Building Societies Act, 1989

Number 17 of 1989

BUILDING SOCIETIES ACT, 1989

ARRANGEMENT OF SECTIONS

PART I

Preliminary and General

PART II

Formation and Authorisation of Building Societies

PART III

Powers of a Building Society

PART IV

Control and Supervision of Building Societies by Central Bank

PART V

Management of Building Societies

PART VI

Meetings, Resolutions, Voting, etc.

PART VII

Accounts and Audit

PART VIII

Disputes and Complaints

PART IX

Savings Protection

PART X

Amalgamations and Transfers of Engagements

PART XI

Conversion to Public Limited Company

PART XII

Winding up, etc.

PART XIII

Miscellaneous

FIRST SCHEDULE

Enactments Repealed

SECOND SCHEDULE

Provisions applicable as respects the memorandum and rules

THIRD SCHEDULE

Supplementary provisions in relation to authorisation

FOURTH SCHEDULE

Supplementary provisions in relation to revocation of an authorisation

FIFTH SCHEDULE

Supplementary provisions in relation to a direction by the Central Bank under Section 40

Number 17 of 1989

BUILDING SOCIETIES ACT, 1989

AN ACT TO MAKE FURTHER AND BETTER PROVISION WITH RESPECT TO BUILDING SOCIETIES AND TO PROVIDE FOR RELATED MATTERS. [12th July, 1989]

BE IT ENACTED BY THE OIREACHTAS AS FOLLOWS:

PART I

Preliminary and General

Short title and commencement.

1.—(1) This Act may be cited as the Building Societies Act, 1989.

(2) This Act shall come into operation on such day or days as may be fixed by order or orders of the Minister, either generally or with reference to a particular purpose or provision, and different days may be so fixed for different purposes and different provisions.

Interpretation.

2.—(1) In this Act, unless the context otherwise requires—

“Act of 1963” means the Companies Act, 1963 ;

“Act of 1971” means the Central Bank Act, 1971 ;

“alteration”, in relation to the memorandum or rules of a building society, includes any addition to or variation of the memorandum or rules, the rescission of any provision of the memorandum or rules, whether with or without the substitution of one or more than one provision in the memorandum or rules for any provision so rescinded, and cognate words shall be construed accordingly;

“adoptable powers” means powers which, under any provision of this Act, must, in order to be exercisable, be adopted by the society and “adopt” or “adopted” means adopt or adopted by agreement on the formation of the society or subsequently by a special resolution;

“the annual accounts” has the meaning assigned to it by section 77 ;

“associated body” means a body in which the society holds shares or corresponding membership rights under section 28 ;

“authorisation” means authorisation under section 17 ;

“bank” means the holder of a licence under section 9 of the Act of 1971;

“building society” means a building society incorporated or deemed by section 124 (2) to be incorporated under this Act;

“Central Bank” means the Central Bank of Ireland;

“commission” includes any gift, bonus, fee, payment or other benefit;

“the Companies Acts” means the Companies Act, 1963 and every enactment which is to be construed with it as one Act;

“contravention” includes failure to comply;

“conversion resolution” has the meaning assigned to it by section 71 ;

“Court” means the High Court;

“deposit” includes loan and cognate expressions shall be construed accordingly;

“dispose” and “disposition”, in relation to any property, include the granting of any interest in or right over it;

“director” includes any person occupying the position of director, by whatever name called;

“functions” includes powers and duties;

“house” includes any building or part of a building used or suitable for use as a dwelling and any outoffice, yard, garden, or other land appurtenant thereto or usually enjoyed therewith and “housing” shall be construed accordingly;

“housing loan” means a loan within the meaning of section 22 ;

“member”, in relation to a society, means a member within the meaning of section 16 ;

“Minister” means the Minister for the Environment;

“mortgage” includes charge;

“officer”, in relation to a building society or other body corporate, means a director, chief executive or secretary, by whatever name called, and, in relation to any offence, also includes any person who purports to act as an officer of the body;

“prescribed” means prescribed by regulations made under this Act;

“the public file”, in relation to a building society, has the meaning assigned to it by section 122 ;

“repealed enactments” means the enactments repealed by section 6 ;

“society” means a building society;

“special resolution” has the meaning assigned to it by section 70 ;

“subsidiary” has the same meaning as it has in the Companies Acts;

“summary financial statement” has the meaning assigned to it by section 79 .

(2) In this Act in any reference to a person's shareholding in a society the value of the person's shares shall be taken as the amount standing to his credit in respect of payments made by him on the shares and interest credited to them by way of capitalisation.

(3) In this Act a reference to a Part, section, or Schedule is to a Part, section, or Schedule of this Act, unless it is indicated that reference to some other enactment is intended.

(4) In this Act a reference to a subsection, paragraph or subparagraph, is to the subsection, paragraph or subparagraph of the provision in which the reference occurs, unless it is indicated that reference to some other provision is intended.

(5) In this Act a reference to an enactment shall be construed as a reference to that enactment as amended, adapted or extended by or under any subsequent enactment including this Act or regulations made under this Act.

(6) In this Act a reference to any provision of this Act shall, where appropriate, be construed as a reference to that provision as modified by regulation.

Regulations, directions, etc.

3.—(1) Regulations may be made by the appropriate authority, being the Minister, the Minister for Finance, the Minister for Justice or the Central Bank—

(a) for the general purposes or for any particular purpose of this Act, or

(b) prescribing any matter referred to in this Act as prescribed or to be prescribed, or in relation to any matter referred to as the subject of regulations.

(2) Regulations under this Act may apply either generally or by reference to a specified class or classes of societies, loans, assets, liabilities or powers of societies, or to a specified time or times, or during a specified period or periods or by reference to any other matter as the appropriate authority may consider appropriate.

(3) Without prejudice to any specific provision of this Act, any regulations thereunder may contain such incidental, consequential, transitional or supplementary provisions (including provisions for the purpose of effecting the transition from the repealed enactments to this Act) as may appear to the appropriate authority to be necessary or proper for any purpose of this Act or in consequence of, or to give full effect to, any provision of this Act.

(4) Every regulation made under this Act shall be laid before each House of the Oireachtas as soon as may be after it is made and, if a resolution annulling the regulation is passed by either House within the next 21 days on which that House has sat after the regulation is laid before it, the regulation shall be annulled accordingly, but without prejudice to the validity of anything previously done thereunder.

(5) The Central Bank may specify matters or give a direction in relation to any provision of this Act or of regulations made thereunder which provides for the specifying of such matters or the giving of such directions by it to a society and the following provisions shall apply—

(a) such specification or direction shall be given by an officer of the Central Bank duly authorised for that purpose,

(b) the provisions of subsections (2) and (3) shall, subject to any necessary modifications, apply to such specifications or directions as they apply to regulations but a specification or direction may also apply to an individual society.

Regulations to remove difficulties.

4.—If, in any respect, any difficulty arises in bringing any provision of this Act into operation or in relation to the operation of any such provision, the Minister may by regulations do anything which appears to him to be necessary or expedient for removing that difficulty, for bringing that provision into operation, or for securing or facilitating its operation, and any such regulations may modify any provision of this Act so far as may be necessary or expedient for carrying such provision into effect for the purposes aforesaid but no regulations shall be made under this section in relation to any provision of this Act after the expiration of 3 years commencing on the day on which the relevant provision of this Act came into operation.

Modification of Act to conform with changes in company and banking law.

5.—(1) If, on any modification of the enactments in force relating to companies or banks, it appears to the Minister to be expedient to modify the provisions of this Act for the purpose of assimilating the law relating to building societies to the law relating to companies or banks, the Minister may by regulations made with the consent of the Minister for Finance make such modifications of any provisions of this Act as he thinks appropriate for that purpose.

(2) The power conferred by subsection (1) includes power to modify the relevant provisions of this Act so as to—

(a) confer power to make orders, regulations, or other instruments;

(b) provide for the charging of fees but not any charge in the nature of taxation.

(3) Regulations under this section may—

(a) make consequential amendments to or repeals of other provisions of this Act;

(b) make such transitional or saving provisions as appear to the Minister to be necessary or expedient.

(4) In this section “modification” includes any addition and, as regards modifications of the enactments relating to companies or banks, any modification whether effected by any future Act or by a statutory instrument made after the passing of this Act under an Act whenever passed.

Repeals and consequential provisions.

6.—(1) Subject to subsections (2), (4) and (5), the enactments specified in column (2) of the First Schedule are hereby repealed to the extent specified in column (3) of the Schedule.

(2) Subject to subsection (3), Part III of the Building Societies Regulations, 1987 (S.I. No. 27 of 1987) as amended by the Building Societies Regulations (Amendment) Regulations, 1987 (S.I. No. 339 of 1987) shall continue in force, as if made by the Central Bank under section 11 (2) and with the substitution of “Central Bank” for “Registrar”, in relation to—

(a) loans made prior to the commencement of section 22 on the security of a mortgage of freehold or leasehold estate or interest in a house, and

(b) housing loans made on or after the said commencement.

(3) Rule I of the First Schedule to the said Regulations (redemption of loans) shall not apply to a housing loan, made on or after the commencement of section 22 , in respect of which the mortgage or loan agreement provides that the rate of interest may not be changed or may only be changed at intervals of not less than one year.

(4) A society that, immediately before the repeal of section 3 of the Building Societies (Amendment) Act, 1986 , is entitled, by virtue of that section and regulations thereunder, to make loans to members for the purpose of carrying out improvement works to a dwelling shall continue to be entitled to make such loans as if that section had not been repealed until, but only until—

(a) the date on which the memorandum of the society takes effect in accordance with section 124 (8), or

(b) the date on which the power to make loans under section 23 (1) (e) becomes exercisable by the society,

whichever is the earlier.

(5) Notwithstanding the repeal of the Building Societies Act, 1976 , sections 20, excepting subsections (9) and (11), and 21 of that Act, shall continue to apply in relation to the exercise by a building society of any function to which an authorisation under section 17 relates pending the coming into force of Part IX .

Service of notices.

7.—(1) Where a notice, direction or other document is authorised or required by or under this Act or regulations made thereunder to be served on a person, it shall, unless otherwise specified in this Act, be addressed to him and shall be served on or given to him in one of the following ways—

(a) where it is addressed to him by name, by delivering it to him;

(b) by leaving it at the address at which he ordinarily resides or, in a case in which an address for service has been furnished, at that address;

(c) by sending it by ordinary prepaid post addressed to him at the address at which he ordinarily resides or, in a case in which an address for service has been furnished, at that address; or

(d) in the case of an officer of a building society, by sending it to him by ordinary prepaid post addressed to him at the address of the chief office of the society.

(2) Any such document may—

(a) in the case of a building society or any other body corporate, be served on the secretary of the society or the body corporate;

(b) in the case of a partnership, be served on any partner; and

(c) in the case of an unincorporated association other than a partnership, be served on any member of its governing body.

Expenses.

8.—(1) The expenses incurred by the Minister and the Minister for Justice in the administration of this Act shall, to such extent as may be sanctioned by the Minister for Finance, be paid out of moneys provided by the Oireachtas.

(2) The expenses incurred by the Minister for Finance in the administration of this Act shall be paid out of moneys provided by the Oireachtas.

(3) The expenses incurred by the Central Bank in the administration of this Act shall be paid out of the general fund of the Bank.

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.

PART III

Powers of a Building Society

Power to raise funds and borrow money.

18.—(1) Subject to section 17 , a building society may raise funds including, with the approval of the Central Bank, funds in a currency other than the currency of the State, to be used for the objects of the society—

(a) by the issue of shares of one or more than one denomination, either with or without accumulating interest, and may repay such funds, and

(b) by borrowing money and accordingly receiving deposits from any person.

(2) A repayment of funds under subsection (1) (a) may not be made to a shareholder (other than at his request) between the date on which he has indicated his intention to propose a resolution or a special resolution or to support a nomination at a meeting of the society and the date of the meeting.

(3) (a) Subject to paragraph (b), a society's aggregate liabilities under subsection (1) (b) shall not at any time exceed its aggregate liabilities under subsection (1) (a).

(b) Where, in the circumstances of a society, the Central Bank considers it expedient to do so, it may grant to the society a dispensation from paragraph (a), to such extent and on such terms as it thinks proper.

(4) A society shall not issue shares under subsection (1) (a) to which voting rights do not attach.

(5) A society may give security for money borrowed, including (subject to any regulations under subsection (6), the approval of the Central Bank and the terms of the mortgage) the security of mortgages held by the society.

(6) The Minister may, with the consent of the Minister for Finance and after consultation with the Central Bank, make regulations in relation to the transfer, sale or assignment of mortgages held by a society.

(7) If a society contravenes subsection (3) the powers conferred on the Central Bank by section 40 shall become exercisable in relation to the society but exceeding the limit shall not affect the validity of transactions effected in excess of it.

(8) A society shall notify the Central Bank of all loans received by it from other societies in such a manner as may be specified by the Bank.

Death of shareholder or depositor.

19.—(1) Where a shareholder in or a depositor with a building society dies and has in the funds of the society a sum of money, the sum or part of it, not exceeding such amount as may from time to time be fixed by the Central Bank after consultation with the Minister for Finance for the purposes of this section, may be paid by the society, without representation within the meaning of the Succession Act, 1965 , having been granted in respect of the estate of the deceased person, to the person who appears to the society to be entitled to receive it, whether as personal representative of the deceased person or otherwise, upon the society's being satisfied by evidence contained in a statutory declaration of the occurrence of the death and of the entitlement of the person, by or on whose behalf the sum is claimed, to the receipt thereof.

(2) Where a payment is made under this section by a society to a person who is not the executor of the deceased person concerned, the society shall, as soon as may be, give to the President of the High Court particulars in writing of the payment.

(3) Where a society duly makes a payment under this section, the payment shall be valid and effectual with respect to any demand against the funds of the society from any person making a claim as regards the estate of the deceased person concerned but the person claiming shall have his remedy for the amount of the payment against the person to whom the payment was made.

Premises.

20.—(1) A building society may acquire or provide itself with premises for the purpose of—

(a) conducting its business, or

(b) enabling a subsidiary or other associated body of the society to conduct the business of the society or of that body from the premises.

(2) If the premises are acquired or provided for the purpose of the business of a society, a subsidiary or other associated body, the society may acquire or otherwise provide itself with and hold the premises notwithstanding that part only of the premises is or will be required for that purpose.

(3) A society—

(a) may dispose of the whole or part of any premises held under this section, and

(b) if no part of the premises comes to be or, as the case may be, is any longer occupied for the business of the society, a subsidiary or other associated body, shall, subject to subsection (4), sell its estate or interest in the premises as soon as it is practicable to do so without undue loss.

(4) Subsection (3) (b) does not require a society to sell any premises if the society may hold it under section 21 and elects to do so by a resolution of the board of directors.

Holding and developing land.

21.—(1) Subject to section 36 , a building society may acquire, hold, dispose of, and develop or participate in developing land where the land is to be used—

(a) for residential purposes and purposes ancillary or incidental thereto, or

(b) for other commercial purposes.

(2) A society which is not for the time being entitled to exercise the powers referred to in this section may acquire, hold and dispose of land which is, or is to be, used for residential purposes if the purpose of the acquisition and holding of the land is to enable the society to make loans on the security of equitable interests in the land in circumstances authorised by the Central Bank.

(3) A society shall dispose of land held under this section if the Central Bank so directs.

(4) The powers referred to in paragraphs (a) and (b) of subsection (1) are separate powers, each of which, if available to a society, must, in order to be exercisable, be adopted by the society in accordance with section 36 .

(5) Premises held under section 20 may, either on application by a society or at the discretion of the Central Bank, be treated in their entirety and regardless of their use as land held under this section for the purposes of the exercise of the Bank's functions under section 39 .

Housing loans.

22.—(1) A building society may make to members loans (referred to in this Act as “housing loans”) including, with the approval of the Central Bank, loans in a currency other than the currency of the State, on the security of a mortgage of a freehold or leasehold estate or interest in a house for the purpose of enabling the member to provide or improve the house or to purchase the said estate or interest.

(2) The power to make housing loans includes power to make them on such terms as may be approved by the Central Bank even if the amount due to the society may exceed the value of the security at any time after the loan has been made and, where the amount due to the society in respect of capital exceeds the amount of the loan, any reference in this Act to the repayment of the loan includes reference to payment of the excess.

(3) Subject to subsection (2), a loan made to a member under this section shall be made on terms such that the capital element of the mortgage debt shall not exceed the value of the security.

(4) A society shall not make a loan under this section on the security of any freehold or leasehold estate or interest which is subject to a prior mortgage unless the prior mortgage is in favour of the society.

(5) (a) The Central Bank may, by regulations, specify charges or descriptions of charges which in its opinion would not materially affect the security and “prior mortgage” in subsection (4) shall not include any charge so specified.

(b) Pending the making of regulations by the Central Bank under paragraph (a) “prior mortgage” shall not include any of the charges specified in the Building Societies (Amendment) Act, 1983 , or in section 4 (2) of the Land Act, 1984 , notwithstanding the repeal of both by this Act.

(6) Nothing in this section shall be construed as precluding a society from accepting additional security for further securing a housing loan as the society may determine.

Other loans.

23.—(1) Subject to this section, a building society may make loans, including, with the approval of the Central Bank, loans in a currency other than the currency of the State, other than housing loans, of the following categories—

(a) loans fully secured by the mortgage of freehold or leasehold estate or interest;

(b) loans to members, before the mortgage has been created, not exceeding the amount which the society has agreed to lend by way of a housing loan;

(c) loans fully secured by one or more securities or guarantees of such description as are from time to time specified by the Central Bank;

(d) loans to be applied in or towards payment of the deposit for the purchase of freehold or leasehold estate or interest that will secure a loan by way of mortgage but such a loan may not exceed 15 per cent., or such other percentage as may be prescribed by the Central Bank, of the amount to be paid for the purchase of the estate or interest;

(e) loans, whether unsecured or secured to any extent, to an individual for the provision or improvement of accommodation for himself or his family; and

(f) loans, including loans on overdraft or other facility accounts, whether unsecured or secured to any extent, to any person.

(2) The power to make loans under subsection (1) is subject to—

(a) section 36 in the case of loans under paragraphs (e) and (f) of that subsection, and

(b) any limit which may be specified by the Central Bank in relation to—

(i) the amount of a loan under any of the categories referred to in subsection (1),

(ii) the amount outstanding at any time, to a person or persons acting in concert, on a loan or loans of a particular category or combination of categories,

by reference to such matters as the Bank considers appropriate.

(3) A society shall take all reasonable steps to ensure that the mortgage referred to in paragraph (b) of subsection (1) is created as soon as may be after the making of a loan under the said paragraph.

Tiered interest rates.

24.—(1) A building society shall not charge a tiered interest rate—

(a) on a loan made under the repealed enactments, unless a tiered interest rate was lawfully charged on the date of the repeal; or

(b) on a housing loan made under this Act, unless a tiered rate is charged from the day on which the mortgage securing the loan is created, the charging of a tiered rate is specifically mentioned in the mortgage and is acknowledged in writing by the member in a form to be specified by the Central Bank.

(2) In this section—

(a) “tiered interest rate” means the rate of interest on a loan where the rate—

(i) is determined by reference to the amount of the loan made or to the amount outstanding at any time on foot of the loan, or to the income of the member to whom the loan is made, as the case may be, and

(ii) is greater than the lowest rate of interest applicable at the time to loans of the same type made by the society to members generally, and

(b) “a loan made under the repealed enactments” means a loan made by the society to a member on the security of a mortgage of a freehold or leasehold estate or interest in a house.

Assessment of security for loans.

25.—(1) A building society shall make such arrangements for assessing the adequacy of the security for loans to be secured by the mortgage of freehold or leasehold estate or interest (referred to in this section as “security”) as may be reasonably expected to ensure that—

(a) an assessment will be made on the occasion of each loan whether or not any previous assessment was made with a view to further loans,

(b) each assessment will be made by a person holding office in or employed by the society who is competent to make the assessment and is not disqualified under this section from making it,

(c) each person making the assessment will have furnished to him a written report on the value of the security and any factors likely to affect its value made by a person who is competent to value, and is not disqualified under this section from making a report on, the security in question,

but the arrangements need not require each report to be made with a view to a particular assessment so long as it is adequate for the purpose of making the assessment.

(2) The following persons are disqualified from making a report on the value of a security under this section, that is to say—

(a) an officer or employee of the society who makes assessments of the adequacy of securities for loans or authorises the making of loans;

(b) where the society has made, or undertaken to make, to any person a payment for introducing to it an applicant for the loan, that person;

(c) where the loan is to be made following a disposition of the security, any person having a financial interest in the disposition and any director, other officer or employee of his or of an associated employer; and

(d) where the loan is to be made following a disposition of the security, any person receiving a commission for introducing the parties to the transaction involving the disposition and any director, other officer or employee of his.

(3) In relation to any security which is to secure a loan following its disposition, the following persons are disqualified from making an assessment of the security or authorising the making of the loan, that is to say—

(a) any person, other than the society making the loan, having a financial interest in the disposition and any director, other officer or employee of his or of an associated employer; and

(b) any person receiving a commission for introducing the parties to the transaction involving the disposition and any director, other officer or employee of his.

(4) An officer, solicitor, surveyor or valuer of a society or other person engaged by a society in making reports on the value of securities or in connection with the assessment of the adequacy of securities or the authorisation of the making of loans shall not accept any commission for or in connection with any loan made or proposed to be made by the society.

(5) Any person who, being disqualified from doing so—

(a) makes a report on a security for a loan,

(b) makes an assessment of the adequacy of a security for a loan, or

(c) authorises the making of a loan,

and, in the case of a person making a report, does so knowing or having reason to believe that the report will be used or is likely to be used for the purposes of a loan, shall be guilty of an offence.

(6) For the purpose of this section any 2 employers are associated if one is a body corporate of which the other (directly or indirectly) has control or if both are bodies corporate of which a third person directly or indirectly has control; and the expression “associated employer” shall be construed accordingly.

(7) In this section a person shall be taken to have a financial interest in the disposition of any security if, but only if, he would, on a disposition of that security, be entitled (whether directly or indirectly, and whether in possession or not) to the whole or part of the proceeds of the disposition.

Sale or retention of mortgaged property.

26.—(1) Where any estate or interest in land mortgaged to a building society is sold by the society in exercise of a power of sale, the society shall ensure as far as is reasonably practicable that the property is sold at the best price reasonably obtainable.

(2) Where a society decides to retain any estate or interest in land mortgaged to the society in exercise of a power under the mortgage, the value of the property shall be determined by an independent and competent person appointed by the society and agreed to by the mortgagor and any other mortgagee and the value so determined shall be treated as if it were money received by a mortgagee arising from a sale.

(3) Where the society is unable to obtain the agreement of the mortgagor or other mortgagee to the appointment of a person under subsection (2), the society may apply to a court of competent jurisdiction to appoint an independent and competent person to determine the value of the property and the costs incurred in such application shall be defrayed equally by the applicant and the persons who do not agree to the person proposed for appointment by the society under subsection (2).

(4) To the extent that any agreement relieves (or may have the effect of relieving) a society or any person from the obligation imposed by subsection (1) or (2) the agreement shall be void.

(5) Where property to which this section relates is sold or its value determined in accordance with subsection (2), the society shall send a notice by registered post to the mortgagor and any other mortgagee at his last known address within 21 days after the completion of the sale or the date on which the report on the value of the property is received by the society, as the case may be, containing particulars of the sale or the value of the property, as the case may be.

(6) Nothing in this section shall affect the operation of any rule of law relating to the duty of a mortgagee to account to a mortgagor.

(7) In this section, “mortgagor” means a person to whom a loan is made by a society, and includes the successor in title of that person.

Discharge of mortgage.

27.—(1) Where, in relation to unregistered land within the meaning of the Registration of Title Act, 1964 , all moneys secured by a mortgage have been fully paid or discharged a building society may endorse on, or annex to, such mortgage either a reconveyance of the mortgaged property to the owner of the equity of redemption (or to such persons and to such uses as such owner may direct) or a receipt under the seal of the society.

(2) Where, in relation to registered land within the meaning of the Registration of Title Act, 1964 , all moneys secured by a mortgage have been fully paid or discharged, a society may issue to the registered owner of the land a receipt under the seal of the society which shall, for the purposes of section 65 of that Act, be sufficient proof of the satisfaction of the mortgage.

(3) A receipt under this section shall operate to vacate the mortgage and shall, without any reconveyance or re-surrender, vest the estate or interest in the property comprised in the mortgage in the person for the time being entitled to the equity of redemption.

(4) Where a mortgage has been registered in the Registry of Deeds established by the Registration of Deeds Act, 1707, the Registrar under that Act shall, on production of a receipt under subsection (1), make an entry opposite the entry of the mortgage to the effect that the mortgage is satisfied and shall grant a certificate (either on the mortgage or separately) to the like effect.

(5) A certificate under subsection (4) shall be received in evidence in all courts and proceedings without any further proof, and an entry under that subsection shall have the effect of clearing the register or record of the relevant mortgage.

(6) The power conferred on the Minister for Justice by section 35 of the Registry of Deeds (Ireland) Act, 1832 (as adapted by the Registry of Deeds (Ireland) Act, 1832 (Adaptation) Order, 1956 (S.I. 281 of 1956)) to fix fees shall include power to fix fees to be paid for making the entry and granting the certificate under subsection (4), and any moneys received under this subsection shall be paid into the Exchequer.

Investment in and support of bodies corporate, etc.

28.—(1) Subject to section 36 , a building society may—

(a) invest in bodies corporate, that is to say, acquire and hold shares or corresponding membership rights in bodies corporate, or form or take part in forming bodies corporate; and

(b) support bodies corporate or approved housing bodies, that is to say, provide bodies corporate in which it invests or approved housing bodies with any of the following services—

(i) loans with or without security and whether or not at interest,

(ii) grants of money,

(iii) guarantees of the discharge of their liabilities, and

(iv) the use of services or property, whether or not for payment.

(2) (a) Subject to paragraph (b) a society shall not, under this section, invest in a body corporate whose objects enable it to—

(i) carry on activities which are outside the powers of the society, or

(ii) invest in other bodies corporate,

but this shall not prevent a society from investing in and supporting a body for a period of 3 months, pending the alteration of the objects of that body.

(b) Where the Central Bank considers it expedient to do so, it may on application by a society grant a dispensation from paragraph (a) to such extent and on such terms and conditions as it considers appropriate.

(3) The Central Bank may specify a percentage of the share capital or corresponding membership rights of a body corporate which a society must hold as a minimum in order to exercise the power available under this section.

(4) Where a body corporate in which a society invests or proposes to invest is, at the time of any such investment or proposed investment or at any time thereafter, engaged in the business of accepting deposits or other repayable funds, the Central Bank may specify such limits or restrictions on the business of the body corporate as it considers appropriate in the interests of the orderly and proper regulation of building societies.

(5) In this section—

“approved housing body” means a body approved of by the Minister for the purposes of section 5 of the Housing Act, 1988 , or a society registered under the Industrial and Provident Societies Acts, 1893 to 1978, or under the Friendly Societies Acts, 1896 to 1977, or a voluntary group provided, in the case of any such society or group, that the support is given for the purpose of providing housing;

“corresponding membership rights”, in relation to a body corporate, means such rights (other than rights arising from the holding of shares) as are attributable to membership of the body;

“property” includes rights of any description.

Financial services.

29.—(1) Subject to section 36 and to subsections (3) and (4) of this section, a building society may provide, as principal or as agent, financial services.

(2) In this section “financial services” means any of the following activities—

(a) arranging the provision of credit, including the joining of credit card companies,

(b) the giving of guarantees and indemnities,

(c) the sale and purchase of financial obligations, debts and securities,

(d) investment services,

(e) the discounting of credit instruments,

(f) the acceptance of deposits of money for current accounts, the collection of cheques and the payment of cheques drawn on the society,

(g) insurance,

(h) the maintenance of a company's register of members,

(i) the provision of advice relating to taxation and financial planning,

(j) financing hire-purchase,

(k) leasing,

(l) money transmission,

(m) trusteeship,

(n) executorship,

(o) foreign exchange,

(p) the operation of a credit transfer system,

(q) the issue of drafts, travellers cheques and letters of credit,

or other activities of a similar nature (including advisory services) that appear to the Central Bank to be financial services but does not include the making of loans.

(3) Subject to section 30 , a society shall not carry on insurance business otherwise than by a subsidiary or other associated body of the society.

(4) The undertaking by a society or the subsidiary or other associated body of a society of any activity pursuant to the provisions of this section and section 36 shall be subject to the provisions of any other enactment.

(5) Section 26 of the Central Bank Act, 1971 (which relates to the collection of cheques and other instruments), is amended—

(a) by the insertion of the words “or a building society authorised under the Building Societies Act, 1989” after “1965” in both subsections (2) and (3) of that section,

(b) by the insertion in subsection (6) of that section of the following additional paragraph—

“(f) any document issued by a person who maintains an account with a building society, authorised under the Building Societies Act, 1989, which is intended to enable a person to obtain payment from the building society of the sum mentioned in the document.”.

(6) Section 30 of the Succession Act, 1965 (which relates to the power to grant representation to a trust corporation), is amended by the insertion in subsection (4) (b) of that section of the following additional subparagraph—

“(v) a building society authorised under the Building Societies Act, 1989; or”.

Bonds and sureties.

30.—(1) A building society undertaking an activity pursuant to section 29 shall not be regarded as having contravened any provision of the Insurance Acts by reason only of the fact that it gives, enters into or accepts a bond or a contract of suretyship or guarantee to which this section applies.

(2) This section applies to any bond or any contract of suretyship or guarantee which is given, or is entered into, as surety or guarantor by a society in the course of its business or which is in the course of his banking business given or entered into, as surety or guarantor, by a person resident outside the State to satisfy, and only for the purposes of, a requirement which is both—

(a) a requirement of a society, and

(b) made solely for the purpose of securing financial facilities to be made available by that society.

(3) For the purposes of this section—

“banking business” has the same meaning as in the Act of 1971,

“the Insurance Acts” means the Insurance Acts, 1909 to 1989, and regulations relating to insurance business made under the European Communities Act, 1972 .

Conveyancing services.

31.—(1) Notwithstanding anything to the contrary in the Solicitors Act, 1954 (“the Act of 1954”) the Minister for Justice, after consultation with the Minister and the Central Bank, may make regulations authorising building societies to provide conveyancing services.

(2) Conveyancing services may be provided by a society in accordance with the provisions of regulations made under this section and in compliance with the requirements of this section and section 36 .

(3) Except in a conveyance by way of mortgage, a society shall not provide conveyancing services to both the disponer and the disponee in the one conveyance.

(4) Regulations under this section may include provisions for—

(a) the protection of persons for whom conveyancing services are provided by societies from conflicts of interests that might otherwise arise in connection with the provision of the services;

(b) securing that adequate compensation is available to such persons in respect of negligence, fraud or other dishonesty on the part of officers or employees of societies in connection with the provision of the services;

(c) the extent to which and the manner in which such services would require the involvement of persons qualified to practise as solicitors within the meaning of the Act of 1954, and the qualifications and experience of personnel generally engaged in the provision of the services;

(d) the class or classes of persons to whom the services may be provided;

(e) the restriction of the power to provide the services to property of a prescribed description;

(f) the restriction of the power to provide the services to societies of a prescribed class or classes;

(g) maximum rates or scales of fees, costs or expenses which may be charged by societies for the provision of the services.

(5) Any communication made to or by a society in the course of its acting as such for a client in conjunction with providing conveyancing services for him shall in any legal proceedings be privileged from disclosure in like manner as if the society had at all material times been acting as the client's solicitor.

(6) A society providing conveyancing services shall not in relation to the provision of such services be an unqualified person within the meaning of the Act of 1954.

(7) Section 58 of the Act of 1954 (restriction on persons drawing certain documents, etc., when not qualified to act as a solicitor) shall not apply to—

(a) a society, or

(b) any officer or employee of a society by reason of any act done by him in the course of his office or employment on behalf of the society,

where the society is providing conveyancing services in accordance with this section.

(8) Section 59 of the Act of 1954 (prohibition on solicitor acting as agent for an unqualified person) shall not apply to any solicitor by reason of any act done by him as an officer or employee of a building society where that society is providing conveyancing services in accordance with this section.

(9) Any reference in any enactment to a solicitor shall, insofar as it relates to conveyancing services under this section, be construed as including a reference to a society.

(10) Where a society provides conveyancing services, it shall include in any document or advertisement issued to the public, which contains a reference to the provision of the services, a statement of the charges or the basis for the charges in respect of the services and a client shall be entitled to ask for and to be furnished with an itemised statement of that society's charges in respect of a conveyance undertaken by the society on his behalf.

(11) Any information which comes into the possession of an officer or employee of a society by virtue of his involvement in the provision of conveyancing services by the society shall not be used by him or by the society or any subsidiary or any other associated body of the society to promote the business of the society or the subsidiary or other associated body.

(12) (a) A society providing conveyancing services shall maintain separate accounting records and prepare accounts in respect of each year showing—

(i) the costs to the society of providing the services, and

(ii) the income accruing to the society from the charges made for the services,

and shall so provide and charge for the services that the income from the provision of the services is not less than sufficient to meet all costs properly attributable to the provision of the services taking one year with another.

(b) A statement attesting the correctness of the accounts prepared in accordance with paragraph (a) and confirming that such accounts have not been distorted as a result of any arrangement which would affect the apportionment of costs and income associated with the provision of the services and that such apportionments as have been made have been properly made shall be signed by the chief executive and 2 directors and attached to the annual accounts.

(13) References in this section to “conveyancing services” are references to the preparation of transfers, conveyances, contracts, leases or other assurances in connection with the disposition or acquisition of estates or interests in land.

Auctioneering services and other services relating to land.

32.—(1) Subject to section 36 , a building society may provide—

(a) an auctioneering service in accordance with the Auctioneers and House Agents Act, 1947 (“the Act of 1947”);

(b) other services relating to land.

(2) (a) The Revenue Commissioners shall grant to a society which applies in accordance with this section a licence to carry on the business of an auctioneer in accordance with the Act of 1947.

(b) An application by a society under paragraph (a) for an auctioneer's licence shall be accompanied by—

(i) a copy of the approval granted by the Central Bank under section 36 to the exercise by the society of the power referred to in subsection (1) (a),

(ii) a certificate of the Accountant of the Courts of Justice, granted not more than 28 days before the date of the application, that the society maintains in the High Court a deposit as required by the Act of 1947 and, where the deposit is a guarantee bond, that it covers the whole of the period for which the licence is to be granted, and

(iii) the excise duty payable on an auctioneer's licence.

(c) An application by a society for a renewal of an auctioneer's licence shall be accompanied by an accountant's certificate in accordance with section 12 of the Act of 1947 (as inserted by section 12 of the Auctioneers and House Agents Act, 1967 ) in addition to the certificate and excise duty required by paragraph (b).

(d) Section 8 (2) of the Act of 1947 shall not apply to an application under this subsection.

(3) (a) Regulations may be made—

(i) by the Minister for Justice, after consultation with the Minister and the Central Bank, in respect of the provision by societies or their subsidiaries of auctioneering services, and

(ii) by the Minister, after consultation with the Central Bank, in respect of the provision by societies or their subsidiaries of other services relating to land.

(b) Without prejudice to the generality of paragraph (a), regulations under this subsection may include provisions for—

(i) the protection of persons for whom the services are provided by societies from conflicts of interest that might otherwise arise in connection with the provision of the services;

(ii) securing that adequate compensation is available to such persons in respect of negligence, fraud or other dishonesty on the part of officers or employees of societies in connection with the provision of the services;

(iii) the extent to which and the manner in which the services would require the involvement of persons with relevant qualifications and experience;

(iv) the class or classes of persons to whom the services may be provided;

(v) the restriction of the power to provide the services to societies of a prescribed class or classes; or

(vi) amending, restricting or extending the definition of services that may be provided under this section.

(4) No employee of a society, a subsidiary or other associated body of which provides services under this section, shall act as agent for the subsidiary or body.

(5) (a) A society or a subsidiary of a society providing auctioneering services or other services in relation to land shall maintain separate accounting records and prepare accounts in respect of each year showing—

(i) the costs of providing each service, and

(ii) the income accruing from the charges made for the services,

and shall so provide and charge for each service that the income from the provision of the service is not less than sufficient to meet all costs properly attributable to the provision of the service taking one year with another.

(b) A statement attesting the correctness of the accounts prepared in accordance with paragraph (a) and confirming that such accounts have not been distorted as a result of any arrangement which would affect the apportionment of costs and income associated with the provision of each service and that such apportionments as have been made have been properly made shall be signed by the chief executive and 2 directors and attached to the annual accounts.

(6) In this section—

(a) “auctioneering service” means any business to which the Act of 1947 relates, including the business of a house agent within the meaning of that Act;

(b) “services relating to land” means any service relating to the acquisition, disposition, management or development of land (including valuation, surveying, the collection of rent and the removal and storage of moveable property) or other services of a similar nature (including advisory services) that appear to the Central Bank to be services relating to such matters.

Power to operate outside the State.

33.—(1) Subject to section 36 , a building society may exercise its powers under this Act outside the State.

(2) In the exercise of any of its functions under this Act the Central Bank shall not be required to treat assets or liabilities of societies held outside the State as if they were held in the State.

Power to hedge.

34.—(1) A building society may, subject to subsection (2), effect contracts for the purpose of reducing the risk of loss arising from changes in interest rates, currency exchange rates or other factors of a similar nature affecting its business.

(2) The Central Bank may specify requirements as to the type or types of contract that may be effected under subsection (1) and the terms on and conditions under which such contracts may be effected, and a contract may only be effected under this section if it complies with such a specification or is otherwise approved by the Bank.

Prohibition on linking services.

35.—(1) A building society shall not make or offer to make a housing loan to any person subject to a condition that any services to which section 29 , 31 or 32 applies, and which that person may require, whether or not in connection with the loan, shall be provided by or through the society or a subsidiary or other associated body of the society.

(2) Where, in connection with a housing loan by a society, several services are made available by the society or by the society and one or more of its subsidiaries or by one or more of its subsidiaries, the society shall not, and shall secure that each of its subsidiaries does not, make the services available on terms other than terms which distinguish the consideration payable for each service so made available; nor shall any of its subsidiaries make the services available on terms other than terms which make that distinction.

Exercise of powers.

36.—(1) This section applies to the exercise by a building society or a subsidiary or other associated body of a power under any of the following sections—

(a) section 21 (holding and developing land);

(b) section 23 (1) (e) and (f) (unsecured loans or loans secured to any extent);

(c) section 28 (investment in and support of bodies corporate etc.);

(d) section 29 (financial services);

(e) section 31 (conveyancing services);

(f) section 32 (auctioneering services and services relating to land); and

(g) section 33 (power to operate abroad).

(2) Each power to which this section relates must, in order to be exercisable, be adopted by the society by special resolution and recorded in its memorandum.

(3) Notice of a special resolution under subsection (2) shall contain or be accompanied by a statement giving—

(a) a description of the activity in relation to which the power is to be exercised,

(b) the reasons for the adoption of each power, and

(c) details of such other matters as the Central Bank may require.

(4) Having adopted a power a society shall not, subject to subsection (5), exercise that power except with the approval of the Central Bank and in accordance with the terms and conditions of such approval.

(5) The Central Bank may specify, in relation to any power, circumstances in and conditions under which a power may be exercised by a society without a specific approval under subsection (4).

(6) Before a special resolution for the adoption of a power is proposed the society may consult with the Central Bank and the Bank may give a preliminary view (without prejudice to any decision under subsection (10)) as to whether and to what extent the exercise of the power would be approved by it.

(7) The Central Bank may specify such requirements as it considers necessary for societies exercising any power to which this section applies and it may specify different requirements as respects different powers.

(8) The powers in respect of which requirements are specified under subsection (7) shall not or, as the case may be, shall cease to be available to a society that does not satisfy the requirements but the cessation of compliance with such requirements by a society does not of itself impose an obligation to dispose of any property or right acquired in the exercise of the power.

(9) An application for approval under subsection (4)—

(a) shall be made in such manner as the Central Bank may specify either generally or in any particular case; and

(b) shall be accompanied by such information as the Central Bank may require, either generally or in any particular case.

(10) (a) Having considered an application made in accordance with subsection (9) the Central Bank may, as it thinks proper—

(i) grant approval,

(ii) refuse to grant approval, or

(iii) grant approval subject to whatever conditions, restrictions or exclusions it considers appropriate.

(b) The Central Bank shall, within 6 months of the date of receipt of the application or of the date of the receipt of such additional information as it may require, notify the society making the application of its decision.

(11) Without prejudice to the generality of subsection (10) (a) (iii), the conditions imposed by the Central Bank may, in particular, include provisions as to—

(a) the class or classes of persons for whom a service may be provided;

(b) whether the activity may be undertaken by the society itself or by a subsidiary or other associated body;

(c) the amount of funds that may be applied by the society or its subsidiary or other associated body to the activity;

(d) whether the society may act as principal or agent in undertaking the activity;

(e) the period during which the activity may be undertaken;

(f) limits on any guarantees, bonds, contracts of suretyship or indemnities given or entered into by the society;

(g) whether and to what extent the approval of the Bank is to be obtained in respect of particular proposals, investments or undertakings;

(h) conditions which must be fulfilled as regards any subsidiary or other associated body of a society undertaking the activity;

(i) the qualifications required to be held by employees of the society or its subsidiary or other associated body undertaking the activity;

(j) the avoidance of conflicts of interest;

(k) charges to be made in relation to the provision of any service;

(l) the maintenance by the society of separate accounting records and the preparation of accounts in respect of the service being provided.

(12) As respects the exercise of powers outside the State, the conditions imposed by the Central Bank, in addition to any imposed under subsection (11), may, in particular, and without prejudice to the generality of subsection (10) (a) (iii), include provisions as to—

(a) the countries in which the power may be exercised,

(b) the forms of security which in any particular country correspond in the opinion of the Bank to the kinds of security referred to in sections 22 and 23 ,

(c) the application of any provision of this Act affecting loans to loans made outside the State with such modifications as appear to the Bank to be appropriate,

(d) requirements relating to currencies.

(13) The Central Bank shall not grant approval to an application unless it is satisfied that the relevant power has been adopted by the society in accordance with this Act.

(14) The Central Bank may at any time withdraw an approval it has granted under this section, impose conditions on an approval or revoke, vary or add to any conditions imposed but any such action by the Bank shall not require the disposal of any property or right already acquired.

(15) The Central Bank may commission an independent assessment of the capacity of a society to exercise a power for which it has sought approval and the society shall, if so directed by the Bank, defray the cost of such assessment.

(16) Where this Act, or the Central Bank in the exercise of its functions under this Act, requires that a power to provide a service may be exercised only through a subsidiary or other associated body the power to undertake that activity is to be treated as a power of the society for the purpose of section 28 .

PART IV

Control and Supervision of Building Societies by Central Bank

Duty of the Central Bank as respects building societies.

37.—(1) Subject to the general function and duty of the Central Bank under section 6 of the Central Bank Act, 1942 , the Bank shall administer the system of regulation and supervision of building societies provided for by or under this Act with a view to—

(a) the protection by each society of the funds of its shareholders and depositors, and

(b) the maintenance of the financial stability and well being of societies generally.

(2) The Central Bank shall have power to do anything which, in its opinion, is calculated to facilitate the exercise of its functions or is incidental or consequential to their exercise.

(3) The report of the Central Bank under section 36 of the Currency Act, 1927 , shall contain a report on the exercise of its functions under this Act.

Supply of mortgage finance.

38.—(1) The Minister may, from time to time as he considers necessary, review, in consultation with the Minister for Finance, the adequacy of the supply of mortgage finance for the provision or improvement of housing and communicate to the Central Bank his assessment of the need for such finance.

(2) Without prejudice to the provisions of section 6 of the Central Bank Act, 1942 , the Central Bank shall, as soon as reasonably practicable, convey its views to the Minister on this assessment together with an indication of any action it considers necessary or desirable.

(3) Every building society shall submit to the Minister such information and returns within such period as the Minister may require from time to time for the purposes of his functions in relation to the national housing programme.

Asset and liability ratios and structures.

39.—(1) A building society shall at all times keep such a proportion of its total assets in liquid form (hereinafter referred to as “liquid assets”) having such a composition as to enable the society to meet its liabilities as they arise.

(2) For the purposes of complying with subsection (1), a society shall have regard to the range and scale of its business and that of any subsidiary or other associated body and the composition and character of its assets and liabilities and those of any such body.

(3) A society may keep liquid assets in addition to those required for the purpose of complying with subsection (1).

(4) The Central Bank may from time to time require a society to maintain—

(a) a specified ratio,

(b) a ratio which does not exceed a specified ratio, or

(c) a ratio which is not less than a specified ratio,

between its assets and its liabilities and the specified ratio may be expressed as a percentage of the assets or liabilities concerned.

(5) A requirement of the Central Bank under subsection (4) may be expressed to apply—

(a) in relation to all societies or to societies of a specified category or specified categories,

(b) in relation to the total assets or total liabilities of the societies concerned or to specified assets or assets of a specified kind or specified liabilities or liabilities of a specified kind of those societies,

(c) in relation to a specified time or times or during a specified period or periods,

and shall have effect in accordance with its terms.

(6) A requirement under subsection (4) which is in force may be revoked by the Central Bank or may be amended by a subsequent requirement under that subsection.

(7) The Central Bank may, from time to time, specify as respects a society requirements as to the composition of its assets and, subject to section 18 (3), requirements as to the composition of its liabilities.

(8) In determining for the purposes of this section the assets and liabilities of a society with which another body corporate is associated, there shall be attributed to the society, in a manner acceptable to or as may be specified by the Central Bank, the whole or part of the assets and liabilities of whatever description of the associated body.

(9) (a) Subject to paragraph (b), “liquid assets” means assets specified as such for the purposes of this section by the Central Bank including deposits with the Bank.

(b) Pending a specification by the Central Bank under paragraph (a), “liquid assets” includes assets held in a form provided for by section 38 of the Building Societies Act, 1976 , notwithstanding the repeal of that Act.

(10) In this section—

(a) “specified” means specified by the Central Bank under this section,

(b) “liabilities” include such contingent liabilities as may be specified by the Central Bank from time to time for the purposes of this section.

Revocation of authorisation and giving of direction by Central Bank.

40.—(1) The Central Bank shall revoke a building society's authorisation if—

(a) the society has requested the Bank to revoke its authorisation,

(b) the society has requested the Bank to cancel its registration,

(c) the society has, under section 95 or 96 , amalgamated with or transferred all its engagements to another society, or

(d) proceedings have been commenced for the winding up of the society under section 109 .

(2) Where the Central Bank is satisfied that—

(a) a society has not made use of the authorisation within 12 months of the date on which it was granted,

(b) a society has ceased to engage in the business of a building society for more than 6 months,

(c) it is expedient to do so in the public interest or in order to protect the funds of shareholders or depositors,

(d) a society has ceased to pursue as one of its objects the making of housing loans,

(e) a society has become or is likely to become unable to meet its obligations to its creditors and shareholders or suspends payments lawfully due by it,

(f) a society has failed to send to the Bank copies of its annual accounts as required by section 82 ,

(g) a condition attached to a society's authorisation or to an approval to exercise a power under section 36 has not been complied with by the society,

(h) a society has failed to comply with a requirement of this Act or a requirement or condition of, or notice from, the Bank in the exercise of its powers under this Act,

(i) a society has been convicted on indictment of an offence under any provision of this Act or an offence involving fraud, dishonesty or breach of trust,

(j) a society no longer possesses or is not maintaining and is unlikely to be in a position to maintain adequate capital resources and in particular no longer provides security for the funds entrusted to it,

(k) since the authorisation was granted or deemed to be granted under section 17 , the circumstances relevant to the grant have changed and are such that, if an application for an authorisation were made in the changed circumstances, it would be refused, or

(l) a society obtained the authorisation through false statements or any other irregular means,

the Bank may, as it thinks proper, revoke an authorisation granted or deemed to be granted to a society under section 17 , or give a direction in writing to the society to suspend for such period, not exceeding 6 months, as shall be specified in the direction all or any of the following, that is to say—

(i) the raising of funds,

(ii) the making of payments,

(iii) the acquisition or disposal of other assets or liabilities,

which have not been authorised by the Bank.

(3) The Fourth Schedule shall apply as respects the revocation of an authorisation.

(4) The Fifth Schedule shall apply as respects a direction by the Central Bank under subsection (2).

(5) While a direction under this section is in force, no winding up proceedings in relation to the society may be commenced or resolution for winding up passed in relation to the society, no receiver over the property or over any part of the property or the undertaking of the society may be appointed and the property of the society shall not be attached, sequestered or otherwise distrained except with the prior sanction of the Court.

(6) Where the Court is satisfied, because of the nature or circumstances of the case or otherwise in the interests of justice, that it is desirable, the whole or any part of proceedings under this section may be heard otherwise than in public.

Inspections, information, etc.

41.—(1) The Governor of the Central Bank may authorise in writing a person (an “authorised person”) being an officer of the Bank, or any other person possessing appropriate qualifications or experience, to inspect or investigate the state and conduct of the business of a building society or other body corporate which is, or was at the relevant time, a subsidiary or other associated body of a society or any particular aspect of such business and report to the Bank thereon.

(2) The Central Bank, or an authorised person, may require a society or other body as is mentioned in subsection (1) to furnish it with—

(a) such information, documents, or other material or explanation of matters, which relate to the business or the plans for the future development of the society and its subsidiary or other associated bodies, as may be specified, within a specified period or at a specified time or place; and

(b) a report by a person approved by the Bank, or the authorised person on, or on specified aspects of, information or documents, or other material so furnished.

(3) An authorised person may, on production of his authorisation if so required, at all reasonable times enter the premises of a society or other corporate body as is mentioned in subsection (1) and inspect and take copies of, or extracts from, any documents or material.

(4) A requirement under this section may be imposed on a society in relation to information, documents or other material in the possession or control of a subsidiary or associated body outside the State.

(5) The duty to produce or provide any information, document, material or explanation extends to a liquidator or any person who is or has been an officer or employee or agent of the society or other body, as the case may be, or appears to the Central Bank or the authorised person to have the information, document, material or explanation in his possession or under his control.

(6) Where any person from whom production of a document or material is required claims a lien on the document or material, the production of it shall be without prejudice to the lien.

(7) Nothing in this section shall compel the production by a barrister or solicitor of a document or material containing a privileged communication made by him or to him in that capacity or the furnishing of information contained in a privileged communication so made.

(8) The Central Bank or an authorised person may take copies of or extracts from any document or material produced in compliance with this section and require the person who produced it or any other person who is a present or past director or officer of, or is or was at any time employed by, the society or other body to provide an explanation of the document or material, and if the document or material is not produced, require the person who was required to produce it to state, to the best of his knowledge and belief, where the document or material is.

(9) In this section—

(a) “specified” means specified in a notice under this section,

(b) “agent”, in relation to a society, or any subsidiary or other body associated with it whose business is under investigation, includes its bankers, accountants, solicitors, auditors and its financial and other advisers,

(c) any reference to an officer, employee or agent of a society or other body includes a reference to a person who has been but no longer is an officer, employee or agent of that society or body.

Control of advertising.

42.—(1) If, with respect to any building society, the Central Bank considers it expedient to do so, it may give the society a direction in relation to the matter and form of any advertisement or other means of soliciting deposits or subscriptions for shares in the society or in relation to the matter and form of any advertisement relating to any service provided or business being undertaken by the society and may direct the society to withdraw an advertisement or to cease advertising.

(2) Without prejudice to the generality of subsection (1), a direction under this section may do all or any of the following—

(a) prohibit the issue by the society of advertisements of all descriptions or any specified description,

(b) require the society to modify advertisements of a specified description in a specified manner,

(c) prohibit the issue by the society of any advertisements which are, or are substantially, repetitions of a specified advertisement,

(d) require the society to withdraw any specified advertisement or any advertisement of a specified description, or

(e) require the society to include specified information in any advertisement to be published by it or on its behalf or in any statement to the public to be made by it or on its behalf.

(3) In this section—

(a) “advertisement” includes every form of recommendation of any matter to which this section relates, including in particular the display or publication of any such matter by way of leaflet, notice, circular, pamphlet, brochure, photograph, film, video, sound broadcasting, television, electronic communication or personal canvassing and references to the issue of advertisements shall be construed accordingly; and

(b) “specified” means specified in a direction under this section.

Power of Court to prohibit certain contraventions of Act.

43.—(1) Where, on an application made in a summary manner by the Central Bank, the Court is of the opinion that there has occurred or is occurring—

(a) a contravention of this Act,

(b) a failure to comply with a condition imposed in relation to an authorisation by virtue of section 17 , or with a direction under section 40 or 42 , or

(c) a failure to comply with a condition imposed on an approval under section 36 to exercise an adoptable power,

the Court may, by order, prohibit the continuance of the contravention or failure by the person or persons concerned, or in the case of paragraph (c), require the cessation of the exercise of the adoptable power.

(2) The Court when considering the application may make such interim or interlocutory order as it considers appropriate.

(3) The foregoing provisions of this section are without prejudice to the general functions of the Central Bank.

(4) Where the Court is satisfied, because of the nature or circumstances of the case or otherwise in the interests of justice, that it is desirable, the whole or any part of proceedings under this section may be held otherwise than in public.

Disclosure of information.

44.—(1) A person, who at the commencement of this section is, or at any time thereafter is appointed, Governor, or a Director, officer or servant of the Central Bank, or who is employed by the Bank in any other capacity, shall not disclose, during his term of office or employment or at any time thereafter, any information concerning the business of any building society or any of its subsidiaries or other associated bodies which may come to his knowledge by virtue of his office or employment unless such disclosure is to enable the Bank to carry out its functions.

(2) The provisions as to non-disclosure contained in subsection (1) shall not apply to any disclosure—

(a) required by a court in connection with any criminal proceedings,

(b) made with the consent of the person to whom the information relates and, where not the same person, of the person from whom that information was obtained,

(c) where the Central Bank is acting or has acted in the capacity of an agent for a person, made to the person in respect of that capacity,

(d) where the Bank considers it necessary for the common good, made to any person charged by law with the supervision of financial institutions (whether or not entitled to take money on deposit from the public) and who, in the opinion of the Bank, has obligations duly imposed in respect of non-disclosure of information and corresponding to obligations under this section,

(e) made to an authority in a foreign jurisdiction duly authorised to exercise functions in that jurisdiction which correspond to the functions of the Bank under this Part and section 17 and which, in the opinion of the Bank, has obligations duly imposed in respect of non-disclosure of information and corresponding to obligations under this section,

(f) made to any institution of the European Communities for the purpose of the State's membership of any of those Communities,

(g) in the form of a summary or collection of information so framed as not to enable information relating to any particular body or person to be ascertained from it,

(h) which, in the opinion of the Bank, is necessary for the protection of the funds of shareholders in or depositors with a building society or to safeguard the interests of the Bank,

(i) made to the Minister, for the purposes of his functions in relation to the national housing programme.

(3) After the commencement of this section, every person who is appointed as Governor, or a Director, officer or servant of the Central Bank, or who is employed by the Bank in any other capacity, shall—

(a) before entering into the office or employment, be informed by the Bank of his obligations under this section, and

(b) acknowledge that he has been so informed and understands his obligations,

in such manner as the Bank shall determine.

(4) A person who contravenes subsection (1) shall be guilty of an offence and shall be liable—

(a) on summary conviction to a fine not exceeding £1,000 or, at the discretion of the court, to imprisonment for a term not exceeding 12 months, or to both, or

(b) on conviction on indictment to a fine not exceeding £25,000 or, at the discretion of the court, to imprisonment for a term not exceeding 5 years, or to both.

(5) In any proceedings for an offence under this section, it shall not be necessary to prove that the provisions of subsection (2) do not apply and the onus of proving that any of those provisions do apply shall be on the person seeking to avail himself thereof.

Appointment of inspector and calling of special meeting.

45.—(1) Where—

(a) an application is made to the Central Bank by not less than one-tenth of the total number of members of a building society entitled to vote pursuant to section 69 (1) (a) or 200 such members, whichever is the lesser; or

(b) the Central Bank is of the opinion that an investigation should be held into the affairs of a society or that the affairs of the society call for consideration by a meeting of the members of the society;

the Bank, as it thinks proper, may appoint one or more inspectors to investigate the affairs of the society and, where necessary, any subsidiary or other associated body and to report thereon in such manner as it directs, or may call a special meeting of the society.

(2) The Central Bank may, either on the same or on different occasions, both appoint an inspector and call a meeting under subsection (1).

(3) (a) An application under this section shall be supported by such evidence as the Central Bank may direct, for the purposes of showing that the applicants have good reason for requiring the investigation to be made or the meeting to be called and that they are not actuated by malicious motives in their application.

(b) Such notice of the application shall be given to the society and, in a case where the investigation is to extend to its affairs also, to the subsidiary or associated body of the society, as the Central Bank may direct.

(c) The Central Bank may require the applicants to give security for payment of the costs of the investigation or meeting before the inspector is appointed or the meeting is called subject, in the case of the costs of an investigation, to an amount not exceeding £200,000.

(d) As regards the expenses of and incidental to the investigation or meeting, the expenses shall be defrayed by the applicants or out of the funds of the society or by the members or officers or former members or officers of the society in such proportions as the Central Bank may direct but, in the case of an investigation (in whichever way instituted), the expenses may be defrayed in the first instance by the Bank but without prejudice to its rights to contribution under section 46 .

(4) (a) The Central Bank may give such directions as it thinks fit in relation to the calling, holding and conduct of a meeting held under this section (including the time and place of the meeting and the matters to be discussed and determined at the meeting).

(b) The Central Bank shall appoint a person to be chairman of the meeting.

(c) The meeting shall have all the powers of a meeting called according to the rules of the society.

(d) This subsection shall have effect notwithstanding anything in the rules of the society.

(5) Before appointing an inspector or calling a meeting under this section the Central Bank may, if it is of the opinion that it would not be prejudicial to the interests of members or creditors, notify the society in writing of the action which it proposes to take and of the grounds on which it proposes to take it and, in such a case, the society shall, within 14 days of the receipt of the notification, be entitled to give to the Bank an explanatory statement in writing.

(6) Where an inspector appointed under this section thinks it necessary for the purposes of his investigation to investigate also the affairs of any other society or any body corporate which is or has at any relevant time been a subsidiary of, or associated with, the first-mentioned society, he shall, with the approval of the Central Bank, have power to do so, and shall report on the affairs of the other society or body corporate so far as he thinks the results of his investigation thereof are relevant to the investigation of the affairs of the first-mentioned society.

Provisions supplemental to section 45 .

46.—(1) It shall be the duty—

(a) of all officers, members and agents of a society or other body the affairs of which are being investigated under section 45 , and

(b) of any other person who the inspector considers is or may be in possession of any information concerning the affairs of the society or body,

to produce to him all books, accounts, deeds, records or other documents of, or relating to, the society or body which are in their power, possession or procurement, to attend before the inspector when required to do so and otherwise to give to him all assistance in connection with the investigation which they are reasonably able to give.

(2) The inspector may examine on oath the officers, members and agents of the society or other body being investigated and any such person as is mentioned in subsection (1) in relation to its affairs and may administer an oath accordingly.

(3) If an inspector has reasonable grounds for believing that a director or past director of the society whose affairs the inspector is investigating maintains or has maintained a bank account of any description, whether alone or jointly with another person and whether in the State or elsewhere, into or out of which there has been paid—

(a) any money which has resulted from or been used in the financing of any transaction, arrangement or agreement particulars of which were not included in the register of certain transactions and arrangements as required by section 59 ; or

(b) any money which has been in any way connected with any act or omission, or series of acts or omissions, which on the part of that director constituted misconduct (whether fraudulent or not) towards that society or its members;

the inspector may require the director or past director to produce to him all documents in the director's possession, or under his control, relating to that bank account and in this subsection “bank account” includes an account with any person exempt by virtue of section 7 (4) of the Act of 1971 from the requirement of holding a licence under section 9 of that Act.

(4) If any officer, member or agent of the society or other body or any such person as is mentioned in subsection (1) refuses to produce to the inspector any book or document which it is his duty under this section to produce, refuses to attend before the inspector when required to do so, or refuses to answer any question put to him by the inspector with respect to the affairs of the society, or other body, as the case may be, he shall be guilty of an offence.

(5) Nothing in this section—

(a) shall compel the production by a barrister or solicitor of a document or material containing a privileged communication made by him or to him in that capacity or the furnishing of information contained in a privileged communication so made, or

(b) shall require the disclosure by a bank or a building society of any information as to the affairs of any of its customers other than the society or body the affairs of which are being investigated.

(6) In this section any reference to officers or to agents shall include past as well as present officers and agents, as the case may be, and “agents”, in relation to a society or other body, shall include the bankers, accountants, solicitors, auditors and the financial and other advisors of the society or other body.

(7) The Central Bank shall be entitled to be repaid the expenses of the investigation defrayed by it under section 45 (3) (d) as follows, that is to say—

(a) by the applicants for the investigation to such extent (if any) as the Bank may direct;

(b) by any body whose affairs were the subject of the investigation to such extent (if any) as the Bank may direct; or

(c) by a person convicted of an offence in proceedings instituted as a result of the investigation to such extent (if any) as the court by or before which he was convicted may order; and a person liable under any one of paragraphs (a) to (c) is entitled to contribution from any other person liable under the same paragraph according to the amount of their respective liabilities under it.

Inspectors' reports and proceedings thereon.

47.—(1) An inspector appointed under section 45 may, and shall if the Central Bank so requires, make an interim report to the Bank and, on conclusion of the investigation, shall make a final report to the Bank, but he may at any time in the course of the investigation, without making an interim report, inform the Bank of matters coming to his knowledge as a result of the investigation.

(2) The Central Bank shall—

(a) forward a copy of any report made by an inspector under this section to the Minister, and the Minister for Finance;

(b) if it thinks fit, furnish a copy thereof to the society and its auditors;

(c) if it thinks fit, furnish a copy thereof, on request and on payment of such fee as it may fix, to any other person who is a member of the society or of any other body corporate dealt with in the report by virtue of section 45 or whose interests as a creditor of the society or of any such other body corporate appear to the Bank to be affected;

(d) if it thinks fit, at the request of the applicants for the investigation, furnish a copy to them on payment of such fee as may be fixed by the Bank.

(3) The Minister may lay the report under subsection (1) before each House of the Oireachtas and such publication shall be privileged and a report not so laid may be printed and published by the Central Bank.

(4) (a) Where it appears to the Central Bank that any person has, in relation to the society or any body corporate the affairs of which have been investigated under section 45 , been guilty of any offence for which he is criminally liable, the Bank shall refer the matter to the Director of Public Prosecutions.

(b) Where the Director of Public Prosecutions institutes proceedings consequent on the receipt by him of a report under paragraph (a), it shall be the duty of all officers, members and agents of the society or any body corporate (other than the defendants in the proceedings) to give him all assistance in connection with the prosecution which they are reasonably able to give.

(5) Where it appears to the Central Bank after consideration of an inspector's report under subsection (1) that it is expedient to do so it may, unless the society is being wound up by the Court, petition the Court for an order to wind up the society under section 109 .

(6) Where it appears to the Central Bank after consideration of an inspector's report under subsection (1) that proceedings ought in the public interest to be brought by the society for damages, in respect of any fraud, misfeasance or other misconduct in connection with the promotion or formation of the society or the management of its affairs, or for the recovery of any property misapplied or wrongfully retained, the Bank may itself bring proceedings for that purpose in the name of the society.

(7) The Central Bank may indemnify the society against any costs or expenses incurred by it in, or in connection with, any proceedings brought under subsection (6).

(8) A copy of any report of an inspector appointed under section 45 shall be admissible in any legal proceedings as evidence of the opinion of the inspector in relation to any matter contained in the report.

PART V

Management of Building Societies

Directors.

48.—(1) A building society shall have at least 3 directors.

(2) A society shall not have as a director a body corporate.

(3) The directors shall appoint from among their number a chairman of the board of directors.

(4) The chairman of the board of directors shall not also be the chief executive of the society except with the consent of the Central Bank.

Chief executive and secretary.

49.—(1) A building society shall have—

(a) a chief executive who, either alone or jointly with one or more other officers of the society, shall be responsible, under the immediate authority of the board of directors, for the conduct of the business of the society; and

(b) a secretary.

(2) The offices of chief executive and secretary may not be held by the same person except with the consent of the Central Bank.

(3) The chief executive and the secretary of a society shall be appointed by the board of directors of the society who shall take all reasonable steps to ensure that the persons appointed are persons who have the knowledge and experience to discharge the functions of those offices.

(4) The board of directors of a society shall give to the Central Bank prior notice of a proposal to appoint a person as chief executive stating the person's full name and address, the date on which he is to take office and such other information as the Bank may require and the Bank shall record the person's name and the date on which he begins to hold office in the public file of the society.

(5) Where a person ceases to hold office as chief executive the board shall, as soon as may be, give notice of that fact to the Central Bank which shall record it in the public file of the society.

(6) Anything required or authorised to be done by or in respect of the chief executive or secretary may, if the office is vacant or there is for any other reason no chief executive or secretary capable of acting, be done by or in respect of any deputy or assistant chief executive or secretary, as the case may be, or if there is no deputy or assistant capable of acting, by or in respect of any officer of the society authorised generally or specially for that purpose by the directors.

(7) Where the chief executive is also a director he may be referred to as the managing director.

Directors: appointment and retirement.

50.—(1) Subject to subsections (11) and (16), the directors of a building society must be elected to office either—

(a) at an annual general meeting of the society, or

(b) by postal ballot conducted during the period of 3 months preceding the date on which the annual general meeting is held,

as the rules provide.

(2) Where subsection (1) (a) applies and the number of candidates for the office of director exceeds the number of vacancies, the election of directors shall be by poll.

(3) The persons entitled to vote in an election of directors are those members of the society who in accordance with section 69 and under the rules are entitled to vote on an ordinary resolution.

(4) A person entitled to vote in an election of directors cannot be required to cast all or any of his votes.

(5) A person who is not a member of a society may, if its rules so provide, be a director.

(6) The rules of a society may impose, as a condition of a person's eligibility to be or to be nominated for election as a director of the society, a requirement that he shall hold beneficially shares in the society not less in value than the amount specified by the rules, but the maximum holding that may be required shall not exceed £500, or such other amount as may be substituted for it in regulations made by the Central Bank.

(7) The rules of a society shall not require, as conditions of the validity of a person's nomination for election as a director, that—

(a) more than 20 members join in nominating him;

(b) a nominating member be a member for more than 2 years before the date of the nomination or hold, or have at any time during that period held, shares in the society to a value greater than £250; or

(c) more than £250 be deposited with the society in connection with his candidature.

(8) The rules of a society shall not impose, as conditions of the validity of a person's nomination for election as a director, conditions in relation to matters other than those in subsections (6) and (7) except as may be approved by the Central Bank as being reasonable.

(9) The Central Bank may, by regulation, substitute for the number, the maximum period of membership, the maximum value of shares, and the maximum amount of the deposit referred to in subsection (7), such other number, period, value, or amount as it thinks appropriate.

(10) A director, other than a director who is also the chief executive of a society, shall retire from office not later than the end of the third annual general meeting of the society following the date of his election, subject to any provision in this Act or in the rules of the society for his earlier retirement and such director shall be eligible for election without nomination, subject to the rules.

(11) If the rules of a society so provide, the directors for the time being may co-opt as director to fill any vacancy on the board of directors any person who—

(a) appears to them to be fit and proper to be a director, and

(b) is not disqualified under section 64 to be a director of a building society,

not being a person who, having stood for election as a director at any election held within the preceding 16 months, was not elected as a director.

(12) A person who is co-opted under subsection (11) shall cease to hold office at the end of the next annual general meeting following his appointment, but a general meeting shall be disregarded for the purposes of this subsection if the closing date for the nomination of candidates falls before the date of the co-opted director's appointment, but he shall retire as a co-opted director at the next annual general meeting following that which is disregarded and shall be eligible for election without nomination, subject to the rules.

(13) Where in an election of directors there is a poll, whether conducted at a meeting or by way of postal ballot, the papers issued by the society for the purposes of or relating to the poll shall—

(a) show with equal prominence the name of each candidate, and

(b) arrange the names alphabetically in the order of the surnames, or if there are 2 or more candidates bearing the same surname, in the alphabetical order of their other names together with such information as will distinguish such candidates.

(14) The acts of a director shall be valid notwithstanding any defects which may afterwards be discovered in his appointment or qualification.

(15) A society shall notify the Central Bank—

(a) of all valid nominations of persons for election as directors, as soon as possible after the closing date for nominations; and

(b) of the proposed co-option of persons as directors at least 14 days before the date of the appointment;

giving in each case the information referred to in section 66 (1) and such other information as the Bank may require.

(16) The persons mentioned in section 10 (2) or a majority of them may appoint as directors to hold office until the conclusion of the first annual general meeting persons not disqualified under section 64 .

(17) In this section, “ordinary resolution”, means a resolution which will be effective without being passed as a special resolution or a conversion resolution.

Directors: supplementary provisions as to elections, etc.

51.—(1) A building society shall give notice of the latest date for the receipt of nominations for election as a director in either of the following ways—

(a) by publishing it in at least 2 daily newspapers published in the State and circulating in the area in which the chief office of the society is situated and such notice shall be published not earlier than 42 days before such date; or

(b) by sending it, not earlier than the date on which notices are issued for the preceding year's annual general meeting to all members who would at the date of the notice be entitled to notice of an election of directors,

as the rules provide, and in either case the notice shall be published or sent, as the case may be, not later than 21 days before the latest date for the receipt of nominations.

(2) If a duly nominated candidate for election as a director of a society furnishes the society with an election address of not more than 300 words before the closing date for nominations, then, subject to subsection (3)—

(a) it shall be the duty of the society, at its expense, to send a copy of the address to each member of the society who is entitled to notice of the election; and

(b) each member's copy shall be sent in the same manner and, so far as practicable, at the same time as the notice of the meeting at which the election is to be conducted or the ballot papers are sent out, as the case may be;

but failure to comply with a requirement of this subsection shall not of itself invalidate the election.

(3) Subsection (2) does not require a society to send copies of an address to members of the society in any case where—

(a) the contents of the address would be likely to diminish substantially public confidence in the society, or

(b) the rights conferred by that subsection are being abused to seek needless publicity for defamatory matter or for frivolous or vexatious purposes,

and that subsection shall not be taken to confer any rights on members, or to impose any duties on a society, in respect of an address which does not relate directly to the affairs of the society.

(4) Where the society refuses, or proposes to refuse, to circulate an election address, the society shall, within 7 days after the receipt of the address, notify the member who furnished it of such refusal and the grounds for the refusal and the said member may, within 7 days of the refusal, refer the refusal to the Central Bank who may direct the society to comply with the request subject to such conditions as the Bank may require.

(5) (a) The person appointed under the rules of a society to supervise the conduct of an election of directors shall prepare and submit to the Central Bank a report on the conduct of the election—

(i) stating whether in his opinion the election was conducted in accordance with the provisions of this Act, regulations made thereunder and the rules and otherwise with fairness and integrity;

(ii) containing details of the number of proxy instruments received, the number declared invalid categorised by cause of invalidation and the number of votes attributable to valid instruments; and

(iii) containing such other information as may be required by the Bank.

(b) The Central Bank may, as it thinks proper, disclose some or all of the contents of a report under paragraph (a) to a duly nominated candidate.

(6) A society shall retain for a period of one year from the date of the election all ballot papers and all its documents and records relating to an election of directors.

(7) The Central Bank may, following consideration of the report made to it under subsection (5), if it thinks proper, apply to the Court for an order setting aside the result of an election of directors and directing the society to hold another election.

(8) An employee, other than an officer, of a society, not being himself a candidate, who, at the place of his employment or of a meeting of the society, solicits support for a candidate for election as a director or invites a member of the society to appoint as his proxy any particular person to vote in an election shall be guilty of an offence and shall be liable on conviction to a fine not exceeding £300.

Connected persons.

52.—(1) For the purposes of this Part, a person is connected with a director of a building society if, but only if, he is—

(a) that director's spouse, parent, brother, sister or child; or

(b) a body corporate with which the director is associated; or

(c) a person acting in his capacity as the trustee (other than as trustee under an employees' share scheme or a pension scheme) of any trust the beneficiaries of which include the director, his spouse or any of his children or a body corporate with which he is associated or the terms of which confer a power on the trustees that may be exercised for the benefit of the director, his spouse or any of his children or any such body corporate; or

(d) a person acting in his capacity as partner of that director or of any person who, by virtue of paragraph (a), (b) or (c) is connected with that director;

unless that person is also a director of the society.

(2) A director of a society is associated with a body corporate if he and his spouse, parent, brother, sister or child or a person acting in his capacity as trustee of any trust the beneficiaries of which include the director, his spouse or any of his children between them either—

(a) own at least one-fifth of that body's equity share capital within the meaning of the Companies Act, 1963 , or

(b) are entitled to exercise or control the exercise of more than one-fifth of the voting power of that body at any general meeting.

(3) In subsection (1) “child” includes a step-child and “son”, “daughter” and “parent” shall be construed accordingly.

Disclosure by directors of interests in contracts.

53.—(1) It shall be the duty of a director of a building society who is in any way, whether directly or indirectly, interested in a contract or proposed contract with the society to declare the nature of his interest at a meeting of the directors of the society.

(2) In a case of a proposed contract, the declaration shall be made—

(a) at the meeting of the directors at which the question of entering into the contract is first considered; or

(b) if the director was not at the date of that meeting interested in the proposed contract, at the next meeting of the directors held after he becomes so interested.

(3) Where the director becomes interested in a contract after it is made, the declaration shall be made at the first meeting of the directors held after the director becomes so interested.

(4) If the contract is not one that will be considered at a meeting of the directors, the declaration shall be made as soon as may be.

(5) Subject to subsection (6), for the purposes of this section, a general notice given to the directors of a society by a director to the effect that—

(a) he is a member of a specified company or firm and is to be regarded as interested in any contract which may, after the date of the notice, be made with that company or firm; or

(b) he is to be regarded as interested in any contract which may after the date of the notice be made with a specified person who is connected with him,

shall be deemed to be sufficient declaration of interest in relation to any such contract.

(6) A notice under subsection (5) shall not be of effect unless either it is given at a meeting of the directors or the director takes reasonable steps to secure that it is brought up and read at the next meeting of the directors after it is given.

(7) A copy of every declaration made and notice given under this section shall, within 3 days (not including a Saturday, a Sunday or a public holiday) after being made or given, be entered in a register kept for the purpose and this register shall be open for inspection without charge by any officer, auditor or member of the society at the chief office of the society and shall be available at every general meeting of the society, and at any meeting of the directors if any director so requests in sufficient time to enable the register to be available at the meeting.

(8) The provisions of this section apply in relation to any transaction or arrangement as they apply to a contract and, for the purposes of this section, a transaction or arrangement of a kind described in section 57 made by a society for a director of the society or a person connected with such a director shall, if it would not otherwise be so treated (and whether or not prohibited by that section), be treated as a transaction or arrangement in which that director is interested.

(9) Nothing in this section shall affect the operation of any rule of law restricting directors of a society from having any interest in contracts with the society.

Contracts of employment of directors.

54.—(1) A building society shall not incorporate in any agreement a term to which this section applies unless the term is first approved by a resolution of the society in general meeting.

(2) This section applies to any term by which a director's employment with the society of which he is a director is to continue, or may be continued, otherwise than at the instance of the society, (whether under the original agreement or under a new agreement entered into in pursuance of the original agreement) for a period exceeding 5 years during which the employment—

(a) cannot be terminated by the society by notice, or

(b) can be so terminated only in specified circumstances.

(3) In any case where—

(a) a person is or is to be employed with a society under an agreement which cannot be terminated by the society by notice or can be so terminated only in specified circumstances, and

(b) more than 6 months before the expiration of the period for which he is or is to be so employed, the society enters into a further agreement (otherwise than in pursuance of a right conferred by or by virtue of the original agreement on the other party thereto) under which he is to be employed with the society,

subsection (2) shall apply as if to the period for which he is to be employed under that further agreement there were added a further period equal to the unexpired period of the original agreement.

(4) A resolution of a society approving a term to which this section applies shall not be passed at a general meeting of the society unless a written memorandum setting out the proposed agreement incorporating the term is available for inspection by members of the society both—

(a) at its chief office during the period of 15 days expiring on the date of the meeting, and

(b) at the meeting itself.

(5) A term incorporated in an agreement in contravention of this section shall to the extent that it contravenes this section be void and that agreement and, in a case where subsection (3) applies, the original agreement shall be deemed to contain a term entitling the society to terminate it at any time by the giving of reasonable notice.

(6) In this section, “employment” includes employment under a contract for services.

Inspection of directors' service contracts.

55.—(1) Subject to this section, a building society shall keep at its chief office a register containing—

(a) in the case of each director who has a contract of service with the society, a copy of that contract if in writing;

(b) in the case of each director whose contract of service with the society is not in writing, a written memorandum setting out the terms of that contract;

(c) in the case of a director who has a contract of service with a subsidiary of the society, a copy of that contract or, if it is not in writing, a written memorandum setting out its terms.

(2) Subsection (1) shall not apply in relation to a director's contract of service with the society or with a subsidiary of the society if that contract required him to work wholly or mainly outside the State, but the society shall keep at its chief office a memorandum—

(a) in the case of a contract of service with the society, setting out the name of the director and the provisions of the contract relating to its duration;

(b) in the case of a contract of service with a subsidiary of the society, setting out the name of the director, the name and place of incorporation of the subsidiary and the provisions of the contract relating to its duration.

(3) Every copy and memorandum required to be kept by subsections (1) and (2) shall, during business hours (subject to such reasonable restrictions as the society may in general meeting impose, so that not less than 2 hours in each day be allowed for inspection), be open to the inspection of any member of the society without charge.

(4) If default is made in complying with subsection (1) or (2) or if an inspection required under subsection (3) is refused, the society and every officer of the society who is in default shall be liable on summary conviction to a fine not exceeding £1,000, and, for continued contraventions, to a daily default fine not exceeding £50.

(5) Subsections (1) and (2) shall apply to a variation of a director's contract of service with a society and a contract of service with a subsidiary of a society as it applies to the contract.

(6) This section shall not require to be kept a copy of, or memorandum setting out the terms of, a contract or a copy of, or memorandum setting out the terms of, a variation of a contract at a time at which the unexpired portion of the term for which the contract is to be in force is less than 3 years or at a time at which the contract can, within the next ensuing 3 years, be terminated by the society without payment of compensation.

Substantial property transactions involving directors and connected persons.

56.—(1) A building society shall not enter into an arrangement—

(a) whereby a director of the society or a person connected with such a director acquires or is to acquire one or more non-cash assets of the requisite value from the society; or

(b) whereby the society acquires or is to acquire one or more non-cash assets of the requisite value from such a director or a person so connected;

unless the arrangement is first approved by a resolution of the society in general meeting.

(2) For the purposes of this section a non-cash asset is of the requisite value if at the time the arrangement in question is entered into its value is not less than £50,000 or, in the case of a society with reserves of less than £500,000, is not less than 10 per cent. of the reserves.

(3) In this section “non-cash asset” means any property or interest in property other than cash and for this purpose “cash” includes foreign currency; and a reference to the acquisition of a non-cash asset includes a reference to the creation or extinction of an estate or interest in, or a right over, any property and also a reference to the discharge of any person's liability other than a liability for a liquidated sum.

(4) An arrangement entered into by a society in contravention of this section and any transaction entered into in pursuance of the arrangement (whether by the society or any other person) shall be voidable at the instance of the society unless—

(a) restitution of any money or any other asset which is the subject matter of the arrangement or transaction is no longer possible or the society has been indemnified in pursuance of subsection (5) (b) by any other person for the loss or damage suffered by it;

(b) any rights acquired bona fide for value and without actual notice of the contravention by any person who is not a party to the arrangement or transaction would be affected by its avoidance; or

(c) the arrangement is, within a reasonable period, affirmed by the society in general meeting.

(5) Without prejudice to any liability imposed otherwise than by this subsection, but subject to subsection (6), where an arrangement is entered into with a society by a director of the society or a person connected with him in contravention of this section, that director and the person so connected, and any other director of the society who authorised the arrangement or any transaction entered into in pursuance of such an arrangement, shall (whether or not it has been avoided in pursuance of subsection (4)) be liable—

(a) to account to the society for any gain which he had made directly or indirectly by the arrangement or transaction; and

(b) jointly and severally with any other person liable under this subsection, to indemnify the society for any loss or damage resulting from the arrangement or transaction.

(6) Where an arrangement is entered into by a society and a person connected with a director of the society in contravention of this section, that director shall not be liable under subsection (5) if he shows that he took all reasonable steps to secure the society's compliance with this section and, in any case, a person so connected and any such other director as is mentioned in that subsection shall not be so liable if he shows that, at the time the arrangement was entered into, he did not know the relevant circumstances constituting the contravention.

Restrictions on loans etc. to directors and connected persons.

57.—(1) Subject to this section, a building society shall not—

(a) make a loan to a director or a person connected with a director of the society;

(b) dispose of property by way of lease or hire to a director or a person connected with a director of the society;

(c) make a payment on behalf of a director or a person connected with a director of the society in connection with the provision of any services under Part III ;

(d) enter into any guarantee or provide any security which is incidental to or connected with any such loan, disposal of property or payment; or

(e) take part in any arrangement whereby—

(i) another person enters into a transaction which if it had been entered into by the society would have contravened any of paragraphs (a) to (d), and

(ii) that other person, in pursuance of the arrangement, has obtained or is to obtain any benefit from the society or a subsidiary of the society.

(2) Subsection (1) (a) does not apply to—

(a) any loan the amount of which when aggregated with any other relevant loans does not exceed £2,500;

(b) any loan made in the ordinary course of the society's business, the amount of which is not greater, and the terms on which it is made are not more favourable, than it is reasonable to expect the society to have offered to a person of the same financial standing but not connected with the society;

(c) any loan, the amount of which, when aggregated with any other relevant loans, does not exceed £50,000 made for or towards the purchase or improvement of a house used or to be used as the director's only or main residence and provided that loans of that description and on similar terms are ordinarily made to employees of the society.

(3) Subsection (1) (b) does not apply to any lease or hiring of property—

(a) the value of which when aggregated with the value of any other relevant leases or hirings does not exceed £5,000;

(b) which is made in the ordinary course of the society's business and is on terms not more favourable than it is reasonable to expect the society to have offered to a person unconnected with the society.

(4) Subsection (1) (c) does not apply to any payment—

(a) amounting, when aggregated with any other relevant payments, to no more than £1,000 in respect of which the person on whose behalf it is made is under an obligation to reimburse the society within a period not exceeding 2 months beginning with the date of the payment; or

(b) of an amount not greater and on other terms not more favourable than it is reasonable to expect the society to have offered to a person of the same financial standing but not connected with the society.

(5) Subject to compliance with the requirements of subsection (6), subsection (1) does not preclude a society from doing anything to provide a director with funds to meet expenditure incurred or to be incurred by him for the purposes of the society or for the purpose of enabling him properly to perform his duties as a director of the society nor does it preclude the society from doing anything to enable a director to avoid incurring such expenditure.

(6) The following are the requirements referred to in subsection (5)—

(a) the things must either be done with the prior approval of the society given at a general meeting at which the requisite matters are disclosed or be done on condition that, if the approval of the society is not so given at the next annual general meeting, the loan is to be repaid, or any other liability arising under the transaction is to be discharged, within 6 months from the conclusion of that meeting; and

(b) the amount provided, when aggregated with any other relevant provision of funds, does not exceed £10,000.

(7) The following are the requisite matters which must be disclosed for the purposes of subsection (6) above—

(a) the purpose of the expenditure incurred or to be incurred, or which would otherwise be incurred, by the director;