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17 1989

BUILDING SOCIETIES ACT, 1989

PART X

Amalgamations and Transfers of Engagements

Amalgamation of societies.

95. —(1) Subject to compliance with section 97 , any 2 or more building societies may amalgamate by forming a building society as their successor.

(2) In order to form a society as their successor the amalgamating societies must—

(a) agree on the objects of their successor and the extent of its powers in a memorandum which complies with the requirements for the time being of Part I of the Second Schedule ,

(b) agree on the rules for the regulation of their successor which comply with the requirements of Part II of the Second Schedule and any regulations for the time being made under section 11 (2),

(c) each approve the terms of the amalgamation by special resolution, which also approves the memorandum and rules of their successor, and

(d) make application jointly under section 98 to the Central Bank for confirmation of the amalgamation and send to the Bank 3 copies of the memorandum and rules of their successor, each copy signed by the secretary of each of the societies.

(3) The Central Bank if it confirms the amalgamation under section 98 , shall, if it is satisfied as respects the matters as to which it must be satisfied before it registers the memorandum and rules of a society, register the memorandum and rules of the successor society and issue to it a certificate of incorporation and specify a date (“the specified date”) as from which the incorporation takes effect.

(4) On the specified date, all the property, rights and liabilities of each of the societies whose amalgamation was confirmed by the Central Bank shall by virtue of this subsection stand transferred to and vested in the society so incorporated as their successor.

(5) On the specified date, each of the societies to which the successor succeeds shall be dissolved by virtue of this subsection; but the transfer effected by subsection (4) shall be deemed to have been effected immediately before the dissolution.

(6) If, on the specified date, the societies whose amalgamation was confirmed by the Central Bank are all authorised, their successor shall be deemed to be authorised for the purposes of this Act as from that date.

(7) The Central Bank shall record in the public file of the successor the fact that, by virtue of subsection (6), the society is deemed to be authorised for the purposes of this Act.

Transfer of engagements.

96. —(1) Subject to compliance with section 97 , a building society may transfer its engagements to any extent to another society which, in accordance with this section, undertakes to fulfil the engagements.

(2) A society, in order to—

(a) transfer its engagements to any extent, or

(b) undertake to fulfil the engagements of another society,

must resolve to do so by a special resolution or, if the Central Bank consents in either case in circumstances where it considers it expedient to do so, by resolution of the board of directors.

(3) The extent of the transfer, as so resolved by the society making and the society taking the transfer, shall be recorded in an instrument of transfer of engagements.

(4) A transfer of engagements between societies shall be of no effect unless—

(a) the transfer is confirmed by the Central Bank under section 98 , and

(b) a registration certificate is issued in respect of the transfer under subsection (5).

(5) Where the Central Bank confirms a transfer of engagements between societies, it shall—

(a) register a copy of the instrument of transfer of engagements, and

(b) issue a registration certificate to the society taking the transfer,

and, on such date as is specified in the certificate and to the extent provided in the instrument of transfer of engagements, the property, rights and liabilities of the society transferring its engagements shall, by virtue of this subsection, stand transferred to and vested in the society taking the transfer.

(6) The Central Bank shall keep a copy of the instrument and of the registration certificate issued under subsection (5) in the public files of the societies involved.

(7) Where all its engagements have been transferred, a society shall, by virtue of this subsection, be dissolved on the date specified in the registration certificate; but the transfer effected by subsection (5) shall be deemed to have been effected immediately before the dissolution.

Statement for members relating to proposed amalgamation or transfer of engagements.

97. —(1) A building society proposing to amalgamate with one or more other societies, to transfer its engagements to another society or to undertake to fulfil the engagements of another society shall, unless the Central Bank, in the case of a society transferring engagements or undertaking to fulfil engagements, has consented under section 96 to its proceeding by resolution of the board of directors, cause to be sent to every member entitled to notice of a meeting of the society a statement, in such form as the Central Bank may direct, showing—

(a) the financial position of each society concerned,

(b) the interest of the directors of each society concerned,

(c) any compensation or consideration proposed to be paid or given to the directors or other officers of each society concerned,

(d) details of any payments proposed to be made to members of each society concerned in consideration of the proposed amalgamation or transfer,

(e) any changes to be made, in connection with the amalgamation or transfer, in the terms governing outstanding loans,

(f) the details of the arrangements proposed in relation to employees of each society, and

(g) any other matter which the Bank may require in the case of a particular amalgamation or transfer.

(2) A statement to be sent to each member of a society under subsection (1) shall be so sent that every member entitled to notice of a meeting of the society receives it not later than the date on which he receives notice of any resolution in favour of the proposal to be moved at a meeting of the society or of any postal ballot to be held on the proposal.

(3) A statement under this section shall not be sent to members unless its contents have been approved by the Central Bank.

Confirmation of amalgamation or transfer.

98. —(1) An application for confirmation by the Central Bank of an amalgamation of building societies or a transfer of engagements shall be made in such manner as the Bank may specify.

(2) A society which makes, or joins in making, an application for confirmation of an amalgamation or a transfer shall, within 7 days after the date of the application, cause to be published, in at least 2 daily newspapers published in the State and circulating in the areas in which the chief offices of the societies concerned in the proposal are situated, a notice giving particulars of the application and indicating that objections or representations relating to it may be made in writing to the Central Bank within such period (being not less than 21 days after the date of publication of the notice) as may be specified in the notice.

(3) A notice under subsection (2) shall be in such form as the Central Bank may specify and shall indicate that a copy of the statement prepared under section 97 may be obtained on demand at the chief office of the society during the ordinary office hours of the society.

(4) Objections and representations relating to an application under subsection (1) may be made to the Central Bank within the period specified in the relevant notice published under subsection (2).

(5) The Central Bank shall allow the society or societies seeking confirmation of an amalgamation or transfer an opportunity to comment on the representations made before the expiration of such period as the Bank specifies in a notice to the society.

(6) The Central Bank, having considered any application, objection, representation and comment under this section, shall either—

(a) confirm the amalgamation or transfer; or

(b) where it is satisfied that—

(i) confirmation would be contrary to the public interest or the Bank's functions as respects societies,

(ii) in the case of an amalgamation or in the case of a transfer which was the subject of a special resolution, some information material to the members' decision about the amalgamation or transfer was not made available to all the members eligible to vote, or

(iii) some relevant requirement of this Act or the rules of any of the societies participating in the amalgamation or transfer was not fulfilled or not fulfilled as regards that society,

subject to subsection (7), refuse to confirm the amalgamation or transfer.

(7) The Central Bank shall not be precluded from confirming an amalgamation or transfer by virtue only of the non-fulfilment of some relevant requirement of this Act or the rules of a society if it appears to the Bank that it could not have been material to the members' decision about the amalgamation or transfer and the Bank is satisfied that the failure may be disregarded for the purposes of this section.

(8) A failure to comply with a requirement of this Part or any rules of a society shall not invalidate an amalgamation or transfer but a society which and any person who fails to comply with any requirement of this Part shall be guilty of an offence.

Compensation for loss of office and bonuses to members.

99. —(1) Where the terms of an amalgamation of, or transfer of engagements between, building societies include provision—

(a) for compensation to be paid by a society to or in respect of any director or other officer of that or any other society for loss of office or diminution of emoluments attributable to the amalgamation or transfer, or

(b) for part of the funds of one or more of the participating societies to be distributed in consideration of the amalgamation or transfer among any of the members of the participating societies,

such provision must be approved by the special resolution giving the approval of the society to the terms of the amalgamation or transfer unless the case falls within subsection (2).

(2) Where the terms of a transfer of engagements between societies include provisions for compensation for loss of office or a distribution of funds as in subsection (1) and a society concerned applies to the Central Bank under section 96 (2) for its consent to the society's approving the transfer of engagements or the undertaking to fulfil engagements by a resolution of the board of directors instead of a special resolution of the society, the Bank shall not give its consent unless it is satisfied that the compensation or the distribution proposed to be made by each society is, in all the circumstances, justified and reasonable.

(3) In this section—

compensation” includes the provision of benefits in kind;

distribution of funds” with reference to members, includes distribution by means of a special rate of interest available to members for a limited period;

loss of office” includes, in relation to an officer of a society holding office in a subsidiary or other associated body of that society by virtue of his position in that society, the loss of that office.