# The Building Societies (Deferred Shares) Order 1989, Paragraph 1


The key terms are terms which have effect so as–
(a) to prohibit the payment or crediting of a return on the specified shares for any financial year until all returns on other shares of any class in respect of that financial year or any previous financial year in accordance with the terms applying to that class, have been duly paid or credited;
(b) to prohibit the payment or crediting of a return on the specified shares in respect of any period save to the extent that the rate of return on those shares for that period does not exceed the rate of return accruing during that period on other shares which for the time being have the lowest rate of return of all classes of shares for the time being in issue;
(c) to prohibit the payment or crediting of a return on the specified shares for any financial year if the board of directors of the society are of opinion that on or after the payment or crediting of that return, or, as the case may be, payment or crediting in full of that return there would be a failure by the society to satisfy the first criterion of prudent management (maintenance of adequate reserves and other designated capital resources) set out in section 45(3) of the Act and in such case passes a resolution cancelling such return or as the case may require reducing it to such extent as may be necessary to secure that there will be no such failure;
(d) to require, where shares in the society fall to be used in order to contribute to the losses of the society, the specified shares and all returns on them to be so used in full before recourse is had to any other shares or returns on those other shares;
(e) to prohibit the repayment of any principal to the shareholders in respect of the specified shares except on the winding up or dissolution of the society in circumstances where all the principal of all other shares and the principal of all subordinated debt due from the society is repaid in full together with all returns credited or accrued thereon;
(f) to prevent the specified shares from participating in profits of the society on the winding up or dissolution of the society save where there is no class of other shares the participation of which is lower than the participation of the specified shares proportionately to the value of these shares and the specified shares respectively; and
(g) to prohibit the transfer of specified shares save–
(i) a transfer by operation of law; or
(ii) a transfer in accordance with a resolution of the board of directors of the society to their transfer to a person who has given notice to the board in writing that he is aware of the terms upon which those shares are held and is prepared to take a transfer of shares of such an amount as is specified in the notice upon those terms.

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Source: https://www.legislation.gov.uk/uksi/1989/207/schedule/paragraph/1 (the official version)
Page: https://openlegislation.uk/building-societies-deferred-shares-order-1989/schedule/paragraph-1
Contains public sector information licensed under the Open Government Licence v3.0. Source: legislation.gov.uk, The National Archives.