection (2) provides that the instrument of dissolution may only be registered by the Financial Services Authority under section 58(5) of the Industrial and Provident Societies Act 1965 or be advertised by the authority as it is required to do under section 58(6) of the same Act if the regulator has first consented in writing to the dissolution, and that a copy of the consent has accompanied the instrument of dissolution sent to the Financial Services Authority.
Clause 156 - Winding up petition by the regulator
438. This clause re-enacts the provisions in paragraph 14 of Schedule 1 to the 1996 Act.
439. Subsection (1) specifies that the effect of this clause is restricted to non-profit registered providers that are either registered companies.
440. Subsection (2) provides that the regulator may present a petition for the registered provider to be wound up under the Insolvency Act 1986 on one of the grounds specified in subsections (3) to (5) which are that:
- the registered provider is not carrying out the objects specified in its constitution, or
- the registered provider is unable to pay its debts as that inability is defined in section 123 of the Insolvency Act 1986, or
- the regulator has directed the registered provider to transfer its land to another person under the power conferred on it by clause 229.
441. Clauses 157 to 159 re-enact the powers of the Housing Corporation in paragraph 15 of Schedule 1 to the 1996 Act as powers of the regulator. These powers relate to the transfer of assets on dissolution of non-profit registered providers of social housing.
Clause 157 - Transfer of property
442. Subsection (1) specifies that the provisions of this clause apply where a non- profit registered provider-
- that is an industrial and provident society has dissolved in accordance with sections 55(a) or 55(b) of the Industrial and Provident Societies Act 1965, or
- that is a registered company that has wound up under the Insolvency Act 1986.
443. Subsection (2) provides that in either of the two cases in subsection (1), any surplus property remaining after the registered provider's liabilities have been satisfied will either be transferred to the regulator, or, if the regulator directs, to another registered provider that it specifies.
444. Subsection (3) provides that that if the registered provider that has been dissolved or wound up under subsection (1) must sell any of its lands in order to satisfy its liabilities, the regulator may discharge those liabilities instead so as to ensure that the land that would otherwise have to be sold is instead transferred as provided for in subsection (2).
445. Subsection (4) provides that if the registered provider dissolved or wound up under subsection (1) is a charity, the registered provider that the regulator may specify as the recipient of surplus assets after its liabilities have been satisfied must also be a charity whose objects the regulator is satisfied are similar to those of the charity being dissolved or wound up.
446. Subsection (5) specifies that the provisions of this clause override any provisions in the following legislation:
- Industrial and Provident Societies Act 1965,
447. It also specifies that the clause overrides any provisions in the constitution of the registered provider that is being dissolved or wound up.
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