The Building Societies (Insolvency and Special Administration) (Amendment) Order 2010

EXPLANATORY NOTE

(This note is not part of the Order)

This Order amends the Building Societies (Insolvency and Special Administration) Order 2009 ( S.I. 2009/805) (“the Principal Order”), which applies Parts 2 (Bank Insolvency) and 3 (Bank Administration) of the Banking Act 2009 (c.1) (“the Banking Act”) to building societies.

Article 2(2)(a) amends the provision of the Principal Order which modifies the application of section 195 of the Insolvency Act 1986 (c.45), so that in meetings of contributories in a building society insolvency, regard is had to the value of the shares held by each contributory.

Article 2(2)(b), (d), (f) and (g) amend provisions of the Principal Order relating to the application of sections 1012 to 1023 and 1034 of the Companies Act 2006 (which relate to the property of a dissolved company) to building society insolvency and special administration.

Article 2(2)(c) substitutes the provision of the Principal Order which modifies the application of section 116 of the Banking Act (dissolution: supplemental). The new provision modifies section 116(4), requiring the FSA to place a direction deferring the date of dissolution of a society on the public file of the society concerned.

Article 2(2)(e) substitutes the provision of the Principal Order relating to the entry in the table in section 145 of the Banking Act for paragraph 80 of Schedule B1 to the Insolvency Act 1986. The new provision applies paragraph 79 of Schedule B1, which provides for the court to end administration on application of the administrator. Article 2(2)(h) inserts a new provision in the Principal Order which makes a similar modification to section 153 of the Banking Act.

Article 2(3) amends the provision of the Principal Order which modifies the application of the Banking Act 2009 (Parts 2 and 3 Consequential Amendments) Order 2009 ( S.I. 2009/317). The amendments relate to the Pension Protection Fund (Entry Rules) Regulations 2005 ( S.I. 2005/590) and the Pension Protection Fund (Entry Rules) Regulations (Northern Ireland) 2005 (S.R. 2005/126) and ensure that references to “company” in regulations 9 and 10 of those Regulations have effect as references to “building society”.

Articles 3 and 4 make consequential amendments to the Pension Protection Fund (Entry Rules) Regulations 2005 and the Pension Protection Fund (Entry Rules) Regulations (Northern Ireland) 2005. The amendments provide that the making of a building society insolvency or special administration order are prescribed insolvency events for the purposes of those Regulations, and that in specified circumstances building society insolvency or special administration proceedings are stayed or come to an end for the purposes of the Regulations.

An impact assessment has not been prepared for this instrument as no impact on the costs of business is foreseen.