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Building Societies Act 1997 (c. 32)Introductory TextPart I Constitution and powers (ss. 1-12)1. Principal purpose and powers.2. Membership and liability of members.3. Capacity etc.4. The lending limit.5. Loans secured on land.6. Loans fully secured on land.7. Discharge of mortgages.8. The funding limit.9. Raising funds and borrowing.10. Restrictions on certain transactions.11. Restriction on creation of floating charges.12. Superseded provisions of 1986 Act.Part II Powers of control of Commission (ss. 13-24)13. Power to direct restructuring of business etc.14. Power to make prohibition orders.15. Powers to petition for winding up etc.16. Imposition or variation of conditions in urgent cases.17. Power to direct transfers of engagements or business.18. Notification and confirmation of transfer directions.19. Revocation: supplementary directions.20. Notification and confirmation of supplementary directions.21. The criteria of prudent management.22. Statements of principles etc. by Commission.23. Rights of appeal.24. Determination of appeals.Part III Accountability to members (ss. 25-31)25. Special meeting on members' requisition.26. Failure to comply with members' requisition.27. Election of directors: general.28. Election of directors: supplementary.29. Acquisition or establishment of a business.30. Information about transfers or proposed transfers of business.31. Transfers of business: increased remuneration etc.Part IV Protection of investors and investigation of complaints (ss. 32-35)32. Amalgamation of building society and banking protection schemes.33. Liability of insolvent society in respect of payments made by Board.34. Recognised schemes for investigation of complaints.35. Persons entitled to have complaints investigated.Part V Miscellaneous and supplemental (ss. 36-47)Miscellaneous (ss. 36-43)36. Registered and business names.37. Access to registers of members.38. Transactions with directors and persons connected with them.39. Application of certain insolvency legislation.40. Abolition of priority liquidation distribution rights.41. Protective provisions for specially formed successors.42. Registration of charges by building societies.43. Other amendments of 1986 Act.Supplemental (ss. 44-47)44. Financial provisions.45. Minor and consequential amendments.46. Transitional provisions, savings and repeals etc.47. Short title, interpretation, commencement and extent.Schedule 1 Capacity of society and power of directors to bind it [Part II of Schedule 2 to 1986 Act]Schedule 2 Discharge of mortgages: supplementary provisions [Schedule 2A to 1986 Act]Schedule 3 Directions: supplementary provisions [Schedule 7A to 1986 Act]Schedule 4 Transfer directions: modifications of Part X [Schedule 8A to 1986 Act]Schedule 4, Part I Directions under section 42B(3) (paras. 1-5)Schedule 4, Part II Directions under section 42B(4) (paras. 6-11)Schedule 5 Information about transfers or proposed transfers of business [Part I of Schedule 17 to 1986 Act]Schedule 5, Part I Issue of statement or summary to members (paras. 1-5)Schedule 5, Part II Notification of proposals for transfers of business [Part IA of Schedule 17 to 1986 Act] (paras. 5A-5E)Schedule 6 Application of other companies insolvency legislation to building societies [Schedule 15A to 1986 Act]Schedule 6, Part I General mode of application (paras. 1-5)Schedule 6, Part II Modified Application of Parts I and II and Chapter I of Part III of Insolvency Act 1986 (paras. 6-27)Schedule 6, Part III Modified Application of Parts II, III and IV of Insolvency (Northern Ireland) Order 1989 (paras. 28-49)Schedule 7 Other amendments of 1986 ActSchedule 8 Transitional provisions and savingsSchedule 9 Repeals and revocations
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Version status: In force | Document consolidation status: Updated to reflect all known changes
Version date: 1 December 1997 - onwards
Version 2 of 2

38. Transactions with directors and persons connected with
them.

After section 66 of the 1986 Act there shall be inserted the following section -

"66A Transactions with directors and persons connected with them

(1) This section applies where a building society enters into a transaction the parties to which include -

(a) a director of the society; or

(b) a person connected with such a director,

and the board of directors, in connection with the transaction, exceed any limitation on their powers by reason of anything included in the society's constitution, that is to say, its memorandum and rules.

(2) The transaction is voidable at the instance of the society.

(3) Whether or not it is avoided, any such party to the transaction as is mentioned in subsection (1)(a) or (b) above, and any director of the society who authorised the transaction, is liable -

(a) to account to the society for any gain which he has made directly or indirectly by the transaction, and

(b) to indemnify the society for any loss or damage resulting from the transaction.

(4) Nothing in the above provisions shall be construed as excluding the operation of any other enactment or rule of law by virtue of which the transaction may be called in question or any liability to the society may arise.

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