(1)This section restricts the making of gifts, and the payment of dividends and bonuses, by a non-profit registered provider to—
(a)a member or former member of the registered provider,
(b)a member of the family of a member or former member,
(c)a company which has as a director a person within paragraph (a) or (b).
(2)A gift may be made, and a dividend or bonus may be paid, only if it falls within one of the following permitted classes.
(3)Class 1 is payments which—
(a)are in accordance with the constitution of the registered provider, and
(b)are due as interest on capital lent to the provider or subscribed in its shares.
(4)Class 2 is payments which—
(a)are paid by a fully mutual housing association (within the meaning of section 1(2) of the Housing Associations Act 1985 (c. 69)),
(b)are paid to former members of the association, and
(c)are due under—
(i)tenancy agreements with the association, or
(ii)agreements under which the former members became members of the association.
(5)Class 3 is payments which—
(a)are in accordance with the constitution of the registered provider making the payment (“the payer”), and
(b)are made to a registered provider which is a subsidiary or associate of the payer.
(6)If a registered company or industrial and provident society contravenes this section—
(a)it may recover the wrongful gift or payment as a debt from the recipient, and
(b)the regulator may require it to take action to recover the gift or payment.