Article 2 Interpretation

In this Order–

• “the Act” means the Building Societies Act 1986;

• “the applicable provisions” means section 97 of the Act and the other applicable provisions as therein described;

• “the authorised sum” means such sum as is equal to the amount of payments which a society may accept by way of subscription for deferred shares without authorisation being required as may be from time to time permitted by section 9 (initial authorisation to raise funds and borrow money);

• “crediting” in relation to interest shall not include the issue, in lieu of interest, of permanent interest bearing shares credited as fully paid by the application of reserves;

• “creditors” in relation to a society extends to members holding shares in the society, other than deferred shares, as regards the principal of those shares and all interest due thereon in accordance with their terms;

• “the first criterion” means the first criterion in section 45(3) (the criteria for prudent management) of the Act;

• “issue terms” in relation to an issue of deferred shares means the provisions of a document which sets out or of a connected series of documents which set out the rights and obligations of a building society and of shareholders in respect of those shares;

• “new deferred shares” means shares issued by a building society on or before the day on which this order comes into operation which are deferred shares as defined by the Building Societies (Deferred Shares) Order 1989^f1;

• “old deferred shares” means shares issued by a building society on or before 31st December 1986 on the terms set out in paragraph 2 of Schedule 1 to the previous regulations;

• “permanent interest bearing shares” has the meaning assigned by article 4below;

• “the prescribed terms” means the terms specified in Schedule 1 hereto and “the disqualifying terms” means the terms specified in Schedule 2 hereto;

• “the previous regulations” means the Building Societies (Authorisation) Regulations 1981^f2 or the Building Societies (Authorisation) Regulations (Northern Ireland) 1982^f3;

• “rate” in relation to interest means the rate per annum and “fixed rate”, “floating rate”, “market rate” and “stepped rate” have the respective meanings assigned by article 4(4);

• “society” in relation to an issue of deferred shares means a society which proposes to issue, or as the case may be, has issued such shares;

• “specified” means specified by issue terms; and

• “subordinated debt”, in relation to a successor company to which a building society transfers the whole of its business in accordance with the applicable provisions, means a sum in respect of which

  1. (a)

     no repayment will be made to the creditor within a period not less than five years from the date of the transfer except with the consent of the Bank of England or in the winding up of the company, and

  2. (b)

     no repayment will be made to the creditor in the winding up of the company except where at least all sums due from the company to other creditors claiming in the winding up of the company are paid to those creditors in full but for this purpose account need not be taken of debts to other creditors being debts which pursuant to any stipulation rank for payment only after debts which are not subject to any such stipulation.

For the purposes of this Order a return on a share or deposit means the interest, dividend or combination of interest and dividend in respect of that share or deposit.