OpenLegislation

Explanatory note

Original text. Later amendments are not shown.

(This note is not part of the Order)

This Order amends the Building Societies (Designation of Qualifying Bodies) Order 1988 (“the principal order”) so as to add “appropriate territorial corporation” as a further type of designated body suitable for investment or support by building societies under Section 18 of the Building Societies Act 1986. This power in relation to such corporations is only available to a building society with commercial assets of not less than £100m (the standard asset provision).

An appropriate territorial corporation is a body corporate formed in a specified territory, that is to say respectively the Isle of Man, Jersey, and Guernsey and Alderney (Article 2 and Schedule, para 4). An appropriate territorial corporation is one which is formed for, or whose objects include, carrying on one or more of the activities of:

  1. (a)

    lending money on mortgage on land in the territory in which it is incorporated;

  2. (b)

    acquiring, holding and disposing of existing mortgage debts, similarly secured;

  3. (c)

    taking deposits anywhere other than in the United Kingdom.

and which does not engage in activities such as market making and estate agency work (article 2 and Schedule, paragraphs 1(b), 3 and 4).

It does not have the capacity to have subordinate organisations and is designated as suitable for investment and support by a building society, but not for support in the absence of investment (article 2 and Schedule, paragraph 1(b) and (c)).

In relation to secured loans which it makes, there is a requirement that the corporation maintains systems similar to those required of building societies for the safe custody of documents and for assessing the adequacy of security. Secured loans by the corporation must, pursuant to the Schedule, paragraph 2(b), be loans which the society itself would have had power to make had the society itself carried on business in the specified territory, pursuant to the power conferred by Section 14 of the Act (power to make advances secured on land overseas) as applied to the specified territory by the relevant order referred to in the Schedule, paragraph 4.