# The Building Societies (Designation of Qualifying Bodies) Order 1995, Paragraph 5: Meaning of “permitted investments”


(1) In this Schedule “permitted investments” means shares or corresponding membership rights, or rights in or to shares or corresponding membership rights, issued by a relevant borrower or by a parent undertaking of a relevant borrower or a subsidiary undertaking of a relevant borrower or of such a parent undertaking, where either—
(a) the shares or rights are issued as partial consideration for granting the loan, and the amount paid (or treated as paid) for the shares or rights does not exceed 5 per cent. of the initial amount of the loan, or
(b) the shares or rights are issued in consideration of the release of the relevant borrower from liability to pay all or part of the amount due under the load (whether principal, interest or otherwise), following default on the part of the relevant borrower under the loan or pursuant to a compromise of the rights of the body or society and the relevant borrower under the loan, and the amount paid (or treated as paid) for the shares or rights does not exceed the amount released.
(2) For the purposes of this paragraph—
(a) “relevant borrower” means a body corporate formed in a member State or the Channel Islands, the Isle of Man, Gibraltar, Iceland, Liechtenstein, Norway or Switzerland, which is the borrower under a loan owed to the body or to the society exercising the relevant power (whether owed to the body or society alone or in a syndicate); and
(b) “the initial amount of a loan”, in the case of a loan which may be advanced or drawn down in more than one instalment, means the maximum amount of principal that may be advanced or drawn down on the date the borrower first receives funds under the loan.

---
Source: https://www.legislation.gov.uk/uksi/1995/1188/schedule/paragraph/5 (the official version)
Page: https://openlegislation.uk/building-societies-designation-of-qualifying-bodies-order-1995/schedule/paragraph-5
Contains public sector information licensed under the Open Government Licence v3.0. Source: legislation.gov.uk, The National Archives.