Commentary on Sections Section 2: Power to alter priorities on dissolution and winding up
19.This section inserts new section 90B into the 1986 Act. Subsection (1) gives the Treasury the power to make an order to ensure that, on the winding up or dissolution by consent of a society, any assets available to satisfy the society’s liabilities to creditors or to shareholders are applied in satisfying those liabilities pari passu (equally). This power may be exercised independently of the section 1 power. An order under this section may make amendments of the 1986 Act, as well as consequential, supplementary, transitional and saving provision (subsection (5)).
20.Subsection (2) provides that liabilities to creditors do not include liabilities in respect of subordinated deposits, preferential debts, and any other category of liability specified by the Treasury. Subsection (3) makes a similar provision in respect of deferred shares. The purpose is to ensure that only ordinary shareholding members are given equality with the general pool of unsecured creditors.
21.Subsection (6) requires an order under new section 90B to be approved in draft by affirmative resolution in each House of Parliament before it is made.