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Restrictions on commencement of business.
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18.—(1) A society shall not raise any funds under section 22 after the commencement of this section unless—
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(a) written evidence has been produced to the Registrar satisfying him that not less than ten of the appropriate persons (or where there are less than ten, all such persons) have each been issued with shares in the society to a value not less than such sum as may be prescribed by the Minister after consultation with the Minister for Finance, and that the total value of such shares is not less than such sum as may be prescribed by the Minister after such consultation,
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(b) written evidence has been produced to the Registrar satisfying him that the appropriate persons have paid to the society the prescribed sums in cash for those shares,
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(c) written evidence has been produced to the Registrar satisfying him that the society has complied with section 20, and
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(d) the Registrar has certified that the evidence referred to in paragraphs (a) to (c) has been produced.
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(2) For the purposes of subsection (1) the appropriate persons are—
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(a) in the case of a society which is incorporated on or after the 5th day of December, 1975, the persons who established the society, and
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(b) in the case of any other society, the directors of the society.
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(3) (a) The terms applicable to the shares to which subsection (1) (a) refers shall not, either at the time when the shares are issued or at any time before the expiration of five years from the date on which the Registrar's certificate referred to in subsection (1) (d) is issued, be in any respect more favourable than those applicable to any other shares issued by the society.
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(b) Within the five-year period referred to in paragraph (a) a society shall not give effect to or recognise any transfer of shares referred to in subsection (1) (a) other than a transfer by operation of law.
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(c) For the purposes of paragraph (a) “terms” shall include rate of interest, dividend or bonus, liability to contribute to losses, rights on a transfer of engagements or winding-up of the society or on the union of the society with another society.
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(4) Within the five-year period referred to in subsection (3) a society shall not repay the sum (or any part thereof) subscribed for the shares referred to in subsection (1) (a) unless during that period the society is wound up under section 95 or a transfer of its engagements to another society has been registered by the Registrar under section 26 or 27 or a person who has subscribed for those shares becomes disqualified under this Act or dies.
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(5) Where a person referred to in subsection (4) becomes disqualified or dies, either—
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(a) the remaining persons who subscribed for the shares referred to in subsection (1) (a) shall within the period of 30 days after the disqualification or death pay to the society sums in cash equal in the aggregate to the sum subscribed by the person becoming disqualified or dying, and shall be issued with shares in the society to the value so subscribed, or
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(b) any other person not disqualified under this Act may subscribe in cash for, and be issued with, shares in the society to a value not less than the sum subscribed by the person becoming disqualified or dying,
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and the provisions of subsection (3) shall apply to shares issued under this subsection.
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(6) The evidence referred to in subsection (1) shall be produced to the Registrar—
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(a) in the case of a society which is incorporated on or after the commencement of this section, within three months from the date of incorporation;
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(b) in the case of any other society, within three months from the commencement of this section.
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(7) Where a society fails to produce to the Registrar within the appropriate period specified in subsection (6) the evidence referred to in subsection (1)—
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(a) in the case of a society which is incorporated on or after the commencement of this section, the Registrar may cancel the registration of the society under section 94;
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(b) in the case of any other society, the Registrar may make an application to the Court under section 95 for the winding-up of the society.
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(8) If a society to which this section applies raises any funds in contravention of this section, or if at any time within the five-year period referred to in subsection (3) any provision in that subsection or in subsection (4) is not complied with, the Registrar may make an application to the Court under section 95 for the winding-up of the society.
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(9) For the purposes of this section, the shares referred to in subsection (1) (a) shall be deemed not to be shares issued under section 22.
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(10) This section shall not apply to—
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(a) any society which was incorporated on or before the 5th day of December, 1973 and which, during the two-year period ended on the 5th day of December, 1975, raised funds and made loans to members on the security of freehold or leasehold estate,
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(b) any society which was incorporated during the two-year period ended on the 5th day of December, 1975 and which, on that date, had assets of not less than £20,000.
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