BUILDING SOCIETIES Title 1 This Order may be cited as the Building Societies (Supplementary Capital) (Amendment) Order 1992. Commencement 2 Article 4(e) of this Order shall come into force on 30th September 1993 and all other provisions thereof shall come into force on 1st August 1992. Interpretation 3 In this Order— “issue term”, “subordinated long term debt”, “supplementary capital” and “supplementary financial resources” have the meanings which they respectively bear in the Supplementary Capital Order , and “the Supplementary Capital Order” means the Building Societies (Supplementary Capital) Order 1988 . Amendment of the Supplementary Capital Order 4 The Supplementary Capital Order shall have effect subject to the following amendments: a in Article 2 (interpretation), for the definition of “balance sheet”, there shall be substituted the following definitions— “the Designated Capital Resources Order ” means the Binding Societies (Designated Capital Resources) Order 1992 , “group accounts” has the meaning which it bears in the Designated Capital Resources Order, “primary capital” has the meaning assigned to it in Article 7(2) of the Designated Capital Resources Order, , b in Article 2, after the definition of “society”, there shall be inserted the following definition— ““subsidiary undertaking” has the meaning assigned to it in Article 5 of the Building Societies Act 1986 (Modifications) Order 1991 , and”, c in Article 4(1) (overall limit on extent of aggregation), the words “as shown in the society’s latest balance sheet” shall be deleted, d for Article 4(2) there shall be substituted the following paragraph— 2 Where a society has subsidiary undertakings, the determination in paragraph (1) above shall be made on a consolidated basis, by reference to the group accounts and accounting records of the society and its subsidiary undertakings, , e in the Schedule, in Part I, in paragraph 1(2) (specification of supplementary capital), for the words “where the issue terms relating to that subordinated long term debt contain any disqualifying term.” there shall be substituted the following— where the issue terms relating to that subordinated long term debt contain any disqualifying term, or at any time when the terms on which shares in the society other than deferred shares are held, whether contained in the society’s rules or otherwise, enable those shares to be written down. , f in the Schedule, to Part II (disqualifying terms) there shall be added the following paragraphs— Interest to increase by more than a specified percentage 3 An issue term which provides that the rate of interest or, as the case may be, margin, payable on subordinated debt will, or will in specified circumstances, increase by more than a 1% in a single step; b 1% in aggregate by a number of steps in any period of five years; or c 2% in aggregate by a number of steps without limit of time, ascertained in accordance with paragraph 4 below, is a disqualifying term for the purposes of paragraph 1(2) of Part I of this Schedule. 4 1 The increase in the rate of interest for the purposes of an issue of subordinated debt the issue terms whereof specify a stepped rate, is to be ascertained— a for the purposes of paragraph 3(a) above, by deducting from the rate of interest specified for the period immediately after the increase the rate of interest specified for the period immediately before the increase; b for the purposes of paragraph 3(b) above, by deducting from the highest rate of interest specified for any part of any period of five years, the lowest rate of interest specified for any other part of that period; and c for the purposes of paragraph 3(c) above, by deducting from the highest rate of interest specified for any period, the lowest rate of interest specified for any other period. 2 The increase of the margin for the purpose of an issue of subordinated debt the issue terms whereof specify a floating rate, being a market rate varied by a margin, is to be ascertained in the manner set out in subparagraph (1) above, save that references to the rate of interest specified shall be read as references to the margin specified. 3 In this paragraph— “a stepped rate” means a rate of interest which increases or reduces from time to time by steps specified in time and amount; “a floating rate” means a rate of interest which is ascertained by reference to a specified market rate or by reference to a specified market rate varied by a specified margin; and “a market rate” means a rate being one of, or an average of, any published rates of interest applicable from time to time for the purpose of calculating interest on debt or other financial obligation arising from transactions between institutions which are authorised for the purposes of the Banking Act 1987; a rate being one of, or an average of, any published rates of interest applicable from time to time for the purpose of calculating interest payable on any class of securities issued in the United Kingdom by Her Majesty’s Government; the rate of interest payable on such interest bearing shares in the society as have from time to time the lowest rate of interest; or the rates of interest payable on such interest bearing shares in the society as have from time to time the highest rate of interest. , g in the Schedule, in Part III (interpretation), in paragraph 4, there shall be inserted, after the definition of “key date”, the following definition— “rate” in relation to interest means the rate per annum and “floating rate”, “market rate” and “stepped rate” have the respective meanings assigned by paragraph 4 of Part II of this Schedule, , and h in the Schedule, in Part III, in paragraph 4, there shall be inserted, after the definition of “shares”, the following definition— “specified” means specified by issue terms, . Transitional provision 5 Nothing in Article 4(f) above shall affect the specification as supplementary capital of supplementary financial resources of a building society relating to subordinated long term debt advanced prior to the date on which that paragraph comes into force, unless an issue term of such debt is varied after that date to have the effect described in paragraph 3 of Part II of the Schedule to the Supplementary Capital Order as affected by this Order. In witness whereof the common seal of the Building Societies Commission is hereto fixed, and is authenticated by me, a person authorised under paragraph 14 of Schedule 1 to the Building Societies Act 1986, on Norman Digance Secretary to the Commission 30th June 1992. We consent to this Order Irvine Patnick Nicholas Baker Two of the Lords Commissioners of Her Majesty’s Treasury 2nd July 1992