Part 2Regulation of Social Housing

Chapter 4Registered providers

General provisions

122Payments to members etc.

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.