PART 3Mutual societies

Building societies: miscellaneous

55Building societies: creation of floating charges

1

Section 9B of the Building Societies Act 1986 (restriction on creation of floating charges) is amended as follows.

2

In subsection (1), at the end insert “unless it complies with the requirements in subsection (1A)”.

3

After that subsection insert—

1A

The requirements are that the floating charge—

a

is created in favour of a participant in a system, and

b

is created for the purpose of securing any rights and obligations that may arise in connection with participation in that system.

4

After subsection (2) insert—

3

In this section “participant” and “system” have the meaning given by Article 2 of Directive 98/26/EC of the European Parliament and of the Council of 19th May 1998 on settlement finality in payment and securities settlement systems (as amended by Directives 2009/44/EC and 2010/78/EU).

56Power to direct transfer of building society's business

1

Section 42B of the Building Societies Act 1986 (power to direct transfers of engagements or business) is amended as follows.

2

In subsection (1)—

a

before the “or” at the end of paragraph (a) insert—

aa

direct the society, within a specified period, to transfer its business under section 97 to an existing or specially formed company that is a subsidiary of another mutual society by a transfer to which provision made by order under section 3 of the 2007 Act (transfers to subsidiaries of other mutuals) applies;

b

in paragraph (b), for “to an existing company under section 97” substitute “under section 97 to an existing company that is not a subsidiary of another mutual society”.

3

After subsection (1) insert—

1A

In this section—

a

“the 2007 Act” means the Building Societies (Funding) and Mutual Societies (Transfers) Act 2007;

b

“mutual society” has the same meaning as in section 3 of that Act.

4

In subsection (4)—

a

in paragraph (a), for “(1)(b)” substitute “(1)(aa) or (b)”, and

b

in paragraph (b), after “existing company” insert “, or to a specially formed company that is a subsidiary of another mutual society,”.

5

In Schedule 8A to that Act (directions under section 42B(4)), in paragraph 9(3), for “section 42B(1)(b)” substitute “section 42B(1)(aa) or (b)”.