# The Building Societies (Designated Capital Resources) (Deferred Shares) Order 1989, Note: Explanatory note


(This note is not part of the Order)
This Order specifies that where a building society has issued shares (“old deferred shares”) in accordance with the terms of regulations made under the Building Societies Act 1962 or shares (“new deferred shares”) in accordance with the terms prescribed for deferred shares by the Building Societies (Deferred Shares) Order 1989 (S.I. 1989/207), they may be treated as capital resources which may be aggregated to the limits mentioned below with reserves for the purposes of the first criterion of prudent management (maintenance of adequate reserves and other designated capital resources) under section 45(3) of the Building Societies Act 1986. The prescribed terms restrict payment of interest and repayment of capital until all other shareholders have been paid. The limits to which such aggregation is permitted are, in the case of old deferred shares, £75,000, and, in the case of new deferred shares, £250,000 less the amount of any old deferred shares for the time being so aggregated.
The terms of deferred shares may permit the society issuing them to pay a special dividend or to repay principal with the approval of the Building Societies Commission if the Society has other capital sufficient for its present and foreseeable capital needs. If such approval is given, the deferred shares thereupon cease to be aggregable with reserves for the purposes mentioned above.
Other resources may also be aggregated with reserves for the purposes of the same criterion by virtue of the Building Societies (Supplementary Capital) Order 1988 (S.I. 1988/777) (which relates to specified forms of subordinated debt).
The Building Societies (Designated Capital Resources) Order 1986 (which permitted aggregation of old deferred shares) with reserves for the purposes of the first criterion of section 45(3) of the Act is revoked.

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Source: https://www.legislation.gov.uk/uksi/1989/208/note (the official version)
Page: https://openlegislation.uk/building-societies-designated-capital-resources-deferred-shares-order-1989/note
Contains public sector information licensed under the Open Government Licence v3.0. Source: legislation.gov.uk, The National Archives.