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Building Societies Act 1965

Schedule 2: Requirements relating to founders' and directors' shares

You could also call this:

"Rules for special shares given to founders and directors of building societies"

When a building society issues shares to founders or directors, there are special rules that apply for five years. During this time, these shares can't have better terms than other shares in the society. This includes things like interest rates, profit sharing, and what happens if the society closes down.

The person who gets these special shares can't give them to someone else for five years, unless it happens by law (like if they die). The society also can't pay back the money for these shares during the five years, as long as the society is still running.

If the society doesn't follow these rules, the Registrar (a government official) can ask a court to close down the society. The society might be able to suggest other options instead of closing down. The society also needs permission from the Registrar to join with another society or transfer its business during the five years, and there might be extra rules if this happens.

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This page was last updated on

View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM372514.

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2Requirements relating to founders' and directors' shares Empowered by ss 29(1), (4), 70(3)(a), 71(5)

1

In this schedule—

the relevant period of 5 years means—

  1. where the relevant shares are issued in compliance with subsection (1) of section 29, the period of 5 years beginning with the date on which a certificate is issued by the Registrar under that subsection; and
    1. where the relevant shares are issued in compliance with section 70, the period of 5 years beginning with the date of the service on the society of a notice under that section

      the relevant shares means shares issued by a society in compliance with subsection (1) of section 29 or section 70.

          2

          Neither at the time when the relevant shares are issued, nor at any other time before the end of the relevant period of 5 years, shall the terms regarding the rate of interest, participation in profits, contribution to losses, or rights on a termination or dissolution be, either as a whole or separately, more favourable for those shares than for any other shares in the society.

            3

            Until the end of the relevant period of 5 years, the society shall not give effect to or recognise any transfer of the relevant shares by the person to whom they were issued, and the terms attaching to those shares shall so provide:

            provided that this clause shall not prevent the society from giving effect to any transmission of those shares by operation of law.

              4

              Until the end of the relevant period of 5 years, and so long as the society is not terminated or dissolved, the society shall not repay the sum subscribed for the relevant shares or any part of that sum, and the terms attaching to those shares shall so provide.

                5(1)

                If at any time before the end of the relevant period of 5 years there is a failure to comply with clauses 2 to 4 of this schedule in relation to any of the relevant shares, the Registrar may, subject to the succeeding provisions of this schedule, apply to the court for the appointment of a liquidator under Part 16 of the Companies Act 1993.

                1. Not less than 1 month before making the application, the Registrar shall send to the society notice of his or her decision, and may, if he or she thinks fit, afford to the society an opportunity of submitting, as an alternative to the liquidation of the society under the Companies Act 1993, proposals for—

                2. dissolving the society in one of the ways mentioned in sections 114 and 115 of this Act; or
                  1. uniting the society under section 32 with another society, or transferring its engagements to another society under section 33;—
                      1. and the Registrar may, having regard to the proposals, postpone his or her decision to make the application.

                    Notes
                    • Schedule 2 clause 5(1): amended, on , by section 10(1) of the Building Societies Amendment Act 1993 (1993 No 111).
                    • Schedule 2 clause 5(2): replaced, on , by section 10(2) of the Building Societies Amendment Act 1993 (1993 No 111).

                    6(1)

                    Until the end of the relevant period of 5 years, the society shall not, without the consent of the Registrar, unite with another society under section 32, or transfer its engagements to another society under section 33, unless the other society (or, in the case of a union with 2 or more societies, one of those societies) has been incorporated for more than 5 years and has assets which exceed $200,000 in value.

                    1. In giving his or her consent under this clause—

                    2. to a union, where any of the holders of the relevant shares will become holders of shares in the society formed on the union; or
                      1. to a transfer of engagements, where any of the holders of the relevant shares will become holders of shares in the society to which the engagements are transferred—
                          1. the Registrar may attach to his or her consent conditions that are in his or her opinion equivalent to the conditions that under the foregoing provisions of this schedule attach to the relevant shares.

                        1. If at any time during the remainder of the relevant period of 5 years any conditions attached by virtue of subclause (2) are broken, the Registrar may apply to the court for the appointment of a liquidator under the Companies Act 1993 of the society formed on the union, or of the society to which the engagements are transferred, as the case may be.

                        Compare
                        • Building Societies Act 1962 First Schedule (UK)
                        Notes
                        • Schedule 2 clause 6(3): amended, on , by section 10(3) of the Building Societies Amendment Act 1993 (1993 No 111).