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17 1989

BUILDING SOCIETIES ACT, 1989

PART II

Formation and Authorisation of Building Societies

Objects and general powers of a building society.

9. —(1) A building society may have as its objects the undertaking of any of the activities permitted by or under this Act and shall have as one of its objects the raising of funds for making housing loans.

(2) A society shall have the powers conferred by or under this Act and any incidental powers that are necessary for the achievement of its objects subject to—

(a) compliance with any requirement that, for a power to be exercisable by a society, it must be adopted by the society; and

(b) the exercise by the Central Bank of its functions under this Act, the Currency and Central Bank Acts, 1927 to 1971, or regulations made under any such Act.

Formation, registration and incorporation.

10. —(1) A building society is formed under this Act on compliance by the persons forming it with the requirements of this Act in relation to the formation of a society and is incorporated under this Act on this issue of a certificate of incorporation.

(2) Any 10 or more persons not disqualified under section 64 may form a society by—

(a) agreeing on the objects of the society and on the extent of its powers in a memorandum the provisions of which comply with the requirements for the time being of Part I of the Second Schedule ;

(b) agreeing on rules for the regulation of the society which comply with the requirements of Part II of the Second Schedule and any regulations for the time being made under section 11 (2); and

(c) delivering to the Central Bank 3 copies of the memorandum and rules, each copy signed by not less than 10 of those persons and by the intended secretary.

(3) Where copies of the memorandum and rules are delivered to the Central Bank in accordance with subsection (2), the Bank, if—

(a) it is satisfied that the memorandum and rules are in conformity with this Act and any regulations made thereunder and that the name of the proposed society is not undesirable,

(b) it has no reason to believe that the society will not be authorised under section 17 , and

(c) it is satisfied that registration would not be prejudicial to the orderly and proper regulation of building societies generally,

shall register the memorandum and rules and issue the society with a certificate of incorporation.

(4) Whenever the Central Bank decides to refuse to register a memorandum and rules it shall, within 6 months of the date of delivery of the rules and memorandum or of the date of receipt of such other information as it may require, whichever is the later, notify the signatories of the memorandum and the rules of its decision and of its reasons for it, and an appeal may be made to the Court against the decision within one month of the receipt of the Bank's decision by not less than 10 such persons.

(5) Where the Central Bank decides to register the memorandum and rules delivered to it under subsection (2) it shall retain and register one copy, return another copy to the secretary of the society together with a certificate of incorporation, keep another copy together with a copy of the certificate of incorporation in the public file of the society and notify the incorporation to the Minister and the Minister for Finance.

(6) From the date of its incorporation a society shall be a body corporate (with the name contained in its memorandum and rules) having perpetual succession and a seal and the power to hold land.

(7) A certificate of incorporation given under this section by the Central Bank shall be sufficient evidence until the contrary is shown that all the requirements of this Act in respect of registration and of matters precedent and incidental thereto have been complied with and that the society is a society duly registered and incorporated under this Act.

Supplemental provisions relating to memorandum and rules.

11. —(1) The provisions of the memorandum and rules of a building society, as read with the provisions of this Act and such regulations made thereunder as are in force for the time being, are binding upon—

(a) the society, every member and officer of the society; and

(b) all persons claiming on account of a member or under the rules;

and all such members, officers, and persons shall be taken to have notice of those provisions.

(2) The Central Bank may, in the interests of the orderly and proper regulation of building societies, by regulation—

(a) make further provision as respects the form and content of the memorandum and such provision may amend, extend or rescind any provision of Part I of the Second Schedule ;

(b) prescribe rules in respect of any of the matters in Part II of the Second Schedule or any of the following matters as respects housing loans or loans of the type referred to in section 6 (2) (a)

(i) the prohibiting or restricting of the charging of redemption fees;

(ii) the making available to a member to whom a loan is to be made of the report made under section 25 relating to the value of the security for the loan;

(iii) removing or restricting the right of a society to require a member to effect and keep effected insurance on the security for a loan with an insurer directed by the society or through the agency of the society or of any intermediary directed by the society;

(iv) precluding or restricting a society from requiring a member to pay its costs of legal investigation of title to the security;

(v) the arranging by a society through an insurer or intermediary nominated by it for the provision of mortgage protection insurance.

(3) Rules prescribed under subsection (2) (b) shall, with effect from one month after the commencement of the regulations, be part of the rules of any society to which they are declared to be applicable by the regulations, notwithstanding any provision of the rules of the society.

(4) Where the memorandum of a society registered before the commencement of regulations under subsection (2) (a) is not, in the opinion of the Central Bank, in accordance with any regulations under that subsection the Bank shall notify the society of its opinion within 6 months after the commencement of the regulations and in such a case the society shall forthwith take all necessary action to alter its memorandum accordingly within such time as the Bank may direct.

(5) If a society fails to comply with a notification by the Central Bank under subsection (4) the powers conferred on the Bank by section 40 shall become exercisable in relation to the society or the Bank may apply to have the society wound up under section 109 .

(6) A society shall supply to any person requiring them a copy of its memorandum and rules for such fee as may, from time to time, be fixed by the Central Bank.

(7) In this section “redemption fee” means, in relation to a loan, any sum in addition to principal and any interest due on such principal (without regard to the fact of the redemption of the loan) at the time of redemption of the whole or part of the loan.

Acts of a society.

12. —(1) Any act or thing done by a building society, which if the society had been empowered to do the same would have been lawfully and effectively done, shall, subject to section 11 (1), be effective in favour of any person relying on such act or thing who dealt with the society in good faith notwithstanding that the society had no power to do such act or thing.

(2) The Court may, on the application of a member, the Central Bank or any person having a material interest, restrain a society from doing any act or thing which it has no power to do.

Registered name.

13. —(1) The words “building society” or the words “cumann foirgníochta” shall be included in the name of a society.

(2) A person, not being a building society and not being a public utility society in existence at the commencement of this section, shall not use in reference to itself or himself a name, title or descriptive expression containing the words “building society” or the words “cumann foirgníochta” or any translation, variant or derivative of those words.

(3) A society shall not use any name or title other than its registered name.

(4) A society shall—

(a) paint or affix its name in a conspicuous position in easily legible letters on the outside of each of its offices or places of business,

(b) have its name engraved in legible characters on its seal,

(c) mention its name in all notices, letters, cheques, receipts or other documents purporting to be issued or sent by or on behalf of it, and

(d) include in all its letters the number with which it is registered and the address of its chief office.

(5) The use by a society, in addition to its registered name, of an abbreviated version of that name shall not be in breach of the provisions of this section.

(6) Where, in the opinion of the Central Bank, a society incorporated before the commencement of this section is registered or a society, on its first registration or on its registration by a new name, is registered (through inadvertence or otherwise) by a name which, in the opinion of the Bank, is undesirable, the Bank may require the society to change its name by giving it notice to that effect.

(7) Where notice is given under subsection (6) to a society, it shall be allowed such period, not being less than one month, as the Central Bank may direct to comply with the notice and, in the event of the society's failure to comply with the notice in that period, the powers conferred on the Bank by section 40 shall become exercisable in relation to the society or the Bank may apply to have the society wound up under section 109 .

Alteration of memorandum and rules.

14. —(1) A building society may by special resolution (and only by special resolution) alter its memorandum or its rules.

(2) A society so altering its memorandum or rules shall deliver to the Central Bank 3 copies of the alteration signed by 3 members and the secretary, together with a letter signed by the secretary confirming that a special resolution has been passed approving the alteration.

(3) Where copies are delivered to the Central Bank in accordance with subsection (2) and—

(a) it is satisfied that—

(i) the memorandum and rules as so altered are in conformity with this Act and any regulations made thereunder,

(ii) registration would not be prejudicial to the orderly and proper regulation of building societies generally, and

(iii) where the alteration involves a change of name, the changed name is not undesirable,

and

(b) in the case of a society that has not been authorised under section 17 , it has no reason to believe that the society will not be authorised under that section,

it shall retain and register one copy, return another copy to the secretary together with a certificate of registration, and keep another copy together with a copy of the certificate of registration in the public file of the society.

(4) An alteration under this section shall not have effect until registered under subsection (3) or until such later date following registration as may be specified in the special resolution unless the Central Bank otherwise directs.

(5) Where the Central Bank refuses to register under subsection (3) a copy of an alteration delivered to it under subsection (2), it shall, within 2 months of the receipt by it of the copies, notify the society of its decision and of its reasons for it, and an appeal may be made to the Court against the decision within one month of the receipt of the Bank's decision.

(6) An alteration of the memorandum or rules shall not affect any subsisting right or obligation of a society or of any member or other person concerned, or render defective any legal proceedings by or against the society, and any legal proceedings commenced by or against it under its former memorandum or rules may be continued by or against it under its altered memorandum or rules.

Chief office of society.

15. —(1) A building society shall, as from the date of its incorporation, have an office in the State (to be known as its chief office) to which all communications and notices may be addressed.

(2) Notice of any decision to change the location of the chief office and of the date on which it will become effective shall, within 7 days of the decision, be sent by the society to the Central Bank which shall register the notice and keep a copy of the notice in the public file of the society.

Membership and liability of members.

16. —(1) Every person holding one or more shares in a building society shall be a member of the society.

(2) Subject to its rules, a society may allow a person to whom a housing loan is made or to whom a loan secured by the mortgage of freehold or leasehold estate or interest has been made under the repealed enactments, to be a member without holding a share in the society, and the liability of such a member shall be no greater than it would be if the rules treated him as being, by reason of the making of the loan, the holder of a share in the society.

(3) Two or more persons may jointly hold shares in a society.

(4) The liability of a member of a society in respect of any share in the society on which no loan has been made shall be limited to the amount actually paid and in arrear on the share and, in respect of any share on which a loan has been made, shall be limited to the amount payable thereon under any mortgage or other security or under the rules of the society.

(5) A person who is not of full age within the meaning of the Age of Majority Act, 1985 , may be admitted as a member of a society the rules of which do not prohibit such admission and can give all necessary receipts, but while he is not of such age he shall not be entitled to vote, hold any office in the society or nominate or join in nominating a person for election as a director of the society.

(6) Where two or more persons jointly hold shares in a society, the following provisions shall apply—

(a) the person whose name first appears in the records of the society in relation to shares jointly held shall be the representative joint holder;

(b) except where the rules of a society otherwise provide, any notice or other document required by this Act to be sent by a society to the holders of shares in the society shall be deemed to have been sent to the joint holders if it is sent to the representative joint holder;

(c) where under this Act a member of a society may vote at a meeting or under a postal ballot by virtue of being a holder of shares in the society and such person is a joint holder of such shares, the person entitled to exercise the rights conferred by sections 68 , 69 and 72 to 74 shall, notwithstanding anything in those sections, be the representative joint holder;

(d) in the register required to be kept under section 65 the entry of that one of the joint holders who is the representative joint holder shall indicate that fact;

(e) for the purposes of Parts X and XI , the shares shall be deemed to be held by the representative joint holder alone, and a joint holder of the shares (other than a representative joint holder) shall not be regarded as a member of the society for the purposes of those Parts;

(f) the representative joint holder, but not the other joint holders, shall have the right to join in making an application under section 45 and any reference in that section to the total membership shall be construed accordingly;

(g) paragraph (b) shall not operate so as to prevent any of the joint holders from obtaining from the society, on demand, a copy of its annual accounts or summary financial statement;

(h) the joint holders shall be entitled to choose the order in which they are named in the records of the society.

(7) Where a loan, being a loan made under the repealed enactments secured by the mortgage of freehold or leasehold estate or interest or a housing loan, is made by a society to two or more persons jointly, the following provisions shall apply—

(a) the person whose name first appears in the records of the society in relation to such a loan shall be the representative joint borrower;

(b) except where the rules of a society otherwise provide, any notice or other document required by this Act to be sent to borrowers shall be deemed to be sent to the joint borrowers if it is sent to the representative joint borrower;

(c) where under this Act a borrower may vote at a meeting of the society or under a postal ballot and such a person is a joint borrower the person entitled to exercise the rights conferred by sections 68 , 69 , 72 and 73 shall, notwithstanding anything in those sections, be the representative joint borrower;

(d) in the register required to be kept under section 65 the entry of that one of the joint borrowers who is the representative joint borrower shall indicate that fact;

(e) for the purposes of Part XI , the rights of the joint borrowers as borrowing members of the society shall be treated as the rights of the representative joint borrower alone and a joint borrower (other than a representative joint borrower) shall not be regarded as a borrowing member of the society for the purposes of that Part;

(f) paragraph (b) shall not operate so as to prevent any of the joint borrowers from obtaining from the society, on demand, a copy of its annual accounts of summary financial statement;

(g) the joint borrowers shall be entitled to choose the order in which they are named in the records of the society.

Authorisation to raise funds.

17. —(1) Except to the extent permitted by subsection (3), a building society or a person acting or purporting to act on its behalf shall not raise funds, or advertise for or otherwise solicit deposits or subscriptions for shares unless there is in force an authorisation granted by the Central Bank or deemed to be granted under this section.

(2) A society which, immediately before the repeal of that section, had permission to advertise under section 19 of the Building Societies Act, 1976, is deemed to have been granted an authorisation under this section and any restriction imposed on the permission shall apply as if it were a condition on the authorisation.

(3) Authorisation is not required for—

(a) the acceptance of payments by way of subscription for deferred shares unless the aggregate of the payments exceeds £250,000 or such higher amount as may be specified by the Central Bank;

(b) the acceptance of payments for amounts due in respect of shares which represent interest on, or the repayment of, loans made to the holders of shares; or

(c) borrowing from another society or a bank or from an officer of the society, if the society has obtained the prior consent in writing of the Central Bank.

(4) On an application duly made by a society for authorisation under this section, the Central Bank may, as it thinks proper and having regard to section 37

(a) if it is satisfied that—

(i) the society has qualifying capital of an amount that is not less than the prescribed minimum,

(ii) the chairman and members of the board of directors, the chief executive and secretary are each fit and proper persons to hold their respective offices in the society, and

(iii) the board of directors, with the chief executive and secretary, have the capacity and intention to direct and manage the affairs of the society with prudence, integrity and adequate professional skills,

grant an authorisation;

(b) grant an authorisation subject to such conditions as will make it so satisfied or as it otherwise considers necessary; or

(c) refuse to grant an authorisation.

(5) The conditions of an authorisation may be revoked, amended or added to and conditions may be imposed by the Central Bank in relation to an authorisation granted or deemed to have been granted under this section where the Bank so thinks proper.

(6) Without prejudice to the generality of subsections (4) and (5), conditions may relate to any matter which the Central Bank considers relevant and may in particular—

(a) impose limitations on the issue of shares or debt instruments, the acceptance of deposits or the employment of assets;

(b) require the society to take specified steps with regard to the conduct of the business of any subsidiary or other associated body;

(c) require the removal of any director or other officer;

(d) relate to any activities of the society or a subsidiary or other associated body; or

(e) require the society to take certain steps or to refrain from adopting or pursuing a particular course of action or to restrict the scope of its business in a particular way.

(7) The provisions of the Third Schedule shall have effect for the purposes of this section.

(8) If a society raises, advertises for or solicits any funds without having an authorisation under this section, the Central Bank may make an application to the Court under section 109 for the winding up of the society.

(9) The grant of an authorisation to a society by or under this section shall not constitute a warranty as to the solvency of the society to which it is granted and the State or the Central Bank, without prejudice to section 94 , shall not be liable in respect of any losses incurred through the insolvency of a society to which an authorisation is deemed granted under this section or granted by the Bank.

(10) In this section—

deferred shares” means shares that—

(a) are not redeemable or are redeemable only in circumstances approved by the Central Bank,

(b) bear rights to participate in distributions of interest, profits or assets only after the claims of other shareholders are met,

(c) are issued on terms that they will be used in full to meet any loss or deficit in the funds of a society before the funds of other shareholders are called upon, and

(d) are issued in accordance with such other requirements as may be specified by the Central Bank for such shares;

the prescribed minimum”, in relation to qualifying capital, is £250,000 or such other sum as may be prescribed by the Central Bank in regulations made after consultation with the Minister;

qualifying capital”, in relation to a society applying for authorisation, means—

(a) the aggregate of the nominal value of the deferred shares issued and paid up at the date of the application and the amount of the reserves as shown in the last balance sheet of the society less any accumulated deficit as so shown; or

(b) where there is no such balance sheet, the aggregate of the nominal value of the deferred shares issued and paid up at the date of the application, such shares being held by not less than 10 members of whose number at least 10 each hold shares to the value of £10,000 or more.