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You are here: BAILII >> Databases >> United Kingdom Statutory Instruments >> The Building Societies (Deferred Shares) Order 1991 No. 701 URL: http://www.bailii.org/uk/legis/num_reg/1991/uksi_1991701_en.html |
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Statutory Instruments
BUILDING SOCIETIES
Made
18th March 1991
Laid before Parliament
19th March 1991
Coming into force
1st June 1991
The Building Societies Commission, with the consent of the Treasuryand in exercise of the powers conferred on it by section 119(1) of theBuilding Societies Act 1986(1) hereby makes the following Order:-
1. This Order may be cited as the Building Societies (Deferred Shares)Order 1991 and shall come into force on 1st June 1991.
2. In this Order unless the context otherwise requires-
"the Act" means the Building Societies Act 1986;
"creditors", in relation to a society extends to members holding shares in thesociety, other than deferred shares, as regards the principal of thoseshares and all interest due thereon in accordance with their terms;
"issue terms" in relation to an issue of deferred shares means the provisions ofa document which sets out, or of a connected series of documents whichset out, the rights and obligations of the society and shareholders inrespect of those shares;
"relevant consent" means consent applied for by the society otherwise than inconsequence of a provision among the issue terms requiring the societyso to apply or granting the society any benefit for so applying orimposing a sanction against failure so to apply;
"the Schedule" means the Schedule to this Order; and
"society" in relation to deferred shares means a society which proposes toissue or, as the case may be, has issued, such shares.
3.-(1) Shares which are issued by a society upon terms which have theeffect of the key term set out in the Schedule to this Order and inrespect of which the condition set out in paragraph (2) of this articleis satisfied, shall be shares of a class defined as deferred shares forthe purposes of section 119 of the Act.
(2) The condition mentioned in paragraph (1) of this article is that thedocument containing the issue terms, or where the issue terms arecontained in a series of documents, one of those documents, being ineither case a document which is furnished to every applicant for theshares and every document evidencing title to the shares shall contain aprominent statement to the effect that the shares are deferred sharesfor the purposes of section 119 of the Act and are not protectedinvestments for the purposes of payments out of the Building SocietiesInvestor Protection Fund.
4. The Building Societies (Deferred Shares) Order 1989(2) shall cease to have effect, but any shares issued by asociety prior to the date on which this order comes into force and inrespect of which the terms are in compliance with article 3 of thatOrder shall continue to be shares of a class defined as deferred sharesfor the purpose of section 119 of the Act.
In witness whereof the common seal of the Building Societies Commission is hereunto fixed, and is authenticated by me, a person authorised under paragraph 14 of Schedule 1 to the Building Societies Act 1986, on 14th March 1991.
L.S.
Norman Digance
Secretary to the Commission
We consent to this Order.
Thomas Sackville
Irvine Patnick
Two of the Lords Commissioners of Her Majesty's Treasury
18th March 1991
Article 3
The key term is a term which has effect so as to prohibit the repayment of any principal to the shareholders in respect of the shares save in either or each of the following events that is to say-
(a)the winding up or dissolution of the society in circumstances whereall sums due from the society to creditors claiming in the winding up ordissolution are paid in full;
(b)the granting of relevant consent by the Commission.
(This note is not part of the Order)
This Order is made under section 119(1) of the Building SocietiesAct 1986 which provides that"deferred shares" means shares of a class defined as such by order. Definition ofsuch a class has two primary effects. Before a society is authorisedunder section 9 of the Act to raise money from members or acceptdeposits it may nevertheless accept payments by way of subscription fordeferred shares up to limits specified insection 9. By virtue of section27(8) of the Act deferred shares are not to count as protectedinvestments for the purposes of the Investor Protection Fund set upunder Part IV of the Act.
The Order defines a class of shares to be deferred shares within themeaning ofsection 119(1) if they are issued fully paid upon terms to theeffect of the key term set out in the Schedule to the Order, and if thefact that the shares are deferred shares and so not protected by theInvestor Protection Scheme is prominently stated in a document furnishedto every applicant for such shares and in every document evidencingtitle to such shares (article 3(2)).
The key term prohibits the repayment of the principal of the sharesexcept on a dissolution of the society after all creditors andshareholders (other than holders of deferred shares) have been paid infull, or with the consent of the Commission.
The Building Societies (Deferred Shares) Order 1989, is revoked,with a saving for shares already issued which complied with that Orderthe provisions of which are more complex.
S.I. 1989/207.
