Explanatory note

These Regulations, which supersede the Building Societies (Mergers) Regulations 1986, prescribe a limit in relation to any bonus distribution by a building society in consideration of a merger. Under section 95 of the Building Societies Act 1986, a distribution within any limit prescribed by regulations requires only the approval of the members of the paying society; a distribution in excess of it requires the approval of the members of each of the societies participating in the merger. The limit specified in the 1986 Regulations was, in relation to a distribution to members of any one society, an amount equal to one per cent. of that society’s total assets. These regulations continue that limit in relation to the generality of cases, but create an exception in the case of a distribution to members of a society which is transferring only some of its liabilities to shareholders; in any such case the limit is an amount equal to one per cent. of the value of the liabilities transferred by the society in question. For the purpose of calculating the limit, assets and liabilities are to be given the value they are given when financial information relevant to the merger is sent to members.