Building Societies Citation and commencement 1 1 This Order may be cited as the Building Societies (Financial Assistance) Order 2008. 2 It comes into force on the day after the day on which it is made. Interpretation 2 1 In this Order— “the 1986 Act ” means the Building Societies Act 1986 ; “ the Authority ” means the Financial Services Authority ; “member” and “officer” have the same meaning as in the 1986 Act ; “relevant building society” means any building society which— receives relevant financial assistance from the Bank of England, has entered into an agreement with the Bank of England under which it may receive relevant financial assistance from the Bank of England, or has received an offer of such an agreement, or of relevant financial assistance, from the Bank of England; “section 1(1)(a) function” means the function of the Authority set out in section 1(1)(a) of the 1986 Act. 2 References in this Order to the Bank of England include— a any person acting for or on behalf of the Bank of England; b any person providing, offering, or entering into an agreement for the provision of, relevant financial assistance to a building society, who does so on the basis of relevant financial assistance that person receives from the Bank of England for that purpose. Purpose or principal purpose of building societies 3 1 Section 5 of the 1986 Act (establishment, constitution and powers) applies in relation to a relevant building society with the following modification. 2 No relevant building society shall be regarded as failing to comply with section 5(1)(a) (purpose or principal purpose) by virtue of any relevant financial assistance it receives from the Bank of England. 3 The powers conferred on the Authority by sections 36 and 37 of the 1986 Act (power to direct restructuring of business etc and powers to petition for winding up etc) shall not become exercisable in relation to a building society which receives relevant financial assistance if, but for the relevant financial assistance, they would not have become exercisable. 4 Sections 5(4A), 36(1) and 37(1) shall be construed accordingly. 5 The Authority shall disregard, for the purposes of its section 1(1)(a) function, a building society to which paragraph (3) applies. The lending limit 4 1 Section 6(1) of the 1986 Act (the lending limit) shall not apply in relation to a relevant building society for the relevant period where— a the society receives relevant financial assistance from the Bank of England, b as a consequence of the financial assistance, the society transfers, assigns or otherwise disposes of any of its assets, and c that transfer, assignment or other disposal would, apart from this article, put the society in breach of section 6(1). 2 No building society within paragraph (1) shall be regarded as failing to comply with section 5(1)(a) of the 1986 Act in the relevant period by virtue of the matters referred to in paragraph (1). 3 The powers conferred on the Authority by sections 36 and 37 of the 1986 Act shall not become exercisable in relation to a building society within paragraph (1) in respect of the relevant period. 4 Sections 5(4A), 36(1) and 37(1) shall be construed accordingly. 5 In the relevant period the Authority shall disregard, for the purposes of its section 1(1)(a) function, a building society within paragraph (1). 6 In this article “the relevant period” is the period commencing on the date on which paragraph (1) is first satisfied in relation to the society and ending— a one year after that date, or b if later, on the date on which the financial assistance referred to in paragraph (1) is no longer provided. The funding limit 5 1 Section 7 of the 1986 Act (the funding limit) applies to a relevant building society with the following modification. 2 There shall be disregarded for the purposes of section 7(2) any relevant financial assistance the society receives from the Bank of England. Raising funds and borrowing 6 Section 8(1)(c) of the 1986 Act (raising funds and borrowing) shall not apply to a relevant building society in relation to any relevant financial assistance the society receives from, or is offered by, the Bank of England. Restriction on creation of floating charges 7 1 Section 9B(1) of the 1986 Act (restriction on creation of floating charges) shall not apply to a relevant building society in relation to any relevant floating charge. 2 Section 9B(2) shall not apply to any relevant floating charge. 3 In this article a “relevant floating charge” is a floating charge created by a relevant building society in favour of the Bank of England in connection with any relevant financial assistance the society receives from the Bank of England. Memorandum and rules 8 1 Schedule 2 to the 1986 Act (establishment, incorporation and constitution of building societies) applies in relation to a relevant building society with the following modifications. 2 Paragraph 2 (the memorandum) shall have effect as if, after sub-paragraph (4), there were inserted— 4A However, no provision of the memorandum of a building society shall be binding on any member or officer of the society, or on any person claiming on account of a member or under the rules, to the extent that it would prevent the society (whether acting through its officers or otherwise) from— a receiving any relevant financial assistance from the Bank of England, or b entering into any transaction connected with the receipt of such financial assistance, and sub-paragraph (4) shall be construed accordingly. . 3 Paragraph 3 (the rules) shall have effect as if, after sub-paragraph (2), there were inserted— 2A However, nothing in the rules of a building society shall be binding on any member or officer of the society, or on any person claiming on account of a member or under the rules, to the extent that it would prevent the society (whether acting through its officers or otherwise) from— a receiving any relevant financial assistance from the Bank of England, or b entering into any transaction connected with the receipt of such financial assistance, and sub-paragraph (2) shall be construed accordingly. . 4 References to the Bank of England in paragraphs 2(4A) and 3(2A) as inserted by paragraphs (2) and (3) above include— a any person acting for or on behalf of the Bank of England, and b any person providing, offering, or entering into an agreement for the provision of, relevant financial assistance to a building society, who does so on the basis of relevant financial assistance that person receives from the Bank of England for that purpose. 5 No member of a building society may bring proceedings under paragraph 16(2) (capacity of society not limited by its memorandum) to restrain the doing of any act by a building society for or in connection with the receipt of relevant financial assistance from the Bank of England. 6 Paragraph 16(3) shall not operate so as to— a require the directors to observe any limitations on their powers flowing from the society’s memorandum which would, apart from this article, prevent them entering into any transaction for or in connection with the receipt of relevant financial assistance by the society from the Bank of England, or b require any such action by the directors which, but for paragraph 16(1), would be beyond the society’s capacity, to be ratified by the society by special resolution. Application of companies winding up legislation to building societies 9 1 Schedule 15 to the 1986 Act (application of companies winding up legislation to building societies) applies in relation to a relevant building society with the following modifications. 2 In paragraph 3(2) , omit paragraph (b). 3 In paragraph 33, for “subsections (2) and (4) to (6)” substitute “subsections (2), (5) and (6)”. 4 In paragraph 55E , for “paragraphs (2) and (4) to (6)” substitute “paragraphs (2), (5) and (6)”. Application of other companies insolvency legislation to building societies 10 Section 90A of the 1986 Act (application of other companies insolvency legislation to building societies) applies in relation to a relevant building society as if— a after “England and Wales” in paragraph (c) there were inserted “, Scotland”; b after “receivers and managers” in that paragraph there were inserted “, receivers or administrative receivers”. 11 1 Schedule 15A to the 1986 Act (application of other companies insolvency legislation to building societies) applies in relation to a relevant building society with the following modifications. 2 In paragraph 1(2)(a) , for “Chapter I of Part III” substitute “Chapters I, II and III of Part III”. 3 In paragraph 2(2), omit paragraph (b). 4 In paragraph 11 — a in sub-paragraph (2), for “is a reference to the Authority” substitute “includes a reference to the Authority”; b omit sub-paragraph (3). 5 Omit paragraphs 12, 13, 18 and 20. 6 For paragraph 27, substitute— 27 1 Subsection (3) of section 40 of the Act (payment of debts out of assets subject to floating charge) as applied to a building society has effect as if the reference to general creditors included a reference to holders of shares in the society. 2 Subsection (3) of section 59 of the Act (priority of debts) as applied to a building society has effect as if the reference to ordinary creditors included a reference to holders of shares in the society. 27A Subsection (1) of section 46 of the Act (information to be given by administrative receiver) or subsection (1) of 65 of the Act (information to be given by receiver) as applied to a building society has effect as if the reference to all the creditors of the society included a reference to all the holders of shares in the society. 27B Subsection (2) of section 47 of the Act (statement of affairs to be submitted) or subsection (2) of section 66 of the Act (building society’s statement of affairs) as applied to a building society has effect as if the reference to its creditors included a reference to all holders of shares in the society. 27C Section 48 of the Act (report by administrative receiver) or section 67 of the Act (report by receiver) as applied to a building society has effect as if— a the reference in subsection (1) to the Authority included a reference to the scheme manager; b the reference in subsection (1)(d) to other creditors included a reference to holders of shares in the society; c the references in paragraphs (a) and (b) of subsection (2) to unsecured creditors of the society included references to holders of shares in the society; and d the reference in subsection (2) to a meeting of the society’s unsecured creditors included a reference to a meeting of holders of shares in the society. 27D Subsection (1) of section 49 or 68 of the Act (committee of creditors) as applied to a building society has effect as if the reference to a meeting of creditors included a reference to a meeting of holders of shares in the society. . 7 In paragraph 33 — a in sub-paragraph (2), for “is a reference to the Authority” substitute “includes a reference to the Authority”; b omit sub-paragraph (3). 8 Omit paragraphs 34, 35, 40 and 42. 9 For paragraph 49, substitute— 49 Paragraph (3) of Article 50 of the Order (payment of debts out of assets subject to floating charge) as applied to a building society has effect as if the reference to general creditors included a reference to holders of shares in the society. 49A Paragraph (1) of Article 56 of the Order (information to be given by administrative receiver) as applied to a building society has effect as if the reference to all the creditors of a society included a reference to all the holders of shares in the society. 49B Paragraph (2) of Article 57 of the Order (statement of affairs to be submitted) as applied to a building society has effect as if the reference to its creditors included a reference to all holders of shares in the society. 49C Article 58 of the Order (report by administrative receiver) as applied to a building society has effect as if— a the reference in paragraph (1) to the Authority included a reference to the scheme manager; b the reference in paragraph (1)(d) to other creditors included a reference to holders of shares in the society; c the references in sub-paragraphs (a) and (b) of paragraph (2) to unsecured creditors of the society included references to holders of shares in the society; and d the reference in paragraph (2) to a meeting of the society’s unsecured creditors included a reference to a meeting of holders of shares in the society. 49D Paragraph (1) of article 59 of the Order (committee of creditors) as applied to a building society has effect as if the reference to a meeting of creditors included a reference to a meeting of holders of shares in the society. . Consequential and supplementary provision 12 Regulation 14 of the Financial Markets and Insolvency (Settlement Finality) Regulations 1999 applies in relation to a relevant building society as if— a the references in paragraphs (5) and (6) to paragraph 99(3) of Schedule B1 to the Insolvency Act 1986 were references to section 19(4) of that Act; b the references in those paragraphs to paragraph 100(3) of Schedule B1 to the Insolvency (Northern Ireland) Order 1989 were references to Article 31(4) of that Order. Claire Ward Frank Roy Two of the Lords Commissioners of Her Majesty’s Treasury 4th June 2008