Operation of credit union
7AF1Power to issue interest-bearing shares
1
A credit union may issue interest-bearing shares if—
a
its rules so provide;
b
its most recent year end balance sheet shows that it holds reserves of at least £50,000 or five per cent of its total assets, whichever is greater;
c
its auditors have made a report under F3 section 87 of the 2014 Act on that balance sheet;
d
it has submitted that balance sheet to the F2appropriate authority; and
2
A credit union which issues interest-bearing shares must submit to the F2appropriate authority an annual report by the auditors appointed to audit its accounts and balance sheet fulfilling the requirements of paragraph (e) of subsection (1) above by the date specified by the F2appropriate authority for the purpose.
3
A credit union shall convert any interest-bearing shares in issue into shares which are not interest-bearing if—
a
its rules no longer provide for the issue of interest-bearing shares;
b
neither its most recent year end balance sheet nor the balance sheet immediately preceding it—
i
shows that the credit union holds reserves of at least £50,000 or five per cent of its total assets, whichever is greater; or
ii
has been submitted to the F2appropriate authority by the date specified; or
c
for two consecutive years it has not complied with subsection (2) above.
4
The Treasury may by order provide for subsections (1)(b) and (3)(b)(i) above to have effect as if the references to £50,000 and five per cent were references to such other sum or percentage as they think appropriate.
5
In this section “year end balance sheet” has the same meaning as in F4 section 82 of the 2014 Act .
6
In this Act “interest-bearing share” means a share issued on terms which entitle the holder to interest but not to a dividend.