The Deregulation (Industrial and Provident Societies) Order 1996

Power to opt out of duty to have accounts audited: friendly societies

10.—(1) After section 32 of the 1974 Act there shall be inserted—

“Power of societies to disapply section 31.

32A.— (1) Subject to subsections (3) and (4) below, a registered society or branch may disapply section 31 above in relation to a year of account beginning on or after the day on which the Deregulation (Industrial and Provident Societies) Order 1996 comes into force if—

(a) the value of its assets at the end of the preceding year of account did not in the aggregate exceed £1,400,000, and

(b) its turnover for that year did not exceed £350,000.

(2) The power conferred by subsection (1) above shall be exercisable by resolution passed at a general meeting of the society or branch at which—

(a) less than 20 per cent. of the total votes cast are cast against the resolution, and

(b) less than 10 per cent. of the members of the society or branch for the time being entitled under the body’s rules to vote cast their votes against the resolution.

(3) Subsection (1) above shall not apply to a society or branch which holds, or has, at any time since the end of the preceding year of account, held, a deposit within the meaning of the Banking Act 1987.

(4) The registrar may by notice to a society or branch disapply subsection (1) above in relation to the year of account of the society or branch in which the notice is given.

(5) Where a society or branch exercises the power conferred by subsection (1) above, the disapplication shall cease to have effect if at any time before the end of the year of account to which it relates—

(a) the society or branch becomes one to which subsection (3) above applies, or

(b) the registrar gives to the society or branch notice under subsection (4) above.

(6) In the case of a society or branch which is a charity within the meaning of the Charities Act 1993, a recognised body as defined by section 1(7) of the Law Reform (Miscellaneous Provisions) (Scotland) Act 1990 or a charity within the meaning of the Charities Act (Northern Ireland) 1964(1) subsection (1) above shall have effect with the substitution for paragraph (b) of—

“(b) its gross income for that year did not exceed £250,000.”

(7) For a period which is a society’s or branch’s year of account, but not in fact a year, the maximum figure in subsection (1)(b) above (including that provision as it has effect by virtue of subsection(6) above) shall be proportionately adjusted.

(8) In this section, “turnover”, in relation to a society or branch, means the amounts derived from the provision of goods and services falling within the society’s or branch’s activities, after deduction of—

(a) trade discounts,

(b) value added tax, and

(c) any other taxes based on the amounts so derived.”

(2) After section 39 of that Act there shall be inserted—

“Duty to obtain accountant’s report where section 31 disapplied.

39A.— (1) Subsection (2) below applies where—

(a) at the end of a registered society’s or branch’s year of account a disapplication under section 32A(1) above is in force in relation to the year, and

(b) the society’s or branch’s turnover in the preceding year of account exceeded £90,000.

(2) The society or branch shall, before the end of the period of 28 days beginning immediately after the end of the year of account, appoint an appropriate person to make—

(a) a report on its accounts and balance sheet for the year which meets the requirements of subsection (3) below, and

(b) a report relating to the preceding year of account which meets the requirement of subsection (4) below.

(3) A report for the purposes of subsection (2)(a) above shall—

(a) state whether, in the opinion of the person making the report, the revenue account or accounts, the other accounts (if any) to which the report relates, and the balance sheet are in agreement with the books of account kept by the society or branch under section 29 above, and

(b) state whether, in that person’s opinion, on the basis of the information contained in those books of account, the revenue account or accounts and the balance sheet comply with the requirements of this Act.

(4) A report for the purposes of subsection (2)(b) above shall state whether in the opinion of the person making the report the financial criteria for the exercise of the power conferred by section 32A(1) above were met in relation to the year.

(5) In subsection (2) above, the reference to an appropriate person is to a person who is—

(a) a qualified auditor for the purposes of this Act, and

(b) not ineligible by virtue of section 37(1) above to be appointed as auditor of the society or branch.

(6) In this section, “turnover” has the same meaning as in section 32A above.

Rights of person appointed under section 39A(2).

39B.— (1) A person appointed under section 39A(2) above shall, for the purposes of his appointment—

(a) have a right of access at all times to the books, deeds and accounts of the relevant society or branch, and to all other documents relating to its affairs, and

(b) be entitled to require from the officers of the relevant society or branch such information and explanations as that person thinks necessary.

(2) If a person appointed under section 39A(2) above fails to obtain all the information and explanations which, to the best of that person’s knowledge and belief, are necessary for purposes of doing what he has been appointed to do, that fact shall be stated in his report.

(3) A person appointed under section 39A(2) above shall be entitled—

(a) to receive notice of, and attend, any general meeting of the relevant society or branch at which any relevant matter is discussed, and

(b) to be heard at any such general meeting which he attends on any part of the business of the meeting which relates to any relevant matter.

(4) For the purposes of subsection (3) above, the following are relevant matters, namely—

(a) any report of the person appointed under subsection (2) of section 39A above, and

(b) any matter which is relevant to what that person has been appointed under that subsection to do.

(5) In this section, references to the relevant society or branch, in relation to a person appointed under section 39A(2) above, are to the society or branch responsible for his appointment under that provision.

Registrar’s power to require accounts of past years to be audited.

39C.— (1) The registrar may give a direction to a registered society or branch in respect of any relevant year of account of the society or branch before the year of account in which the direction is given—

(a) requiring it to appoint a qualified auditor or qualified auditors to audit its accounts and balance sheet for that year, and

(b) where it has sent to him its annual return for that year before the date of the direction, requiring it, after its accounts and balance sheet have been audited by a qualified auditor, to send him within three months from receipt of the direction a further annual return complying with the requirements of this Act (other than that as to time of sending).

(2) A failure by a registered society or branch to comply with any direction given by the registrar under subsection (1) above shall be an offence under this Act.

(3) For the purposes of subsection (1) above, a year of account of a registered society or branch is relevant year of account if it is one at the end of which there is in force in relation to it a disapplication under section 32A(1) above.”

(1)

1964 c. 33 (N.I.).