The Building Societies (Designation of Qualifying Bodies) (No.2) Order 1991

Explanatory Note

(This note is not part of the Order)

1.  This Order designates a description of bodies corporate as suitable for investment or support by building societies under section 18 of the Building Societies Act 1986, so as to add “appropriate services vehicles” as a further type of designated body.

2.  An appropriate services vehicle is a body corporate (not being one designated under any other Order made under section 18 of the Act or excluded by the particular restrictions for appropriate services vehicles) formed for the purpose of, or the objects of which include any activity which is ancillary, promotes or is conducive to any activity which is within the powers of a society to carry on.

3.  The particular restrictions for appropriate services vehicles, except where societies hold less than 2% of the issued shares or corresponding membership rights, are that a body corporate is not an appropriate services vehicle for a society where: it is a market maker; its business includes lending money, secured or unsecured on its own account, save in narrow circumstances provided for in the Order; its business includes activities the society itself has no power to undertake either because the society has not adopted the necessary adoptable power or because the activities would contravene a restriction on the extent of a power which the society has adopted; or it has a subordinate organisation which is not within the prescribed range, that is bodies which a society may invest in or support under section 18, but as regards bodies designated by description providing that they are one tier organisations.

4.  Investment is defined by section 18 of the Act as acquiring and holding shares in and forming and taking part in forming bodies corporate. Support is defined by that section as provision of loans, grants, guarantees, services or property to bodies corporate.

5.  The Building Societies (Designation of Qualifying Bodies) Order 1991 has been amended to bring the group interest provision in line with this Order. The group interest provision in each Order is confined to qualifying bodies within the appropriate payments services vehicle or appropriate services vehicle group of companies respectively.