The Building Societies (Accounts and Related Provisions) Regulations 1992

Regulation 9

SCHEDULE 9 ANNUAL BUSINESS STATEMENT

Statutory ratios and percentages

1.—(1) Subject to the following provisions of this paragraph, the annual business statement of a society shall state, as at the end of the financial year with which it deals, the following ratios and particulars:

(a) a ratio showing—

(i) as its first quantity, non-retail funds and deposits as a percentage of shares and deposits, and

(ii) as its second quantity, the relevant statutory limit for that percentage;

(b) a ratio showing—

(i) as its first quantity, deposits as a percentage of shares and deposits, and

(ii) as its second quantity, the relevant statutory limit for that percentage;

(c) advances secured on residential property as a percentage of total commercial assets;

(d) advances secured on land other than residential property as a percentage of total commercial assets;

(e) a ratio showing—

(i) as its first quantity, commercial assets other than advances secured on land as a percentage of total commercial assets, and

(ii) as its second quantity, the relevant statutory limit for that percentage; and

(f) a ratio showing—

(i) as its first quantity, the aggregate of the assets to which paragraphs (d) and (e)(i) refer as a percentage of total commercial assets, and

(ii) as its second quantity, the relevant statutory limit for that percentage.

(2) The annual business statement shall include an explanation of what is represented by—

(a) each of the quantities specified in subparagraph (1);

(b) the description of advances referred to in—

(i) subparagraph (1)(c), and

(ii) subparagraph (1)(d); and

(c) each of the relevant statutory limits specified in subparagraph (1).

(3) In subparagraph (1)—

(a) in paragraph (a), the first quantity shall be shown in accordance with subsection (3) of section 7 of the Act (power to raise funds and borrow money) and accordingly—

(i) “non-retail funds and deposits” means liabilities of the society in respect of its non- retail funds and deposits less those of them which are among the particular liabilities to which subsection (14) of that section refers, and

(ii) “shares and deposits” means the total liabilities of the society in respect of shares and deposits less the particular liabilities to which subsection (14) of that section refers;

(b) in paragraph (b), the first quantity shall be shown in accordance with subsection (1) of section 8 of the Act (proportion of liabilities to be in form of shares) and accordingly—

(i) “deposits” means the amount of the principal of, and interest payable on, sums deposited with the society less that part of it which comes within the particular liabilities to which subsection (2) of that section refers, and

(ii) “shares and deposits” means the aggregate of the principal of, and interest payable on, sums deposited with the society and the principal value of, and interest payable on, shares in the society less the particular liabilities to which subsection (2) of that section refers;

(c) in paragraph (c), “advances secured on residential property” means those commercial assets which are class 1 assets for the purpose of the requirements of Part III of the Act for the structure of commercial assets;

(d) in paragraph (d), “advances secured on land other than residential property” means those commercial assets which are class 2 assets for the purpose of the requirements of Part III of the Act for the structure of commercial assets; and

(e) “relevant statutory limit” shall be construed—

(i) subject to subparagraph (ii), in accordance with section 36 of the Act (powers in event of breach of limits), and

(ii) where the relevant statutory limit imposed by subsection (2) (or (3))

of section 20 (commercial asset structure requirement) in respect of a particular financial year of a society is the amount imposed by paragraph (b) of that subsection, as if that amount were expressed as a percentage of the total commercial assets of the society as at the end of that financial year.

(4) Where relevant rules are in force so as to attribute to a society assets or liabilities of a body corporate associated with it, the ratios and particulars required to be shown by this paragraph shall be shown so as to take that attribution into account, and—

(a) where such relevant rules make provision for the disregarding of assets or liabilities of the society, those ratios and particulars shall be shown so as to take that provision into account, and

(b) in this paragraph “relevant rules” means—

(i) aggregation rules under section 7(10), 8(3) or 20(9) of the Act, or

(ii) rules approved under section 7(13), 8(5)

or 20(12) of the Act.

Other percentages

2.—(1) Subject to the following provisions of this paragraph, the annual business statement of a society shall state the following particulars in respect of the society both in relation to the financial year with which it deals and in relation to the previous financial year—

(a) as a percentage of the share and deposit liabilities as at the balance sheet date—

(i) the gross capital as at that date, and

(ii) the free capital as at that date;

(b) the liquid assets as at the balance sheet date as a percentage of the total assets as at that date;

(c) the profit or loss after taxation as a percentage of—

(i) the mean reserves, and

(ii) the mean total assets; and

(d) (except where there is no extraordinary profit or loss shown in the income and expenditure account in relation to either of those financial years) the ordinary profit or loss after taxation as a percentage of—

(i) the mean reserves, and

(ii) the mean total assets.

(2) Where the society is a group accounts society, the particulars required to be stated by subparagraph (1) in respect of the society shall be stated in respect of the society and its subsidiary undertakings, but this subparagraph shall not be taken to prohibit the stating in addition by a society of those particulars in respect of the society alone.

(3) Any matter required by subparagraph (1) to be stated as a particular in, or to be used as a factor in calculating a particular required by this paragraph to be stated in, the annual business statement and which relates to a previous financial year is required to be so stated or used for the purpose of assisting the assessment of the corresponding particular for the financial year with which the annual business statement deals and accordingly shall, where it can be derived from an amount in annual accounts adjusted in accordance with Regulation 3(6)(b), be derived from that amount as so adjusted.

(4) The annual business statement shall include an explanation of what is represented by each of the particulars referred to in subparagraph (1) and, where subparagraph (2) applies, a statement of the basis on which particulars are stated by virtue of that subparagraph.

(5) Subject to subparagraph (3), in this paragraph—

(a) “share and deposit liabilities” means the aggregate of liabilities in the balance sheet representing retail and non-retail funds and deposits;

(b) “liquid assets” and “total assets” shall be taken from the items so named in the balance sheet;

(c) “the profit or loss after taxation” shall be taken from item 21 in Part I or, as the case may be, item 24 in Part II of Schedule 1;

(d) “the ordinary profit or loss after taxation” shall be taken from item 14 in Part I or, as the case may be, item 16 in Part II of Schedule 1;

(e) “mean reserves” means, in respect of a financial year, the average amount of total reserves which would have been included in the balance sheet throughout that year under item 18 in Part I or, as the case may be, item 19 in Part II of Schedule 2, calculated on a reasonable basis.

(f) “mean total assets” means, in respect of a financial year, the average amount of total assets which would have been included in the balance sheet throughout that year under item 9 in Part I or, as the case may be, item 10 in Part II of Schedule 2, calculated on a reasonable basis.

(6) With regard to subparagraph (5)(e) and (f) the basis of calculation used in each case shall be stated in the annual business statement.

(7) In subparagraph (5)(e) and (f) “reasonable” shall be interpreted in accordance with section 74(5) of the Act.

Information relating to directors and other officers

3.—(1) The annual business statement of a society shall state—

(a) in relation to each person who was, at the end of the financial year with which it deals, a director of the society—

(i) his name;

(ii) his home address or an address, other than that of the society, at which documents may be served on him;

(iii) his business occupation;

(iv) the bodies (other than the society)

of which he is a director, if any;

(v) his date of birth; and

(vi) his date of appointment as director; and

(b) in relation to each person who was, at the end of the financial year with which it deals, an officer (but not a director) of the society—

(i) his name;

(ii) his business occupation; and

(iii) the bodies of which he is a director, if any.

(2) The annual business statement of a society shall state, in relation to each person who was, at the end of the financial year with which it deals, a director or the chief executive of the society, particulars of his service contract (if any) with the society.

(3) The annual business statement of a society shall state particulars of any arrangement entered into during the financial year with which it deals whereby—

(a) a director of the society or a person connected with him acquired, or arranged to acquire, any non-cash asset from a relevant body, or

(b) a relevant body acquired, or arranged to acquire, any non-cash asset from a director of the society or a person connected with him,

and for the purposes of this subparagraph “non-cash asset” and “connected with” shall be construed in accordance with Part VII (Management of Societies) of the Act, and “relevant body” means the society or any subsidiary undertaking of the society.

Average rates

4.—(1) Subject to the following provisions of this paragraph, the annual business statement of a society shall state the following particulars in respect of the society, in relation to the financial year with which it deals, with regard to each of the major categories of interest bearing assets and liabilities:

(a) the average amount outstanding during the financial year;

(b) the interest earned on such assets;

(c) the interest paid on such liabilities;

(d) the average yield on such assets; and

(e) the average rate paid on such liabilities.

(2) Where the society is a group accounts society, the particulars required to be stated by subparagraph (1) in respect of the society shall be stated in respect of the society and its subsidiary undertakings, but this subparagraph shall not be taken to prohibit the stating in addition by a society of those particulars in relation to the society alone.

(3) The annual business statement shall include an explanation of what is represented by each of the particulars referred to in subparagraph (1) and, where subparagraph (2) applies, a statement of the basis on which particulars are stated by virtue of that subparagraph.

(4) In this paragraph—

(a) the major categories of interest bearing assets are—

(i) liquid assets, and

(ii) secured advances;

(b) the major categories of interest bearing liabilities are—

(i) retail funds and deposits, and

(ii) non-retail funds and deposits;

(c) “the average amount outstanding during the financial year”, in respect of each major category of interest bearing assets and liabilities, shall be calculated on a reasonable basis by reference to the amounts attributable to that balance sheet category throughout that year, and for this purpose the amount attributable to secured advances shall be the aggregate of the amounts in Asset items 2, 3, 4(a) and 4(c) of the balance sheet in Part I, or, in the case when group accounts are used, Part II of Schedule 2;

(d) “the interest earned”, in respect of each major category of interest bearing assets, means the amount (or aggregate amount) included within interest receivable in the income and expenditure account which is attributable to that category as calculated in accordance with paragraph (c);

(e) “the interest paid”, in respect of each major category of interest bearing liabilities, means the amount included within interest payable in the income and expenditure account which is attributable to that category as calculated in accordance with paragraph (c);

(f) “the average yield”, in respect of each major category of interest bearing assets, means the amount (or aggregate amount) in paragraph (d) attributable to that category as a percentage of the amount in paragraph (c) attributable to that category; and

(g) “the average rate paid”, in respect of each major category of interest bearing liabilities, means the amount in paragraph (e) attributable to that category as a percentage of the amount in paragraph (c) attributable to that category.

(5) With regard to subparagraph (4)(c), the basis of calculation used in each case shall be stated in the annual business statement.

(6) In subparagraph (4)(c) “reasonable” shall be defined in accordance with section 74(5) of the Act.

Information about new activities

5.—(1) The annual business statement of a society shall state, in respect of each adopted power of the society which has been exercised by the society for the first time during the financial year with which the annual business statement deals, the fact that it has been so exercised.

(2) In determining for the purposes of subparagraph (1) whether a power has been exercised by a society, the society shall be treated as including its associated bodies.