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17 1989

BUILDING SOCIETIES ACT, 1989

PART XI

Conversion to Public Limited Company

Interpretation of this Part.

100. —In this Part—

borrowing member” has the meaning assigned to it by section 71 ;

company” means a public company limited by shares within the meaning of the Companies Acts;

conversion date” means the date on which the society becomes converted and is registered as a company;

conversion scheme” means a scheme drawn up by the board of directors of a society for the conversion of the society into a company;

successor company” means the company into which a society converts itself.

Conversion of a society to a public limited company.

101. —(1) A building society may, subject to this Part, convert itself into a company.

(2) In order to convert into a company a society must—

(a) approve a conversion scheme by a conversion resolution pursuant to section 71 ,

(b) obtain the confirmation of the Central Bank to the conversion scheme under section 104 , and

(c) have the society registered as a company under the Companies Acts in accordance with the provisions of this Part and any regulations made thereunder.

(3) A conversion scheme for the purposes of subsection (2) shall—

(a) state the name of the proposed company,

(b) state in relation to the proposed company the amount of the proposed authorised share capital and the amount of such capital proposed to be issued on conversion,

(c) have annexed to it the memorandum of association and the articles of association of the proposed company that comply with the requirements of the Companies Acts,

(d) specify the names of the persons who are proposed to be the first directors and auditors of the proposed company,

(e) specify the persons or classes of persons who will be members of the proposed company,

(f) specify, in the case of persons or classes of persons who are members of the society and who will be members of the proposed company, by reference to the shareholding of those persons or classes of persons in the society—

(i) their entitlement to shares in the proposed company, and

(ii) their rights (if any) to subscribe for shares in the proposed company,

and, in either case, the rights attaching to the shares,

(g) specify, in the case of persons or classes of persons (if any) who are members of the society and who will not be members of the proposed company, the rights and liabilities of such persons or classes of persons,

(h) specify the changes proposed in the society's investments (if any) in subsidiaries and other associated bodies in consequence of the conversion,

(i) specify, in the case of persons or classes of persons who are members of the society at the conversion date, the rights of such persons or classes of persons to a distribution of its assets in the event of the successor company being wound up within 5 years of the conversion date, and if there are to be no such rights the scheme shall so state,

(j) specify the terms on which the shareholdings of members of the society will be held as deposits by the successor company,

(k) specify the terms of any proposed distribution of the funds of the society in connection with the conversion scheme, and

(l) provide for such other and related matters as the Central Bank may specify.

(4) A society proposing to convert into a company shall, at least 6 months prior to the date on which the conversion resolution is intended to be moved at a general meeting of the society or voted on in a postal ballot, advise the Central Bank of the intention to do so and shall consult with the Bank as to the matters to be provided for in the conversion scheme.

(5) A conversion scheme under this section shall not be sent to the members of the society unless the scheme has been approved by the Central Bank as meeting the requirements of or under this Part.

(6) The terms of a conversion scheme shall restrict any rights conferred on members of the society entitling them to shares in the successor company, to acquire shares in the successor company in priority to other subscribers or to any distribution of the funds of the society, in the case of those persons who become members of the society after 21 December, 1988, to those members who held shares in the society throughout the period of 2 years which expired with the day on which notice is given to members of the conversion resolution.

Protective provisions.

102. —(1) A successor company shall not for a period of 5 years after the conversion date—

(a) offer to the public, or allot or agree to allot with a view to their being offered for sale to the public, any shares in or debentures of the company,

(b) allot or agree to allot any share in or debenture of the company, or

(c) register a transfer of shares in or debentures of the company,

if the effect of—

(i) the offer, the allotment or the registration of the transfer would be that 15 per cent. or more of the shares in or debentures of the company would be held by, or by nominees for, any one person, or

(ii) the offer, the allotment or the registration of the transfer of shares would be that 15 per cent. or more of the voting rights attaching to the company's shares would be held by, or by nominees for, any one person or by persons or their nominees acting in concert.

(2) The articles of association of the successor company shall include provisions such as will secure that the company shall not take any action in contravention of subsection (1) and no alteration in these provisions shall be made by the company during the 5 year period specified in that subsection.

(3) Any allotment or registration of a transfer of shares or debentures in contravention of subsection (1) shall be void and any voting rights held by, or by nominees for, any one person or by persons or their nominees acting in concert in excess of a figure representing 15 per cent. of the total voting rights shall not be exercisable by that person or persons or by their nominees.

(4) The Central Bank may, if it considers it necessary to do so in the interests of depositors with the successor company, direct by notice to the company that subsections (1), (2) and (3) shall cease to apply to it.

(5) In this section “transfer” in relation to shares or debentures does not include a transfer to a person to whom the right to any shares or debentures has been transmitted by operation of law.

Conversion statement.

103. —(1) Before a conversion resolution is moved pursuant to section 101 a statement in accordance with subsection (2) shall be sent by the building society to every member entitled to notice of the meeting of the society at which the conversion resolution is to be moved or, as the case may be, of the postal ballot.

(2) Every statement required by subsection (1) shall—

(a) summarise in sufficient detail, to enable persons entitled to vote to decide how to vote on the resolution, the matters required to be referred to in, and the documents required to be annexed to, the conversion scheme by section 101 ;

(b) state the reasons for the proposal to convert;

(c) specify any proposed change in the principal activities of the society to be carried on by its successor with particular reference to its proposed policy in relation to the making of loans for the provision and improvement of housing and the determination of the rate of interest to be charged on such subsisting and future loans;

(d) state the financial position and record of the society and its subsidiaries;

(e) state the interest (if any) of the officers of the society in the conversion;

(f) state the compensation or other consideration (if any) proposed to be paid to or in respect of the officers of the society;

(g) state the manner in which the salary, fees, borrowing rights and other benefits of officers of the society to be appointed to any position by the successor company or any company associated with it will be affected;

(h) state that a full and complete copy of the scheme for conversion may be obtained on demand and free of charge by any member at every place of business of the society at any time during normal business hours; and

(i) deal with such other matters as the Central Bank may specify.

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

Confirmation and registration of conversion scheme by Central Bank.

104. —(1) An application by a building society that has duly approved a conversion scheme in accordance with this Part shall be made to the Central Bank for confirmation of the scheme within 14 days of the meeting at which the society approved the scheme by forwarding to the Bank a copy of the resolution as passed together with 3 copies of the scheme as approved by the society.

(2) Subsections (1) to (5), (7) and (8) of section 98 shall, subject to this section and any necessary modifications, apply to an application to the Central Bank for confirmation of a conversion scheme under this section.

(3) The Central Bank shall notify the Minister and the Minister for Finance when confirming a conversion scheme.

(4) The Central Bank, having considered an application under subsection (1), any objection or representation received and any comment by the society shall confirm the conversion scheme unless it is of the opinion that—

(a) confirmation would be contrary to the public interest, or

(b) some information material to the members' decision about the conversion scheme was not made available to all the members eligible to vote, or

(c) some relevant requirement of this Act or the rules of the society was not fulfilled, or

(d) there is a substantial risk that the successor company will not be granted a licence under section 9 of the Act of 1971.

(5) Where the Central Bank confirms a conversion scheme it shall register the scheme and the conversion resolution and send to the applicant a certificate of registration which shall be sufficient evidence unless the contrary is proved that the requirements of this Part in relation to the conversion scheme have been complied with.

(6) The Central Bank shall forthwith publish such notice of confirmation and registration of the scheme as it considers appropriate.

Petition to High Court against conversion scheme.

105. —(1) A petition for the cancellation of a conversion scheme as confirmed under section 104 may be made to the Court—

(a) by not less than 100 members who were qualified to vote on the conversion resolution approving the conversion scheme, or

(b) with the approval of the Court, by any member of the society.

(2) A petition under this section shall be made within one month after the date on which the Central Bank has published notice of its confirmation and registration of the conversion scheme under section 104 .

(3) A petition under subsection (1) (a) may be made on behalf of one or more of the persons entitled to make the petition by such one or more of their number as may be appointed in writing for the purpose.

(4) Where a petition has been made to the Court, the Court shall as soon as may be send a copy of the petition to the Central Bank and to the society.

(5) On a petition under subsection (1) the Court may make an order confirming or cancelling the conversion scheme on such terms and conditions as it thinks fit.

(6) In exercising its powers under subsection (5) the Court shall have regard only to the rights and interests of the members of the society, or any class of them.

(7) No appeal from any order made under subsection (5) shall be brought after the expiration of one month from the date of perfection of the order.

Registration of society as a company.

106. —(1) As soon as may be but not sooner than one month after the registration pursuant to section 104 (5) and, where a petition is made to the Court under section 105 , the petition is finally determined, the building society shall deliver, to the registrar of companies—

(a) the following documents—

(i) a copy of the conversion resolution under section 101 certified by the Central Bank as registered under section 104 ,

(ii) a copy of the scheme confirmed and registered by the Central Bank under section 104 ,

(iii) the Court order under section 105 , if any,

(iv) the certificate of incorporation of the society as a building society,

and

(b) the memorandum and articles of association of the successor company and such other documents and fee as are required under the Companies Acts to register a company.

(2) On receiving the documents listed in subsection (1) and on being satisfied that all the requirements of the Companies Acts in respect of registration of memorandum and articles and of matters precedent and incidental thereto have been complied with the registrar of companies shall retain and register the memorandum and articles and issue a certificate of incorporation for the company.

(3) The certificate of incorporation as a company shall be sufficient evidence until the contrary is shown that the requirements of this section have been complied with and that the society was on the date shown in the certificate duly registered as a company under the Companies Acts.

(4) On the date shown in the certificate of incorporation as a company the society shall cease to be incorporated under this Act and shall be a company incorporated under the Companies Acts and those Acts shall apply to it accordingly.

(5) The registrar of companies shall forthwith publish as he considers appropriate notice of the registration of the society as a company.

(6) On the registration of a society as a company—

(a) all persons who are to be members of the company shall in accordance with the terms of the conversion scheme be members of the company; and

(b) the shares, if any, in the capital of the company to which all such persons are entitled in accordance with the conversion scheme shall be deemed to be allotted to such persons.

(7) Notwithstanding anything contained in section 58 or section 116 of the Companies Act, 1963 , no company into which a society has become converted pursuant to this Part shall be required within 5 years of the conversion date—

(a) to show on the list required to be delivered to the registrar of companies by section 58 of the Companies Act, 1963 , or

(b) to enter in the register of its members referred to in section 116 of the Companies Act, 1963 ,

the occupation of any person who immediately before the conversion date was a member of the society if the register of members of the society did not contain the occupation of that person.

Consequential provisions on conversion of society.

107. —(1) Where a building society becomes converted into a company pursuant to this Part—

(a) every shareholding in and deposit with the society shall on conversion become a deposit of the same amount with the successor company, and

(b) the business, property, rights and liabilities of the society, shall, on the conversion date, vest in the company.

(2) Without prejudice to the generality of subsection (1), the following provisions shall have effect where a society becomes converted into a company pursuant to this Part, that is to say—

(a) a reference (express or implied) to the society in any instrument made, given, passed, or executed before the conversion date shall be read and construed as a reference to the company;

(b) except as provided in subsection (3), all contracts, agreements, conveyances, mortgages, deeds, leases, licences, other instruments, undertakings and notices (whether or not in writing) entered into by, made with, given to or by, or addressed to the society (whether alone or with any other person) before the conversion date and subsisting immediately before the conversion date shall, to the extent that they were previously binding on and enforceable by, against, or in favour of the society, be binding on and enforceable by, against, or in favour of the company as fully and effectually in every respect as if, instead of the society, the company had been the person by whom they were entered into, with whom they were made, or to or by whom they were given or addressed as the case may be;

(c) an instruction, order, direction, mandate, or authority given to the society and subsisting immediately before the conversion date shall be deemed to have been given to the company;

(d) a security held by the society as security for a debt or other liability to the society incurred before the conversion date shall be available to the company as security for the discharge of that debt or liability and, where the security extends to future or prospective debts or liabilities, shall be available as security for the discharge of debts or liabilities to the company incurred on or after the conversion date; and, in relation to a security, the company shall be entitled to all the rights and priorities (howsoever arising) and shall be subject to all liabilities to which the society would have been entitled or subject if the society had not become converted into a company;

(e) all the rights and liabilities of the society as bailor or bailee of documents or chattels shall be vested in and assumed by the company;

(f) a negotiable instrument or order for payment of money which before the conversion date is drawn on or given to or accepted or endorsed by the society or payable at a place of business of the society shall, unless the context otherwise requires, have the same effect on and after the conversion date as if it had been drawn on or given to or accepted or endorsed by the company instead of the society or was payable at the place of business of the company;

(g) nothing effected or authorised by this Part—

(i) shall be regarded as placing the society, or the company, or any other person in breach of contract or confidence or as otherwise making any of them guilty of a civil wrong; or

(ii) shall be regarded as giving rise to a right to any person to terminate or cancel any contract or arrangement or to accelerate the performance of any obligation; or

(iii) shall be regarded as placing the society, or the company, or any other person in breach of any enactment or rule of law or contractual provision prohibiting, restricting or regulating the assignment or transfer of any property or the disclosure of any information; or

(iv) shall release any surety wholly or in part from any obligation; or

(v) shall invalidate or discharge any contract or security;

(h) any action, arbitration or proceedings, or cause of action which immediately before the conversion date is pending or existing by, against, or in favour of the society or to which the society is a party may be prosecuted, and without amendment of any writ, pleading, or other document, continued and enforced by, against, or in favour of the company;

(i) on the conversion date each employee of the society shall become an employee of the company but, for the purposes of every enactment, law, award, determination, contract and agreement relating to the employment of each such employee, the contract of employment of that employee, shall be deemed to have been unbroken and the period of service with the society shall be deemed to have been a period of service with the company, and the terms and conditions of employment of each such employee shall, until varied, be identical with the terms and conditions of that employee's employment with the society immediately before the conversion date and be capable of variation in the same manner.

(3) Where a society becomes converted into a company pursuant to this Part and the conversion scheme provides for the conversion or alteration of the rights or liabilities of any person that were subsisting immediately before the conversion date, those rights and liabilities shall, notwithstanding subsection (2), cease to be enforceable by, against, or in favour of the company on or after the conversion date except in accordance with that scheme.

(4) Where a society becomes converted into a company pursuant to this Part and the conversion scheme provides for any rights or liabilities to arise immediately after the conversion date, those rights and liabilities shall be enforceable by, against, or in favour of the company on and after the conversion date.

Conversion regulations.

108. —The Minister for Finance may, by regulations, make further provision in relation to the conversion of a building society into a company under this part including provision for and in connection with the transition from regulation and supervision by and under this Act to regulation and supervision by and under the Companies Acts and the Currency and Central Bank Acts, 1927 to 1971.