There are provisions for amalgamations and transfer of engagements of a Building Society. Amalgamation is by formation of a Building Society as successor. The amalgamating Societies must agree on the rules, objects of the successor Society and make joint application to the Central Bank for confirmation. If the Central Bank confirms the amalgamation, it is to take effect on the specified date. There are provisions to facilitate the transfer of assets, liabilities etc.
A Building Society may transfer its engagements to another Society which undertakes to fulfil the engagements. The Society in both of the above cases must resolve to do so by special resolution. It must be confirmed by the Central Bank. There are provisions to facilitate the transfer. In the case of an amalgamation, each must approve the amalgamation by special resolution.
Building Societies proposing to amalgamate or transfer their engagements must provide a detailed statement to members disclosing a range of matters.
There are provisions for publication of the proposed amalgamation or transfer. Objections and representations may be made to the Central Bank. The Building Societies are allowed to respond. Having considered representations, application etc., the Central Bank may confirm the amalgamation. They may refuse the amalgamation if it would be contrary to public interest if relevant information is not made available or if any requirements applicable to, the amalgamation or transfer have not been fulfilled.
Where an amalgamation or transfer involve provisions for loss of office by officers of the Society, it must be approved by the special resolution giving approval of the Society unless certain exceptions apply. This also applies where funds are to be distributed in consideration of the amalgamation or transfer amongst members of the participating scheme. The bank must be satisfied that compensation or distribution is justified and reasonable in the circumstances.
A significant feature of the 1989 Building Society Act was the power to convert building societies to public companies. Upon conversion, shareholdings and deposits of the same amount with the successor company were issued to members and the business property and assets vest in the company. The company may float on a stock exchange. After conversion, certain to the restrictions such as the obligation to maintain half of its funds in shares no longer applies.
The 1989 legislation provided that a converted company may not be taken over a period of five years after conversion. No one person may obtain more than 15 percent of shares with voting rights in this period
There are provisions for the conversion of Building Societies to public limited company. The Society must approve a conversion scheme pursuant to a special resolution. It must obtain Central Bank confirmations. The Society must be registered under the Companies Act.
Building Society is converted by approving a conversion scheme at general meetings. Detailed information about the conversion scheme must be provided to each member in advance. The rationale for the conversion must be explained.
The scheme must allow members of the Society to obtain shares in the successor company. Qualifying conditions apply to members who are entitled to the conversion rights. A proposed conversion required prior notice to the Central Bank and consultation regarding the conversion scheme.
Members with at least 100 share or one member with court approval may petition to high court to conform to cancel the scheme. The court considers the interest and rights of the members of the Society in relation to the scheme.
There are detailed provisions in relation to the terms and conditions of the conversion scheme. There are detailed provisions in respect of approval and adoption of the scheme. The prior approval of the Central Bank is required.
A successor company shall not offer its shares to the public by way of sale, allotment, registered transfers if the effect would be that 15% or more of the shares would be held by any one or more persons or if the allotment registration or transfer would be that 15% or more of the voting rights would be held by nominees of one person or persons acting in concert.
A conversion statement must be prepared containing requisite information to be presented to members at the meeting to approve conversion.
Where the scheme has been approved, an application for confirmation of the scheme is made to the Central Bank. The Central Bank may confirm the scheme or may reject it. If on certain grounds, including procedural grounds, regulatory ground or that it may be contrary to the public interest.
A certain number of members not less than 100 or with the approval of court, any number may petition to annul the conversion schemes. The court may make an order cancelling or confirming the scheme. It is to have regards to the rights and interests of the members only or any class of them.
Upon conversion, there is a procedure for adaptation of Memorandum and Articles of Association and conversion of the Building Society into a company.
A Building Society may be wound up in accordance with the Company’s Acts. The grounds off winding up are broadly similar to those in respect of companies. One ground includes revocation of an authorisation.
Where a Society is being wound up, a person to whom a loan is made is not obliged to pay the amount payable on the loan other than in accordance with the terms of the mortgage or other security. A liquidator may only dispose of assets secured by mortgages etc. on terms which the court is satisfied are just and equitable and which the borrower would have reasonably entitled to expect if the Society had been wound up.
A Central Bank may cancel registration of a Building Society if it has been dissolved, wound up, converted to a company. Prior notice must be given to the Society. There is an appeal to court against cancellation.