The Building Societies (Mergers) (Amendment) Regulations 1995

Explanatory Note

(This note is not part of the Regulations)

These Regulations amend the Building Societies (Mergers) Regulations 1987, which prescribe a limit in relation to any bonus distribution by a building society in consideration of a merger. Under section 96 of the Building Societies Act 1986, a distribution within any limit prescribed by regulations requires only the approval of the members of the paying society; a distribution in excess of it requires the approval of the members of each of the societies participating in the merger. The limit specified in the 1987 Regulations was, in relation to a distribution to members of any one society, an amount equal to one per cent. of that society’s total assets (referred to below as the asset limit), or, in the case of a distribution to members of a society which is transferring only some of its liabilities to shareholders, one per cent. of the value of the liabilities transferred by the society in question (referred to below as the liabilities limit). These regulations increase the asset limit to 5% of the value of the assets, or a sum calculated from the society’s reserves less fixed assets, and increase the liabilities limit to 5% of the value of the liabilities transferred, or a part of the sum calculated as above, proportionate to the liabilities transferred.

A review of the cost of compliance with these Regulations has been undertaken and the resulting compliance cost assessment may be obtained from the Secretary, Building Societies Commission, 15 Great Marlborough Street, London W1V 2LL.