SCHEDULES
SCHEDULE 1 Registered social landlords: regulation
Part I Control of payments to members, &c
Payments by way of gift, dividend or bonus
1
1
A registered social landlord shall not make a gift or pay a sum by way of dividend or bonus to—
a
a person who is or has been a member of the body,
b
a person who is a member of the family of a person within paragraph (a), or
c
a company of which a person within paragraph (a) or (b) is a director,
except as permitted by this paragraph.
2
The following are permitted—
a
the payment of a sum which, in accordance with the constitution or rules of the body, is paid as interest on capital lent to the body or subscribed by way of shares in the body;
b
the payment by a fully mutual housing association to a person who has ceased to be a member of the association of a sum which is due to him either under his tenancy agreement with the association or under the terms of the agreement under which he became a member of the association.
F60c
the payment of a sum, in accordance with the constitution or rules of the body, to a registered social landlord which is a subsidiary or associate of the body.
3
Where an industrial and provident society or a company registered under the M1Companies Act 1985 pays a sum or makes a gift in contravention of this paragraph, the society or company may recover the sum or the value of the gift, and proceedings for its recovery shall be taken if the F1Relevant Authority so directs.
Payments and benefits to officers and employees, &c.
I12
1
A registered social landlord which is an industrial and provident society or a company registered under the Companies Act 1985 shall not make a payment or grant a benefit to—
a
an officer or employee of the society or company,
b
a person who at any time within the preceding twelve months has been a person within paragraph (a),
c
a close relative of a person within paragraph (a) or (b), or
d
a business trading for profit of which a person falling within paragraph (a), (b) or (c) is a principal proprietor or in the management of which such a person is directly concerned,
except as permitted by this paragraph.
2
The following are permitted—
a
payments made or benefits granted to an officer or employee of the society or company under his contract of employment with the society or company;
b
the payment of remuneration or expenses to an officer of the society or company who does not have a contract of employment with the society or company;
c
any such payment as may be made in accordance with paragraph 1(2) (interest payable in accordance with the rules and certain sums payable by a fully mutual housing association to a person who has ceased to be a member);
d
the grant or renewal of a tenancy by a co-operative housing association;
e
where a tenancy of a house has been granted to, or to a close relative of, a person who later became an officer or employee, the grant to that tenant of a new tenancy whether of the same or another house;
f
payments made or benefits granted in accordance with any determination made by the F2Relevant Authority.
3
A determination for the purposes of sub-paragraph (2)(f) may specify the class or classes of case in which a payment may be made or benefit granted and specify the maximum amount.
4
Where a society or company pays a sum or grants a benefit in contravention of this paragraph, the society or company may recover the sum or value of the benefit; and proceedings for its recovery shall be taken if the F2Relevant Authority so directs.
Maximum amounts payable by way of fees, expenses, &c.
I23
1
The F3Relevant Authority may from time to time specify the maximum amounts which may be paid by a registered social landlord which is an industrial and provident society or a company registered under the M2Companies Act 1985—
a
by way of fees or other remuneration, or by way of expenses, to a member of the society or company who is not an officer or employee of the society or company, or
b
by way of remuneration or expenses to an officer of the society or company who does not have a contract of employment with the society or company.
2
Different amounts may be so specified for different purposes.
3
Where a society or company makes a payment in excess of the maximum permitted under this paragraph, the society or company may recover the excess, and proceedings for its recovery shall be taken if the F3Relevant Authority so directs.
Part II Constitution, change of rules, amalgamation and dissolution
General power to remove director, trustee, &c.
4
1
The F39Relevant Authority may, in accordance with the following provisions, by order remove—
a
a director or trustee of a registered social landlord which is a registered charity,
b
a committee member of a registered social landlord which is an industrial and provident society, or
c
a director of a registered social landlord which is a company registered under the Companies Act 1985.
2
The F39Relevant Authority may make an order removing any such person if—
a
he has been adjudged bankrupt or has made an arrangement with his creditors;
b
he is subject to a disqualification order F40or disqualification undertaking under the M18Company Directors Disqualification Act 1986 F41or to a disqualification order under Part II of the companies (Northern Ireland) order 1989F52or disqualification undertaking under the Companies Directors Disqualification (Northern Ireland) Order 2002;
c
he is subject to an order under section 429(2) of the M19Insolvency Act 1986 (failure to pay under county court administration order);
d
he is disqualified under section 72 of the M20Charities Act 1993 from being a charity trustee;
e
he is incapable of acting by reason of mental disorder;
f
he has not acted; or
g
he cannot be found or does not act and his absence or failure to act is impeding the proper management of the registered social landlord’s affairs.
3
Before making an order the F39Relevant Authority shall give at least 14 days’ notice of its intention to do so to the person whom it intends to remove, and to the registered social landlord.
4
That notice may be given by post, and if so given to the person whom the F39Relevant Authority intend to remove may be addressed to his last known address in the United Kingdom.
5
A person who is ordered to be removed under this paragraph may appeal against the order to the High Court.
Restriction on power of removal in case of registered charity
5
1
The F42Relevant Authority may make an order under paragraph 4 removing a director or trustee of a registered charity only if the charity has, at any time before the power is exercised—
a
received financial assistance under section 24 of the M21Local Government Act 1988 (assistance for privately let housing accommodation),
b
had property transferred to it on a qualifying disposal under section 135 of the M22Leasehold Reform, Housing and Urban Development Act 1993, or
c
received a grant or loan under any of the following provisions.
2
The provisions are—
section 18 of this Act (social housing grants),
section 22 of this Act or section 58 of the M23Housing Associations Act 1985 (grants or loans by local authorities),
section 50 of the M24Housing Act 1988, section 41 of the Housing Associations Act 1985 or any enactment replaced by that section (housing association grant),
section 51 of the Housing Act 1988 or section 54 or 55 of the Housing Associations Act 1985 (revenue deficit grant or hostel deficit grant),
section 79 of the Housing Associations Act 1985 (loans by Housing Corporation),
section 31 of the M25Housing Act 1974 (management grants), or
any enactment mentioned in paragraph 2 or 3 of Schedule 1 to the Housing Associations Act 1985 (pre-1974 grants and certain loans).
Registered charity: power to appoint new director or trustee
6
1
The F43Relevant Authority may by order appoint a person to be a director or trustee of a registered social landlord which is a registered charity—
a
in place of a person removed by the F43Relevant Authority,
b
where there are no directors or no trustees, or
c
where the F43Relevant Authority is of the opinion that it is necessary for the proper management of the charity’s affairs to have an additional director or trustee.
The power conferred by paragraph (c) may be exercised notwithstanding that it will cause the maximum number of directors or trustees permissible under the charity’s constitution to be exceeded.
2
The F43Relevant Authority shall only exercise its power under sub-paragraph (1) if—
a
the charity has, at any time before the power is exercised, received financial assistance, had property transferred to it, or received a grant or loan as mentioned in paragraph 5, and
3
A person may be so appointed notwithstanding any restrictions on appointment in the charity’s constitution or rules.
4
A person appointed under this paragraph shall hold office for such period and on such terms as the F43Relevant Authority may specify; and on the expiry of the appointment the F43Relevant Authority may renew the appointment for such period as it may specify.
This does not prevent a person appointed under this paragraph from retiring in accordance with the charity’s constitution or rules.
5
A person appointed under this paragraph as director or trustee of a registered charity is entitled—
a
to attend, speak and vote at any general meeting of the charity and to receive all notices of and other communications relating to any such meeting which a member is entitled to receive,
b
to move a resolution at any general meeting of the charity, and
c
to require a general meeting of the charity to be convened within 21 days of a request to that effect made in writing to the directors or trustees.
Company: power to appoint new director
7
1
The F44Relevant Authority may by order appoint a person to be a director of a registered social landlord which is a company registered under the M26Companies Act 1985—
a
in place of a director removed by the F44Relevant Authority,
b
where there are no directors, or
c
where the F44Relevant Authority is of the opinion that it is necessary for the proper management of the company’s affairs to have an additional director.
2
A person may be so appointed whether or not he is a member of the company and notwithstanding anything in the company’s articles of association.
3
Where a person is appointed under this paragraph—
a
he shall hold office for such period and on such terms as the F44Relevant Authority may specify, and
b
on the expiry of the appointment the F44Relevant Authority may renew the appointment for such period as it may specify.
This does not prevent a person from retiring in accordance with the company’s articles of association.
4
A person appointed under this paragraph is entitled—
a
to attend, speak and vote at any general meeting of the company and to receive all notices of and other communications relating to any general meeting which a member of the company is entitled to receive,
b
to move a resolution at any general meeting of the company, and
c
to require an extraordinary general meeting of the company to be convened within 21 days of a request to that effect made in writing to the directors of the company.
Industrial and provident society: power to appoint new committee member
8
1
The F45Relevant Authority may by order appoint a person to be a committee member of a registered social landlord which is an industrial and provident society—
a
in place of a person removed by the F45Relevant Authority,
b
where there are no members of the committee, or
c
where the F45Relevant Authority is of the opinion that it is necessary for the proper management of the society’s affairs to have an additional committee member.
The power conferred by paragraph (c) may be exercised notwithstanding that it will cause the maximum number of committee members permissible under the society’s constitution to be exceeded.
2
A person may be so appointed whether or not he is a member of the society and, if he is not, notwithstanding that the rules of the society restrict appointment to members.
3
A person appointed under this paragraph shall hold office for such period and on such terms as the F45Relevant Authority may specify; and on the expiry of the appointment the F45Relevant Authority may renew the appointment for such period as it may specify.
This does not prevent a person appointed under this paragraph from retiring in accordance with the rules of the society.
4
A person appointed under this paragraph is entitled—
a
to attend, speak and vote at any general meeting of the society and to receive all notices of and other communications relating to any general meeting which a member of the society is entitled to receive,
b
to move a resolution at any general meeting of the society, and
c
to require a general meeting of the society to be convened within 21 days of a request to that effect made in writing to the committee of the society.
Change of rules, &c. by industrial and provident society
9
1
This paragraph applies to an industrial and provident society whose registration as a social landlord has been recorded by the F4Financial Services Authority.
2
Notice shall be sent to the F5Relevant Authority of any change of the society’s name or of the situation of its registered office.
F63
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F73A
Consent under sub-paragraph (3)—
a
if given by the Housing Corporation, shall be given by order under its seal, and
b
if given by the Secretary of State, shall be given by order in writing.
4
5
The Industrial and Provident Societies Act 1965 applies in relation to the provisions of this paragraph as if they were contained in section 10 of that Act (amendment of registered rules).
Change of objects by certain charities
10
1
This paragraph applies to a registered social landlord—
a
which is a registered charity and is not a company incorporated under the M27Companies Act 1985, and
b
whose registration under this Part of this Act has been recorded by the F75Charity Commission in accordance with section 3(3).
2
No power contained in the provisions establishing the registered social landlord as a charity, or regulating its purposes or administration, to vary or add to its objects may be exercised without the consent of the F75Charity Commission.
Before giving F76its consent the F75Charity Commission shall consult the F46Relevant Authority.
Change of memorandum or articles of association of company
11
1
This paragraph applies to a company registered under the Companies Act 1985 (including such a company which is also a registered charity) whose registration as a social landlord has been recorded by the registrar of companies.
2
Notice shall be sent to the F47Relevant Authority of any change of the company’s name or of the address of its registered office.
F483
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F493A
Consent under sub-paragraph (3)—
a
if given by the Housing Corporation, shall be given by order under its seal, and
b
if given by the Secretary of State, shall be given by order in writing.
4
A copy of that consent shall be sent with any copy of the alterations required to be sent to the registrar of companies under the Companies Act 1985.
Amalgamation and dissolution &c. of industrial and provident society
12
1
This paragraph applies to an industrial and provident society whose registration as a social landlord has been recorded by the F8Financial Services Authority.
2
The F9Financial Services Authority shall not register a special resolution which is passed for the purposes of—
a
section 50 of the M4Industrial and Provident Societies Act 1965 (amalgamation of societies),
b
section 51 of that Act (transfer of engagements between societies), or
c
section 52 of that Act (power of a society to convert itself into, amalgamate with or transfer its engagements to a company registered under the Companies Act 1985),
3
Any new body created by the amalgamation or conversion or, in the case of a transfer of engagements, the transferee, shall be deemed to be registered as a social landlord forthwith upon the amalgamation, conversion or transfer taking effect.
4
If the society resolves by special resolution that it be wound up voluntarily under the M5Insolvency Act 1986, the resolution has no effect unless—
a
before the resolution was passed the F11Relevant Authority gave its consent to its passing, and
b
a copy of the consent is forwarded to the F12Financial Services Authority together with a copy of the resolution required to be so forwarded in accordance with the Companies Act 1985.
5
If the society is to be dissolved by instrument of dissolution, the F13Financial Services Authority shall not—
a
register the instrument in accordance with section 58(5) of the M6Industrial and Provident Societies Act 1965, or
b
cause notice of the dissolution to be advertised in accordance with section 58(6) of that Act,
6
a
if it is given by the Housing Corporation, to consent given by order under its seal, and
b
if it is given by the Secretary of State, to consent given by order in writing.
Arrangement, reconstruction, &c. of company
13
1
This paragraph applies to a company registered under the M28Companies Act 1985 whose registration as a social landlord has been recorded by the registrar of companies.
2
An order of the court given for the purposes of section 425 of the Companies Act 1985 (compromise or arrangement with creditors or members) is not effective unless the F50Relevant Authority has given its consent.
A copy of the consent shall be sent to the registrar of companies along with the office copy of the order delivered to him under that section.
3
An order of the court given for the purposes of section 427 of the Companies Act 1985 (transfer of undertaking or property for purposes of reconstruction or amalgamation) is not effective unless the F50Relevant Authority has given its consent.
A copy of the consent shall be sent to the registrar of companies along with the office copy of the order delivered to him under that section.
4
The registrar of companies shall not register any resolution under section 53 of the Industrial and Provident Societies Act 1965 (conversion of company into industrial and provident society), unless, together with the copy of the resolution, there is sent to him a copy of the F50Relevant Authority’s consent to the conversion.
5
Where a director, administrator or liquidator of the company proposes to make a voluntary arrangement with the company’s creditors under section 1 of the M29Insolvency Act 1986, the arrangement shall not take effect under section 5 (effect of approval by members and creditors) of that Act unless the F50Relevant Authority has given its consent to the voluntary arrangement.
6
If the company resolves by special resolution that it be wound up voluntarily under the Insolvency Act 1986, the resolution has no effect unless—
a
before the resolution was passed the F50Relevant Authority gave its consent to its passing, and
b
a copy of the consent is forwarded to the registrar of companies together with a copy of the resolution required to be so forwarded in accordance with section 380 of the Companies Act 1985.
7
a
if it is given by the Housing Corporation, to consent given by order under its seal, and
b
if it is given by the Secretary of State, to consent given by order in writing.
8
Where sub-paragraph (3) or (4) applies, the transferee or, as the case may be, any new body created by the conversion shall be deemed to be registered as a social landlord forthwith upon the transfer or conversion taking effect.
F17Relevant Authority’s power to petition for winding up
14
1
The F16Relevant Authority may present a petition for the winding up under the Insolvency Act 1986 of a registered social landlord which is—
a
a company incorporated under the Companies Act 1985 (including such a company which is also a registered charity), or
b
on either of the following grounds.
2
The grounds are—
a
that the landlord is failing properly to carry out its purposes or objects, or
b
that the landlord is unable to pay its debts within the meaning of section 123 of the Insolvency Act 1986.
Transfer of net assets on dissolution or winding up
15
1
This paragraph applies—
a
where a registered social landlord which is an industrial and provident society is dissolved as mentioned in section 55(a) or (b) of the Industrial and Provident Societies Act 1965 (winding-up under the Insolvency Act 1986 or by instrument of dissolution), and
b
where a registered social landlord which is a company registered under the M9Companies Act 1985 is wound up under the Insolvency Act 1986.
2
On such a dissolution or winding-up, so much of the property of the society or company as remains after meeting the claims of its creditors and any other liabilities arising on or before the dissolution or winding-up shall be transferred to the F18Relevant Authority or, if the F18Relevant Authority so directs, to a specified registered social landlord.
The above provision has effect notwithstanding anything in the Industrial and Provident Societies Act 1965, the Companies Act 1985 or the Insolvency Act 1986, or in the rules of the society or, as the case may be, in the memorandum or articles of association of the company.
3
In order to avoid the necessity for the sale of land belonging to the registered social landlord and thereby secure the transfer of the land under this paragraph, the F18Relevant Authority may, if it appears to it appropriate to do so, make payments to discharge such claims or liabilities as are referred to in sub-paragraph (2).
4
Where the registered social landlord which is dissolved or wound up is a charity, the F18Relevant Authority may dispose of property transferred to it by virtue of this paragraph only to another registered social landlord—
a
which is also a charity, and
b
the objects of which appear to the F18Relevant Authority to be, as nearly as practicable, akin to those of the body which is dissolved or wound up.
F195
In any other case—
a
the Relevant Authority may dispose of property transferred to it by virtue of this paragraph to a registered social landlord, and
b
the Housing Corporation may dispose of property transferred to it by virtue of this paragraph to any of its subsidiaries.
6
Where property transferred to the F18Relevant Authority by virtue of this paragraph includes land subject to an existing mortgage or charge (whether in favour of the F18Relevant Authority or not), the F18Relevant Authority may, in exercise of its powers under Part III of the M10Housing Associations Act 1985, dispose of the land either—
a
subject to that mortgage or charge, or
F53Transfer of net assets on termination of charity not within paragraph 15(1)
Sch. 1 para. 15A and preceding cross-heading inserted (18.11.2004 for specified purposes) by Housing Act 2004 (c. 34), s. 270(2)(b), Sch. 11 para. 16
15A
1
The Secretary of State may by regulations provide for any provisions of paragraph 15(2) to (6) to apply in relation to a registered social landlord within sub-paragraph (2)—
a
in such circumstances, and
b
with such modifications,
as may be specified in the regulations.
2
A registered social landlord is within this sub-paragraph if—
a
it is a registered charity, and
b
it does not fall within sub-paragraph (1) of paragraph 15.
3
Regulations under this paragraph may in particular provide that any provision of the regulations requiring the transfer of any property of the charity is to have effect notwithstanding—
a
anything in the terms of its trusts, or
b
any resolution, order or other thing done for the purposes of, or in connection with, the termination of the charity in any manner specified in the regulations.
4
Any regulations under this paragraph shall be made by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament.
Part III Accounts and audit
General requirements as to accounts and audit
I316
1
The F20Relevant Authority may from time to time determine accounting requirements for registered social landlords with a view to ensuring that the accounts of every registered social landlord—
a
are prepared in a proper form, and
b
give a true and fair view of—
i
the state of affairs of the landlord, so far as its housing activities are concerned, and
ii
the disposition of funds and assets which are, or at any time have been, in its hands in connection with those activities.
2
The F20Relevant Authority by a determination under sub-paragraph (1) may lay down a method by which a registered charity is to distinguish in its accounts between its housing activities and other activities.
C13
The accounts of every registered social landlord shall comply with the requirements laid down under this paragraph.
F61C14
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C1F625
Every registered social landlord shall furnish to the Relevant Authority—
a
a copy of its accounts, and
b
(subject to sub-paragraph (7)) a copy of the auditor’s report in respect of them,
within six months of the end of the period to which they relate.
6
The auditor’s report shall state, in addition to any other matters which it is required to state, whether in the auditor’s opinion the accounts comply with the requirements laid down under this paragraph.
7
The provisions of sub-paragraphs (5)(b) and (6) do not apply where, by virtue of any enactment—
a
any accounts of a registered social landlord are not required to be audited, and
b
instead a report is required to be prepared in respect of them by a person appointed for the purpose (“the reporting accountant”),
and sub-paragraph (8) shall apply in place of those provisions.
8
In such a case—
a
the registered social landlord shall furnish to the Relevant Authority a copy of the reporting accountant’s report in respect of the accounts within six months of the end of the period to which they relate; and
b
that report shall state, in addition to any other matters which it is required to state, whether in the reporting accountant’s opinion the accounts comply with the requirements laid down under this paragraph.
F54Companies exempt from audit requirements: accountant’s report
Sch. 1 para. 16A and cross-heading inserted (18.1.2005) by Housing Act 2004 (c. 34), s. 270(3)(c), Sch. 11 para. 18
16A
1
This paragraph applies to registered social landlords which are companies registered under the Companies Act 1985 (“RSL companies”).
2
In section 249A of the Companies Act 1985 (exemptions from audit)—
a
subsection (2) shall apply in relation to an RSL company which meets the total exemption conditions in respect of a financial year (whether it is a charity or not), and
b
that subsection shall apply in relation to such a company in the same way as it applies in relation to an RSL company which is a charity and meets the report conditions in relation to a financial year; and
c
subsection (1) accordingly does not have effect in relation to an RSL company.
3
In section 249C of that Act (report required for the purposes of section 249A(2)), subsection (3) shall apply in relation to an RSL company within sub-paragraph (2)(a) above as if the reference to satisfying the requirements of section 249A(4) were a reference to meeting the total exemption conditions.
4
The Relevant Authority may, in respect of any relevant financial year of an RSL company, give a direction to the company requiring it—
a
to appoint a qualified auditor to audit its accounts and balance sheet for that year, and
b
to furnish to the Relevant Authority a copy of the auditor’s report by such date as is specified in the direction.
5
For the purposes of sub-paragraph (4), a financial year of an RSL company is a “relevant financial year”if—
a
it precedes that in which the direction is given, and
b
the company met either the total exemption conditions or the report conditions in respect of that year, and
c
its accounts and balance sheet for that year were not audited in accordance with Part 7 of the Companies Act 1985.
6
In this paragraph—
a
“financial year” has the meaning given by section 223 of the Companies Act 1985;
b
“qualified auditor” means a person who is eligible for appointment as auditor of the company under Part 2 of the Companies Act 1989;
c
any reference to a company meeting the report conditions is to be read in accordance with section 249A(4) of the Companies Act 1985; and
d
any reference to a company meeting the total exemption conditions is to be read in accordance with section 249A(3) or section 249A(3) and (3A) of that Act, depending on whether it is a charity.
F55Industrial and provident societies exempt from audit requirements: accountant’s report
Sch. 1 para. 17 and cross-heading substituted (18.1.2005) by Housing Act 2004 (c. 34), s. 270(3)(c), Sch. 11 para. 19
17
1
This paragraph applies to registered social landlords which are industrial and provident societies.
2
Section 9A of the Friendly and Industrial and Provident Societies Act 1968 (duty to obtain accountant’s reports where section 4 applied) shall have effect, in its application to such a landlord, with the omission of subsection (1)(b) (accountant’s report required only where turnover exceeds a specified sum).
3
The Relevant Authority may, in respect of any relevant year of account of such a landlord, give a direction to the landlord requiring it—
a
to appoint a qualified auditor to audit its accounts and balance sheet for that year, and
b
to furnish to the Relevant Authority a copy of the auditor’s report by such date as is specified in the direction.
4
For the purposes of sub-paragraph (3), a year of account of a landlord is a “relevant year of account”if—
a
it precedes that in which the direction is given, and
b
at the end of it there is in force in relation to it a disapplication under section 4A(1) of the Friendly and Industrial and Provident Societies Act 1968.
5
In this paragraph—
“qualified auditor” means a person who is a qualified auditor for the purposes of the Friendly and Industrial and Provident Societies Act 1968;
“year of account” has the meaning given by section 21(1) of that Act.
Accounting and audit F59 or reporting requirements for charities
Words in Sch. 1 para. 18 cross-heading inserted (18.1.2005) by Housing Act 2004 (c. 34), s. 270(3)(c), Sch. 11 para. 20(2)
18
1
2
The charity shall in respect of its housing activities—
a
cause to be kept properly books of account showing its transactions and its assets and liabilities, and
b
establish and maintain a satisfactory system of control of its books of accounts, its cash holdings and all its receipts and remittances.
The books of account must be such as to enable a true and fair view to be given of the state of affairs of the charity in respect of its housing activities, and to explain its transactions in the course of those activities.
3
The charity shall for each period of account prepare—
a
a revenue account giving a true and fair view of the charity’s income and expenditure in the period, so far as arising in connection with its housing activities, and
b
a balance sheet giving a true and fair view as at the end of the period of the state of the charity’s affairs.
The revenue account and balance sheet must be signed by at least two directors or trustees of the charity.
F634
The charity must appoint a qualified auditor (“the auditor”) to audit the accounts prepared in accordance with sub-paragraph (3) in respect of each period of account in which—
F77a
the charity's gross income arising in connection with its housing activities exceeds the sum for the time being specified in section 43(1)(a) of the Charities Act 1993, or
b
the charity's gross income arising in that connection exceeds the accounts threshold and at the end of that period the aggregate value of its assets (before deduction of liabilities) in respect of its housing activities exceeds the sum for the time being specified in section 43(1)(b) of that Act;
and in this sub-paragraph “gross income” and “accounts threshold” have the same meanings as in section 43 of the Charities Act 1993.
4A
Where sub-paragraph (4) does not apply in respect of a period of account, the charity must appoint a qualified auditor (“the reporting accountant”) to make such a report as is mentioned in paragraph 18A(1) in respect of the period of account.
4B
In sub-paragraphs (4) and (4A) “qualified auditor” means a person who is eligible for appointment as auditor of the charity under Part 2 of the Companies Act 1989 or who would be so eligible if the charity were a company registered under the Companies Act 1985.
5
The auditor shall make a report to the charity on the accounts audited by him, stating whether in his opinion—
a
the revenue account gives a true and fair view of the state of income and expenditure of the charity in respect of its housing activities and of any other matters to which it relates, and
b
the balance sheet gives a true and fair view of the state of affairs of the charity as at the end of the period of account.
6
The auditor in preparing his report shall carry out such investigations as will enable him to form an opinion as to the following matters—
a
whether the association has kept, in respect of its housing activities, proper books of account in accordance with the requirements of this paragraph,
b
whether the charity has maintained a satisfactory system of control over its transactions in accordance with those requirements, and
c
whether the accounts are in agreement with the charity’s books;
and if he is of opinion that the charity has failed in any respect to comply with this paragraph, or if the accounts are not in agreement with the books, he shall state that fact in his report.
7
The auditor—
a
has a right of access at all times to the books, deeds and accounts of the charity, so far as relating to its housing activities, and to all other documents relating to those activities, and
b
is entitled to require from officers of the charity such information and explanations as he thinks necessary for the performance of his duties;
and if he fails to obtain all the information and explanations which, to the best of his knowledge and belief, are necessary for the purposes of his audit, he shall state that fact in his report.
8
A period of account for the purposes of this paragraph is twelve months or such other period not less than six months or more than 18 months as the charity may, with the consent of the F21Relevant Authority, determine.
F56Charities exempt from audit requirements: accountant’s report
Sch. 1 para. 18A and cross-heading inserted (18.1.2005) by Housing Act 2004 (c. 34), s. 270(3)(c), Sch. 11 para. 21
18A
1
The report referred to in paragraph 18(4A) is a report—
a
relating to the charity’s accounts prepared in accordance with paragraph 18(3) in respect of the period of account in question, and
b
complying with sub-paragraphs (2) and (3) below.
2
The report must state whether, in the opinion of the reporting accountant—
a
the revenue account or accounts and the balance sheet are in agreement with the books of account kept by the charity under paragraph 18(2),
b
on the basis of the information contained in those books of account, the revenue account or accounts and the balance sheet comply with the requirements of the Charities Act 1993, and
c
on the basis of the information contained in those books of account, paragraph 18(4A) applied to the charity in respect of the period of account in question.
3
The report must also state the name of the reporting accountant and be signed by him.
4
Paragraph 18(7) applies to the reporting accountant and his functions under this paragraph as it applies to an auditor and his functions under paragraph 18.
5
The Relevant Authority may, in respect of a relevant period of account of a charity, give a direction to the charity requiring it—
a
to appoint a qualified auditor to audit its accounts for that period, and
b
to furnish to the Relevant Authority a copy of the auditor’s report by such date as is specified in the direction;
and paragraph 18(5) to (7) apply to an auditor so appointed as they apply to an auditor appointed under paragraph 18.
6
For the purposes of sub-paragraph (5), a period of account of a charity is a relevant period of account if—
a
it precedes that in which the direction is given; and
b
paragraph 18(4A) applied in relation to it.
7
In this paragraph “period of account” and “qualified auditor” have the same meaning as in paragraph 18(4A).
Responsibility for securing compliance with accounting requirements
19
1
Every responsible person, that is to say, every person who—
a
is directly concerned with the conduct and management of the affairs of a registered social landlord, and
b
is in that capacity responsible for the preparation and audit of accounts,
shall ensure that paragraph 16 (general requirements as to accounts and audit) and, where applicable, paragraph 18 (accounting and audit requirements for charities) are complied with by the registered social landlord.
2
If—
a
paragraph 16(5) (furnishing of accounts and auditor’s report) is not complied with,
b
the accounts furnished to the F22Relevant Authority under that provision do not comply with the accounting requirements laid down under paragraph 16(1),
c
paragraph 18 (accounting and audit F68 or reporting requirements for charities), where applicable, is not complied with,
F65d
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
e
any notice under section 26 (information relating to disposal proceeds fund) is not complied with,
every responsible person, and the registered social landlord itself, commits a summary offence and is liable on conviction to a fine not exceeding F67 level 5 on the standard scale.
3
In proceedings for an offence under this paragraph it is a defence—
a
for a responsible person to prove that he did everything that could reasonably have been expected of him by way of discharging the relevant duty;
b
for a registered social landlord to prove that every responsible person did everything that could reasonably have been expected of him by way of discharging the relevant duty in relation to the registered social landlord.
4
Proceedings for an offence under this paragraph may be brought only by or with the consent of the F22Relevant Authority or the Director of Public Prosecutions.
F665
Where any of paragraphs (a) to (e) of sub-paragraph (2) applies in respect of any default on the part of a registered social landlord, the High Court may, on the application of the Relevant Authority, make such order as the court thinks fit for requiring the default to be made good.
Any such order may provide that all the costs or expenses of and incidental to the application shall be borne by the registered social landlord or by any of its officers who are responsible for the default.
F57Disclosure of information by auditors etc. to the Relevant Authority
Sch. 1 para. 19A and cross-heading inserted (18.1.2005) by Housing Act 2004 (c. 34), s. 270(3)(c), Sch. 11 para. 23
19A
1
A person who is, or has been, an auditor of a registered social landlord does not contravene any duty to which he is subject merely because he gives to the Relevant Authority —
a
information on a matter of which he became aware in his capacity as auditor of the registered social landlord, or
b
his opinion on such a matter,
if he is acting in good faith and he reasonably believes that the information or opinion is relevant to any functions of the Relevant Authority.
2
Sub-paragraph (1) applies whether or not the person is responding to a request from the Relevant Authority.
3
This paragraph applies to a person who is, or has been, a reporting accountant as it applies to a person who is, or has been, an auditor.
4
A “reporting accountant” means a person appointed as mentioned in paragraph 16(7)(b).
Part IV Inquiry into affairs of registered social landlords
Inquiry
20
1
The F23Relevant Authority may direct an inquiry into the affairs of a registered social landlord if it appears to the F23Relevant Authority that there may have been misconduct or mismanagement.
For this purpose “misconduct” includes any failure to comply with the requirements of this Part of this Act.
2
Any such inquiry shall be conducted by one or more persons appointed by the F23Relevant Authority.
3
If one person is appointed F24by the Housing Corporation to conduct an inquiry he must be a person who is not a member or an employee of the F25Housing Corporation and has not been such a member or employee within the previous five years; and if more than one person is F24so appointed at least one of them must be such a person.
4
If the F23Relevant Authority so directs, or if during the course of the inquiry the person or persons conducting the inquiry consider it necessary, the inquiry shall extend to the affairs of any other body which at any material time is or was a subsidiary or associate of the registered social landlord.
F694A
The person or persons conducting the inquiry may determine the procedure to be followed in connection with the inquiry.
5
The person or persons conducting the inquiry may, if they think fit during the course of the inquiry, make one or more interim reports on such matters as appear to them to be appropriate.
6
On completion of the inquiry the person or persons conducting the inquiry shall make a final report on such matters as the F23Relevant Authority may specify.
7
F708
A local authority may, if they think fit, contribute to the expenses of the Relevant Authority in connection with any inquiry under this paragraph.
F58Evidence
Sch. 1 para. 20A and cross-heading inserted (18.1.2005) by Housing Act 2004 (c. 34), s. 270(3)(c), Sch. 11 para. 25
20A
1
For the purposes of an inquiry the person or persons conducting it may serve a notice on an appropriate person directing him to attend at a specified time and place and do either or both of the following, namely—
a
give evidence;
b
produce any specified documents, or documents of a specified description, which are in his custody or under his control and relate to any matter relevant to the inquiry.
2
The person or persons conducting such an inquiry—
a
may take evidence on oath and for that purpose administer oaths, or
b
instead of administering an oath, require the person examined to make and subscribe a declaration of the truth of the matters about which he is examined.
3
In this paragraph—
“appropriate person” means a person listed in section 30(2);
“document” has the same meaning as in section 30;
“inquiry” means an inquiry under paragraph 20.
4
A person may not be required under this paragraph to disclose anything that, by virtue of section 30(4), he could not be required to disclose under section 30.
5
Section 31 (enforcement of notice to provide information, &c) applies in relation to a notice given under this paragraph by the person or persons conducting an inquiry as it applies in relation to a notice given under section 30 by the Relevant Authority, but subject to sub-paragraph (6).
6
A person guilty of an offence under section 31(1) as it applies in accordance with sub-paragraph (5) is liable—
a
on summary conviction, to a fine not exceeding the statutory maximum;
b
on conviction on indictment, to imprisonment for a term not exceeding two years or to a fine, or both.
7
Any person who, in purported compliance with a notice given under this paragraph by the person or persons conducting an inquiry, knowingly or recklessly provides any information which is false or misleading in a material particular commits an offence and is liable to the penalties mentioned in sub-paragraph (6).
8
Proceedings for an offence under sub-paragraph (7) may be brought only by or with the consent of the Relevant Authority or the Director of Public Prosecutions.
Power of appointed person to obtain information
21
1
A person appointed by the F26Relevant Authority under paragraph 20 to conduct an inquiry (or, if more than one person is so appointed, each of those persons) has, for the purposes of the inquiry, the same powers as are conferred on the F26Relevant Authority by section 30 (general power to obtain information).
2
Where by virtue of a notice under that section given by an appointed person any documents are produced to any person, the person to whom they are produced may take copies of or make extracts from them.
3
F724
A person guilty of an offence under section 31(1) as it applies in accordance with sub-paragraph (3) is liable—
a
on summary conviction, to a fine not exceeding the statutory maximum;
b
on conviction on indictment, to imprisonment for a term not exceeding two years or to a fine, or both.
5
Any person who, in purported compliance with a notice given under this paragraph by an appointed person, knowingly or recklessly provides any information which is false or misleading in a material particular commits an offence and is liable to the penalties mentioned in sub-paragraph (4).
6
Proceedings for an offence under sub-paragraph (5) may be brought only by or with the consent of the Relevant Authority or the Director of Public Prosecutions.
Extraordinary audit for purposes of inquiry
22
1
2
A person is a qualified auditor for this purpose if he would be eligible for appointment as auditor of the ordinary accounts of the registered social landlord.
3
4
The expenses of the audit, including the remuneration of the auditor, shall be paid by the F27Relevant Authority.
5
An audit under this paragraph is additional to, and does not affect, any audit made or to be made under any other enactment.
Powers exercisable on interim basis
23
1
The F28Relevant Authority may make an order under this paragraph—
a
where an inquiry has been directed under paragraph 20 and the F28Relevant Authority has reasonable grounds to believe—
i
that there has been misconduct or mismanagement in the affairs of the registered social landlord, and
ii
that immediate action is needed to protect the interests of the tenants of the registered social landlord or to protect the assets of the landlord; or
b
where an interim report has been made under paragraph 20(5) as a result of which the F28Relevant Authority is satisfied that there has been misconduct or mismanagement in the affairs of a registered social landlord.
2
The orders that may be made under this paragraph are—
a
an order suspending any officer, employee or agent of the registered social landlord who appears to the F28Relevant Authority to have been responsible for or privy to the misconduct or mismanagement or by his conduct to have contributed to or facilitated it;
b
an order directing any bank or other person who holds money or securities on behalf of the registered social landlord not to part with the money or securities without the approval of the F28Relevant Authority;
c
an order restricting the transactions which may be entered into, or the nature or amount of the payments which may be made, by the registered social landlord without the approval of the F28Relevant Authority.
3
4
A person suspended by an order under sub-paragraph (2)(a) may appeal against the order to the High Court.
5
6
A person who contravenes an order under sub-paragraph (2)(b) commits an offence and is liable on summary conviction to a fine not exceeding level 5 on the standard scale or imprisonment for a term not exceeding three months, or both.
Proceedings for such an offence may be brought only by or with the consent of the F28Relevant Authority or the Director of Public Prosecutions.
Powers exercisable as a result of final report or audit
24
1
Where the F29Relevant Authority is satisfied, as the result of an inquiry under paragraph 20 or an audit under paragraph 22, that there has been misconduct or mismanagement in the affairs of a registered social landlord, it may make an order under this paragraph.
2
The orders that may be made under this paragraph are—
a
an order removing any officer, employee or agent of the registered social landlord who appears to the F29Relevant Authority to have been responsible for or privy to the misconduct or mismanagement or by his conduct to have contributed to or facilitated it;
b
an order suspending any such person for up to six months, pending determination whether he should be removed;
c
an order directing any bank or other person who holds money or securities on behalf of the registered social landlord not to part with the money or securities without the approval of the F29Relevant Authority;
d
an order restricting the transactions which may be entered into, or the nature or amount of the payments which may be made, by the registered social landlord without the approval of the F29Relevant Authority.
3
Before making an order under sub-paragraph (2)(a) the F29Relevant Authority shall give at least 14 days’ notice of its intention to do so—
a
to the person it intends to remove, and
b
to the registered social landlord concerned.
Notice under this sub-paragraph may be given by post, and if so given to the person whom the F29Relevant Authority intends to remove may be addressed to his last known address in the United Kingdom.
4
A person who is ordered to be removed under sub-paragraph (2)(a) or suspended under sub-paragraph (2)(b) may appeal against the order to the High Court.
5
Where a person is suspended under sub-paragraph (2)(b), the F29Relevant Authority may give directions with respect to the performance of his functions and otherwise as to matters arising from the suspension.
The F29Relevant Authority may, in particular, appoint a named person to perform his functions.
6
A person who contravenes an order under sub-paragraph (2)(c) commits an offence and is liable on summary conviction to a fine not exceeding level 5 on the standard scale or imprisonment for a term not exceeding three months, or both.
Proceedings for such an offence may be brought only by or with the consent of the F29Relevant Authority or the Director of Public Prosecutions.
Disqualification as officer of registered social landlord.
25
1
A person is disqualified from being an officer of a registered social landlord if the F30Relevant Authority has made an order against him under—
a
paragraph 24(2)(a) (removal for misconduct or mismanagement), or
2
The F30Relevant Authority may, on the application of any such person, waive his disqualification either generally or in relation to a particular registered social landlord or particular class of registered social landlord.
3
Any waiver shall be notified in writing to the person concerned.
4
5
The register shall be available for public inspection at all reasonable times.
Persons acting as officer while disqualified.
26
1
A person who acts as an officer of a registered social landlord while he is disqualified under paragraph 25(1) commits an offence.
A person guilty of such an offence is liable—
a
on summary conviction, to imprisonment for a term not exceeding six months or to a fine not exceeding the statutory maximum, or both;
b
on conviction on indictment, to imprisonment for a term not exceeding two years or to a fine, or both.
2
Proceedings for an offence under sub-paragraph (1) may be brought only by or with the consent of the F31Relevant Authority or the Director of Public Prosecutions.
3
Acts done as an officer of a registered social landlord by a person who is disqualified under paragraph 25(1) are not invalid by reason only of that disqualification.
4
Where the F31Relevant Authority is satisfied—
a
that a person has acted as an officer of a registered social landlord while disqualified under paragraph 25(1), and
b
that while so acting he has received from the registered social landlord any payments or benefits in connection with his so acting,
it may by order direct him to repay to the registered social landlord the whole or part of any such sums or, as the case may be, to pay to it the whole or part of the monetary value (as determined by it) of any such benefit.
Power to direct transfer of land
I427
1
Where as a result of an inquiry under paragraph 20 or an audit under paragraph 22 the F32Relevant Authority is satisfied as regards a registered social landlord—
a
that there has been misconduct or mismanagement in its administration, or
b
that the management of its land would be improved if its land were transferred in accordance with the provisions of this paragraph,
2
Where the registered social landlord concerned is a charity, the F32Relevant Authority may only direct a transfer to be made to another registered social landlord—
a
which is also a charity, and
b
the objects of which appear to the F32Relevant Authority to be, as nearly as practicable, akin to those of the registered social landlord concerned.
3
4
The transfer shall be on such terms as the F32Relevant Authority may direct on the basis of principles determined by it.
F35If the transfer is directed by the Housing Corporation, the consent of the Secretary of State is required both for the terms of the transfer and for the determination of the principles on which it is based.
5
The price shall not be less than the amount certified by the district valuer to be the amount the property would command if sold by a willing seller to another registered social landlord.
6
The terms shall include provision as to the payment of debts and liabilities (including debts and liabilities secured on the land).
Availability of powers in relation to registered charities.
28
1
The F36Relevant Authority may exercise its powers under paragraphs 20 to 26 in relation to a registered charity only if the charity has, at any time before the powers are exercised—
a
received financial assistance under section 24 of the M13Local Government Act 1988 (assistance for privately let housing accommodation),
b
had property transferred to it on a qualifying disposal under section 135 of the M14Leasehold Reform, Housing and Urban Development Act 1993, or
c
received a grant or loan under any of the following provisions.
2
The provisions are—
section 18 of this Act (social housing grant),
section 22 of this Act or section 58 of the M15Housing Associations Act 1985 (grants or loans by local authorities),
section 50 of the M16Housing Act 1988, section 41 of the Housing Associations Act 1985 or any enactment replaced by that section (housing association grant),
section 51 of the Housing Act 1988 or section 54 or 55 of the Housing Associations Act 1985 (revenue deficit grant or hostel deficit grant),
section 79 of the Housing Associations Act 1985 (loans by F37Relevant Authority),
section 31 of the M17Housing Act 1974 (management grants), or
any enactment mentioned in paragraph 2 or 3 of Schedule 1 to the Housing Associations Act 1985 (pre-1974 grants and certain loans).
3
In relation to a registered charity paragraphs 20 to 26 have effect with the following adaptations—
a
references to its affairs are confined to its housing activities and such other activities (if any) as are incidental to or connected with its housing activities;
b
references to its accounts do not include revenue accounts which do not relate to its housing activities, except so far as such accounts are necessary for the auditing of revenue accounts which do so relate or of the balance sheet;
c
a person is a qualified auditor for the purpose of paragraph 22 (extraordinary audit) only if he is an auditor qualified for the purposes of paragraph 18 (accounting and audit requirements for charities).
4
The F36Relevant Authority shall notify the F78Charity Commission upon the exercise in relation to a registered charity of its powers under—
a
paragraph 20(1) (inquiry into affairs of registered social landlord),
b
paragraph 23(2)(a) (interim suspension of person in connection with misconduct or mismanagement), or
c
paragraph 24(2)(a) or (b) (removal of person in connection with misconduct or mismanagement or suspension with a view to removal).
29
The F38Relevant Authority may not exercise its powers under paragraph 27 in relation to a registered charity.
Words in Pt. I substituted (1.11.1998) by 1998 c. 38, s. 140, Sch. 16 para. 82(1)(2) (with ss. 139(2), 141(1), 143(2)); S.I. 1998/2244, art.5.