Building Societies Act 1986

Accounts U.K.

72 Duty of directors to prepare annual accounts. U.K.

(1) Subject to subsection (4) below, the directors of every building society shall prepare with respect to each financial year of the society—

(a) an income and expenditure account showing the income and expenditure for that year, [F1 and]

(b) a balance sheet showing the state of its affairs as at the end of that year, F2 . . .

(c) a statement of the source and application of the funds during that year.

(2) F3 . . ., if, at the end of its financial year, a building society has [F4 subsidiary undertakings] , the directors shall also prepare, with respect to that year, group accounts dealing respectively with the income and expenditure, [F5 and the state of the affairs], of the society and the [F4 subsidiary undertakings].

(3) The directors of a building society which has [F4 subsidiary undertakings] shall secure that, except where in their opinion there are good reasons against it, the financial year of each of its [F4 subsidiary undertakings] coincides with the society’s own financial year.

F6 (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F7 (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F7 (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(7) The [F8 Treasury may by regulations]—

(a) add to the classes of documents to be comprised in a society’s accounts to be prepared for each financial year under subsection (1) or (2) above;

(b) make provision as to the matters to be included in any document so added;

(c) modify the requirements of this Part as to the matters to be stated in any document comprised in the society’s accounts; and

(d) reduce the classes of documents to be comprised in a society’s accounts.

(8) Regulations under subsection (7) above may make different provision for different descriptions of society, and may include incidental and supplementary provisions.

(9) The power to make regulations under subsection (7) above is exercisable by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament.

(10) The accounts prepared with respect to a society’s financial year under this section (whether as individual accounts or group accounts), with the notes to them, are referred to in this Part as “the annual accounts”.

Textual Amendments

F1 Word in s. 72(1)(a) inserted (23.3.1999) by S.I. 1999/248, reg. 3, Sch. para. 2(1)

F2 Word in s. 72(1)(c) omitted (23.3.1999) by virtue of S.I. 1999/248, reg. 3, Sch. para. 2(1)

F3 Words in s. 72(2) omitted by virtue of S.I. 1991/1729, art. 4(1).

F4 Words in ss. 71-82 (Pt. VIII) substituted by S.I. 1991/1729, art. 3.

F5 Words in s. 72(2) substituted (23.3.1999) by S.I. 1999/248, reg. 3, Sch. para. 2(2)

F6 S. 72(4) repealed (23.3.1999) by S.I. 1999/248, reg. 3, Sch. para. 2(3)

F7 S. 72(5)(6) omitted by virtue of S.I. 1991/1729, art. 4(2).

F8 Words in s. 72(7) substituted (17.8.2001 for certain purposes and otherwise 1.12.2001) by S.I. 2001/2617, arts. 2(a)(b), 8, 13(1), Sch. 3 para. 164 (with art. 13(3), Sch. 5); S.I. 2001/3538, art. 2(1)

Modifications etc. (not altering text)

C1 S. 72(7)(8): Functions of the Building Societies Commission transferred (1.12.2001) to the Treasury by S.I. 2001/2617, arts. 2(b), 4(1), Sch. 1 Pt. III (with art. 5); S.I. 2001/3538, art. 2(1)

73 Contents and form of annual accounts. U.K.

(1) The annual accounts of a building society shall conform to the requirements of this section and regulations made under it.

(2) Every income and expenditure account shall give a true and fair view of the income and expenditure of the society for the financial year.

(3) Every balance sheet shall give a true and fair view of the state of the affairs of the society as at the end of the financial year.

F9 (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(5) Subsections [F10 (2) and (3)] above, in their application to the group accounts of a society, are to be read as referring to the society and (so far as it concerns the members of the society) the [F11 subsidiary undertakings] dealt with in the group accounts.

(6) The annual accounts shall also contain, whether in the form of notes or otherwise, such supplementary information as is prescribed.

(7) The [F12 Treasury shall by regulations] make provision with respect to the contents and the form of the annual accounts.

(8) Without prejudice to the generality of subsections (6) and (7) above, the regulations may—

(a) prescribe accounting principles and rules;

(b) require corresponding information for a preceding financial year;

(c) require the accounts of societies to deal also with [F13 their associated undertakings];

(d) make different provision for different descriptions of society;

(e) require the accounts to give particulars of the emoluments, pensions, compensation for loss of office and financial interests of directors, other officers and employees of prescribed descriptions of the society;

and may permit group accounts to be prepared in other than consolidated form.

(9) Where compliance with regulations under this section would not secure compliance with the requirements of subsection [F14 (2) or (3)] above the directors shall take such steps with regard to the contents or form of the accounts, in addition to or, if additions do not suffice, in derogation of the provisions of the regulations, as they think necessary to secure compliance with those subsections and record, in the notes to the accounts, what they have done, the reasons for it and its effects.

(10) The power to make regulations under this section is exercisable by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament.

(11) It is the duty of every director, other officer and employee of a building society as respects whom prescribed particulars are by virtue of subsection (8)(e) above required to be given in the accounts to give notice of such matters as may be necessary to enable the society to give those particulars in the accounts.

(12) In this section “prescribed” means prescribed in regulations under it.

Textual Amendments

F9 S. 73(4) repealed (23.3.1999) by S.I. 1999/248, reg. 3, Sch. para. 3(1)

F10 Words in s. 73(5) substituted (23.3.1999) by S.I. 1999/248, reg. 3, Sch. para. 3(2)

F11 Words in ss. 71-82 (Pt. VIII) substituted by S.I. 1991/1729, art. 3

F12 Words in s. 73(7) substituted (17.8.2001 for certain purposes and otherwise 1.12.2001) by S.I. 2001/2617, arts. 2(a)(b), 8, 13(1), Sch. 3 para. 165 (with art. 13(3), Sch. 5); S.I. 2001/3538, art. 2(1)

F13 Words in s. 73(8)(c) substituted (1.12.1997 in specified cases and for specified purposes and otherwise in accordance with art. 2(2)(3)(5) of S.I. 1997/2668) by 1997 c. 32, ss. 43, 47(3), Sch. 7 para. 30; S.I. 1997/2668, art. 2, Sch. Pt. II(w)(z)(xvii)

F14 Words in s. 73(9) substituted (23.3.1999) by S.I. 1999/248, reg. 3, Sch. para. 3(3)

Modifications etc. (not altering text)

C2 S. 73(6)-(8): Functions of the Building Societies Commission transferred (1.12.2001) to the Treasury by S.I. 2001/2617, arts. 2(b), 4(1), Sch. 1 Pt. III (with art. 5); S.I. 2001/3538, art. 2(1)

74 Duty of directors to prepare annual business statement. U.K.

(1) The directors of every building society shall, by reference to the annual accounts and other records and information at their disposal, prepare with respect to each financial year of the society a statement (referred to in this Act as “the annual business statement”) relating to prescribed aspects of the business of the society during the year.

(2) Where the society has [F15 connected undertakings] the annual business statement shall deal also with prescribed aspects of the business of the [F15 connected undertakings] during the year to which it relates.

(3) The annual business statement shall contain such information relating to such aspects of the business of the society and shall be in such form as the [F16 Treasury prescribe by regulations]; and in this section “prescribed” means prescribed by regulations under this subsection.

(4) Without prejudice to the generality of subsections (1) to (3) above the regulations may require the annual business statements of building societies to include prescribed information about directors and past directors and persons connected with them and other officers and past officers and persons connected with them and their financial interests.

(5) The information comprising the annual business statement shall give a true representation of the matters in respect of which it is given.

(6) To such extent as may be prescribed matters contained in the society’s annual business statement shall not be the subject of report by the auditors under section 78.

(7) The power to make regulations under subsection (3) above is exercisable by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament.

(8) It is the duty of every director or other officer of a building society to give notice to the society of such matters relating to himself or his financial interests as may be necessary for the purposes of compliance with the preceding provisions of this section.

(9) Any person who fails to comply with subsection (8) above shall be liable on summary conviction to a fine not exceeding level 5 on the standard scale.

(10) Any director who fails to comply with subsection (1) above shall be liable on conviction on indictment or on summary conviction to a fine not exceeding, on summary conviction, the statutory maximum.

Textual Amendments

F15 Words in s. 74(2) substituted (1.12.1997 in specified cases and for specified purposes and otherwise in accordance with art. 2(2)(3)(5) of S.I. 1997/2668) by 1997 c. 32, ss. 43, 47(3), Sch. 7 para. 31; S.I. 1997/2668, art. 2, Sch. Pt. II(w)(z)(xviii)

F16 Words in s. 74(3) substituted (17.8.2001 for certain purposes and otherwise 1.12.2001) by S.I. 2001/2617, arts. 2(a)(b), 8, 13(1), Sch. 3 para. 166 (with art. 13(3), Sch. 5); S.I. 2001/3538, art. 2(1)

Modifications etc. (not altering text)

C3 S. 74(3)(4): Functions of the Building Societies Commission transferred (1.12.2001) to the Treasury by S.I. 2001/2617, arts. 2(b), 4(1), Sch. 1 Pt. III (with art. 5); S.I. 2001/3538, art. 2(1)

75 Directors’ report. U.K.

(1) The directors of a building society shall prepare for submission to the annual general meeting a report on the business of the society containing—

(a) a fair review of the development of its business during the financial year and of its position at the end of it, and

(b) such information relating to such aspects of the business of the society or the society and any [F17 connected undertakings] as may be prescribed by regulations made by the F18 . . . Treasury, and

[F19 (c) a statement as to the matters mentioned in subsection (1A) below.]

[F20 (1A) The said matters are—

(a) whether the society has acquired or established, or allowed a subsidiary undertaking to acquire or establish, a business to which subsection (3) and subsection (4) or, as the case may be, subsection (5) of section 92A applied;

(b) if the society has acquired or established, or allowed such an undertaking to acquire or establish, such a business, what the business is and whether the society complied with the requirements of subsection (1) of that section; and

(c) if the society did not comply with those requirements, why the society nevertheless proceeded, or allowed the undertaking to proceed, with the acquisition or establishment.]

(2) Where the society has [F21 connected undertakings] the report shall, in addition to containing the information prescribed in relation to them under subsection (1)(b) above, review the development of the business of the society and its [F22 connected undertakings] during the year and their position at the end of it.

(3) The power to make regulations under subsection (1) above is exercisable by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament.

(4) If a directors’ report does not contain [F23 the review, information and statement required by subsection (1) above and, where applicable, the review required by subsection (2) above], each director shall be liable on conviction on indictment or on summary conviction to a fine not exceeding, on summary conviction, the statutory maximum.

Textual Amendments

F17 Words in s. 75(1)(b) substituted (1.12.1997 in specified cases and for specified purposes and otherwise in accordance with art. 2(2)(3)(5) of S.I. 1997/2668) by 1997 c. 32, ss. 43, 47(3), Sch. 7 para. 32(1)(a); S.I. 1997/2668, art. 2, Sch. Pt. II(w)(z)(xix)

F18 Words in s. 75(1)(b) repealed (1.12.2001) by S.I. 2001/2617, arts. 2(b), 13(2), Sch. 4 (with art. 13(3), Sch. 5); S.I. 2001/3538, art. 2(1)

F19 S. 75(1)(c) substituted (1.12.1997 in specified cases and for specified purposes and otherwise in accordance with art. 2(2)(3)(5) of S.I. 1997/2668) by 1997 c. 32, ss. 43, 47(3), Sch. 7 para. 32(1)(b); S.I. 1997/2668, art. 2, Sch. Pt. II(w)(z)(xix)

F20 S. 75(1A) inserted (1.12.1997 in specified cases and for specified purposes and otherwise in accordance with art. 2(2)(3)(5) of S.I. 1997/2668) by 1997 c. 32, ss. 43, 47(3), Sch. 7 para. 32(2); S.I. 1997/2668, art. 2, Sch. Pt. II(w)(z)(xix)

F21 Words in s. 75(2) substituted (1.12.1997 in specified cases and for specified purposes and otherwise in accordance with art. 2(2)(3)(5) of S.I. 1997/2668) by 1997 c. 32, ss. 43, 47(3), Sch. 7 para. 32(3)(a); S.I. 1997/2668, art. 2, Sch. Pt. II(w)(z)(xix)

F22 Words in s. 75(2) substituted (1.12.1997 in specified cases and for specified purposes and otherwise in accordance with art. 2(2)(3)(5) of S.I. 1997/2668) by 1997 c. 32, ss. 43, 47(3), Sch. 7 para. 32(3)(b); S.I. 1997/2668, art. 2, Sch. Pt. II(w)(z)(xix)

F23 Words in s. 75(4) substituted (1.12.1997 in specified cases and for specified purposes and otherwise in accordance with art. 2(2)(3)(5) of S.I. 1997/2668) by 1997 c. 32, ss. 43, 47(3), Sch. 7 para. 32(4); S.I. 1997/2668, art. 2, Sch. Pt. II(w)(z)(xix)

Modifications etc. (not altering text)

C4 S. 75(1)(b): Functions of the Building Societies Commission transferred (1.12.2001) to the Treasury by S.I. 2001/2617, arts. 2(b), 4(1), Sch. 1 Pt. III (with art. 5); S.I. 2001/3538, art. 2(1)

76 Summary financial statement for members and depositors. U.K.

(1) The directors of a building society shall, with respect to each financial year, prepare for members and depositors a summary financial statement for that year, that is to say, a statement derived from the annual accounts, annual business statement and director’s report, giving a summary account of the society’s financial development during and financial position at the end of the year.

(2) Where the society has [F24 connected undertakings] the statement shall (so far as they are dealt with in the group accounts) give an account of the financial development and position of the society and its [F25 connected undertakings].

(3) The [F26 Treasury may by regulations] make provision with respect to—

(a) the form of the summary financial statement, and

(b) the information which must be included in it.

(4) Every summary financial statement shall also include in the prescribed form statements to the effect that—

(a) it is only a summary of information in the accounts, business statement and directors’ report;

(b) in so far as it summarises the information in the accounts, those accounts have been audited;

(c) the accounts, business statement and director’s report will be available to members and depositors free of charge on demand at every office of the society after a specified date.

(5) Every summary financial statement shall include a statement of the auditors’ opinion as to its consistency with the accounts, business statement and directors’ report and its conformity with the requirements of this section and regulations made under it.

(6) The power to make regulations under subsection (3) above is exercisable by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament.

(7) The summary financial statement shall be signed by two directors on behalf of the board of directors and by the chief executive of the society.

[F27 (8) Not later than 21 days before the date of the annual general meeting at which the accounts and reports are to be considered, the society shall send one copy of the documents to which this subsection applies to every member of the society who is entitled to receive notice of the meeting, and two copies of the documents to which this subsection applies to the Authority.

(8A) The documents to which subsection (8) applies are—

(a) the summary financial statement, and

(b) where subsection (8) extends under section 78(6) to the auditors’ report also, the auditors’ report.]

[F28 (8B) Where a copy of the summary financial statement or of the auditor’s report is required to be sent to a member under subsection (8)—

(a) it may be sent to him electronically only if it is sent to an electronic address notified to the society by the member for the purpose; but

(b) the requirement to send it shall also be treated as satisfied if the conditions set out in subsection (8C) are satisfied.

(8C) The conditions of this subsection are satisfied in the case of a copy of a summary financial statement or auditor’s report if—

(a) the society and the member have agreed that information that is required to be sent to him may instead be accessed by him on a web site;

(b) the agreement applies to the summary financial statement or auditor’s report in question;

(c) the member is notified, in a manner agreed between him and the society, of—

(i) the publication of the summary financial statement and (where applicable) the auditor’s report on a web site,

(ii) the address of that web site, and

(iii) the place on that web site where the statement and (where applicable) the report may be accessed, and how it may be accessed;

(d) the notification given for the purposes of paragraph (c) is given not less than 21 days before the date of the annual general meeting at which the accounts and reports are to be considered; and

(e) a copy of the statement and (where applicable) the report is published on the web site throughout a period beginning at least 21 days before the date of meeting.

(8D) Where, in a case in which subsection (8C) is relied on for compliance with a requirement of subsection (8)—

(a) a copy of a summary financial statement or auditor’s report is published for a part, but not all, of the period mentioned in subsection (8C)(e), and

(b) the failure to publish it throughout that period is wholly attributable to circumstances which it would not be reasonable to have expected the society or the officer to prevent or avoid,

the failure shall not invalidate the proceedings of the meeting at which the accounts and reports are considered, and no offence is committed under subsection (10) by reason of that failure.]

(9) A copy of the summary financial statement and, where this subsection extends under section 78(6) to the auditors’ report also, of the auditors’ report shall be given or sent by the society free of charge, at any time during the period ending with the publication of the next summary financial statement, to—

F29 [(a) any individual who for the first time subscribes for shares in the society, on his first subscribing for the shares, and]

(b) any member of the society who was not sent a copy under subsection (8)(a) above, within seven days of his making a demand for a copy.

[F30 (9A) Where a copy of the summary financial statement or of the auditor’s report is required under subsection (9)(a) to be sent to an individual who for the first time subscribes for shares in the society (“new subscriber”)—

(a) it may be sent to him electronically only if it is sent to an electronic address notified to the society by that new subscriber for the purpose before or at the time when he subscribes for the shares; but

(b) the requirement to send it shall also be treated as satisfied if the conditions set out in subsection (9B) are satisfied.

(9B) The conditions of this subsection are satisfied in the case of a copy of a summary financial statement or of an auditor’s report if—

(a) before or at the time when he subscribes for the shares, the society and the new subscriber have agreed that information that is required to be sent to him may instead be accessed by him on a web site;

(b) the agreement applies to the summary financial statement or to the auditor’s report in question;

(c) before or at the time when he subscribes for the shares, the new subscriber is notified, in a manner agreed between him and the society, of—

(i) the publication of the summary financial statement or auditor’s report on a web site,

(ii) the address of that web site, and

(iii) the place on that web site where that statement or that report may be accessed, and how it may be accessed; and

(d) a copy of the summary financial statement or of the auditor’s report is published on that web site throughout a period beginning on the date on which the new subscriber is notified in accordance with paragraph (c) and ending no later than the date of the publication of the next summary financial statement.

(9C) Where a copy of the summary financial statement or of the auditor’s report is required to be sent to a member under subsection (9)(b)—

(a) it may be sent to him electronically only if it is sent to an electronic address notified to the society by that member for the purpose; but

(b) the requirement to send it shall also be treated as satisfied if the conditions set out in subsection (9D) are satisfied.

(9D) The requirements of this subsection are satisfied in the case of a copy of a summary financial statement or of an auditor’s report if—

(a) the society and that member have agreed that information that is required to be sent to him may instead be accessed by him on a web site;

(b) the agreement applies to the summary financial statement or auditor’s report in question;

(c) within the seven days specified in subsection (9)(b), the member is notified, in a manner agreed between him and the society, of—

(i) the publication of the summary financial statement or auditor’s report on a web site,

(ii) the address of that web site, and

(iii) the place on that web site where the statement or report may be accessed, and how it may be accessed; and

(d) a copy of the summary financial statement or of the auditor’s report is published on that web site throughout a period beginning on the date on which the member is notified in accordance with paragraph (c) and ending no earlier than the date of the publication of the next summary financial statement.

(9E) Where, in a case in which subsection (9A)(b) or (9C)(b) is relied on for compliance with a requirement under subsection (9),

(a) a copy of a summary financial statement or auditor’s report is published for a part, but not all, of the period mentioned in paragraph (d) of subsection (9B) or (9D) (as the case may be), but

(b) the failure to publish that copy of a statement or report throughout that period is wholly attributable to circumstances which it would not be reasonable to have expected the society or the officer to prevent or avoid,

the failure shall not prevent the requirements of subsection (9) from being treated as fulfilled in relation to that copy of a statement or report, and no offence is committed under subsection (11) by reason of that failure.]

(10) If default is made by a building society in complying with subsection (8) above, the society shall be liable on summary conviction—

(a) to a fine not exceeding level 5 on the standard scale; and

(b) in the case of a continuing offence, to an additional fine not exceeding £200 for every day during which the offence continues,

and so shall any officer who is also guilty of the offence.

(11) If default is made by a building society in complying with subsection (9) above, the society shall be liable on summary conviction—

(a) to a fine not exceeding level 3 on the standard scale; and

(b) in the case of a continuing offence, to an additional fine not exceeding £40 for every day during which the offence continues,

and so shall any officer who is also guilty of the offence.

(12) The [F31 Authority shall keep one of the copies] of the summary financial statement received by it under subsection (8) above in the public file of the society.

Textual Amendments

F24 Words in s. 76(2) substituted (1.12.1997 in specified cases and for specified purposes and otherwise in accordance with art. 2(2)(3)(5) of S.I. 1997/2668) by 1997 c. 32, ss. 43, 47(3), Sch. 7 para. 33(1)(a); S.I. 1997/2668, art. 2, Sch. Pt. II(w)(z)(xx)

F25 Words in s. 76(2) substituted (1.12.1997 in specified cases and for specified purposes and otherwise in accordance with art. 2(2)(3)(5) of S.I. 1997/2668) by 1997 c. 32, ss. 43, 47(3), Sch. 7 para. 33(1)(b); S.I. 1997/2668, art. 2, Sch. Pt. II(w)(z)(xx)

F26 Words in s. 76(3) substituted (17.8.2001 for certain purposes and otherwise 1.12.2001) by S.I. 2001/2617, arts. 2(a)(b), 8, 13(1), Sch. 3 para. 168(a) (with art. 13(3), Sch. 5); S.I. 2001/3538, art. 2(1)

F27 S. 76(8)(8A) substituted (17.8.2001 for certain purposes and otherwise 1.12.2001) for s. 76(8) by S.I. 2001/2617, arts. 2(a)(b), 8, 13(1), Sch. 3 para. 168(b) (with art. 13(3), Sch. 5); S.I. 2001/3538, art. 2(1)

F28 S. 76(8B)-(8D) inserted (20.3.2003) by The Building Societies Act 1986 (Electronic Communications) Order 2003 (S.I. 2003/404), arts. 1(1), 6(2)

F29 S. 76(9)(a) substituted (9.6.1997) by 1997 c. 32, s. 43, Sch. 7 para. 33(2); S.I. 1997/1427, art. 2(k)(n)(viii)

F30 S. 76(9A)-(9E) inserted (20.3.2003) by The Building Societies Act 1986 (Electronic Communications) Order 2003 (S.I. 2003/404), arts. 1(1), 6(3)

F31 Words in s. 76(12) substituted (17.8.2001 for certain purposes and otherwise 1.12.2001) by S.I. 2001/2617, arts. 2(a)(b), 8, 13(1), Sch. 3 para. 168(c) (with art. 13(3), Sch. 5); S.I. 2001/3538, art. 2(1)

Modifications etc. (not altering text)

C5 S. 76(3): Functions of the Building Societies Commission transferred (1.12.2001) to the Treasury by S.I. 2001/2617, arts. 2(b), 4(1), Sch. 1 Pt. III (with art. 5); S.I. 2001/3538, art. 2(1)