CHAPTER 412
BUILDING SOCIETIES ACT

Arrangement of Sections

   Section

PART I
PRELIMINARY

   1.   Short title

   2.   Interpretation

PART II
FORMATION AND REGISTRATION

   3.   Establishment of building society

   3A.   Establishment of the Zambia National Building Society

   4.   Bank of Zambia may suspend registration

   4A.   Repealed.

   5.   Conditions relating to deposit with Bank of Zambia

   6.   Registration of existing societies

   7.   Effect of registration

   8.   Prohibition of unregistered and terminating societies

   9.   Register of building societies

   10.   Name of building society

   11.   Contents of rules

   12.   Effect of rules

PART IIA
LICENSING OF BUILDING SOCIETIES

   12A.   —

PART III
MEMBERSHIP AND COMMENCEMENT OF BUSINESS

   13.   Members who are not shareholders

   14.   Members under the age of twenty-one

   15.   Joint shareholders

   16.   Liability of members

   17.   Business not to be commenced before registration

   18.   Building society not to make advances outside Zambia

   19.   Minimum subscription by founding members

PART IV
MANAGEMENT

   20.   Books and records to be kept by building society

   21.   Building society to supply copies of rules

DIRECTORS AND OTHER OFFICERS

   22.   Number of directors

   23.   Repealed

   24.   Election of directors

   25.   Validity of acts of director

   26.   Persons disqualified from being a director

   27.   Repealed.

   28.   Notification of changes in holders of certain offices

   29.   Officers not to accept commissions in connection with loans

   30.   Officers to give security and to account

   31.   Officers not to be exempted from liability

ACCOUNTS AND AUDIT

   32.   Keeping of books of account

   33.   Annual accounts and balance sheet

   34.   Contents and form of accounts

   35.   Supplementary provisions as to offences under sections 32, 33 and 34

   36.   Signing of balance sheet

   37.   Account and auditors’ report to be annexed to balance sheet

   38.   Directors’ report

   39.   Right to receive copies of balance sheet and auditors’ and directors’ reports

   40.   Appointment of auditors

   41.   Disqualifications for appointment as auditor

   42.   Auditor’s report and right of access to books and documents and to attend and be heard

MEETINGS AND RETURNS

   43.   Annual general meeting

   44.   Other meetings

   45.   Length and manner of notice

   46.   Persons entitled to notice

   47.   Proxies

   48.   Right to demand a poll

   49.   Special resolutions

   50.   Notice of members’ special resolutions

   51.   Annual return

   52.   Additional annual return of certain transactions

   53.   Auditors’ report on annual return

DETERMINATION OF DISPUTES

   54.   General provisions as to disputes

   55.   Determination of disputes by arbitration

   56.   Determination of disputes by Registrar

   57.   Determination of disputes by Court

   58.   Effect of determination

   59.   Statement of case for High Court

PART V
ADVANCES

   60.   Advances

   61.   Repealed

   62.   Repealed

   63.   Repealed

   64.   Repayment of advances

   65.   Amount of advances

   66.   Advances to full value in certain cases

   67.   Special advance to purchaser of mortgaged property

   68.   Further advances for certain purposes

   69.   Restrictions on second and contributory mortgages

   70.   Advance for single premium life policy

   71.   Valuation for purposes of advance

   72.   Record of advances

   73.   Security taken from third party

   74.   Offer of advance not to imply warranty

   75.   Prohibition against balloting for advances

   76.   Provisions as to sale of mortgaged properties

   77.   Disposal of surplus when mortgagor cannot be found

   78.   Discharge of mortgages

PART VI
BORROWING POWERS

   79.   Power to borrow

   80.   Limit of repayments to investors and lenders

   81.   Limit of deposits

   82.   Liability for borrowing in excess of powers

   83.   Minimum notice of withdrawal

   84.   Assistance by one building society to another

   85.   Depositor under the age of twenty-one

   86.   Members or depositors dying intestate

   87.   Trustee status for certain investments in building societies

   88.   Provisions of Act to be inserted in certain documents

PART VII
INVESTMENT AND BANKING OF SURPLUS FUNDS

   89.   Authorised investment

   90.   Repealed

   91.   Offences under Part VII

   92.   General reserve fund

   93.   Provisions as to liquidity

   94.   Restriction of payment of dividends

PART VIII
CHANGE OF NAME, ETC.

   95.   Change of name

   96.   Notification of change of address

   97.   Alteration of rules

PART IX
UNIONS OF SOCIETIES AND TRANSFERS OF ENGAGEMENTS

   98.   Union of building societies

   99.   Transfer of engagements

   100.   Registrar may approve union or transfer

   100A.   Repealed

   101.   Registration of transfers, etc., to operate as a conveyance

   102.   Creditors not to be prejudiced by union or transfer

PART X
NOMINATION, POWERS AND CONTROL OF REGISTRAR

   103.   Repealed

   104.   Repealed

   105.   Repealed

   106.   Repealed

   107.   Power to call a meeting

   108.   Power to suspend borrowing and subscription for shares

   109.   Power to control advertising

PART XI
WINDING-UP AND DISSOLUTION

   110.   Dissolution in accordance with rules

   111.   Dissolution by consent

   112.   Dissolution on award of Registrar

   113.   Provisions applicable to dissolution under sections 110 and 111

   114.   Insolvent building society

   115.   Liability of members in winding-up or dissolution

   116.   Notice of winding-up or dissolution

PART XII
MISCELLANEOUS AND SUPPLEMENTARY PROVISIONS

   117.   Powers in relation to land

   118.   Offences in relation to property of building societies

   119.   False statements in documents

   120.   Compulsory cancellation or suspension of registration

   121.   Cancellation of registration at request of building society

   122.   Effect of cancellation or suspension of registration

   123.   Obsolete

   124.   Repealed

   125.   Provisions as to evidence

   126.   Form in which records may be kept

   127.   Regulations

   128.   Registrar to consider representations by building societies

   129.   Rules of Court

   130.   Financial year of building societies

   131.   Non-compliance not to invalidate advance

   132.   Lost or destroyed share certificate, etc.

   133.   Inspection of documents by public

   134.   General penalty

   134A.   Buildings societies exempt from certain provisions of Banking and Financial Services Act

   135.   Repeals

   136.   Transitional provisions

      FIRST SCHEDULE

      SECOND SCHEDULE

AN ACT

to provide for the formation, registration, powers and duties, winding-up and dissolution of building societies; to provide for membership of building societies; to provide for the conducting of the business and management of building societies; to make provisions relating to advances, borrowing and investment by and in building societies; to provide for the union of building societies and the transfer of engagements by one building society to another; to provide for the powers of the Registrar of Building Societies; and to provide for matters connected with or incidental to the foregoing.

[2nd December, 1968]

Act 67 of 1970,

Act 37 of 1973,

Act 6 of 1991,

Act 13 of 1994,

Act 22 of 2005.

PART I
PRELIMINARY

1.   Short title

This Act may be cited as the Building Societies Act.

2.   Interpretation

   (1) In this Act, unless the context otherwise requires—

“additional security”, in relation to an advance made by a building society, means any security for the advance other than a mortgage of freehold or leasehold estate, whether effected by the person to whom the advance is made or by any other person;

“advance” means a sum of money advanced by a building society under Part V;

“advertisement”, in relation to a building society, means an advertisement in any medium making known the activities of the society or inviting business for the society;

“alteration”, in relation to the rules of a building society, includes any addition to the rules, and also includes the rescission of all or any of the rules, with or without the substitution of one or more new rules for any rules rescinded;

“annual return” has the meaning assigned to it by section 51;

“authorised investment” means an investment prescribed by the Bank of Zambia in accordance with the

Banking and Financial Services Act;

[Ins by s 2(a) of Act 22 of 2005.]

“Bank of Zambia” means the Bank of Zambia established under the Bank of Zambia Act;

[Ins by s 2(a) of Act 22 of 2005.]

“board of directors”, in relation to a building society, means the managing body of the society by whatever name called;

“borrower” means a person to whom an advance has been made by a building society under Part V;

“building society” means a society formed for the purpose of raising a stock or fund from which to make advances upon security either by way of mortgage of freehold or leasehold estate or in such manner as is permitted by this Act;

“collective advance” has the meaning assigned to it by section 63;

“director”, in relation to a building society, includes a member of the managing body of the society and any other person occupying the position of director by whatever name called;

“existing society” means any building society which, immediately prior to the commencement of this Act, is registered under the Building Societies Act 1874, of the United Kingdom;

“financial year” has the meaning assigned to it by section 130;

“general reserve fund” means a fund established in accordance with the provisions of section 92;

“leasehold” shall include the title obtained from a District Council under the Housing (Statutory Improvement Areas) Act;

“license” means a license to conduct a financial service business issued under the Banking and Financial Services Act;

[Ins by s 2(a) of Act 22 of 2005.]

“liquid funds”, in relation to a building society, means the amount by which the aggregate of—

      (a)   its cash at the bank and in hand;

      (b)   the total book value or the total market value of its investments, whichever is the lesser; and

      (c)   interest accrued on its investments exceeds the aggregate of—

      (i)   the amount of its liabilities in respect of loans from, and overdrafts with, its bankers; and

      (ii)   the total amount shown as “other liabilities” in its balance sheet;

“local authority” means a municipal council, township council or rural council;

“member”, in relation to a building society, includes any person who for the time being holds a share (whether advanced or not) in the society;

“minimum subscription” has the meaning assigned to it by section 19;

“officer”, in relation to a building society, includes a director, manager or secretary of a society and, in so far as Part IV so provides, also includes an auditor of the society;

“ordinary advance” has the meaning assigned to it by section 61;

“policy of life assurance” means a policy of life assurance issued by an insurance company to which the Insurance Act applies or by a friendly society which is a registered society for the purposes of the Friendly Societies Act, 1896, of the United Kingdom;

“Registrar” means the Registrar of Banks and Financial Institutions appointed under section 20 of the Banking and Financial Services Act;

[Subs by s 2(a) of Act 22 of 2005.]

“secretary”, in relation to a building society, means any executive officer of the society acting in the capacity of secretary;

“share” includes stock;

“special advance” has the meaning assigned to it by section 62;

“special resolution” has the meaning assigned to it by section 49;

“terminating society” means a society or association which, by its rules, is to terminate at a fixed date or when a result specified in its rules is attained, or the rules of which provide for the organisation of its members in sections, for the separate administration of the affairs of each section, or the general administration of the affairs of all sections, and for the termination of each section at a fixed date or when a result specified in the rules is attained.

[Am by Act 43 of 1996.]

   (2) For the purposes of any provision in this Act to the effect that an officer of a building society who is in default shall be liable to a fine or penalty, “officer who is in default” means any officer of the society who knowingly and willfully authorises or permits the default, refusal or contravention mentioned in the Act.

   (3) For the purposes of this Act, the value of the assets of a building society shall be the value at which the assets are taken into account in the latest balance sheet and not any alternative values shown in that balance sheet.

   (4) For the purposes of any reference in this Act to a person holding shares in a building society up to a specified value—

      (a)   any shares which are fully paid up shall be taken at their nominal value;

      (b)   any shares which are partly paid up shall be taken at the amount which has been paid on them respectively;

      (c)   any share held by a person to whom, as the holder of the share, the society has made an advance shall be disregarded.

   (5) Any reference in this Act to contravention of any provision of this Act, or of any regulations or directions thereunder, shall include a reference to failure to comply with that provision.

   (6) References in this Act to any enactment shall be construed as references to that enactment as amended by or under any other enactment.

   (7) References in this Act to the Governor of the Bank of Zambia shall be construed as including the Deputy Governor while he is acting in place of the Governor.

[S 2 am by Act 6 of 1991.]

PART II
FORMATION AND REGISTRATION

3.   Establishment of building society

   (1) Any number of persons, not being less than five, may establish a building society under this Act by—

      (a)   agreeing upon rules for the government of the society, being rules which comply with the requirements of section 11; and

      (b)   sending to the Registrar two copies of the rules, signed by all of those persons and by the intended secretary or other officer, together with an application for registration in the prescribed form; and

      (c)   each of those persons subscribing the minimum subscription referred to in section 19; and

      (d)   satisfying the Registrar that the total sum subscribed by way of shares or deposits or negotiated loans, or any combination of these, but excluding the deposit mentioned in paragraph (e), is not less than an amount to be prescribed by the Bank of Zambia, by statutory order, and that the subscriptions comprised in such total sum are to remain as fixed term investments with the society for a period of not less than five years:

Provided that, every building society shall maintain such capital as the Bank of Zambia may, by statutory order, prescribe; and

[S 3(1)(d) subs by s 3(a)(i) of Act 22 of 2005.]

      (e)   depositing with the Bank of Zambia cash or securities acceptable to the Bank of Zambia, or a combination of such cash and securities, to a total value of such amount as the Bank of Zambia may, by Gazette notice prescribe and such deposit shall be subject to the conditions set out in section 5; and

[S 3(1)(e) subs by s 3(a)(ii) of Act 22 of 2005.]

      (f)   obtaining a license to conduct a financial service business under the Banking and Financial Services Act.

[S 3(1)(f) subs by s 3(a)(iv) of Act 22 of 2005.]

   (2) Application for registration under the provisions of sub-section (1) shall be accompanied by such fee as may be prescribed.

   (3) If the Registrar is satisfied that the application and rules comply, with the requirements of this Act and that the provisions of sub-section (1) relating to minimum subscription, total subscription and deposit have also been complied with and if the Registrar determines to grant the applications a license in accordance with the Banking and Financial Services Act, he shall—

[S 3(3) am by s 3(b)(i) of Act 22 of 2005.]

      (a)   enter in the register referred to in section 9 the prescribed particulars relating to the application and the license; and

[S 3(3)(a) am by s 3(b)(ii) of Act 22 of 2005.]

      (b)   retain and register one copy of the rules and return the other copy to the secretary or other officer of the society, together with a certificate of registration.

   (4) A building society which is registered under this Act shall be deemed to be a financial institution for purposes of the Banking and Financial Services Act and shall be subject to the supervisory and regulatory of the Bank of Zambia.

[S 3(4) ins by s 3(c) of Act 22 of 2005.]

3A.   Establishment of the Zambia National Building Society

   (1) As from the date of the commencement of the Building Societies (Amendment) Act, 1970, there is hereby established a building society under the name of the Zambia National Building Society (hereinafter in this section referred to as “the Society”) which shall be deemed to be a building society registered under this Act and the Registrar shall issue a certificate of registration dated the same day as that on which the Building Societies (Amendment) Act, 1970, came into force, and from that day it shall, subject to sub-section (6), be subject to the provisions of this Act.

   (2) The Minister shall appoint—

      (a)   not less than seven persons to constitute the board of directors of the Society and shall designate one of them as Chairman; and

      (b)   the secretary or other officer of the Society.

   (3) The board of directors shall, prior to the 31st day of January, 1971, make rules for the government of the Society, being rules which comply with the requirements of section 11, and submit such rules to the Minister for approval:

Provided that such rules may subsequently be altered in the same manner as the rules of any other building society are capable of being altered under the provisions of this Act.

   (4) The secretary or other officer of the Society shall forthwith after the approval of such rules, with or without modification by the Minister, lodge two copies thereof with the Registrar together with particulars of the directors and secretary or other officer.

   (5) On receipt of such rules and particulars the Registrar shall—

      (a)   enter in the register referred to in section 9 the particulars of the directors and secretary or other officer and such other particulars as may be prescribed;

      (b)   retain and register one copy of the rules and return the other copy to the secretary or other officer.

   (6) Save as aforesaid, the provisions of section 3 shall not apply to the Society.

[S 3A am by Act 67 of 1970.]

4.   Bank of Zambia may suspend registration

Notwithstanding the provisions of section 3, the Bank of Zambia may, if it determines that it is in the public interest so to do—

      (a)   by Statutory Instrument, suspend the registration of new building societies either indefinitely or for the period stated in the Statutory Instrument and during the period of suspension the Registrar shall not register any new society; or

      (b)   in any particular case direct the Registrar that registration of a proposed new society shall be refused.

[S 4 subs by s 4 of Act 22 of 2005.]

4A. ...

[S 4A rep by s 5 of Act 22 of 2005.]

5.   Conditions relating to deposit with Bank of Zambia

The following conditions shall apply to any deposit made with the Bank of Zambia under the provisions of paragraph (e) of sub-section (1) of section 3, that is to say—

      (a)   if any cash is deposited the Bank of Zambia may invest such cash in securities in the name of the building society making the deposit and such securities shall be deemed to be securities deposited by that society;

[S 5(a) am by s 6(a) of Act 22 of 2005.]

      (b)   income from a deposit shall be paid to the building society which made the deposit;

      (c)   a building society may, with the approval of the Bank of Zambia, substitute for any security deposited with the Bank another security of equivalent value;

[S 5(c) am by s 6(b) of Act 22 of 2005.]

      (d)   a building society shall, be entitled to obtain annually from the Bank a certificate of the deposit standing in its name;

      (e)   the deposit shall be returned to the building society which made it if the Bank of Zambia is satisfied that the sum standing at the credit of the society’s general reserve fund satisfies the minimum requirements set out in sub-section (5) of section 92;

[S 5(e) am by s 6(c) of Act 22 of 2005.]

      (f)   in the event of a society being wound up or dissolved, the deposit, on the authority of a certificate by the Registrar, shall be paid over to the liquidator, trustee or other person conducting the winding-up or dissolution.

6.   Registration of existing societies

   (1) The provisions of section 3 shall not apply to an existing society.

   (2) An existing society, without application, shall be given a certificate of registration dated the same day as that on which this Act commences; and from that day it shall be subject to all the other provisions of this Act.

   (3) If the rules of an existing society do not comply with section 11, the society shall take the necessary steps to amend the rules and shall register the amended rules with the Registrar within a period of twelve months from the date of the society’s registration under this Act.

7.   Effect of registration

From the date of its registration under this Act a building society shall be a body corporate by its registered name, having perpetual succession and a common seal.

8.   Prohibition of unregistered and terminating societies

   (1) No terminating society shall carry on business in Zambia.

   (2) Notwithstanding any other provisions of this Act, a person shall not carry on business in Zambia as a building society unless registered under this Act and licensed in accordance with the provisions of the Banking and Financial Services Act and the name or style “building society” shall not be used except by a building society so registered and licensed.

[S 8(2) subs by s 7 of Act 22 of 2005.]

   (3) Any society which, or person who, contravenes the provisions of sub-section (1) or (2) shall be guilty of an offence and liable on conviction to a fine not exceeding fifteen thousand penalty units and one thousand five hundred penalty units for each day during which such contravention continues.

[S 8(3) am by Act 13 of 1994.]

9.   Registrar of building societies

   (1) The Registrar shall, in accordance with section 19 of the Banking and Financial Services Act, maintain a register of all building societies which are registered under this Act and licensed according to that Act.

   (2) The register of building societies maintained by the Registrar under this Act prior the commencement of this Act shall be transferred to the Registrar of Banks and Financial Institutions on the date of the commencement of this Act.

[S 9 subs by s 8 of Act 22 of 2005.]

10.   Name of building society

   (1) No building society shall be registered under this Act by a name which is identical with that of any other society previously registered, or which so nearly resembles the name of such other society as to be likely to deceive, unless such other society is in course of being dissolved and consents to such registration.

   (2) The Registrar may refuse to register a building society by a name which, in his opinion, is undesirable.

   (3) The name of every building society shall end with the words “building society”.

   (4) The common seal of a building society shall bear the registered name of the society.

   (5) A building society shall not use any name other than that in which it is registered.

   (6) If a building society contravenes sub-section (5), the society, and every director of the society who is a party to the contravention, shall be liable to a fine not exceeding seven hundred and fifty penalty units for every week or part of a week during which the offence continues.

[S 10(6) am by Act 13 of 1994.]

11.   Contents of rules

The rules of every building society shall set out—

      (a)   the name of the society and the address of its chief office or place of meeting;

      (b)   the manner in which the stock or funds of the society is or are to be raised;

      (c)   the manner in which a person may become a member of the society and the manner in which he may cease to be a member;

      (d)   the purposes to which the funds of the society are to be applied;

      (e)   provision that the society shall not, except with the approval of the Minister, make advances on the security of freehold or leasehold estate or in respect of any development, lands or buildings, situated outside the territorial limits of Zambia;

      (f)   the classes of shares to be issued and the preferential and other rights and conditions attached to each class of shares;

      (g)   the terms and conditions on which deposits are to be accepted and repaid;

      (h)   provision that the society reserves the right to make all repayments, whether of shares, deposits, loans or otherwise, in Zambian currency;

      (i)   the manner in which advances are to be made and repaid and the conditions on which a borrower can redeem the amount due from him before the end of the period for which the advance was made;

      (j)   the manner in which losses are to be ascertained and provided for;

      (k)   whether the society intends to borrow money, and if so, within what limits, not exceeding those prescribed by this Act;

      (l)   the manner of appointing, remunerating and removing the board of directors and other officers, their powers and duties, and the manner of remunerating auditors;

      (m)   the manner of calling and holding meetings, the giving of notice thereof, form of notice, quorum, voting rights, right to requisition meetings, procedure to be observed at meetings, the right to demand a poll, and the manner in which a poll is to be taken;

      (n)   the manner of settling disputes, subject to the provisions of this Act;

      (o)   provision for an annual or more frequent audit and the inspection by the auditors of the titles, mortgage deeds and other securities held by the society;

      (p)   provision for the custody of the titles, mortgage deeds and other securities belonging to or held by the society;

      (q)   provision for the device, custody and use of the society’s common seal;

      (r)   the fines and forfeitures, if any, to be imposed on members of the society;

      (s)   the manner in which the society may be dissolved.

12.   Effect of rules

The rules of a building society are binding upon each of the members and officers of the society, and on all persons claiming on account of a member or under the rules; and all such members, officers and persons shall be deemed to have full notice of the rules.

PART IIA
LICENSING OF BUILDING SOCIETIES

[Part IIA ins by s 9 of Act 22 of 2005.]

12A.   —

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