Commentary Building societies: miscellaneous Section 56: Power to direct transfer of building society’s business
508.Section 97 of the Building Societies Act 1986 makes provision in relation to the transfer by a building society of its business to a company. Section 3 of the Building Societies (Funding) and Mutual Societies (Transfers) Act 2007 (the “2007 Act”) gives Treasury the power to simplify and modify the procedure for the transfer of the business of a mutual society (including a building society) to a company if that company is the subsidiary of a mutual. The Mutual Societies (Transfers) Order 2009, S.I. 2009/509 (the “2009 Order”), made on the basis of the powers in section 3 of the 2007 Act, put in place a modified procedure for the transfer of the business of a building society to a company that is the subsidiary of another mutual.
509.Section 42B of the Building Societies Act gives the FSA the power to direct a building society, in certain circumstances, to transfer its business to an existing company (section 42B(1)(b)), and the power to dispense with the requirement to have the transfer approved by members’ resolutions and to have it approved instead by a resolution of the board of the society (section 41B(4)).
510.Section 56 amends section 42B so as to provide, in addition to the powers described above, an additional power to direct a building society to transfer its business to a company that is the subsidiary of a mutual, under the modified procedure established by the 2009 Order.