Building Societies Act, 1989

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.