BUILDING SOCIETIES ACT
Arrangement of Sections
1. Short title
FORMATION AND REGISTRATION
3. Establishment of building society
3A. Establishment of the Zambia National Building Society
4. Bank of Zambia may suspend registration
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
LICENSING OF BUILDING SOCIETIES
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
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
24. Election of directors
25. Validity of acts of director
26. Persons disqualified from being a director
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
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
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
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
INVESTMENT AND BANKING OF SURPLUS FUNDS
89. Authorised investment
91. Offences under Part VII
92. General reserve fund
93. Provisions as to liquidity
94. Restriction of payment of dividends
CHANGE OF NAME, ETC.
95. Change of name
96. Notification of change of address
97. Alteration of rules
UNIONS OF SOCIETIES AND TRANSFERS OF ENGAGEMENTS
98. Union of building societies
99. Transfer of engagements
100. Registrar may approve union or transfer
101. Registration of transfers, etc., to operate as a conveyance
102. Creditors not to be prejudiced by union or transfer
NOMINATION, POWERS AND CONTROL OF REGISTRAR
107. Power to call a meeting
108. Power to suspend borrowing and subscription for shares
109. Power to control advertising
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
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
125. Provisions as to evidence
126. Form in which records may be kept
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
136. Transitional provisions
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.
This Act may be cited as the Building Societies Act.
(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.]
FORMATION AND REGISTRATION
(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.]
(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.]
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.]
[S 4A rep by s 5 of Act 22 of 2005.]
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.
(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.
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.
(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.]
(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.]
(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.]
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.
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.
LICENSING OF BUILDING SOCIETIES
[Part IIA ins by s 9 of Act 22 of 2005.]
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