Restructuring of registered societies
70.Section 96 of the 2010 Act makes provision for the restructuring,(32) winding up and dissolution of RSLs that are registered societies. Section 96(2) applies Chapter 2 of Part 10 to certain restructurings of a registered society as mentioned in section 97 of the 2010 Act. Chapter 2 applies the provisions of Chapter 1 of Part 10 (on disposal of land) to society restructurings to which section 97 applies. But restructurings where the RSL is converting into a registered company are not covered (see section 123(2)(a)).
71.Section 96(3) provides that the Regulator must not give consent in the following cases unless the society has consulted its tenants, namely—
the winding up of a registered society (under section 98), and
the dissolution of a registered society (under section 99).
72.Section 97(1) (and Chapter 2 of Part 10) applies to certain restructurings, namely those that will result in a tenant under a Scottish secure tenancy ceasing to be a tenant of the society but not those where the RSL is converting into a registered company (see section 123(2)(a)). It provides that the Financial Conduct Authority (“the FCA”) may register the special resolution relating to the restructuring only if the Regulator consents to the special resolution and the RSL sends a copy of that consent to the FCA with the copy special resolution. Chapter 1 of Part 10 governs the obtaining of Regulator consent. See paragraphs 42 to 45 for an explanation of the operation of Chapter 1.
73.In addition, section 97(1) applies to restructurings where the RSL is converting into a registered company. In such a case, Chapter 2 of Part 10 does not apply (and so Chapter 1 of that Part does not apply either). The FCA may register the special resolution only if the Regulator consents and the society sends a copy of that consent with the copy special resolution.
74.Section 97(2) applies to all restructurings and provides that a new body created, or to whom an RSL’s engagements are transferred, by virtue of a restructuring is to be included in the register of registered social landlords.(33)
75.Section 96 is amended by section 6(2) of the Act. That subsection repeals subsections (2) and (3) of section 96. These repeals are consequential on the removal of the need for Regulator’s consent. In addition, what was Chapter 2 of Part 10 is repealed (by section 6(15) of the Act)(34) as the requirements it imposed are now imposed directly in new section 96A and in the new version of section 97 (inserted by section 6(3) and (4) of the Act). In addition, the tenant consultation requirements are now incorporated directly into sections 98 and 99 (see further below).
76.Section 6(3) inserts a new section 96A into Part 8 of the 2010 Act. This new section applies where a registered society proposes to restructure(35) and, as a result of that restructuring, a tenant under a Scottish secure tenancy will cease to be a tenant of the society. This new section imposes a duty on the society to comply with sections 115 to 120 of Part 10 of the 2010 Act (as those sections are amended by section 4 of the Act). Those sections, which apply to certain disposals of land by an RSL, are applied to the restructuring of an RSL that is a registered society by virtue of section 96A(3) with the modification in that subsection.(36) Those sections require the RSL to consult the tenants affected by the restructuring and to then seek their agreement to it, either by ballot or by written agreement.(37)
77.Section 6(4) substitutes for section 97 of the 2010 Act a new version. This section applies to all restructurings by RSLs that are registered societies, not just those covered by section 96A.
78.Section 97(2) provides that, where an RSL proposes a restructuring to which section 96A applies,(38) the FCA may register the special resolution relating to the restructuring only if the RSL confirms it complied with its duty to consult its affected tenants under section 115, that it sought the agreement of those tenants under section 115A(1) and that a majority of these tenants agreed to the restructuring (see new section 97(3)).
79.In the case of all restructurings, and not just those to which section 96A applies, the RSL must also give the Regulator notice of the special resolution sent to the FCA. Where section 96A applies, that notice must be given no later than 28 days after the copy special resolution is sent to the FCA.
80.Section 97(5) re-enacts the provision in section 97(2) of the 2010 Act which provides that a new body created, or to whom an RSL’s engagements are transferred, by virtue of a restructuring is to be included in the register of registered social landlords.
The “restructurings” to which sections 96 and 97 of the 2010 Act apply are amalgamations of registered societies, the transfer of engagements between registered societies and the conversion into or amalgamation of a registered society with a registered company – see the definition of “restructuring provision” in section 97(1). See also the amended definition, updating references to the Co-operative and Community Benefit Societies and Credit Unions Act 1965 to references to the Co-operative and Community Benefit Societies Act 2014, in section 6(3) of the Act (see new section 96A(4)).
Established under Part 2 of the 2010 Act and maintained by the Regulator.
See also paragraphs 108 to 110 below.
But “restructure” here does not include the conversion of the registered society into a registered company.
The modification relates to when notice of the results of the tenant ballot or the seeking of tenant’s written agreement is to be given to the Regulator under section 115A(2).
See paragraphs 53 to 61 above for a full explanation of Chapter 1 of Part 10 and the amendments made to it by section 4 of the Act.
And which therefore requires the RSL to seek the agreement of affected tenants.
