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17 1989

BUILDING SOCIETIES ACT, 1989

PART IV

Control and Supervision of Building Societies by Central Bank

Duty of the Central Bank as respects building societies.

37. —(1) Subject to the general function and duty of the Central Bank under section 6 of the Central Bank Act, 1942 , the Bank shall administer the system of regulation and supervision of building societies provided for by or under this Act with a view to—

(a) the protection by each society of the funds of its shareholders and depositors, and

(b) the maintenance of the financial stability and well being of societies generally.

(2) The Central Bank shall have power to do anything which, in its opinion, is calculated to facilitate the exercise of its functions or is incidental or consequential to their exercise.

(3) The report of the Central Bank under section 36 of the Currency Act, 1927 , shall contain a report on the exercise of its functions under this Act.

Supply of mortgage finance.

38. —(1) The Minister may, from time to time as he considers necessary, review, in consultation with the Minister for Finance, the adequacy of the supply of mortgage finance for the provision or improvement of housing and communicate to the Central Bank his assessment of the need for such finance.

(2) Without prejudice to the provisions of section 6 of the Central Bank Act, 1942 , the Central Bank shall, as soon as reasonably practicable, convey its views to the Minister on this assessment together with an indication of any action it considers necessary or desirable.

(3) Every building society shall submit to the Minister such information and returns within such period as the Minister may require from time to time for the purposes of his functions in relation to the national housing programme.

Asset and liability ratios and structures.

39. —(1) A building society shall at all times keep such a proportion of its total assets in liquid form (hereinafter referred to as “liquid assets”) having such a composition as to enable the society to meet its liabilities as they arise.

(2) For the purposes of complying with subsection (1), a society shall have regard to the range and scale of its business and that of any subsidiary or other associated body and the composition and character of its assets and liabilities and those of any such body.

(3) A society may keep liquid assets in addition to those required for the purpose of complying with subsection (1).

(4) The Central Bank may from time to time require a society to maintain—

(a) a specified ratio,

(b) a ratio which does not exceed a specified ratio, or

(c) a ratio which is not less than a specified ratio,

between its assets and its liabilities and the specified ratio may be expressed as a percentage of the assets or liabilities concerned.

(5) A requirement of the Central Bank under subsection (4) may be expressed to apply—

(a) in relation to all societies or to societies of a specified category or specified categories,

(b) in relation to the total assets or total liabilities of the societies concerned or to specified assets or assets of a specified kind or specified liabilities or liabilities of a specified kind of those societies,

(c) in relation to a specified time or times or during a specified period or periods,

and shall have effect in accordance with its terms.

(6) A requirement under subsection (4) which is in force may be revoked by the Central Bank or may be amended by a subsequent requirement under that subsection.

(7) The Central Bank may, from time to time, specify as respects a society requirements as to the composition of its assets and, subject to section 18 (3), requirements as to the composition of its liabilities.

(8) In determining for the purposes of this section the assets and liabilities of a society with which another body corporate is associated, there shall be attributed to the society, in a manner acceptable to or as may be specified by the Central Bank, the whole or part of the assets and liabilities of whatever description of the associated body.

(9) (a) Subject to paragraph (b), “liquid assets” means assets specified as such for the purposes of this section by the Central Bank including deposits with the Bank.

(b) Pending a specification by the Central Bank under paragraph (a), “liquid assets” includes assets held in a form provided for by section 38 of the Building Societies Act, 1976 , notwithstanding the repeal of that Act.

(10) In this section—

(a) “specified” means specified by the Central Bank under this section,

(b) “liabilities” include such contingent liabilities as may be specified by the Central Bank from time to time for the purposes of this section.

Revocation of authorisation and giving of direction by Central Bank.

40. —(1) The Central Bank shall revoke a building society's authorisation if—

(a) the society has requested the Bank to revoke its authorisation,

(b) the society has requested the Bank to cancel its registration,

(c) the society has, under section 95 or 96 , amalgamated with or transferred all its engagements to another society, or

(d) proceedings have been commenced for the winding up of the society under section 109 .

(2) Where the Central Bank is satisfied that—

(a) a society has not made use of the authorisation within 12 months of the date on which it was granted,

(b) a society has ceased to engage in the business of a building society for more than 6 months,

(c) it is expedient to do so in the public interest or in order to protect the funds of shareholders or depositors,

(d) a society has ceased to pursue as one of its objects the making of housing loans,

(e) a society has become or is likely to become unable to meet its obligations to its creditors and shareholders or suspends payments lawfully due by it,

(f) a society has failed to send to the Bank copies of its annual accounts as required by section 82 ,

(g) a condition attached to a society's authorisation or to an approval to exercise a power under section 36 has not been complied with by the society,

(h) a society has failed to comply with a requirement of this Act or a requirement or condition of, or notice from, the Bank in the exercise of its powers under this Act,

(i) a society has been convicted on indictment of an offence under any provision of this Act or an offence involving fraud, dishonesty or breach of trust,

(j) a society no longer possesses or is not maintaining and is unlikely to be in a position to maintain adequate capital resources and in particular no longer provides security for the funds entrusted to it,

(k) since the authorisation was granted or deemed to be granted under section 17 , the circumstances relevant to the grant have changed and are such that, if an application for an authorisation were made in the changed circumstances, it would be refused, or

(l) a society obtained the authorisation through false statements or any other irregular means,

the Bank may, as it thinks proper, revoke an authorisation granted or deemed to be granted to a society under section 17 , or give a direction in writing to the society to suspend for such period, not exceeding 6 months, as shall be specified in the direction all or any of the following, that is to say—

(i) the raising of funds,

(ii) the making of payments,

(iii) the acquisition or disposal of other assets or liabilities,

which have not been authorised by the Bank.

(3) The Fourth Schedule shall apply as respects the revocation of an authorisation.

(4) The Fifth Schedule shall apply as respects a direction by the Central Bank under subsection (2).

(5) While a direction under this section is in force, no winding up proceedings in relation to the society may be commenced or resolution for winding up passed in relation to the society, no receiver over the property or over any part of the property or the undertaking of the society may be appointed and the property of the society shall not be attached, sequestered or otherwise distrained except with the prior sanction of the Court.

(6) Where the Court is satisfied, because of the nature or circumstances of the case or otherwise in the interests of justice, that it is desirable, the whole or any part of proceedings under this section may be heard otherwise than in public.

Inspections, information, etc.

41. —(1) The Governor of the Central Bank may authorise in writing a person (an “authorised person”) being an officer of the Bank, or any other person possessing appropriate qualifications or experience, to inspect or investigate the state and conduct of the business of a building society or other body corporate which is, or was at the relevant time, a subsidiary or other associated body of a society or any particular aspect of such business and report to the Bank thereon.

(2) The Central Bank, or an authorised person, may require a society or other body as is mentioned in subsection (1) to furnish it with—

(a) such information, documents, or other material or explanation of matters, which relate to the business or the plans for the future development of the society and its subsidiary or other associated bodies, as may be specified, within a specified period or at a specified time or place; and

(b) a report by a person approved by the Bank, or the authorised person on, or on specified aspects of, information or documents, or other material so furnished.

(3) An authorised person may, on production of his authorisation if so required, at all reasonable times enter the premises of a society or other corporate body as is mentioned in subsection (1) and inspect and take copies of, or extracts from, any documents or material.

(4) A requirement under this section may be imposed on a society in relation to information, documents or other material in the possession or control of a subsidiary or associated body outside the State.

(5) The duty to produce or provide any information, document, material or explanation extends to a liquidator or any person who is or has been an officer or employee or agent of the society or other body, as the case may be, or appears to the Central Bank or the authorised person to have the information, document, material or explanation in his possession or under his control.

(6) Where any person from whom production of a document or material is required claims a lien on the document or material, the production of it shall be without prejudice to the lien.

(7) Nothing in this section shall compel the production by a barrister or solicitor of a document or material containing a privileged communication made by him or to him in that capacity or the furnishing of information contained in a privileged communication so made.

(8) The Central Bank or an authorised person may take copies of or extracts from any document or material produced in compliance with this section and require the person who produced it or any other person who is a present or past director or officer of, or is or was at any time employed by, the society or other body to provide an explanation of the document or material, and if the document or material is not produced, require the person who was required to produce it to state, to the best of his knowledge and belief, where the document or material is.

(9) In this section—

(a) “specified” means specified in a notice under this section,

(b) “agent”, in relation to a society, or any subsidiary or other body associated with it whose business is under investigation, includes its bankers, accountants, solicitors, auditors and its financial and other advisers,

(c) any reference to an officer, employee or agent of a society or other body includes a reference to a person who has been but no longer is an officer, employee or agent of that society or body.

Control of advertising.

42. —(1) If, with respect to any building society, the Central Bank considers it expedient to do so, it may give the society a direction in relation to the matter and form of any advertisement or other means of soliciting deposits or subscriptions for shares in the society or in relation to the matter and form of any advertisement relating to any service provided or business being undertaken by the society and may direct the society to withdraw an advertisement or to cease advertising.

(2) Without prejudice to the generality of subsection (1), a direction under this section may do all or any of the following—

(a) prohibit the issue by the society of advertisements of all descriptions or any specified description,

(b) require the society to modify advertisements of a specified description in a specified manner,

(c) prohibit the issue by the society of any advertisements which are, or are substantially, repetitions of a specified advertisement,

(d) require the society to withdraw any specified advertisement or any advertisement of a specified description, or

(e) require the society to include specified information in any advertisement to be published by it or on its behalf or in any statement to the public to be made by it or on its behalf.

(3) In this section—

(a) “advertisement” includes every form of recommendation of any matter to which this section relates, including in particular the display or publication of any such matter by way of leaflet, notice, circular, pamphlet, brochure, photograph, film, video, sound broadcasting, television, electronic communication or personal canvassing and references to the issue of advertisements shall be construed accordingly; and

(b) “specified” means specified in a direction under this section.

Power of Court to prohibit certain contraventions of Act.

43. —(1) Where, on an application made in a summary manner by the Central Bank, the Court is of the opinion that there has occurred or is occurring—

(a) a contravention of this Act,

(b) a failure to comply with a condition imposed in relation to an authorisation by virtue of section 17 , or with a direction under section 40 or 42 , or

(c) a failure to comply with a condition imposed on an approval under section 36 to exercise an adoptable power,

the Court may, by order, prohibit the continuance of the contravention or failure by the person or persons concerned, or in the case of paragraph (c), require the cessation of the exercise of the adoptable power.

(2) The Court when considering the application may make such interim or interlocutory order as it considers appropriate.

(3) The foregoing provisions of this section are without prejudice to the general functions of the Central Bank.

(4) Where the Court is satisfied, because of the nature or circumstances of the case or otherwise in the interests of justice, that it is desirable, the whole or any part of proceedings under this section may be held otherwise than in public.

Disclosure of information.

44. —(1) A person, who at the commencement of this section is, or at any time thereafter is appointed, Governor, or a Director, officer or servant of the Central Bank, or who is employed by the Bank in any other capacity, shall not disclose, during his term of office or employment or at any time thereafter, any information concerning the business of any building society or any of its subsidiaries or other associated bodies which may come to his knowledge by virtue of his office or employment unless such disclosure is to enable the Bank to carry out its functions.

(2) The provisions as to non-disclosure contained in subsection (1) shall not apply to any disclosure—

(a) required by a court in connection with any criminal proceedings,

(b) made with the consent of the person to whom the information relates and, where not the same person, of the person from whom that information was obtained,

(c) where the Central Bank is acting or has acted in the capacity of an agent for a person, made to the person in respect of that capacity,

(d) where the Bank considers it necessary for the common good, made to any person charged by law with the supervision of financial institutions (whether or not entitled to take money on deposit from the public) and who, in the opinion of the Bank, has obligations duly imposed in respect of non-disclosure of information and corresponding to obligations under this section,

(e) made to an authority in a foreign jurisdiction duly authorised to exercise functions in that jurisdiction which correspond to the functions of the Bank under this Part and section 17 and which, in the opinion of the Bank, has obligations duly imposed in respect of non-disclosure of information and corresponding to obligations under this section,

(f) made to any institution of the European Communities for the purpose of the State's membership of any of those Communities,

(g) in the form of a summary or collection of information so framed as not to enable information relating to any particular body or person to be ascertained from it,

(h) which, in the opinion of the Bank, is necessary for the protection of the funds of shareholders in or depositors with a building society or to safeguard the interests of the Bank,

(i) made to the Minister, for the purposes of his functions in relation to the national housing programme.

(3) After the commencement of this section, every person who is appointed as Governor, or a Director, officer or servant of the Central Bank, or who is employed by the Bank in any other capacity, shall—

(a) before entering into the office or employment, be informed by the Bank of his obligations under this section, and

(b) acknowledge that he has been so informed and understands his obligations,

in such manner as the Bank shall determine.

(4) A person who contravenes subsection (1) shall be guilty of an offence and shall be liable—

(a) on summary conviction to a fine not exceeding £1,000 or, at the discretion of the court, to imprisonment for a term not exceeding 12 months, or to both, or

(b) on conviction on indictment to a fine not exceeding £25,000 or, at the discretion of the court, to imprisonment for a term not exceeding 5 years, or to both.

(5) In any proceedings for an offence under this section, it shall not be necessary to prove that the provisions of subsection (2) do not apply and the onus of proving that any of those provisions do apply shall be on the person seeking to avail himself thereof.

Appointment of inspector and calling of special meeting.

45. —(1) Where—

(a) an application is made to the Central Bank by not less than one-tenth of the total number of members of a building society entitled to vote pursuant to section 69 (1) (a) or 200 such members, whichever is the lesser; or

(b) the Central Bank is of the opinion that an investigation should be held into the affairs of a society or that the affairs of the society call for consideration by a meeting of the members of the society;

the Bank, as it thinks proper, may appoint one or more inspectors to investigate the affairs of the society and, where necessary, any subsidiary or other associated body and to report thereon in such manner as it directs, or may call a special meeting of the society.

(2) The Central Bank may, either on the same or on different occasions, both appoint an inspector and call a meeting under subsection (1).

(3) (a) An application under this section shall be supported by such evidence as the Central Bank may direct, for the purposes of showing that the applicants have good reason for requiring the investigation to be made or the meeting to be called and that they are not actuated by malicious motives in their application.

(b) Such notice of the application shall be given to the society and, in a case where the investigation is to extend to its affairs also, to the subsidiary or associated body of the society, as the Central Bank may direct.

(c) The Central Bank may require the applicants to give security for payment of the costs of the investigation or meeting before the inspector is appointed or the meeting is called subject, in the case of the costs of an investigation, to an amount not exceeding £200,000.

(d) As regards the expenses of and incidental to the investigation or meeting, the expenses shall be defrayed by the applicants or out of the funds of the society or by the members or officers or former members or officers of the society in such proportions as the Central Bank may direct but, in the case of an investigation (in whichever way instituted), the expenses may be defrayed in the first instance by the Bank but without prejudice to its rights to contribution under section 46 .

(4) (a) The Central Bank may give such directions as it thinks fit in relation to the calling, holding and conduct of a meeting held under this section (including the time and place of the meeting and the matters to be discussed and determined at the meeting).

(b) The Central Bank shall appoint a person to be chairman of the meeting.

(c) The meeting shall have all the powers of a meeting called according to the rules of the society.

(d) This subsection shall have effect notwithstanding anything in the rules of the society.

(5) Before appointing an inspector or calling a meeting under this section the Central Bank may, if it is of the opinion that it would not be prejudicial to the interests of members or creditors, notify the society in writing of the action which it proposes to take and of the grounds on which it proposes to take it and, in such a case, the society shall, within 14 days of the receipt of the notification, be entitled to give to the Bank an explanatory statement in writing.

(6) Where an inspector appointed under this section thinks it necessary for the purposes of his investigation to investigate also the affairs of any other society or any body corporate which is or has at any relevant time been a subsidiary of, or associated with, the first-mentioned society, he shall, with the approval of the Central Bank, have power to do so, and shall report on the affairs of the other society or body corporate so far as he thinks the results of his investigation thereof are relevant to the investigation of the affairs of the first-mentioned society.

Provisions supplemental to section 45 .

46. —(1) It shall be the duty—

(a) of all officers, members and agents of a society or other body the affairs of which are being investigated under section 45 , and

(b) of any other person who the inspector considers is or may be in possession of any information concerning the affairs of the society or body,

to produce to him all books, accounts, deeds, records or other documents of, or relating to, the society or body which are in their power, possession or procurement, to attend before the inspector when required to do so and otherwise to give to him all assistance in connection with the investigation which they are reasonably able to give.

(2) The inspector may examine on oath the officers, members and agents of the society or other body being investigated and any such person as is mentioned in subsection (1) in relation to its affairs and may administer an oath accordingly.

(3) If an inspector has reasonable grounds for believing that a director or past director of the society whose affairs the inspector is investigating maintains or has maintained a bank account of any description, whether alone or jointly with another person and whether in the State or elsewhere, into or out of which there has been paid—

(a) any money which has resulted from or been used in the financing of any transaction, arrangement or agreement particulars of which were not included in the register of certain transactions and arrangements as required by section 59 ; or

(b) any money which has been in any way connected with any act or omission, or series of acts or omissions, which on the part of that director constituted misconduct (whether fraudulent or not) towards that society or its members;

the inspector may require the director or past director to produce to him all documents in the director's possession, or under his control, relating to that bank account and in this subsection “bank account” includes an account with any person exempt by virtue of section 7 (4) of the Act of 1971 from the requirement of holding a licence under section 9 of that Act.

(4) If any officer, member or agent of the society or other body or any such person as is mentioned in subsection (1) refuses to produce to the inspector any book or document which it is his duty under this section to produce, refuses to attend before the inspector when required to do so, or refuses to answer any question put to him by the inspector with respect to the affairs of the society, or other body, as the case may be, he shall be guilty of an offence.

(5) Nothing in this section—

(a) shall compel the production by a barrister or solicitor of a document or material containing a privileged communication made by him or to him in that capacity or the furnishing of information contained in a privileged communication so made, or

(b) shall require the disclosure by a bank or a building society of any information as to the affairs of any of its customers other than the society or body the affairs of which are being investigated.

(6) In this section any reference to officers or to agents shall include past as well as present officers and agents, as the case may be, and “agents”, in relation to a society or other body, shall include the bankers, accountants, solicitors, auditors and the financial and other advisors of the society or other body.

(7) The Central Bank shall be entitled to be repaid the expenses of the investigation defrayed by it under section 45 (3) (d) as follows, that is to say—

(a) by the applicants for the investigation to such extent (if any) as the Bank may direct;

(b) by any body whose affairs were the subject of the investigation to such extent (if any) as the Bank may direct; or

(c) by a person convicted of an offence in proceedings instituted as a result of the investigation to such extent (if any) as the court by or before which he was convicted may order; and a person liable under any one of paragraphs (a) to (c) is entitled to contribution from any other person liable under the same paragraph according to the amount of their respective liabilities under it.

Inspectors' reports and proceedings thereon.

47. —(1) An inspector appointed under section 45 may, and shall if the Central Bank so requires, make an interim report to the Bank and, on conclusion of the investigation, shall make a final report to the Bank, but he may at any time in the course of the investigation, without making an interim report, inform the Bank of matters coming to his knowledge as a result of the investigation.

(2) The Central Bank shall—

(a) forward a copy of any report made by an inspector under this section to the Minister, and the Minister for Finance;

(b) if it thinks fit, furnish a copy thereof to the society and its auditors;

(c) if it thinks fit, furnish a copy thereof, on request and on payment of such fee as it may fix, to any other person who is a member of the society or of any other body corporate dealt with in the report by virtue of section 45 or whose interests as a creditor of the society or of any such other body corporate appear to the Bank to be affected;

(d) if it thinks fit, at the request of the applicants for the investigation, furnish a copy to them on payment of such fee as may be fixed by the Bank.

(3) The Minister may lay the report under subsection (1) before each House of the Oireachtas and such publication shall be privileged and a report not so laid may be printed and published by the Central Bank.

(4) (a) Where it appears to the Central Bank that any person has, in relation to the society or any body corporate the affairs of which have been investigated under section 45 , been guilty of any offence for which he is criminally liable, the Bank shall refer the matter to the Director of Public Prosecutions.

(b) Where the Director of Public Prosecutions institutes proceedings consequent on the receipt by him of a report under paragraph (a), it shall be the duty of all officers, members and agents of the society or any body corporate (other than the defendants in the proceedings) to give him all assistance in connection with the prosecution which they are reasonably able to give.

(5) Where it appears to the Central Bank after consideration of an inspector's report under subsection (1) that it is expedient to do so it may, unless the society is being wound up by the Court, petition the Court for an order to wind up the society under section 109 .

(6) Where it appears to the Central Bank after consideration of an inspector's report under subsection (1) that proceedings ought in the public interest to be brought by the society for damages, in respect of any fraud, misfeasance or other misconduct in connection with the promotion or formation of the society or the management of its affairs, or for the recovery of any property misapplied or wrongfully retained, the Bank may itself bring proceedings for that purpose in the name of the society.

(7) The Central Bank may indemnify the society against any costs or expenses incurred by it in, or in connection with, any proceedings brought under subsection (6).

(8) A copy of any report of an inspector appointed under section 45 shall be admissible in any legal proceedings as evidence of the opinion of the inspector in relation to any matter contained in the report.