Building Societies Act 1986 (Amendment) Act 2024

Commentary on provisions of Act

Section 1: The funding limit: funds to be disregarded

1. This section amends section 7(3) of the 1986 Act to add further sources of funds that a building society can disregard for the purpose of calculating its wholesale funding limit.
2. It describes the types of funds to be exempted from the building society wholesale funding limit calculation: Bank of England liquidity insurance facilities, debt instruments raised to meet the minimum requirement for own funds and eligible liabilities (MREL) requirements, and sums received under a repurchase agreement with a view to complying with a specified Prudential Regulation Authority (PRA) rule. It also inserts a new subsection (9A) into section 7 of the Act which defines some of the key expressions contained in the new sources of funding added to section 7(3).
3. This section also adds three new subsections (9B), (9C) and 9(D) to section 7 of the 1986 Act, which give HM Treasury the power to specify named funds, or descriptions of funds, and PRA rules (including by means of ambulatory references) through secondary legislation subject to the affirmative resolution procedure. The Government set out further detail in the Edinburgh Reforms on the funds that will be specified in regulations 1 .

Section 2: Attendance at meetings by electronic means

1. This section amends the 1986 Act to explicitly allow the option for building societies to hold meetings and votes so as to enable virtual attendance and voting resulting in hybrid in person/online meetings. Subsection (1) confirms that nothing in Part III of Schedule 2 to the 1986 Act precludes the holding and conducting of building society meetings in a way which allows people who are not present together in the same place to attend, speak and vote by electronic means. The provision is the same as that set out for companies in the Companies Act 2006.
2. Subsection (2) makes provision to limit requirements and restrictions on electronic participation in meetings to those which are necessary and proportionate to ensure identification of those attending or to ensure that the electronic communication is secure. The purpose of subsection (2) is to ensure the use of electronic means is only subject to necessary and proportionate requirements to ensure the identification of those attending the meeting and the security of electronic communication. This is the same position as for companies in the Companies Act 2006.

Section 3: Power to assimilate with company law: common seals and execution of documents

1. This section extends the power in section 104(1) of the 1986 Act which enables HM Treasury to modify certain parts of the 1986 Act for the purpose of assimilating company law by making regulations subject to the affirmative resolution procedure. The section inserts a new paragraph (aa) into section 104(2) to bring Part 2 of the Act into the scope of the power, but the insertion of a new subsection (3A) ensures that the new power is only exercisable in so far as it relates to the assimilation of company law in relation to common seals and the execution of documents.

Section 4: Extent, commencement, transitional provision and short title

1. This Act extends to England, Wales, Scotland and Northern Ireland.
2. Section 4(2) provides that the Act comes into force at the end of the period of two months from the date on which it was passed.
3. Section 4(3) is a transitional provision so that when HM Treasury exercises the power in section 104 of the 1986 Act for the purpose of assimilating to companies law for the use of common seals and the execution of documents, it may do so to assimilate modifications to companies law statutory provisions in force in Great Britain and Northern Ireland whether made before or after the coming into force of the Act.