The Building Societies Act 1986 (Electronic Communications) Order 2003

Explanatory Note

(This note is not part of the Order)

This Order which is made under sections 8 and 9 of the Electronic Communications Act 2000 (c. 7) modifies various provisions of the Building Societies Act 1986 (c. 53) (“the Act”) for the purpose of facilitating the use of electronic communications by building societies when sending notices and other documents to their members and to other persons, and when conducting voting in resolutions of the society and elections of directors.

Article 2 amends section 60 of the Act (directors: elections and retirements) so as to clarify the conditions which a society must satisfy if it uses electronic communications to comply with the requirement to notify persons of specified information about candidates for election as director. If the information is sent to a person electronically, it must be sent to an electronic address notified by that person for the purpose. The information will also be treated as properly notified to a person if it is published on a web site throughout a specified period and that person, who has previously agreed to accessing information on a web site instead of it being sent to him, is notified by the society of its availability in a manner agreed by him.

Articles 4 to 7, 13, and 20 to 24 amend the following provisions of the Act to make similar provision in each case in relation to the use of electronic communications to comply with a requirement to send to a person a notice, statement or other document:

• section 68 (records of loans, etc for directors falling within section 65)—the statement in question is a statement containing particulars of registered transactions falling within section 65(1);

• section 69 (disclosure and record of income of related business)—the statement in question is a statement of the registered particulars of related business of directors or officers of the society;

• section 76 (summary financial statement for members and depositors)—the statement or document in question is a summary financial statement or auditor’s report;

• section 81 (laying and furnishing accounts, etc, to members and the Authority)—the document in question is a copy of the annual accounts;

• paragraph 20A of Schedule 2 (special meeting on members' requisition)—the statement in question is a statement of the matters to be dealt with at a special meeting of the society;

• paragraph 3 of Schedule 8A (transfer directions: modifications of Part X)—the statement in question is a statement containing required particulars in relation to a transfer of engagements;

• paragraph 9 of Schedule 8A (statements to members)—the statement in question is a statement containing required particulars in relation to a transfer of business;

• paragraph 4 of Schedule 11 (auditors: appointment, tenure, qualifications)—the document in question is a copy of representations made by a retiring auditor or a statement of the effect of an order of the High Court;

• paragraph 7 of Schedule 11 (resignation of auditors)—the document in question is an auditor’s notice of resignation or a statement setting out the effect of an order of the High Court or of the Financial Services Authority;

• paragraph 8 of Schedule 11—the statement in question is a statement by a resigning auditor of circumstances connected with his resignation.

Article 3 amends section 61 of the Act (directors: supplementary provisions as to elections, etc) to make provision clarifying the conditions which a society must satisfy in order to comply with a requirement to send an election address in the same manner as a notice of a meeting, postal or electronic ballot, in cases where that notice is sent to a person electronically or by publication on a web site.

Articles 8 and 10 make provision to facilitate the use by a society of electronic communications for the service of statutory notices and documents. Article 8 amends section 115 of the Act (service of notices) to clarify that a requirement under the Act to serve a notice on a person may be discharged by sending that notice to an electronic address notified by that person. Article 10 amends paragraph 3 of Schedule 2 to the Act (rules) to provide that nothing in the rules of a society shall prevent the society from using electronic communications to serve a notice or a document in accordance with an express provision of the Act.

Article 9 amends the definition of “notice” in section 119 of the Act (interpretation), and inserts into that section definitions of “ballot”, “electronic address”, “electronic ballot”, “electronic communication” and “postal ballot”.

Article 11 amends paragraph 9 of Schedule 2 to the Act (use and change of name) to clarify that the requirement for specified documents to state the registered name of the society applies where those documents are contained in a electronic communication or published on a web site.

Article 12 amends paragraph 13 of Schedule 2 to the Act (register of members) so as to require that where a member has notified an electronic address for the purpose of receiving notices or documents, that electronic address is included in the register in addition to the postal address of that member.

Article 14 inserts new paragraphs 22A and 22B into Schedule 2 to the Act. Paragraph 22A (transmission of notice of meeting to an electronic address) clarifies that a notice of a meeting of the society may be sent to a person electronically only if it is sent to an electronic address notified for the purpose. Paragraph 22B (publication of notice of meeting on a web site) provides that a society will also be treated as having sent a notice of a meeting to a person if that notice is published on a web site, provided that specified conditions are met. Those conditions are that the person has agreed to accessing notices on a web site, he is notified of the availability of the notice in a manner agreed by him, and the notice is published throughout the period between the giving of that notification and the conclusion of the meeting. The new paragraphs also make provision as to when a notice sent or made available electronically is treated as having been given.

Articles 15 and 19 make provision in relation to the appointment of proxies when electronic communications are used. Article 15 amends paragraph 24 of Schedule 2 to the Act (proxies) to facilitate the use of electronic communications in the notification of proxies where voting is to take place at a meeting of the society. Article 19 amends paragraph 34 of that Schedule (declarations to be made in proxy and ballot forms) to provide for the form of the declaration required under that paragraph, and to ensure the authenticity and integrity of the appointment where the appointment of a proxy is contained in an electronic communication, or of the vote in cases where a voting form is returned electronically in a postal ballot, or votes are registered on a web site in the course of an electronic ballot.

Article 16 amends paragraph 32 of Schedule 2 to the Act (members' resolutions: supplementary provisions) to make provision clarifying the conditions which a society must satisfy in order to comply with the requirement to send a notice of a resolution and a statement in respect of the resolution in the same manner as the notice of the meeting at which the resolution is to be moved, in cases where that notice is transmitted electronically or made available on a web site.

Article 17 amends paragraph 33 of Schedule 2 to the Act (postal ballots) to facilitate the use of electronic communications in the conduct of a postal ballot. Provision is made to clarify the conditions which apply where notice of a ballot is sent to a member electronically or made available on a web site, and to clarify the conditions which a society must satisfy in order to comply with a requirement that the notice of the ballot must contain or be accompanied by another document, in cases where that notice is given using electronic communications.

Article 18 inserts paragraph 33A into Schedule 2 to the Act (electronic ballots). Paragraph 33A makes provision concerning the conduct of voting by electronic ballot—that is, a ballot conducted either exclusively by electronic voting via a web site voting facility, in accordance with paragraph 33A, or by a combination of electronic voting and postal ballot. Voting may be conducted by electronic ballot which consists of a combination of electronic voting and postal ballot in any election or a resolution which may, under the rules of the society, be conducted by postal ballot; but voting may only be conducted by an electronic ballot where all the voting is electronic voting if the rules of the society expressly permit the exclusive use of electronic voting in those circumstances. Paragraph 33A also modifies provisions of paragraph 33 which regulate the conduct of postal ballots so as to apply them to the conduct of electronic ballots.

Articles 25 to 28 amend the following provisions of the Act so as to clarify the conditions which a society must satisfy in order to comply with a requirement to send a document in or with the notice of a meeting in cases where that notice is given using electronic communications:

• paragraph 1 of Schedule 16 (mergers: supplementary provisions)—the document in question is a statement concerning specified matters in connection with a proposed merger;

• paragraph 4 of Schedule 16 (notification of proposals for a merger)—the document in question is a merger statement or a transfer proposal notification;

• paragraph 4 of Schedule 17 (transfers of business: supplementary provisions)—the document in question is a transfer statement or transfer summary;

• paragraph 5C of Schedule 17 (duty to notify members)—the document in question is a transfer proposal notification.

Articles 29 and 30 make minor consequential amendments to provisions of the Act to take account of the possibility that the appointment of a proxy may be contained in an electronic communication, and that voting may be conducted by electronic ballot.