The Credit Unions (Northern Ireland) Order 1985

• Citation: S.I. 1985/1205 (N.I.)
• Sections: 120

Section 1 Title and commencement

(1) This Order may be cited as the Credit Unions (Northern Ireland) Order 1985.

(2) This Order shall come into operation on such day or days as the Head of the Department may by order appoint .

Section 2 Interpretation

(1) The Interpretation Act (Northern Ireland) 1954 shall apply to Article 1 and the following provisions of this Order as it applies to a Measure of the Northern Ireland Assembly.

(2) In this Order—

“ the 2000 Act ” means the Financial Services and Markets Act 2000;

“amendment”, in relation to the rules of a credit union, includes a new rule, and a resolution rescinding a rule, of the credit union;

“annual return” means the annual return which a credit union is required by Article 49 to send to the FCA ;

“the appropriate authority” means—

in relation to a credit union which is a PRA -authorised person, the PRA ; and

in relation to a credit union which is not a PRA -authorised person, the FCA ;

“authorised bank” means—

a person who has permission under Part 4A of the Financial Services and Markets Act 2000 to accept deposits;

an EEA firm of the kind mentioned in paragraph 5(b) of Schedule 3 to that Act which has permission under paragraph 15 of that Schedule (as a result of qualifying for authorisation under paragraph 12(1) of that Schedule) to accept deposits;

a municipal bank, that is to say a company which, immediately before the 1st December 2001 fell within the definition in section 103 of the Banking Act 1987;

a trustee savings bank within the meaning of section 3 of the Trustee Savings Banks Act 1981;

the National Savings Bank;

Sub.‐para. (d) rep. by SI 2001/1149

...

“board of directors” means the committee of management or other directing body of a credit union;

"body corporate" includes a partnership regarded as a legal person under the law of the country or territory in which it was established;

“civil partner” includes former civil partner and reputed civil partner ;

"corporate member" , in relation to a credit union, means—

a body corporate that is a member of the credit union,

an individual who is a member of the credit union in the individual's capacity as a partner in a partnership, or

an individual who is a member of the credit union in the individual's capacity as an officer or member of the governing body of an unincorporated association;

“credit union” means a society registered under this Order or a society registered under the Co-operative and Community Benefit Societies Act (Northern Ireland) 1969 as a credit union;

“the Department” means the Department of Economic Development;

“electronic form” means a document or information sent by electronic means (for example, by email of fax), or by any other means while in electronic form (for example, sending a disc in the post);

“electronic means” means a document or information sent initially and received at its destination by means of electronic equipment for the processing (which includes digital compression) or storage of data, and entirely transmitted, conveyed and received by wire, by radio, by optical means or by other electromagnetic means;

“the FCA” means the Financial Conduct Authority;

“the FCA’s seal” means the seal provided for in regulations made under section 109(1)(b) of the Friendly Societies Act 1974;

" interest-bearing share " means a share issued on terms which entitle the holder to interest but not to a dividend;

“meeting”, includes, where the rules of a credit union so allow, a meeting of delegates appointed by members;

“member of the family”, in relation to any person, means—

his spouse or civil partner ;

any lineal ancestor, lineal descendant, brother, sister, half-brother, half-sister, uncle, aunt, nephew, niece, first cousin of his or his spouse or civil partner ;

the spouse or civil partner of any person within sub-paragraph (b);

adoptive father, mother, son or daughter;

and for the purpose of deducing any such relationship—

Sub‐para. (i) rep. by 1987 NI 22

an illegitimate child or step-child shall be treated as the legitimate child of the relationship in question ;

“non-qualifying member” means a person who remains a member of a credit union by virtue of Article 14(5) and includes, in relation to an amalgamated credit union or a credit union which has accepted a transfer of engagements, a person who does not have the required qualifications for admission to membership of that credit union but became a member of it by virtue of the amalgamation or transfer of engagements, having been immediately before the amalgamation or transfer a non-qualifying member of one of the amalgamating credit unions or, as the case may be, the credit union from which the transfer of engagements was made;

“officer”, includes any treasurer, secretary, member of the board of directors, manager or servant of the credit union other than a servant appointed by the board of directors, but does not include an auditor appointed by the credit union in accordance with the requirements of this Order;

“order” except in Article 1(2), means an order made by the Department subject to affirmative resolution;

“the PRA” means the Prudential Regulation Authority;

“PRA-authorised person” has the meaning in section 2B of the 2000 Act;

"partnership" means a partnership not regarded as a legal person under the law of the country or territory in which it was established;

“persons claiming through a member”, includes the heirs, executors or administrators and assignees of a member and, where nomination is allowed, his nominee;

...

“registered”, in relation to the name or an office of a credit union means for the time being registered under this Order;

“registered rules” means the rules of the credit union registered under this Order as for the time being in force after any amendment of the rules so registered;

...

“regulations” means regulations made by the Department subject to negative resolution;

“spouse” includes former spouse and reputed spouse;

“statutory provision” has the meaning assigned to it by section 1(f) of the Interpretation Act (Northern Ireland) 1954;

“year of account” means any period required by Article 49 to be included in an annual return of the credit union.

" year-end balance sheet " means a balance sheet relating to the position at the end of a year of account;

(2A) In this Order, references to a deposit or accepting deposits and sub-paragraphs (a) and (ab) of the definition of “authorised bank” in paragraph (2) must be read with—

(a) section 22 of the Financial Services and Markets Act 2000;

(b) any relevant order under that section; and

(c) Schedule 2 to that Act.

(3) In this Order “the current year of account”, in relation to the appointment of an auditor or auditors, means the year of account in which the question of that appointment arises, and “the preceding year of account” means the year of account immediately preceding the current year of account.

(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Section 2A The registrar and assistant registrar

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Section 3 Registration

(1) Subject to Article 13 a society may be registered as a credit union under this Order if—

(a) it is shown to the satisfaction of the FCA that the conditions specified in paragraph (2) are fulfilled;

(b) the rules of the society comply with Article 8(1); . . .

(c) the place which under those rules is to be the society's registered office is situated in Northern Ireland ;

(d) the society has made an application for a permission under Part 4A of the 2000 Act to accept deposits;

(e) the FCA is satisfied that, once registered under this Order, the society will satisfy, and continue to satisfy, the threshold conditions (within the meaning of section 55B(1) of the 2000 Act) for which the FCA is responsible in relation to the regulated activity of accepting deposits; and

(f) the PRA is satisfied that, once registered under this Order, the society will satisfy, and continue to satisfy, the threshold conditions (within the meaning of section 55B(1) of the 2000 Act) for which the PRA is responsible in relation to the regulated activity of accepting deposits.

(1A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(1B) The PRA must notify the FCA in writing if it is satisfied as mentioned in paragraph (1)(f).

(2) The conditions referred to in paragraph (1)(a) are—

(a) that the objects of the society are those, and only those, of a credit union; and

(b) that admission to membership of the society is restricted to persons each of whom has, in relation to all the other members, not less than one common bond.

(3) The objects of a credit union are—

(a) the promotion of thrift among its members by the accumulation of their savings;

(b) the creation of sources of credit for the benefit of its members at a fair and reasonable rate of interest;

(c) the use and control of members' savings for their mutual benefit; and

(d) the training and education of members in the wise use of money and in the management of their financial affairs.

(3A) In paragraph (3) references to members do not include corporate members.

(4) A common bond for the purpose of paragraph (2)(b) is—

(a) following a particular occupation;

(b) residing or being employed in a particular locality;

(c) being employed by a particular employer;

(d) being a member of a bona fide organisation or being otherwise associated with other members of the society for a purpose other than that of forming a society to be registered as a credit union;

(e) any other common bond approved by the FCA .

(5) In ascertaining whether a common bond exists between the members of a society, the FCA —

(a) may, if the FCA considers it proper in the circumstances of the case, treat as sufficient evidence of the existence of a common bond a statutory declaration which is given by three members and the secretary of the society, and is to the effect that a common bond exists,

(b) may, if the FCA considers it proper in the circumstances of the case, treat the fact that admission to membership is restricted as mentioned in paragraph (2)(b) as sufficient evidence of the existence of a common bond.

(6) For the purposes of this Order, if the rules of a credit union so provide, a person shall be treated as having the qualifications required for admission to membership stated in those rules if he is a member of the same household as, and is a member of the family of, another person who is a member of the credit union and who has a direct common bond with those other members.

Section 3A Common bonds: corporate members

(1) This Article applies for the purposes of determining whether—

(a) a body corporate, or

(b) an individual acting in the capacity as a partner in a partnership or an officer or member of the governing body of an unincorporated association,

has a common bond within Article 3(4)(a) to (d) in relation to other members of a credit union.

(2) The body corporate or individual falls within the common bond specified in Article 3(4)(a) if the principal business of the body corporate, partnership or unincorporated association—

(a) requires it to employ or otherwise engage persons who follow the particular occupation, or

(b) relates to that occupation in some other way.

(3) The body corporate or individual falls within the common bond specified in Article 3(4)(b) if the body corporate, partnership or unincorporated association has a place of business in, or other significant connection with, the particular locality.

(4) The body corporate or individual falls within the common bond specified in Article 3(4)(c) if the body corporate, partnership or unincorporated association—

(a) employs the persons who qualify for membership under that common bond, or

(b) provides services, or is otherwise related, to that employer.

(5) The body corporate or individual falls within the common bond specified in Article 3(4)(d) if the body corporate, partnership or unincorporated association is a member of a bona fide organisation or otherwise associated with other members of the society for the purpose specified in that provision.

Section 4 Supplementary provisions as to registration

(1) An application for the registration of a society under this Order shall be signed by 21 members and the secretary of the society and shall be sent to the FCA with 2 copies of the society’s rules or, if the application is made by electronic means, one copy of those rules .

(2) On being satisfied that a society has complied with the provisions of this Order as to registration the FCA shall issue to the credit union an acknowledgement of registration , bearing the FCA’s seal, which shall be conclusive evidence that the credit union is duly registered under this Order unless it is proved that the registration of the credit union has been cancelled or is for the time being suspended.

(2A) The FCA must not issue an acknowledgement of registration under paragraph (2) unless—

(a) if the FCA is the appropriate regulator (within the meaning given in section 55A of the 2000 Act), it proposes to give the society permission under Part 4A of the 2000 Act to accept deposits; or

(b) if the PRA is the appropriate regulator (within the meaning given in section 55A of the 2000 Act), the PRA has confirmed to the FCA that it proposes to give the society permission under Part 4A of the 2000 Act to accept deposits.

(3) A society whose objects are wholly or substantially those of a credit union within the meaning of Article 3(3) shall not be registered otherwise than as a credit union under this Order and any such registration shall be void.

Section 5 Registration to effect incorporation of credit union with limited liability

A credit union shall by virtue of its registration be a body corporate known by its registered name, by which it may sue and be sued, with perpetual succession and a common seal and with limited liability; and that registration shall rest in the credit union all property for the time being vested in any person in trust for the credit union and all legal proceedings pending by or against the trustees of the credit union may be brought or continued by or against the credit union in its registered name.

Section 6 Use of name “ credit union ”, etc.

(1) A credit union shall not be registered under this Order under a name which in the opinion of the FCA is undesirable.

(2) The name of every credit union shall contain the words “credit union” and the word “Limited” shall be the last word in that name.

(3) Every credit union shall cause its registered name to be painted or affixed, and to be kept painted or affixed, in a conspicuous position and in letters easily legible, on the outside of its registered office and every other office or place in which the business of the credit union is carried on, and shall have that name engraven in legible characters on its seal and set out in legible characters—

(a) in all notices, advertisements and other official publications of the credit union;

(b) in all business letters of the credit union;

(c) in all bills of exchange, promissory notes, endorsements, cheques, and orders for money or goods, purporting to be signed by or on behalf of the credit union;

(d) in all bills, invoices, receipts, and letters of credit of the credit union.

(4) Any officer of a credit union, or any other person acting on a credit union's behalf, who—

(a) uses any seal purporting to be a seal of the credit union which does not have the credit union's registered name engraven on it in legible characters; or

(b) issues or authorises the issue of any document such as is mentioned in paragraph (3) (a) or (d) in which that name is not set out in legible characters; or

(c) signs or authorises to be signed on behalf of the credit union any document such as is mentioned in paragraph (3)(c) in which that name is not so set out,

shall be guilty of an offence and liable on summary conviction to a fine not exceeding level 3 on the standard scale and, in the case of a conviction by virtue of sub-paragraph (c), shall further be personally liable to the holder of any such document as is referred to in that sub-paragraph for the amount specified in the document unless that amount is duly paid by the credit union.

(5) Subject to paragraph (6), a person shall not, unless registered as a credit union,—

(a) use, in reference to himself, a name, title or descriptive expression containing the words “credit union” or any cognate term or any derivative of those words; or

(b) represent himself as being a credit union;

and any person who contravenes this paragraph shall be guilty of an offence and shall be liable on summary conviction to a fine not exceeding level 4 on the standard scale.

(6) Paragraph (5) does not apply to—

(a) the use by an officer or employee of a credit union of a title or descriptive expression indicating his office or post with the credit union; or

(b) the use with reference to an association or group of credit unions of a name which has been approved in writing by the FCA .

Section 7 Change of name

(1) A credit union may change its name in the following manner and in that manner only, that is to say—

(a) by a resolution for the purpose passed at a general meeting of the credit union after the giving of such notice as is required by the rules of the credit union for such a resolution or, if the rules do not make special provision as to notice of such a resolution, after the giving of such notice as is required by the rules for a resolution to amend the rules; and

(b) with the approval in writing of the FCA .

(2) A change in the name of a credit union shall not affect any right or obligation of the credit union, or of any member of the credit union and any pending legal proceedings may be continued by or against the credit union notwithstanding its new name.

Section 8 Rules

(1) The rules of a credit union shall be in such form as the FCA may determine and shall contain—

(a) provision with respect to the matters mentioned in Schedule 1;

(b) such additional provisions as the registrar may determine.

(1A) The rules of a credit union must not be inconsistent with the 2000 Act or any rules made or any requirements imposed by or under that Act.

(2) An acknowledgement of the registration of a credit union issued under Article 4(2) shall also constitute an acknowledgement, and be conclusive evidence, of the registration under this Order of the rules of that credit union in force at the date of the credit union's registration.

Section 9 Supplementary provisions as to rules

(1) The rules of a credit union or any schedule to those rules may specify the form of any instrument necessary for carrying the purposes of the credit union into effect.

(2) The rules of a credit union may impose reasonable fines (not exceeding £100) on persons who contravene any of those rules.

(3) Where, within such reasonable time as may be specified in the rules, a person has failed to pay any fine imposed by the rules of a credit union under paragraph (2), the credit union may cancel the membership of that person of the credit union.

(4) Any provision of, or of any instrument made under, this Order or any other statutory provision requiring or authorising the rules of a credit union to deal with particular matters shall be without prejudice to the power of such a credit union to make rules with respect to any other matter which are not inconsistent with any such provision or with any other provision of this or any other statutory provision and which are not otherwise unlawful.

Section 10 Amendment or registered rules

(1) The rules of a credit union shall not be amended except by a resolution passed by not less than two-thirds of the members present at a general meeting called for the purpose after the giving of such notice as is by the rules required for such a resolution.

(2) Subject to paragraph (3), any amendment of a credit union's rules as for the time being registered under this Order shall not be valid until the amendment has been so registered, for which purpose there shall be sent to the FCA 2 copies of the amendment signed by 3 members and the secretary of the credit union.

(3) Paragraph (2) shall not apply to a change in the situation of a credit union's registered office or in the name of a credit union; but—

(a) notice of any change in the situation of a credit union's registered office shall, not later than 14 days from the date of that change, be sent to the FCA ; and

(b) where such a notice is duly sent, or where a change in the name of a credit union is made in accordance with Article 7, the change in the situation of the credit union's registered office or, as the case may be, the change in the credit union's name shall be registered by the FCA as an amendment of the credit union's rules.

(4) Subject to paragraph (7), the FCA , on being satisfied that any amendment of a credit union's rules is not contrary to the provisions of this Order, shall issue to the credit union in respect of that amendment an acknowledgement of registration , bearing the FCA’s seal, which shall be conclusive evidence that it is duly registered.

(5) Notwithstanding anything in the rules of any credit union, the board of directors of a credit union may by resolution passed during the appropriate period make such amendments of the rules of the credit union as may be consequential on the provisions of this Order.

(6) For the purposes of paragraph (5) the appropriate period, in relation to any credit union, shall be whichever is the longer of the following two periods, that is to say—

(a) a period of 1 year beginning with the date of the coming into operation of this Article, and

(b) a period beginning with the date of the coming into operation of this Article and ending with the date on which an amendment of the rules of that credit union is first registered after that date under paragraph (4).

(7) Notwithstanding anything in paragraph (4), after the end of 1 year beginning with the date of the coming into operation of this Article, the FCA shall not be required to register any amendment of a credit union's rules unless such consequential amendments of the rules of that credit union as are mentioned in paragraph (5) either have been made before the application for registration of that amendment or are to be effected by that amendment.

Section 11 Rules to bind members

(1) Subject to paragraph (2) the registered rules of a credit union shall bind the credit union and all members of it and all persons claiming through them respectively to the same extent as if each member had subscribed his name and affixed his seal to those rules and there were contained in those rules a covenant on the part of each member and any person claiming through him to conform to those rules subject to the provisions of this Order.

(2) A member of a credit union shall not, without his consent in writing having been first obtained, be bound by any amendment of the credit union's rules registered after he became a member if and so far as that amendment requires him to take or subscribe for more shares than the number held by him at the date of registration of the amendment, or to pay upon the shares so held any sum exceeding the amount unpaid upon them at that date, or in any other way increases the liability of that member to contribute to the share or loan capital of the credit union.

Section 12 Provision of copies of rules

(1) A credit union must, on demand, give a copy of its registered rules—

(a) free of charge to any member of the credit union who has not previously been given a copy of those rules;

(b) to any other person upon payment of such fee (not exceeding £5) as the credit union may determine.

(1A) The Department may by regulations substitute for the amount for the time being specified in paragraph (1)(b) such other amount as it considers appropriate.

(2) If any person, with intent to mislead or defraud, gives to any other person—

(a) a copy of any rules other than rules for the time being registered under this Order on the pretence that they are the existing rules, or that there are no other rules, of a credit union; or

(b) a copy of the rules of a society which is not registered under this Order on the pretence that they are the rules of a credit union,

he shall be guilty of an offence and shall be liable on summary conviction to a fine not exceeding level 4 on the standard scale.

Section 13 Minimum number of members

(1) The minimum number of members of a credit union shall be 21.

(1A) Where shares are allotted to an individual who is a corporate member (see Articles 14(1)(b) and 14A), then for the purposes of paragraph (1) the partnership or (as the case may be) the unincorporated association is to be treated as the member in respect of those shares.

(1B) This does not affect the treatment of the individual as a member in respect of any shares that the individual holds on his or her own behalf.

(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Section 14 Membership and voting rights

(1) The following may be members of a credit union—

(a) an individual (acting on his or her own behalf);

(b) if, and to the extent, permitted by virtue of Article 14A—

(i) a body corporate;

(ii) an individual acting in the capacity as a partner in a partnership;

(iii) an individual acting in the capacity as an officer or member of the governing body of an unincorporated association.

(2) A person shall not be a member of a credit union unless he holds at least 1 fully paid-up share in that credit union, but the rules of the credit union shall not require a person to hold more than £5 in fully paid-up shares as a condition of membership.

(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(5) A member of a credit union who ceases to have the required qualifications for admission to membership shall be entitled ... to retain his membership unless the rules of the credit union provide otherwise.

(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(7) Non-qualifying members of a credit union shall be left out of account in determining for any purpose whether a common bond exists between the members of the credit union.

(8) A non-qualifying member of a credit union shall be entitled, except so far as the rules of the credit union may provide otherwise, to purchase shares and . . . to receive loans.

(9) Subject to any provision in the rules of a credit union as to voting by a chairman who has a casting vote, on every matter which is determined by a vote of members of a credit union every member shall be entitled to vote and shall have one vote only.

(9A) Article 13(1A) and (1B) (membership rules: treatment of corporate members) apply for the purpose of paragraph (9); and the vote of the partnership or unincorporated association is to be cast by the corporate member.

(10) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Section 14A Corporate members

(1) A credit union may admit persons of a kind mentioned in Article 14(1)(b)(i) to (iii) (persons who will, if admitted, be corporate members) if its rules so provide.

(2) The number of corporate members of a credit union must not exceed 10% of the total number of members.

(3) For the purposes of paragraph (2) the number of corporate members and the total number of members are to be determined in accordance with Article 13(1A) and (1B) (membership rules: treatment of corporate members).

(4) The number of shares in a credit union allotted to corporate members must not exceed 25% of the total number of allotted shares.

(5) For the purposes of paragraph (4) the total number of allotted shares is the total found in the most recent year-end balance sheet submitted to the appropriate authority.

(6) Where shares are allotted to an individual who is a corporate member, then for the purpose of determining the amount of the interest in the shares of the credit union held by each of its members—

(a) the partnership or, as the case may be, the unincorporated association is to be treated as a member holding the shares, and

(b) the shares are not to be treated as being held by the individual.

(7) The Department may by order substitute for the percentage for the time being specified in paragraph (2) or (4) such other percentage as it considers appropriate.

Section 15 Members under the age of 18

A person under the age of 18 years but above the age of 16 years may be a member of a credit union unless the rules otherwise provide and may, subject to those rules and to the provisions of this Order, enjoy all the rights of a member and execute all instruments and give all receipts necessary to be executed or given under those rules, but shall not be a member of the board of directors or any committee, trustee, manager or treasurer of the credit union.

Section 16 Remedy for debts from members

(1) All money payable to a credit union by a member of it shall be a debt recoverable summarily by the credit union from the member.

(2) A credit union shall have a lien on the shares of any member for any debt due to the credit union by that member, and may set off any sum credited to the member on those shares in or towards the payment of that debt.

(3) Where any debt arises in respect of shares held by, or a loan made to, an individual who is a corporate member, paragraphs (1) and (2) are to be read subject to Articles 23(2A) and (2B) (transfer of shares) and 28(1C) and (1D) (transfer of loans).

Section 17 Nomination to property in credit union

(1) Subject to paragraphs (2) and (3), a member of a credit union may, by a written statement signed by him and delivered at or sent to the credit union's registered office during his lifetime or made in any book kept at that office, nominate a person or persons to become entitled at his death to the whole, or to such part or respective parts as may be specified in the nomination, of any property in the credit union (whether in shares, loans or otherwise) which he may have at the time of his death.

(2) The nomination by a member of a credit union under paragraph (1) of a person who is at the date of the nomination an officer or servant of the credit union shall not be valid unless that person is the husband, wife, civil partner, father, mother, child, brother, sister, nephew or niece of the nominator.

(3) For the purposes of the disposal of any property which is the subject of a nomination under paragraph (1) if the nomination was made after 20th April 1967 and at the date of the nominator's death the amount of his property in the credit union comprised in the nomination exceeds £5,000 (or such higher amount as may be substituted under section 6(1) of the Administration of Estates (Small Payments) Act (Northern Ireland) 1967), the nomination shall be valid to the extent of £5,000 (or such higher amount as aforesaid) but not further or otherwise.

(4) A nomination by a member of a credit union under paragraph (1) may be varied or revoked by a subsequent nomination by him under that paragraph or by any similar document in the nature of a revocation or variation signed by the nominator and delivered at or sent to the credit union's registered office during his lifetime, but shall not be revocable or variable by the will of the nominator or by any codicil to such will.

(5) Every credit union shall keep a book in which the names of all persons nominated under paragraph (1) and any revocation or variation of any nomination under that paragraph shall be recorded.

(6) The formation of a marriage or civil partnership by a member of a credit union shall operate as a revocation of any nomination made by him before the marriage or civil partnership was formed ; but if any property of that member has been transferred by an officer of the credit union in pursuance of the nomination in ignorance of the formation of a marriage or civil partnership by the nominator subsequent to the date of the nomination, the receipt of the nominee shall be a valid discharge to the credit union and the credit union shall be under no liability to any other person claiming the property.

(7) A nomination made by an individual who is a corporate member is valid only if—

(a) in the case of a nomination made by an individual acting in the capacity as a partner in a partnership, the person nominated is (immediately before the individual's death) a partner in the partnership;

(b) in the case of a nomination made by an individual acting in the capacity as an officer or member of the governing body of an unincorporated association, the person nominated is (immediately before the individual's death) an officer or member of the governing body of the unincorporated association.

Section 18 Proceedings on death of nominator

(1) Subject to paragraph (2), where any member of a credit union has made a nomination under Article 17, the board of directors, on receiving satisfactory proof of the death of that member, and if and to the extent that the nomination is valid under paragraphs (2) and (3) of that Article, shall in the case of each person entitled under the nomination either transfer to him, or pay him the full value of, any property to which he is so entitled.

(2) Where any of the property comprised in a nomination under Article 17 consists of shares in the credit union, paragraph (1) shall have effect notwithstanding that the rules of the credit union declare the shares in the credit union not be transferable; but if the transfer of any shares comprised in the nomination in the manner directed by the nominator would raise the shareholding of any nominee beyond the maximum for the time being permitted in the case of that credit union, the board of directors shall not transfer to that nominee more of those shares than will raise his shareholding to that maximum and shall pay him the value of any of those shares not transferred.

(2A) The reference in paragraph (2) to the shareholding of the nominee is to be read in accordance with Article 14A(6).

(3) Where any sum fails to be paid under paragraph (1) or (2) to a nominee who is under the age of 16 years, the credit union may pay that sum to either parent, or to a guardian, of the nominee or to any other person of full age who will undertake to hold it on trust for the nominee or to apply it for his benefit and whom the credit union may think a fit and proper person for the purpose, and the receipt of that parent, guardian or other person shall be a sufficient discharge to the credit union for all money so paid.

Section 19 Provision for small payments on death

If any member of a credit union dies and at his death his property in the credit union (whether in shares, loans or otherwise) does not exceed in the whole £5,000 (or such higher amount as may be substituted under section 6(1) of the Administration of Estates (Small Payments) Act (Northern Ireland) 1967) and is not the subject of any nomination under Article 17, then the board of directors may, without letters of administration or probate of any will, distribute that property among such persons as appear to the board on such evidence as it deems satisfactory to be entitled by law to receive it.

Section 20 Payments in respect of mentally incapable persons

Where in the case of a member of a credit union or a person claiming through such a member the credit union's board of directors is satisfied after considering medical evidence that the member or person is incapable through disorder or disability of mind of managing his own affairs and is also satisfied that no person has been duly appointed to administer his property on his behalf, and it is proved to the satisfaction of the board that it is just and expedient so to do, the credit union may pay the amount of any property (whether in shares, loans or otherwise) belonging to that member or person to any person whom it judges proper to receive it on his behalf, whose receipt shall be a good discharge to the credit union for any sum so paid.

Section 21 Validity of payment to persons apparently entitled

All payments or transfers made by the board of directors of a credit union under Article 19 or 20 to any person appearing to the board at the time of the payment or transfer to be entitled under those Articles shall be valid and effectual against any demand made upon the board or credit union by any other person.

Section 22 Restriction on business of credit union

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Section 23 Shares

(1) All shares in a credit union shall be of £1 denomination and may, subject to the rules of the credit union, be subscribed for either in full or by periodical or other subscriptions but no share shall be allotted to a member until it has been fully paid in cash.

(2) Shares in a credit union shall be transferable only in accordance with—

(a) Article 18(1) (transfer to nominees on death of nominator), or

(b) paragraph (2A) (transfer of certain corporate shares);

and a credit union shall not issue to a member a certificate denoting ownership of a share.

(2A) Shares held by an individual who is a corporate member may be transferred, in accordance with the rules of the credit union, to another individual (“ the transferee ”), who must be—

(a) in the case of shares held by an individual acting in the capacity as a partner in a partnership, another partner in the partnership;

(b) in the case of shares held by an individual acting in the capacity as an officer or member of the governing body of an unincorporated association, another officer or member of that governing body.

(2B) On the transfer of a share under paragraph (2A), all the rights and liabilities that the holder of the share has in respect of it, or in connection with it, are transferred to the transferee.

(3) Subject to paragraph (4) and Article 28(1E) , shares in a credit union shall be withdrawable, but a credit union shall not issue shares except on terms enabling it to require not less than 60 days' notice of withdrawal.

(4) Where a credit union has made a loan to a member which is treated by virtue of Article 28A as a secured loan, the member must not bepermitted to withdraw shares if the member's shareholding is (or following withdrawal would be) less than the member's total liability.

(5) In paragraph (4)—

(a) the member's “shareholding” is the member's paid-up shareholding in the credit union;

(b) the member's “total liability” is the member's total liability (including contingent liability) to the credit union whether as borrower, guarantor or otherwise;

(c) where the loan has been made to an individual in his or her capacity as a corporate member, the member's “shareholding” and “total liability” are any shareholding and total liability in that capacity.

Section 23A Power to issue interest-bearing shares

(1) A credit union may issue interest-bearing shares if—

(a) its rules so provide,

(b) its most recent year-end balance sheet shows that it holds reserves of at least the threshold amount,

(c) its auditors have made a report under Article 47 on that balance sheet,

(d) it has given the appropriate authority a copy of the balance sheet, and

(e) it has given the appropriate authority a copy of a relevant report, made after the date of the balance sheet.

(2) The “threshold amount” is whichever of the following is greater—

(a) £50,000;

(b) 5% of the credit union's total assets.

(3) A “relevant report” is a report made by the auditors appointed to audit the credit union's accounts and balance sheet, stating that in their opinion the credit union satisfies such conditions as are specified by the appropriate authority for the purposes of this paragraph.

(4) The Department may by order substitute for the amount or percentage for the time being specified in paragraph (2) such other amount or percentage as it considers appropriate.

Section 23B Duties where interest-bearing shares have been issued

(1) This Article applies to a credit union that has issued interest-bearing shares.

(2) The credit union must give the appropriate authority a relevant report each year, by the date specified by the appropriate authority for the purposes of this paragraph.

(3) The credit union must convert any interest-bearing shares in issue into shares that are not interest-bearing if—

(a) its rules cease to provide for the issue of interest-bearing shares,

(b) neither its most recent year-end balance sheet nor the year-end balance sheet preceding it shows that the credit union holds reserves of at least the threshold amount,

(c) neither of those balance sheets was given to the appropriate authority by the specified date, or

(d) for two consecutive years it has not complied with paragraph (2).

(4) In this Article—

“ relevant report ” and “ threshold amount ” have the same meaning as in Article 23A;

“ specified date ”, in relation to a credit union's year-end balance sheet, means the date by which rules under the 2000 Act require the credit union to give a copy of the balance sheet to the appropriate authority.

Section 24 Prohibition on carrying on banking

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Section 25 Prohibition on deposit-taking

(1) Subject to Articles 26 and 27, a credit union shall not accept a deposit from any person except by way of subscription for its shares.

(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Section 26 Deposits by persons too young to be members

(1) A credit union may take deposits . . . from a person who is under the age at which, by virtue of Article 15, he may become a member of the credit union.

(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Section 27 Power to borrow money

(1) A credit union may borrow money . . . .

(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Section 28 Loans by credit unions

(1) A credit union may make to a member a loan, upon such security (or without security) and terms as the rules of the credit union may provide.

(1A) But a credit union may make a loan to a corporate member only if—

(a) the credit union's rules provide that it may make loans to corporate members, and

(b) the making of the loan would not result in the total amount of the outstanding balances on loans made to corporate members exceeding 10% of the total amount of the outstanding balances on all loans made by the credit union to members.

(1B) The Department may by order substitute for the percentage for the time being specified in paragraph (1A)(b) such other percentage as it considers appropriate.

(1C) If a credit union's rules provide that it may make loans to corporate members, those rules may also provide that loans to individuals who are corporate members may be transferred in accordance with this paragraph.

(1D) The reference in paragraph (1C) to the transfer of a loan is to a transferof all the rights and liabilities that the borrower has under the loan, or in connection with it, to an individual who is—

(a) in the case of a loan to a person who is an individual acting in the capacity as a partner in a partnership, another partner in the partnership;

(b) in the case of shares held by an individual acting in the capacity as an officer or member of the governing body of an unincorporated association, another officer or member of that governing body.

(1E) The terms of a loan made from a credit union to a member (other than a loan treated by virtue of Article 28A as a secured loan) must state whether, for the duration of the loan, the borrower is permitted to withdraw shares where the borrower's shareholding is (or following withdrawal would be) less than the borrower's total liability.

(1F) In paragraph (1E)—

(a) the borrower's “shareholding” is the borrower's paid-up shareholding in the credit union;

(b) the borrower's “total liability” is the borrower's total liability (including contingent liability) to the credit union whether as borrower, guarantor or otherwise;

(c) where the loan is made to an individual in his or her capacity as a corporate member, the borrower's “shareholding” and “total liability” are any shareholding and total liability in that capacity.

(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Para. (3) rep. by 1997 NI 22

(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(5) A credit union may charge interest on loans made by it but such interest shall be at a rate not exceeding 1 per cent per month (or such other rate as an order may specify) on the amount of the loan outstanding and such interest shall be inclusive of all administrative and other expenses incurred in connection with the making of the loan.

(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Section 28A Loans to be treated as secured

(1) This Article applies where—

(a) a credit union makes a loan to a member of the credit union, and

(b) at the time the loan is made, the member's paid-up shareholding in the credit union is equal to or greater than his total liability (including contingent liability) to the credit union, whether as borrower, guarantor or otherwise.

(2) On the application of the member to the credit union, the loan shall be treated for the purposes of this Order as a secured loan.

Section 28B Loans by approved credit unions

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Section 28C Grant of certificates of approval

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Section 28D Withdrawal of certificates of approval

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Section 29 Promissory notes and bills of exchange

A promissory note or bill of exchange shall be deemed to have been made, accepted or endorsed on behalf of any credit union if made, accepted or endorsed in the name of the credit union, or by or on behalf or account of the credit union, by any person acting under the authority of the credit union.

Section 30 Contracts

(1) Contracts may be made, varied or discharged on behalf of a credit union as follows:—

(a) a contract which, if made between individuals, would be by law required to be in writing under seal may be made, on behalf of the credit union in writing under the common seal of the credit union;

(b) a contract which, if made between individuals, would be by law required to be in writing, signed by the parties to be charged with the contract, may be made on behalf of the credit union in writing by any person acting under the express or implied authority of the credit union;

(c) a contract which, if made between individuals, would by law be valid although made by parol only, and not reduced into writing, may be made by parol on behalf of the credit union by any person acting under the express or implied authority of the credit union;

(d) a contract made according to this paragraph may be varied or discharged in the same manner in which it is authorised by this Article to be made and a contract under seal which, if made between individuals, might be varied or discharged in writing not under seal, signed by any person interested in the contract, may be similarly varied or discharged in writing not under seal on behalf of the credit union, signed by any person acting under the express or implied authority of the credit union.

(2) A signature purporting to be made by a person holding any office in a credit union attached to a writing by which any contract purports to be made, varied or discharged by or on behalf of the credit union shall, until the contrary is proved, be taken to be the signature of a person holding that office at the time when the signature was made.

(3) A contract which may be or have been made, varied or discharged according to the provisions of this Article shall be effectual in law and bind the credit union and its successors and all other parties to the contract.

Section 31 Charges on assets of credit unions

(1) An instrument which is executed by a credit union and which creates or is evidence of a fixed or floating charge on assets of the credit union shall not be a bill of sale for the purposes of the Bills of Sale (Ireland) Acts 1879 and 1883 or be invalidated by those Acts if the charge is recorded in accordance with paragraph (2).

(2) An application for the recording of a charge under paragraph (1) shall be made by delivering by post or otherwise to the FCA , within the period of 14 days beginning with the date of execution of the instrument which creates or is evidence of the charge of within any extended period allowed under paragraph (5),—

(a) a copy of the instrument authenticated in such manner as may be directed by the FCA and such additional particulars relating to the charge authenticated in such manner as may be directed by the FCA ; and

(b) any fee required by rules made in accordance with paragraph 23 of Schedule 1ZA to the 2000 Act.

(3) If an application is made in accordance with subsection (2), the FCA must—

(a) give the person who makes the application an acknowledgment of the application, bearing the FCA’s seal;

(b) place the copy of the instrument included in the application, a note of any particulars included in it, and a copy of the acknowledgement on a file kept by the FCA in respect of the society; and

(c) make the file available for inspection during office hours by members of the public on payment of any fee required by rules made in accordance with paragraph 23 of Schedule 1ZA to the 2000 Act.

(4) The FCA may, under Article 80, make provision for—

(a) the giving to the FCA of notice of any release, discharge or other transaction relating to a charge in respect of which an application under this Article has been made;

(b) the inclusion in the file mentioned in this Article of any such notice appearing to the FCA to relate to the charge.

(5) If in the case of an instrument such as is mentioned in paragraph (1) it appears to the High Court, on the application of the credit union which executed the instrument or of any other person claiming the benefit of the instrument, that by reason of inadvertence or other sufficient cause—

(a) an application for the recording of the charge to which the instrument relates was not made within the period of 14 days mentioned in paragraph (2); or

(b) any matters were omitted from or were mis-stated in such an application,

the Court may, on such terms as it thinks fit, order that the period for making such an application shall be extended or, as the case may be, that the omission or mis-statement shall be rectified.

Section 32 Holding of land

(1) A credit union may acquire and hold in its own name any land for the purpose of conducting its business on the land but, subject to paragraph (2), for no other purpose, and may dispose of any such land; and—

(a) no person shall be bound to inquire as to the authority for any dealing with the land by a credit union; and

(b) the receipt of the credit union shall be a discharge for all money arising from or in connection with any dealing with land by it.

(2) A credit union may hold any estate in land so far as is necessary for the purpose of making loans to its members on the security of an estate in land and of enforcing any such security.

(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Section 33 Investments

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Section 34 Discharge of mortgages

(1) Where, in the case of any mortgage to a credit union of any property, a receipt in full for all money secured by the mortgage on that property is endorsed on or annexed to the mortgage or other assurance, being a receipt—

(a) signed by 2 members of the board of directors and countersigned by the secretary of the credit union or, if the credit union is in liquidation, signed by the liquidator or liquidators for the time being, described as such; and

(b) in the form set out in Schedule 2, or in any other form set out in the rules of the credit union or any schedule to those rules,

then, that receipt shall be fully effective to vacate the mortgage and vest in the mortgagor the estate of and in the property comprised in the mortgage.

(2) If the mortgage is registered in accordance with the Registration of Deeds Acts, the Registrar under those Acts shall—

(a) on production of the receipt mentioned in paragraph (1), make an entry in the margin of the registry-book against the registry of the memorial of the mortgage that the mortgage is satisfied; and

(b) grant a certificate, either on the mortgage or separately, that the mortgage is satisfied.

(3) The certificate granted under paragraph (2) (b) shall—

(a) be received in all courts and proceedings without further proof; and

(b) have the effect of clearing the register of the mortgage.

(4) In this Article “mortgage” includes a further charge, and “mortgagor”, in relation to a mortgage, means the person for the time being entitled to the equity of redemption.

Section 35 Receipt on payment of money secured to a credit union

On payment of all money intended to be secured to a credit union on the security of any property, the debtor or his successor or representatives shall be entitled to a receipt in the form set out in Schedule 2, or in any other form set out in the rules of the credit union or any schedule to those rules.

Section 36 Application of surplus

(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3) Following the application of such amount of its surplus funds to its reserves as may be required by rules made by the FCA under the 2000 Act and, if the society is a PRA -authorised person, rules made by the PRA under the 2000 Act , a credit union may apply such proportion of the remaining amount available for distribution in respect of any year of account (that is to say, the surplus for that year reduced or increased by any transfer to or from general reserve) in one or more of the following ways as the credit union may in general meeting determine—

(a) subject to paragraph (4), in the payment to members of dividends on the amount of their paid-up shares;

(b) as a rebate of interest paid by or due from members who have received loans from the credit union, such rebate being proportional to the interest paid by or due from such members during that year of account; and

(c) subject to paragraph (5), for social, cultural or charitable purposes.

(4) The dividend payable on any shares of a credit union shall not exceed a rate of 8 per cent per annum or such other rate as an order may specify.

(5) No part of the amount available for distribution in respect of any year of account shall be applied by a credit union for the purposes mentioned in paragraph (3) (c) unless a dividend ... is paid for that year on all paid-up shares of the credit union; and the total sum applied for those purposes out of the amount available for distribution in respect of any year of account shall not exceed 10 per cent of that amount.

(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Section 37 Insurance against fraud or other dishonesty

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Section 38 Guarantee funds

(1) Subject to the provisions of this Article, a credit union, or any 2 or more credit unions, may enter into arrangements with a person carrying on the business of insurance for the purpose of making funds available to meet losses incurred by members of a credit union which is a party to the arrangements; and any 2 or more credit unions may enter into any other kind of arrangements for that purpose.

(2) A credit union may make contributions under arrangements made in accordance with paragraph (1), and such arrangements may in particular provide for the vesting of a fund in trustees appointed under the arrangements.

(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Section 39 Prohibition on undischarged bankrupts and other persons

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Section 40 Books of account, etc.

(1) Every credit union shall—

(a) cause to be kept proper books of account with respect to its transactions and its assets and liabilities, and

(b) establish and maintain a satisfactory system of control of its accounts, its cash holdings and all its receipts and remittances.

(2) For the purposes of sub-paragraph (a) of paragraph (1), proper books of account shall not be taken to be kept with respect to the matters mentioned in that sub-paragraph if there are not kept such accounts as are necessary to give a true and fair view of the state of the affairs of the credit union and to explain its transactions.

Section 41 Form in which books of account may be kept

(1) Any books of account to be kept by a credit union may be kept either by making entries in bound books or by recording the matters in question in any other manner.

(2) Where any such book is not kept by making entries in a bound book but by some other means, the credit union shall take adequate precautions for guarding against falsification and facilitating its discovery.