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BSOG 1.1 Application, purpose and definitions

Application[deleted]

BSOG 1.1.1G

1This Guide applies to building societies.

Purpose[deleted]

BSOG 1.1.2G

This Guide provides guidance on the Building Societies Act 1986 and on various constitutional and other provisions relating to building societies. It is not comprehensive and should not be treated as such.

Interpretation[deleted]

BSOG 1.1.2AG

6The interpretation provisions in GEN 2 apply as guidance to the interpretation of this Guide.

Frequently used terms[deleted]

BSOG 1.1.3G

The following terms are used in this Guide and have the meaning described here:

"the 1986 Act"

the Building Societies Act 1986 (as amended)6

6

"the 1997 Act"

the Building Societies Act 1997

"the Accounts Regulations"

the Building Societies (Accounts & Related Provisions) Regulations 1998 (SI 1998/504)

"the Act"

the Financial Services and Markets Act 2000 (as amended)6

"AGM"

Annual General Meeting

"amalgamation agreement"

a formal agreement between societies on the terms of their amalgamation

"approved person"

a person approved under section 59 of the Act (Approval for particular arrangements) to perform a controlled function

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"the Banking Consolidation Directive"

the Council Directive of 20 March 2000 relating to the taking up and pursuit of the business of credit institutions (No 2000/12/EC)

"the Banking Regulator"

the Prudential Regulator or other competent authority in another EEA state, as the case may be

"the BCD"

the Banking Consolidation Directive

"the board"

the board of directors of a building society

"borrower" or "borrowing member"

a person who is indebted to a society in respect of a loan fully, or where the Rules so provide, substantially secured on land

"the BSA"

the Building Societies Association

"the Combined Code"

the Combined Code on Corporate Governance, developed by the Corporate Governance Committee of the Financial Reporting Council for accounting periods beginning before 29 June 20103

"the Commission"

the Building Societies Commission

[Note: the functions of the Bank of England under the Banking Act 1987, which was repealed by the Act, were transferred to the Authority by the Bank of England Act 1998. Similarly, the functions of the Commission, and of the Central Office of the Registry of Friendly Societies were transferred to the Authority by and under the Act.]

"the Confirmation Criteria"

means in relation to mergers- the three criteria specified in section 95(4) of the 1986 Act which the Prudential Regulator has to consider when deciding whether to confirm a merger of the business of one society with the business of another society; and

means in relation to transfers- the four criteria specified in section 98(3) of the 1986 Act which the Prudential Regulator has to consider when deciding whether to confirm a transfer of the business of a society to a commercial company

"controlled function"

a function, relating to the carrying on of a regulated activity by a firm, which is specified, under section 59 of the Act (Approval for particular arrangements), in the table of controlled functions shown in the Supervision manual of the Handbook (see SUP 10.4.5 R)

6

"conversion"

the transfer of business of a society to a specially formed company

"credit institution"

an undertaking whose business is to receive deposits or other repayable funds from the public and to grant credits for its own account

4

"the Electronic Communications Order"

the Building Societies Act 1986 (Electronic Communications) Order 2003 (SI 2003/404)

"existing company"

A company which is a company within the meaning of the Companies Act 20062and is a public company limited by shares, or is incorporated in an EEA State other than the United Kingdom and has power to offers its shares and debentures to the public, and which is carrying on business as a going concern on the date of the Transfer Agreement

2

6“FCA”

the Financial Conduct Authority6

"Fees Rules"

the Rules made by the FCA under paragraph 23 of schedule 1ZA and the PRA under paragraph 31 of schedule 1ZB to the Act prescribing the fees to be paid in connection with the discharge of the FCA’s or the PRA’s functions under the 1986 Act.6

6

"First, Second, Third Criterion"

See "Confirmation Criteria", and relating respectively, in relation to mergers, to the criteria specified in subsections (a), (b) and (c) of section 95(4) of the 1986 Act

"First, Second, Third, Fourth Criterion"

See "Confirmation Criteria", and relating respectively, in relation to transfers, to the criteria specified in subsections (a), (b), (c) and (d) of section 98(3) of the 1986 Act

"the IAS Regulation"

the Regulation of the European Parliament and of the Council of 19th July 2002 on the application of international accounting standards (1606/2002/EC)

"Instrument of Transfer"

The Instrument of Transfer of Engagements required by section 94(6) of the 1986 Act

"listed"

included in an official list

"member"

a shareholding or borrowing member of a society

"Memorandum"

the Memorandum of a building society required by paragraph 2 of Schedule 2 to the 1986 Act

"merger"

an amalgamation or transfer of engagements

"Merger Document"

the document or booklet containing the Schedule 16 Statement

"Merger Notification Statement"

a statement sent to members in the circumstances described in chapter 2 of this Guide

"Merger Resolutions"

the shareholding members' resolution and borrowing members' resolution required to approve a merger where no direction under section 42B(3) of the 1986 Act6 has been given

"official list"

(a) the list maintained by the FCA in accordance with section 74(1) of the Financial Services and Markets Act 2000 (The official list) for the purposes of Part VI of the Act (Official Listing);

(b) any corresponding list maintained by a competent authority for listing in another EEA State.

"OFT"

Office of Fair Trading

"PIBS"

Permanent interest-bearing shares, a type of deferred share

6“PRA”

the Prudential Regulation Authority

"proxy voting form"

an instrument appointing a proxy to attend a meeting of a society and vote on the member's behalf

6“the Prudential Regulator”

(a) in relation to a building society which is a PRA-authorised person, the PRA; and6

(b) in relation to a building society which is not a PRA-authorised person, the FCA

"Qualifying Day"

the day specified in the Transfer Agreement as the qualifying day for the purposes of section 100 of the 1986 Act

"rationale"

the explanation of the reasons for a proposed merger provided to the members of a society by its board of directors

"the Rules"

the Rules of a building society

"Schedule 16 Statement" or "the Statement"

the statutory statement required by Schedule 16 to the 1986 Act to be sent to every member entitled to notice of a meeting of the society

"SGM"

Special General Meeting

"shareholder" or "shareholding member"

a person holding a share in a society (by investing in one or more share accounts or holding PIBS or other deferred shares)

"society"

a building society

"specially formed company"

a company formed by a society (and by no other than its nominees) for the purpose of assuming and conducting the society's business in its place, which is a company within the meaning of the Companies Act 20062 and is a public company limited by shares, or is incorporated in an EEA State other than the United Kingdom and has power to offer its shares or debentures to the public

2

"Statutory Cash Bonus"

the bonus required by section 100(2)(b) and (4) of the 1986 Act to be paid to every shareholder of the society who held shares on the Qualifying Day and was not eligible to vote on the requisite shareholding members' resolution

"successor" or "successor company"

A company, whether an existing company or a specially formed company, to which the business of a society is proposed to be transferred

"successor society"

a society accepting a transfer of engagements or the new society in the case of an amalgamation

"takeover"

the transfer of business of a society to an existing company

"the Three Criteria"

the criteria prescribed by section 95(4) of the 1986 Act which the Prudential Regulator has to consider when deciding whether to confirm a merger

[Note: the Three Criteria are varied in certain circumstances see section 6 of chapter 2 of this Guide.]

"transfer"

a conversion or takeover or both, as the context requires

"Transfer Agreement"

the agreement required by section 97(4)(b) of the 1986 Act between a society and its successor company on the terms of the transfer

"Transfer Document"

the document or booklet containing, inter alia, either the Transfer Statement or the Transfer Summary

"Transfer Regulations"

the Building Societies (Transfer of Business) Regulations 1998 (SI 1998/212)

"Transfer Resolutions"

the shareholding members' resolution and borrowing members' resolution required to approve a transfer where no direction under section 42B(4) of the 1986 Act has been given

"transferee society"

a society accepting a transfer of engagements from another society

"transferor society"

a society transferring its engagements to another society

"Transfer Statement"

the statement required by Schedule 17 to the 1986 Act to be sent in or with the notice of the meeting at which the Transfer Resolutions are to be considered or, if a Transfer Summary is sent, made available to every member entitled to notice of a meeting of the society

"Transfer Summary"

The summary of the Transfer Statement which may, in accordance with Schedule 17 to the 1986 Act, be sent, instead of the Transfer Statement, in or with the notice of the meeting at which the Transfer Resolutions are to be considered, to every member entitled to receive that notice

"Trustee Account Holder"

a person who is a shareholding or borrowing member of a society, by virtue of being the sole or representative joint holder of an account which he holds in trust for another person or persons any one or more of whom cannot reasonably practicably act in relation to that account themselves by reason of ill-health or old age or any physical or mental incapacity or disability, as provided by section 102D of the 1986 Act, whether or not the account holder is a shareholding or borrowing member in respect of any other accounts

3the UK Corporate Governance Code

the UK Corporate Governance Code, published by the Financial Reporting Council

"vesting date"

the date on which all the property, rights and liabilities of the society making the transfer, except any shares in the successor company, are transferred to the successor company