Regulation 9 Priority liquidation distributions
The priority liquidation distribution to which qualifying members of a society are to be entitled on the liquidation of the successor company in accordance with section 100(2)(c) of the Act, in the case of a transfer of the society’s business to a specially formed company, is a distribution to each qualifying member calculated according to the formula—
A x B C where—
the amount of the member’s qualifying investment on the date on which the successor company resolves that it be wound up or on which a winding up order is made against it, as the case may be, is A;
the amount of the society’s reserves required to be stated pursuant to paragraph 13 of Part I of the Schedule to these regulations in the transfer statement less—
the aggregate amount distributed to members of the society in pursuance of section 100(2)(b) of the Act, and
the cost of and incidental to the transfer borne or incurred by the society and the successor company save to the extent that such cost has been taken into account in calculating the amount of the reserves, is B; and
the aggregate amount invested by qualifying members in shares in the society on the day immediately preceding the vesting date is C.
For the purposes of paragraph (1)(b) and (c) above, the aggregate amount referred to in paragraph (1)(b)(i) above, the amount of the cost referred to in paragraph (1)(b)(ii) above and the aggregate amount referred to in paragraph (1)(c) above shall, if certified by the auditor of the successor company as soon as reasonably practicable after the vesting date, be taken respectively to be quantified as so certified.
For the purposes of paragraph (1) above, a member’s qualifying investment is a sum equal to either—
the amount of the member’s initial deposit less the aggregate amount of the withdrawals since the vesting date from the account in which the deposit was then held, or (b) the lesser (or, as the case may be, the least) of the following, namely the amount of the member’s initial deposit and the amount held on the date of any periodic review in the account in which that deposit was held,
whichever is provided for in the transfer agreement.
In this regulation—
a member’s “initial deposit” means the amount of the liability which the successor company assumes in respect of the qualifying shares held by the member on the vesting date pursuant to section 100(2)(a) of the Act, and where that liability is in respect of a deposit held in more than one account, either—
the amount in each account shall be treated as a separate deposit and thus a separate qualifying investment in respect of which a priority liquidation distribution may be due, or
the accounts in which the deposit was held shall be treated as if they were a single account, whichever is provided for in the transfer agreement; and
a “periodic review” means a review undertaken at regular intervals following the vesting date, being either annual intervals or more frequent intervals specified in the transfer agreement.
For the purposes of this regulation—
a transfer of any sum from one account to another account in the name of the same member shall not be treated as a withdrawal where both accounts were accounts in which the member’s initial deposit was held but shall be so treated where the account from which the sum was transferred was, and the other account was not, an account (or, as the case may be, one of the accounts) in which the member’s initial deposit was held;
accounts in joint names shall not be treated as being a single account with any other account except one of which all the joint holders are the same as those of the former;
and
interest, other than interest which has been credited by way of capitalisation, shall be disregarded in calculating a member’s initial deposit, and payment of interest, other than interest so credited, shall nOt be treated as a withdrawal.