# The Building Societies (Designation of Qualifying Bodies) (Amendment) Order 1988, Note: Explanatory note


(This note is not part of the Order)
This Order amends the Building Societies (Designation of Qualifying Bodies) Order 1988, which designates corporate bodies and types of corporate body as suitable for investment or support by building societies under section 18 of the Building Societies Act 1986. The main amendments are contained in paragraphs 1 and 2 of the Schedule to this Order.
Paragraph 1 designates LondonClear Limited for the purposes of section 18 as a body corporate suitable for investment and support by building societies.
Paragraph 2 revises the group interest provision contained in paragraph 4 of Part II of the Schedule to the previous order. This provision is a condition which applies to corporate bodies (other than general insurance companies) designated by description which have subordinate organisations (that is to say organisations in which the designated body has at least a 5 per cent interest). The condition imposes two duties on a society investing in such a designated body.
First, if the society discovers that any subordinate organisation of the designated body is conducting business in the “prohibited range” (as defined in new paragraph 4(2)), the society must dispose of its interest in the designated body as soon as conveniently practicable without undue loss. Business in this prohibited range is market making, lending money (except by a stockbroker in the ordinary course of buying or selling investments as agents), taking deposits in a manner requiring authorisation under the Banking Act 1987 (c. 22), and activities which the society itself cannot undertake because it has not adopted the necessary power or because the activities would contravene a restriction on the extent of a power, which it has adopted.
Secondly, except where the designated body is a company in which the society has an interest of less than 15 per cent, the society must seek to obtain a certificate for each financial year of the designated body to the effect that at least 60 per cent of the consolidated gross income of the designated body and its subordinate organisations was derived from carrying on activities for which the society has power to provide investment or support. If not such certificate is obtained for two successive financial years, the society must cease having an interest in the designated body (or reduce its interest to less than 15 per cent if the designated body is a company).

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Source: https://www.legislation.gov.uk/uksi/1988/1393/note (the official version)
Page: https://openlegislation.uk/building-societies-designation-of-qualifying-bodies-amendment-order-1988/note
Contains public sector information licensed under the Open Government Licence v3.0. Source: legislation.gov.uk, The National Archives.