(1)Except to the extent permitted by subsection (3) below, a building society shall not raise money from members or accept deposits of money unless there is in force an authorisation of the Commission granted under this section or treated as granted under this section by any provisions of this Act.
(2)Authorisation under this section shall, if granted, be granted unconditionally or subject to conditions as provided by subsection (4) or (5) below.
(3)Authorisation is not required for—
(a)the acceptance of payments by way of subscription for deferred shares unless the aggregate of the payments exceeds the amount produced by multiplying the prescribed minimum for qualifying capital by the factor of 2 or such other factor as may be substituted for it by order of the Commission made with the consent of the Treasury;
(b)the acceptance of payments for amounts due in respect of shares which represent interest on, or the repayment of, advances made to the holders of shares;
(c)borrowing from a banking or finance company, or from a director or other officer of the society, if the society has obtained the consent in writing of the Commission; or
(d)borrowing under section 33.
(4)The Commission, on an application duly made for authorisation under this section, shall grant unconditional authorisation to the building society if it is satisfied that—
(a)the society has qualifying capital of an amount which is not less than the prescribed minimum;
(b)the chairman of the board of directors and any executive directors, the chief executive, the secretary and the managers (if any) are each fit and proper persons to hold their respective offices in the society;
(c)the board of directors, with the chief executive and secretary, have the capacity and intention to direct the affairs of the society in accordance with the criteria of prudent management and, in so far as those criteria fell to be satisfied before the date of the application, have secured that they were satisified; and
(d)the investments of shareholders and depositors will be adequately protected without the imposition of conditions.
(5)If the Commission, on an application so made, is not satisfied of the matters specified in subsection (4) above in relation to the society, it shall—
(a)if those matters are or include the matters specified in paragraphs (a) and (b), refuse to grant authorisation;
(b)in any other case, if it is satisfied that the imposition of conditions would secure the protection of the investments of shareholders and depositors, grant authorisation subject to such conditions to be complied with by the society as the Commission thinks fit to impose to secure that purpose; or
(c)if not satisfied, refuse to grant authorisation.
(6)The conditions that may be imposed under subsection (5) above on granting authorisation to a society may—
(a)relate to any activities of the society, whether or not those referred to in subsection (1) above; and
(b)require the society to take certain steps or to refrain from adopting a particular course of action or to restrict the scope of its business in a particular way.
(7)Without prejudice to the generality of subsection (6) above, conditions imposed under subsection (5) above may—
(a)impose limitations on the issue of shares, acceptance of deposits or the making of advances or other loans;
(b)require the society to take steps with regard to the conduct of the business of any subsidiary or associated body; and
(c)require the removal of any director or other officer.
(8)The provisions of Schedule 3 to this Act regulating—
(a)the making and determination of applications for authorisation,
(b)the furnishing of information or additional information in connection with such applications, and
(c)the imposition of conditions of authorisation,
apply in relation to authorisation under this section.
(9)Conditions imposed under subsection (5) above—
(a)may be varied from time to time (and notwithstanding any pending appeal) by agreement between the Commission and the society; and
(b)may be revoked at any time by the Commission if it is satisfied that the investments of shareholders and depositors will be adequately protected without the conditions;
but paragraph (b) above is without prejudice to the power of the Commission, under Part VI, to impose other conditions.
(10)On granting authorisation to abuilding society under this section the Commission shall inform the central office of the fact and the central office shall record that fact, and the date on which the authorisation was granted, in the public file of the society.
(11)If, in contravention of subsection (1) above, a building society raises money from members or accepts deposits of money, then—
(a)the society shall be liable on conviction on indictment or on summary conviction to a fine not exceeding, on summary conviction, the statutory maximum; and
(b)any officer of the society who is also guilty of the offence shall be liable—
(i)on conviction on indictment, to imprisonment for a term not exceeding two years or to a fine or both, and
(ii)on summary conviction, to a fine not exceeding the statutory maximum;
but such a contravention does not affect any civil liability arising in respect of the acceptance or of the money accepted.
(12)Failure by a society to comply with conditions imposed under this section on granting authorisation to the society shall render it liable, if other conditions are not imposed on it under Part VI, to have its authorisation revoked under that Part.
(13)For the purposes of this section, in relation to a building society—
“business” includes business the society proposes to carry on;
“the prescribed minimum”, in relation to qualifying capital, is £100,000 or such other sum as the Commission may specify by order made with the consent of the TreasuryX;
“qualifying capital”, in relation to a building society applying for authorisation, means,
(a)the aggregate of the nominal value of the qualifying deferred shares issued at the date of the application and the amount of the reserves as shown in the last balance sheet of the society less any accumulated deficit as so shown; or
(b)where there is no balance sheet of the society, the nominal value of the qualifying deferred shares issued at the date of application; and
“” means deferred shares other than deferred shares which, by virtue of regulations under section 45(5), are not included in capital resources aggregated with reserves for the purposes of the first criterion in subsection (3) of that section.
(14)Any power of the Commission to make an order under this section is exercisable by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament.