Credit Unions Act 1993

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AT 19 of 1993

CREDIT UNIONS ACT 1993

Credit Unions Act 1993 Index


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CREDIT UNIONS ACT 1993

Index Section Page

1 Registration of credit unions ......................................................................................... 5
2 Supplementary and transitional provisions as to registration ................................. 6
3 Use of name “credit union”, etc .................................................................................... 7
Rules and membership 8

4 Rules ................................................................................................................................. 8
5 Membership and voting rights ..................................................................................... 8
6 Minimum and maximum number of members .......................................................... 9
Operation of credit union 10

7 Shares .............................................................................................................................. 10
8 General prohibition on deposit taking....................................................................... 10
9 Deposits by persons too young to be members ........................................................ 11
10 Power to borrow money .............................................................................................. 12
11 Loans............................................................................................................................... 12
12 Power to hold land for limited purposes .................................................................. 13
13 Investments .................................................................................................................... 14
14 Computation and application of profits .................................................................... 14
Insurance and other arrangements 16

15 Insurance against fraud or other dishonesty ............................................................ 16
16 Share guarantees ........................................................................................................... 17
Powers of Authority 18

17 Power to require information ..................................................................................... 18
18 Power to appoint inspector and call meeting ........................................................... 19
19 Power to suspend operations of credit union ........................................................... 19
20 Cancellation or suspension of registration and winding up .................................. 20
Amalgamations, transfers of engagements and conversions 21

21 Amalgamations and transfers of engagements ........................................................ 21
22 No conversion of credit union into company ........................................................... 22
23 Conversion of company into credit union ................................................................ 22
General and miscellaneous 23

24 Audit of accounts .......................................................................................................... 23
Index Credit Unions Act 1993


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25 Prohibition on undischarged bankrupts etc ............................................................. 23
26 Exclusion of deposit taking business under the Financial Services Act 2008 ........ 23
27 Offences ......................................................................................................................... 24
28 Orders ............................................................................................................................ 24
29 Interpretation ................................................................................................................ 24
30 Short title, citation and commencement .................................................................... 25
SCHEDULE 1 27

MATTERS TO BE PROVIDED FOR IN RULES OF CREDIT UNION 27
SCHEDULE 2 28

PROCEDURE IN RELATION TO DIRECTIONS UNDER SECTION 19 28
ENDNOTES 31

TABLE OF ENDNOTE REFERENCES 31

Credit Unions Act 1993 Section 1


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c i e
CREDIT UNIONS ACT 1993

Received Royal Assent: 19 October 1993
Passed: 20 October 1993
Commenced: 27 June 1994
AN ACT
to enable certain societies to be registered under the Industrial and
Building Societies Act 1892 as credit unions; and to make further provision with
respect to societies so registered.
1 Registration of credit unions

[P1979/34/1]
(1) Subject to the following provisions of this section and to sections 6(4) and
15(1), and to section 9 of the Industrial and Building Societies Act 1892 (“the

1892 Act
”), a society may be registered under that Act as a credit union,
and a society which is so registered by virtue of this section is in this Act
referred to as a “credit union
”.
(2) [Repealed]1

(3) A society may not be registered as a credit union unless —
(a) it is shown to the satisfaction of the Authority that the following
conditions are fulfilled —
(i) the objects of the society are those, and only those, of a
credit union; and
(ii) admission to membership of the society is restricted to
persons all of whom fulfil a specific qualification which is
stated in the rules and is appropriate to a credit union
(whether or not any other qualifications are also required
by the rules) and that in consequence a common bond
exists between members of the society;2

(b) the rules of the society comply with section 4(1); and
(c) the place which under those rules is to be the society’s registered
office is situated in the Island.
(4) The objects of a credit union are —
Section 2 Credit Unions Act 1993


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(a) the promotion of thrift among the members of the society by the
accumulation of their savings;
(b) the creation of sources of credit for the benefit of the members of
the society at a fair and reasonable rate of interest;
(c) the use and control of the members’ savings for their mutual
benefit; and
(d) the training and education of the members in the wise use of
money and in the management of their financial affairs.
(5) The qualifications for admission to membership which are appropriate to
a credit union are —
(a) following a particular occupation;
(b) residing in a particular locality;
(c) being employed in a particular locality;
(d) being employed by a particular employer;
(e) 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;
and such other qualifications as are for the time being approved by the
Authority; and for the purposes of this Act the Island shall be treated as a
particular locality.3

(6) In ascertaining whether a common bond exists between the members of a
society, the Authority —
(a) shall have regard to the nature of the qualification for admission
to membership of the society; and
(b) may, if it considers it proper in the circumstances of the case, treat
the fact that admission to membership is restricted as mentioned
in subsection (3)(a)(ii) as sufficient evidence of the existence of a
common bond.4

(7) For the purposes of this Act, if the rules of a credit union so provide, a
person shall be treated as fulfilling a qualification for admission to
membership stated in those rules if he is a member of the same
household as, and is a relative of, another person who is a member of the
credit union and fulfils that qualification directly.
2 Supplementary and transitional provisions as to registration

[P1979/34/2]
(1) Section 6 of, and Schedule 1 to, the 1892 Act (societies which may be
registered and matters to be provided for in their rules) shall not apply in
relation to registration as a credit union.
(2) In section 9(5) of the 1892 Act (acknowledgement of registration) as it
applies to registration as a credit union, the reference to compliance with
Credit Unions Act 1993 Section 3


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the provisions of the 1892 Act shall be construed, subject to
subsection (1), as a reference to compliance with the provisions as to
registration of both that Act and this Act.
(3) A society whose objects are wholly or substantially those of a credit
union within the meaning of section 1(4) shall not be registered under the
1892 Act otherwise than as a credit union and, except in the case of a
registration made before the commencement of this Act, any such
registration shall be void.
(4) A society which at the commencement of this Act is registered under the
1892 Act but whose objects are wholly or substantially those of a credit
union within the meaning of section 1(4) shall take all reasonable steps to
have its existing registration cancelled and become registered as a credit
union.
(5) Where in accordance with subsection (4) a society’s existing registration
is cancelled on its registration as a credit union, the society shall,
notwithstanding anything in section 11(5) or 17(1) of the 1892 Act, be
taken for all purposes to be the same body corporate before and after the
change of registration.
(6) If a society to which subsection (4) applies does not become registered as
a credit union within such reasonable period after the commencement of
this Act as the Department of Economic Development may allow, the
Department of Economic Development may proceed to cancel or
suspend its existing registration under section 11 of the 1892 Act in the
same way as if it were satisfied that it has ceased to exist; and an appeal
shall lie under section 11(4) of that Act where it would lie in such a case.5

3 Use of name “credit union”, etc

[P1979/34/3]
(1) The name of every society registered as a credit union shall contain the
words “credit union”.
(2) Subject to subsection (3), 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 subsection shall be guilty of an
offence and liable on summary conviction to a fine not exceeding £2,500.6

(3) Subsection (2) does not apply to —
(a) the use by any officer or employee of a credit union of a title or
descriptive expression indicating his office or post with the credit
union; or
Section 4 Credit Unions Act 1993


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(b) the use with reference to an association or group of credit unions
of a name which has been approved in writing by the Authority.7

(4) For the purposes of section 2 of the Industrial and Building Societies
(Amendment) Act 1955 (societies which may be permitted to have a name
which does not contain the word “limited”) the objects of a credit union
shall not be regarded as wholly charitable or benevolent.
Rules and membership
4 Rules

[P1979/34/4]
(1) The rules of a credit union shall be in such form as the Authority may
determine and shall contain —
(a) provision with respect to the matters mentioned in Schedule 1;
and
(b) such additional provision as the Authority may determine.8
9

(2) The rules of a credit union may 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.
(3) In section 14(3) of the 1892 Act (acknowledgement of registration of
amendment of rules) as it applies to credit unions, the reference to
conformity with the 1892 Act shall be construed as including a reference
to conformity with this Act.
(4) The Authority may by order vary the fee which under section 14(5) of the
1892 Act may be charged by a credit union for supplying a person with a
copy of its registered rules.10

5 Membership and voting rights

[P1979/34/5]
(1) Only individuals shall be members of a credit union.
(2) A person shall not be a member of a credit union unless he holds at least
one 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) A member of a credit union shall not have or claim any interest in the
shares of the credit union exceeding £5,000.
(4) The Authority may by order amend subsection (3) so as to substitute for
the sum for the time being specified in that subsection such other sum,
not being less than £5,000, as may be specified in the order.11

Credit Unions Act 1993 Section 6


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(5) A member of a credit union who ceases to fulfil the qualifications for
admission to membership shall be entitled, subject to subsection (6), to
retain his membership unless the rules of the credit union provide
otherwise; and, subject to section 21(4), in this Act “non-qualifying

member
”, in relation to a credit union, means a person who remains a
member of the credit union by virtue of this subsection.
(6) The number of non-qualifying members of a credit union shall not at any
time exceed 10 per cent. of the total membership of the credit union.
(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, subject to section 11(3), 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.

6 Minimum and maximum number of members

[P1979/34/6]
(1) The minimum number of members of a credit union shall be 21, and,
accordingly, in section 9(1) of the 1892 Act, as it applies to registration as
a credit union and to an application therefor, for “seven” there shall be
substituted “twenty-one”.
(2) Subject to the following provisions of this section, the maximum number
of members of a credit union shall be 5,000.
(3) The Authority may by order amend subsection (2) so as to substitute for
the maximum number of members for the time being provided for in
that subsection such other maximum number as may be specified in the
order.12

(4) Subject to subsection (5) , a society shall not be registered as a credit
union if the number of its members exceeds the maximum for the time
being provided for in subsection (2).
(5) The Authority may grant exemption from the maximum number for the
time being provided for in subsection (2) —
(a) to a credit union,
(b) to a society or company seeking registration as a credit union, and
(c) in respect of a credit union proposed to be created by
amalgamation,
Section 7 Credit Unions Act 1993


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if it is satisfied that exemption would be in the public interest and in the
interests of the members and would not jeopardise the existence of a
common bond between them.13

(6) An exemption under subsection (5) may be granted on such conditions
as the Authority thinks fit, and those conditions shall include, in
particular, a condition that the number of members shall not exceed such
other maximum as may be specified by it.14

Operation of credit union
7 Shares

[P1979/34/7]
(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 not be transferable and a credit union shall
not issue to a member a certificate denoting ownership of a share.
(3) Nothing in subsection (2) shall affect the operation of section 17(5)(e) of
the 1892 Act (transfer in pursuance of nomination on death of
nominator).
(4) Subject to subsection (5), 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.
(5) If a withdrawal of shares would reduce a member’s paid-up
shareholding in the credit union to less than his total liability (including
contingent liability) to the credit union whether as borrower, guarantor
or otherwise, then —
(a) in the case of a non-qualifying member the withdrawal shall not
be permitted; and
(b) in any other case the withdrawal shall be permitted only at the
discretion of the committee.
8 General prohibition on deposit taking

[P1979/34/8]
(1) Subject to sections 9 and 10, a credit union shall not accept a deposit from
any person except by way of subscription for its shares.
(2) In this section and section 9 a “deposit
” means a sum of money paid on
terms —
(a) under which it will be repaid, with or without interest or at a
premium, and either on demand or at a time or in circumstances
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agreed by or on behalf of the person making the payment and the
credit union; and
(b) which are not referable to the provision of property or services or
the giving of security.
(3) For the purposes of subsection (2)(b), money is paid on terms which are
referable to the provision of property or services or to the giving of
security if, and only if —
(a) it is paid by way of advance or part-payment for the sale, hire or
other provision of property or services of any kind and is
repayable only in the event that the property or services is or are
not in fact sold, hired or otherwise provided; or
(b) it is paid by way of security for payment for the provision of
property or services of any kind provided or to be provided by
the credit union; or
(c) it is paid by way of security for the delivery up or return of any
property, whether in a particular state of repair or otherwise.
(4) If a credit union accepts a deposit in contravention of this section it shall
be guilty of an offence and liable —
(a) on conviction on information to a fine, or
(b) on summary conviction to a fine not exceeding £5,000.15

(5) The fact that a deposit is taken in contravention of this section shall not
affect any civil liability arising in respect of the deposit or the money
deposited.
9 Deposits by persons too young to be members

[P1979/34/9]
(1) A credit union may take deposits up to a total of £750 from a person who
is under the age at which, by virtue of section 17(7) of the 1892 Act, he
may become a member of the credit union.
(2) Any deposit received by a credit union as mentioned in subsection (1)
shall be held by it on trust for the depositor, and all such deposits shall
be kept in a fund apart from the general funds of the credit union and
shall be invested only in the manner specified in Part I or Part II of
Schedule 1 (narrower-range investments) to the Trustee Investments Act
1961 (an Act of Parliament), as applied to the Island by section 1 of the
Trustee Act 1961.
(3) The moneys which from year to year are earned by the investment of
deposits in accordance with subsection (2) shall, after deduction of the
expenses incurred in operating the separate fund referred to in that
subsection, be distributed as interest to the depositors.
(4) The Authority may by order amend subsection (1) so as to substitute for
the maximum amount for the time being provided for in that subsection
Section 10 Credit Unions Act 1993


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such other amount, being not less than £750, as may be specified in the
order.16

10 Power to borrow money

[P1979/34/10]
(1) A credit union may borrow money from an authorised bank or
temporarily from another credit union or an association of credit unions
but the amount so borrowed and not repaid shall not at any time exceed
in the aggregate one half of the total paid-up share capital.
(2) A temporary loan obtained by a credit union from an authorised bank
shall be disregarded for the purposes of the limit on borrowing imposed
by subsection (1) if the credit union has obtained the consent in writing
of the Authority.17

(3) A person dealing with a credit union shall not be obliged to satisfy
himself or to inquire whether the limit on borrowing by that credit union
imposed by subsection (1) has been or is being observed, but if a person
who lends money to a credit union or takes security in connection with
such a loan has, at the time when the loan is made or the security is
given, actual notice of the fact that the limit has been or is thereby
exceeded, the debt or security shall be unenforceable.
(4) Subject to subsection (3), no transaction with a credit union shall be
invalid or ineffectual solely by reason of the fact that the limit on
borrowing by that credit union imposed by subsection (1) has been or is
thereby exceeded.
(5) Where money borrowed by a credit union is not repaid on written
demand on the date on which repayment is due, the credit union shall
not make any loans or permit the withdrawal of any shares until the
repayment is made.
(6) If a credit union borrows in excess of the limit imposed by subsection (1)
or makes loans or permits withdrawals in contravention of
subsection (5), it shall be guilty of an offence and liable —
(a) on conviction on information to a fine, or
(b) on summary conviction to a fine not exceeding £5,000.18

11 Loans

[P1979/34/11]
(1) Subject to the provisions of this section, a credit union may make to a
member who is of full age a loan for a provident or productive purpose,
upon such security (or without security) and terms as the rules of the
credit union may provide.
(2) The total amount on loan to a member of a credit union shall not at any
time be more than £5,000 (or such other sum as may from time to time be
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prescribed) in excess of his total paid-up shareholding in the credit union
at that time.
(3) Without prejudice to subsection (2), a credit union shall not at any time
make a loan to a non-qualifying member if the making of the loan would
cause that member’s total liability (including contingent liability) to the
credit union, whether as borrower, guarantor or otherwise, to exceed his
total paid-up shareholding in the credit union at that time.
(4) The maximum period within which a loan by a credit union must be
repaid shall be 5 years in the case of a secured loan and 2 years in the
case of an unsecured loan, or such other period as may from time to time
be prescribed.
(5) A credit union may charge interest on loans made by it but such interest
shall be at a rate not exceeding one per cent per month, or such other rate
as may from time to time be prescribed, 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) A credit union shall not at any time make a loan to a member if the
making of such a loan would bring the total amount outstanding on
loans to members above such limit as may from time to time be
prescribed.
(7) In this section “prescribed” means prescribed by order made by the
Authority.19

(8) Section 18(2) of the 1892 Act (secured advances to members) shall not
apply to a credit union.
12 Power to hold land for limited purposes

[P1979/34/12]
(1) A credit union may hold, purchase or take on lease in its own name any
land for the purpose of conducting its business thereon but, subject to
subsection (2), for no other purpose, and may sell, exchange, mortgage or
lease any such land, and erect, alter or pull down buildings on it.
(2) A credit union shall have power to hold any interest in land so far as is
necessary for the purpose of making loans to its members on the security
of an interest in land and of enforcing any such security.
(3) No person shall be bound to inquire as to the authority for any dealing
with land by a credit union; and the receipt of a credit union shall be a
discharge for all moneys arising from or in connection with any dealing
with land by it.
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13 Investments

[P1979/34/13]
(1) A credit union may not invest any part of its surplus funds except in a
manner authorised by an order made by the Authority; and such an
order may contain provisions authorising the application of the funds of
a credit union in any form of investment subject to any limitations as to
amount, whether by reference to a fixed sum or by reference to a
proportion of the total investments of the credit union or otherwise.20

(2) Any surplus funds of a credit union which are not either —
(a) invested in accordance with subsection (1), or
(b) kept in cash in the custody of officers of the credit union,
shall be kept by the credit union on current account with, or otherwise
on loan to, an authorised bank.
(3) Where an institution ceases to be an authorised bank and any funds of a
credit union are on loan to that institution, the credit union shall take all
practicable steps to call in and realise the loan within the period of 3
months from the time when the institution ceased to be an authorised
bank or, if that is not possible, as soon after the end of that period as
possible.
(4) In this section “surplus funds”, in relation to a credit union, means funds
not immediately required for its purposes.
(5) Nothing in this section shall —
(a) prevent a credit union from making a temporary loan to another
credit union; or
(b) apply to funds held on trust as mentioned in section 9(2).
(6) If a credit union contravenes the provisions of this section, it shall be
guilty of an offence and liable —
(a) on conviction on information to a fine, or
(b) on summary conviction to a fine not exceeding £5,000.21

(7) Section 18(3) and (3A) of the 1892 Act (investments) shall not apply to a
credit union.
14 Computation and application of profits

[P1979/34/14]
(1) In ascertaining the profit or loss resulting from the operations of a credit
union during any year of account all operating expenses in that year
shall be taken into account (including payments of interest) and
provision shall be made for depreciation of assets, for tax liabilities and
for bad and doubtful debts, but no provision shall be made in respect of
amounts to be paid by way of dividend.
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(2) A credit union shall out of its profits from year to year establish and
maintain a general reserve, as follows —
(a) if at the end of any year of account the amount standing to
general reserve before any transfer under this subsection is less
than 10 per cent. of total assets, the credit union shall transfer to
general reserve not less than 20 per cent. of its profits for that year
or such lesser sum as is required to bring the general reserve up to
10 per cent. of total assets;
(b) if at the end of any year of account the amount standing to
general reserve before any transfer under this subsection is more
than 20 per cent. of total assets, the credit union shall transfer to
the revenue account and treat as revenue for that year a sum not
less than that required to reduce the general reserve to 20 per cent.
of total assets;
(c) subject to paragraphs (a) and (b), a credit union may at the end of
any year of account —
(i) transfer to general reserve from the profits of that year, or
(ii) transfer from general reserve to the revenue account and
treat as revenue for that year,
such sum as the credit union may in general meeting determine,
provided that the general reserve is not thereby reduced to less than 10
per cent or increased to more than 20 per cent of total assets.
(3) Not less than 90 per cent of the amount available for distribution in
respect of any year of account, that is to say, the profit of that year
reduced or increased by any transfer to or from general reserve in
accordance with subsection (2), shall be applied in such one or more of
the following ways as the credit union shall in general meeting
determine —
(a) subject to subsection (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 subsection (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 may from time to time
be prescribed by order made by the Authority.22

(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
subsection (3)(c) unless a dividend of not less than 3 per cent per annum
is paid for that year on all paid-up shares of the credit union; and the
Section 15 Credit Unions Act 1993


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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) Where in accordance with subsection (3) a credit union in general
meeting determines that an amount shall be applied in any of the ways
mentioned in subsection (3)(a) to (c), that amount may, unless the
determination is that it be distributed or expended forthwith, be so
applied by being appropriated to a fund to be distributed or expended
from time to time or at some future date; and where in accordance with
that subsection a credit union in general meeting determines that an
amount shall be applied for a purpose falling within subsection (3)(c),
that amount may, unless the determination is that it be expended in
some specific manner, be expended for that purpose at the discretion of
the committee.
(7) Nothing in this section applies to income arising from, or to expenses
incurred by a credit union in operating, such a trust fund as is referred to
in section 9(2).
Insurance and other arrangements
15 Insurance against fraud or other dishonesty

[P1979/34/15]
(1) A society shall not be registered as a credit union unless the Authority is
satisfied that on registration there will be in force in relation to that
society a policy of insurance complying with the requirements of this
section; and a credit union shall at all times maintain in force such a
policy and if it fails to do so shall be guilty of an offence and liable on
summary conviction to a fine not exceeding £2,500.23

(2) In order to comply with this section, a policy of insurance —
(a) subject to such exceptions as may be prescribed, must insure the
credit union in respect of every description of loss suffered or
liability incurred by reason of the fraud or other dishonesty of any
of its officers or employees;
(b) must so insure the credit union up to a limit of not less than
£20,000 (or such other figure as may be prescribed) in respect of
any one claim, except that the liability of the insurer may be
restricted to an amount not less than £100,000 (or such other
figure as may be prescribed) in respect of the total of the claims
made in any one year;
(c) must not, except with the consent in writing of the Authority,
provide in relation to any claim for any amount greater than one
per cent of the limit referred to in paragraph (b) to be met by the
credit union; and24

Credit Unions Act 1993 Section 16


c AT 19 of 1993 Page 17

(d) must be issued by a person who is authorised or permitted under
the Insurance Act 2008 to carry on in the Island insurance business
of a relevant class.25

(3) In subsection (2)(a) and (b) “prescribed” means prescribed by order
made by the Authority.26

(4) An order made by virtue of subsection (2)(b) may provide for different
figures in relation to different descriptions of credit union, whether by
reference to the amount of the assets of the credit union or to such other
factors as appear to the Authority to be appropriate; and if such an order
does so provide the reference in subsection (2)(c) to the limit referred to
in subsection (2)(b) shall be construed as a reference to the limit
applicable to the credit union in question.27

16 Share guarantees

(1) A society shall not be registered as a credit union unless the Authority is
satisfied that on registration there will be in force in relation to that
society arrangements complying with the requirements of this section,
consisting of —
(a) a policy or policies of insurance issued by a person or persons
authorised or permitted under the Insurance Act 2008 to carry on
in the Island insurance business of a relevant class, or28

(b) arrangements (other than a policy of insurance) which are
approved for the purpose by the Authority, or29

(c) a combination of such a policy or policies and such arrangements,
which is approved for the purpose by the Authority.30
31

(2) A credit union shall at all times maintain in force such arrangements as
are referred to in subsection (1), and if it fails to do so it shall be guilty of
an offence and liable on summary conviction to a fine not exceeding
£2,500.32

(3) In order to comply with this section, arrangements —
(a) subject to such exceptions as may be prescribed, must insure —
(i) every member of the credit union, and
(ii) every person from whom deposits are taken under
section 9,
in respect of losses incurred by reason of the insolvency of the
credit union; and
(b) must so insure the credit union up to a limit not less than the
amount specified in subsection (4).
(4) The amount referred to in subsection (3)(b) is the aggregate of —
(a) the interest in shares of every member of the credit union (not
exceeding the amount specified in section 5(3)), together with any
Section 17 Credit Unions Act 1993


Page 18 AT 19 of 1993 c

dividends accrued thereon, less the amount outstanding of any
loan made to such member together with interest accrued thereon;
and
(b) the amount of deposits taken from every person under section 9
(not exceeding the amount specified in section 9(1)), together with
interest accrued thereon under section 9(3).
(5) For the purpose of this section a credit union becomes insolvent —
(a) on the commencement of the winding-up of the credit union
pursuant to section 24(4) of the 1892 Act;
(b) on the dissolution of the credit union otherwise than pursuant to
the said section 24(4) where it is determined, in such manner as
may be prescribed, that the credit union was immediately before
such dissolution unable to pay its debts.
(6) In this section “prescribed” means prescribed by order made by the
Authority.33

Powers of Authority34

17 Power to require information

[P1965/12/48; P1979/34/17]
(1) The Authority may at any time, by notice in writing served on a credit
union or on any person who is or has been an officer of a credit union,
require that credit union or person to produce to the Authority such
books, accounts and other documents relating to the business of the
credit union, and to furnish to it such other information as to that
business, as the Authority considers necessary for the exercise of any of
its powers under the Societies Acts in relation to that or any other credit
union, and any such notice may contain a requirement that any
information to be furnished in accordance with the notice shall be
verified by a statutory declaration.35

(2) If a credit union or other person fails without reasonable excuse to
comply with a notice under subsection (1) it or he shall be guilty of an
offence and liable on summary conviction to a fine not exceeding £1,000
or to imprisonment for a term not exceeding 3 months, or to both.
(3) The Authority may, if it considers it just, direct that all or any of the
expenses incurred by it in exercising its powers under subsection (1) in
relation to any credit union shall, either wholly or to such extent as the
Authority may determine, be defrayed out of the funds of the credit
union or by the officers or former officers of the credit union or any of
them; and any sum which any credit union or other person is required by
such a direction to pay shall be a debt due to the Authority from that
credit union or person.36

Credit Unions Act 1993 Section 18


c AT 19 of 1993 Page 19

(4) Without prejudice to section 16(1)(d) of the 1892 Act (duty to furnish
annual returns), the Authority may by notice in writing served on a
credit union require it to furnish, within such period as may be specified
in the notice, a financial statement or periodic financial statements in
such form and containing such information as may be so specified.37

(5) If a credit union fails without reasonable excuse to comply with a notice
under subsection (4) it shall be guilty of an offence and liable on
summary conviction to a fine not exceeding £1,000.
18 Power to appoint inspector and call meeting

[P1965/12/49; P1979/34/18]
(1) Without prejudice to section 22 of the 1892 Act (appointment of inspector
or calling of special meeting by court), where the Authority is of the
opinion —
(a) that an investigation should be held into the affairs of a credit
union, or
(b) that the affairs of the credit union call for consideration by a
meeting of the members,
it may appoint an inspector to investigate and report on the affairs of the
credit union or may call a special meeting of the credit union, or may
(either on the same or on different occasions) both appoint such an
inspector and call such a meeting.38

(2) All expenses of and incidental to an investigation or meeting held
pursuant to subsection (1) shall be defrayed out of the funds of the credit
union, or by the members or officers or former members or officers of the
credit union in such proportions as the Authority shall direct.39

(3) An inspector appointed under this section may require the production of
all or any of the books, accounts, securities and documents of the credit
union, and may examine on oath its officers, members, agents and
servants in relation to its business, and may for that purpose administer
oaths.
(4) The Authority may direct at what time and place a special meeting under
this section is to be held, and what matters are to be discussed and
determined at the meeting; and the meeting shall have all the powers of a
meeting called according to the rules of the credit union, and shall have
power to appoint its own chairman notwithstanding any rule of the
credit union to the contrary.40

19 Power to suspend operations of credit union

[P1979/34/19]
(1) If, with respect to any credit union, the Authority considers it expedient
to do so having regard to the interests of all the members of the credit
Section 20 Credit Unions Act 1993


Page 20 AT 19 of 1993 c

union or in the interests of potential members of the credit union, it may
give a direction prohibiting the credit union to such extent and subject to
such conditions as may be specified in the direction from carrying on any
one or more of the following activities —
(a) borrowing money;
(b) accepting a payment representing the whole or any part of an
amount due by way of subscription for a share in the credit union
other than a payment which fell due before the making of the
order;
(c) lending money; and
(d) repaying share capital;
and Schedule 2 shall have effect in relation to the giving of a direction
under this section.41

(2) Nothing in any direction given under this section shall make it unlawful
for a credit union to borrow from an authorised bank if the credit union
has obtained the consent in writing of the Authority.42

(3) For the purposes of this section and of any direction given under it, if
any indebtedness of a member to a credit union is set off to any extent
against the share capital credited to him, then, to that extent, the setting
off shall be treated as a repayment of that share capital.
(4) A direction given under this section may be revoked by the Authority
and notice of the revocation shall be published in the same manner as
notice of the giving of the direction.43

(5) Where a direction under this section is revoked, any obligation of any
person to make a payment to the credit union which fell due at a time
when the credit union was prohibited by the direction from accepting it
shall be suspended for a period equal to the period for which the
prohibition was in force.
(6) Subject to subsection (5), any obligation to make to a credit union a
payment which the credit union is prohibited from accepting by a
direction under this section shall be wholly rescinded.
(7) If a credit union contravenes a direction under this section it shall be
guilty of an offence and liable —
(a) on conviction on information to a fine, or
(b) on summary conviction to a fine not exceeding £2,000.
20 Cancellation or suspension of registration and winding up

[P1979/34/20]
(1) The grounds on which the registration of a credit union may be cancelled
or suspended under section 11 of the 1892 Act, as it applies to credit
unions, include —
Credit Unions Act 1993 Section 21


c AT 19 of 1993 Page 21

(a) that the Authority is satisfied that the number of members of the
credit union has been reduced to less than 21;44

(b) that the Authority is satisfied that the credit union has after notice
from it violated any of the provisions of the Societies Acts; and45

(c) that it appears to the Authority that there is no longer a common
bond between the members of the credit union;46

and section 11(4) of that Act (appeals) shall apply accordingly.
(2) Without prejudice to section 24(4) of the 1892 Act (winding up), a
petition for the winding up of a credit union may be presented to the
court by the Authority if it appears to it that —
(a) the credit union is unable to pay sums due and payable to its
members, or is able to pay such sums only by obtaining further
subscriptions for shares or by defaulting in its obligations to
creditors; or
(b) there has been, in relation to that credit union, a failure to comply
with any provision of, or of any direction given under, the
Societies Acts; or
(c) there is no longer a common bond between the members of the
credit union;
or in any other case where it appears to the Authority that the winding
up of the credit union is in the public interest or is just and equitable
having regard to the interests of all the members of the credit union.47

Amalgamations, transfers of engagements and conversions
21 Amalgamations and transfers of engagements

[P1979/34/21]
(1) In its application to credit unions, section 23(3) of the 1892 Act
(amalgamations of registered societies and transfers of engagements
between them) shall have effect subject to the provisions of
subsections (2) and (3).
(2) A credit union shall not amalgamate with or transfer its engagements to
or accept a transfer of engagements from any registered society which is
not a credit union.
(3) The Authority shall not register a special resolution under section 23(3)
of the 1892 Act if in its opinion —
(a) the proposed amalgamation or transfer of engagements would
result in a contravention of any provision of the Societies Acts; or
(b) there would be no common bond between the members of the
proposed amalgamated credit union or, as the case may be, the
Section 22 Credit Unions Act 1993


Page 22 AT 19 of 1993 c

credit union which proposes to accept the transfer of
engagements.48

(4) In this Act “non-qualifying member
”, in relation to an amalgamated
credit union or a credit union which has accepted a transfer of
engagements, includes a person who does not fulfil the 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.
22 No conversion of credit union into company

[P1979/34/22]
Section 23(4) of the 1892 Act (conversion of registered society into company or
amalgamation with, or transfer of engagements from registered society to,
company) shall not apply to credit unions.
23 Conversion of company into credit union

[P1979/34/23]
(1) In its application to the conversion of a company into a credit union,
section 8 of the 1892 Act (conversion of company into registered society)
shall have effect subject to the provisions of this section.
(2) A company shall not be registered as a credit union in accordance with
that section unless the Authority is satisfied —
(a) that either there are no outstanding deposits by members with the
company or that, in the case of every such outstanding deposit,
the member concerned has consented in writing to the deposit
being converted into an equivalent amount of shares in the credit
union immediately upon the company being registered as a credit
union;
(b) that in no case does the nominal value of the company’s shares
held by any member, together with the amount of any deposit of
his which is to be converted as mentioned in paragraph (a) exceed
the maximum shareholding for the time being permitted by
section 5(3) in the case of a member of a credit union; and
(c) that, except in a case where an exemption has been granted to the
company under section 6(5), the number of its members does not
exceed the maximum for the time being provided for in
section 6(2) in relation to a credit union.49

Credit Unions Act 1993 Section 24


c AT 19 of 1993 Page 23

General and miscellaneous
24 Audit of accounts

[P1979/34/24]
(1) A credit union may display at its registered office, but only at that office,
an interim revenue account or balance sheet which has not been audited,
provided that —
(a) the latest audited revenue account and balance sheet are
displayed side by side with the interim revenue account or
balance sheet; and
(b) the interim revenue account or balance sheet so displayed is
marked in clearly legible characters and in a prominent position
with the words “UNAUDITED REVENUE ACCOUNT” or, as the
case may be, “UNAUDITED BALANCE SHEET”.
(2) Section 16(1)(c) and (g) of the 1892 Act (audit etc.) shall not apply in
relation to any such interim revenue account or balance sheet as is
referred to in subsection (1).
25 Prohibition on undischarged bankrupts etc

[P1979/34/27]
A person who is an undischarged bankrupt or who has been convicted on
information of any offence involving fraud or dishonesty shall not —
(a) sign an application form for registration of a credit union; or
(b) act as a member of the committee of a credit union; or
(c) directly or indirectly take part in or be concerned in the
management of a credit union; or
(d) permit his name to be put forward for election or appointment to
any office in a credit union;
and where a person holding any office in a credit union becomes
ineligible by virtue of this section to hold that office, he shall forthwith
cease to hold that office.
26 Exclusion of deposit taking business under the Financial Services Act

2008

The carrying out by a credit union of transactions permitted by its rules shall
not be treated as deposit taking business, and accordingly a credit union shall
not be treated as a deposit taking institution, for the purposes of the Financial
Services Act 2008.50

Section 27 Credit Unions Act 1993


Page 24 AT 19 of 1993 c

27 Offences

[P1979/34/28]
(1) In sections 25 to 31 of the 1892 Act (general provisions as to offences) as
they apply to credit unions, references to the 1892 Act shall include
references to this Act.
(2) Where an offence under this Act which has been committed by a body
corporate other than a registered society is proved to have been
committed with the consent or connivance of, or to be attributable to any
neglect on the part of, any director, manager, secretary or similar officer
of the body corporate, or any person who was purporting to act in any
such capacity, he as well as the body corporate shall be guilty of that
offence and shall be liable to be proceeded against and punished
accordingly.
(3) In any proceedings for an offence under this Act it shall be a defence for
the person charged to prove that he took all reasonable precautions and
exercised all due diligence to avoid the commission of such an offence by
himself or any person under his control.
28 Orders

Orders made by the Authority under this Act (except an order under
section 30(3)) shall not have effect unless they are approved by Tynwald.51

29 Interpretation

[P1979/34/31]
(1) In this Act —
“the 1892 Act
” means the Industrial and Building Societies Act 1892;
“authorised bank
” means —
(a) the holder of a licence under section 7 of the Financial Services Act
2008 in respect of deposit taking;52

(b) the National Savings Bank;
“Authority
” means the Isle of Man Financial Services Authority (as established
by article 4 of the Transfer of Functions (Isle of Man Financial Services
Authority) Order 2015);53

“civil partner
” includes former civil partner and reputed civil partner;54

“the Commission
” [Repealed]55

“credit union
” means a society registered under the 1892 Act by virtue of
section 1;
“non-qualifying member
”, in relation to a credit union, has the meaning given
by sections 5(5) and 21(4);
Credit Unions Act 1993 Section 30


c AT 19 of 1993 Page 25

“relative
”, in relation to any person, means any of the following —
(a) his spouse or civil partner;56

(b) any lineal ancestor, lineal descendant, brother, sister, aunt, uncle,
nephew, niece or first cousin of his or his spouse or civil partner;
and57

(c) the spouse or civil partner of any relative within paragraph (b);58

and for the purpose of deducing any such relationship a step-child shall
be treated as a legitimate child;
“the Societies Acts
” means the Industrial and Building Societies Acts 1892 to
1993;
“spouse
” includes former spouse and reputed spouse.
(2) Sections 2 and 32 of the 1892 Act shall apply for the purposes of this Act
as they apply for the purposes of that Act.
30 Short title, citation and commencement

(1) This Act may be cited as the Credit Unions Act 1993.
(2) The Industrial and Building Societies Acts 1892 to 1986 and this Act may
be cited together as the Industrial and Building Societies Acts 1892 to
1993.
(3) This Act shall come into operation on such day as the Authority may by
order appoint.59
60

Credit Unions Act 1993 Schedule 1



c AT 19 of 1993 Page 27

Schedule 1

MATTERS TO BE PROVIDED FOR IN RULES OF CREDIT UNION

Section 4(1)
1. The name of the society, which shall comply with section 3(1) and with section
9(4) of the 1892 Act and section 1(1) of the Industrial and Building Societies
(Amendment) Act 1955 (name not to be undesirable and to end with the word
“limited”).
2. The objects of the society.
3. The place in the Island which is to be the registered office of the society to which
all communications and notices to the society may be addressed.
4. The qualifications for, and the terms of, admission to membership of the society,
including any special provision for the insurance of members in relation to their shares.
5. The mode of holding meetings, including provision as the quorum necessary for
the transaction of any description of business, and the mode of making, altering or
rescinding rules.
6. The appointment and removal of a committee, by whatever name, and of
managers or other officers and their respective powers and remuneration.
7. Determination (subject to section 5(3)) of the maximum amount of the interest in
the shares of the society which may be held by any member.
8. Provision for the mode of withdrawal of shares and for payment of the balance
due thereon on withdrawing from the society.
9. The mode and circumstances in which loans to members are to be made and
repaid, including any special provision for the insurance of members in relation to
loans made to them.
10. Provision for the custody and use of the society’s seal.
11. Provision for the audit of accounts by one or more auditors appointed by the
society.
12. Provision for the withdrawal of members from the society and for the claims of
the representatives of deceased members or the trustees of the property of bankrupt
members, and for the payment of nominees.
13. Provision for terminating the membership of members in order to comply
with —
Schedule 2
Credit Unions Act 1993


Page 28 AT 19 of 1993 c

(a) the limit on the number of members of a credit union for the time
being provided for in subsection 6(2) or, if a conditional
exemption has been granted under subsection 6(5), any other limit
which may be specified as a condition of that exemption; and
(b) the limit provided for in section 5(6) on the number of non-
qualifying members of a credit union;
and for the repayment of the shares held by, and of any loans
made to, a member whose membership is terminated for such a
purpose.
14. Provision for the dissolution of the society, including provision requiring any
assets remaining after the payment of debts, repayment of share capital and discharge
of other liabilities —
(a) to be transferred to another credit union; or
(b) if not so transferred, to be applied for charitable purposes.
Schedule 2

PROCEDURE IN RELATION TO DIRECTIONS UNDER SECTION 19

Section 19
1. Not less than 14 days before giving a direction, the Authority shall serve on the
credit union concerned, and on every member of its committee, a notice stating that it
proposes to give such a direction and specifying the nature of the direction it proposes
to give and the considerations which have led it to conclude that it should give such a
direction.61

2. (1) The Authority shall consider any representations with respect to the
notice which may be made to it by the credit union within such period as it may allow,
not being less than 14 days from the date on which the credit union is served with the
notice.62

(2) If the credit union so requests, the Authority shall afford it an
opportunity of making oral representations to the Authority or a person appointed by
it for the purpose within that period; and where such representations are made to a
person so appointed, the Authority shall not give the direction without considering the
report of that person.63

3. (1) On giving such a direction the Authority shall serve the direction on the
credit union and shall serve on every member of its Committee a notice of the giving of
the direction.64

(2) The direction and notices served in accordance with sub-paragraph (1)
shall be accompanied by a notice specifying the considerations which have led the
Authority to conclude that it should give the direction.65

Credit Unions Act 1993 Schedule 2



c AT 19 of 1993 Page 29

(3) The Authority shall not have power to give such a direction unless all the
considerations so specified were those, or were among those, which were specified in
the notice under paragraph 1.66

4. A notice under this Schedule may be served on a member of the committee of a
credit union by sending it by post to his address, or latest address, as notified to the
Authority by him or by the credit union.67

5. Failure to serve a notice under this Schedule on a committee member shall not
affect the validity of a direction.
6. Notice of the giving of a direction shall be published by the Authority in one or
more newspapers published and circulating in the Island and in any other manner
which appears to it to be necessary for informing the public.68

Credit Unions Act 1993 Endnotes


c AT 19 of 1993 Page 31

ENDNOTES

Table of Endnote References

1
Subs (2) repealed by Companies (Transfer of Functions) Act 2000 Schs 1 and 3. 2
Para (a) amended by SD2015/0090 as amended by SD2015/0276. 3
Subs (5) amended by SD2015/0090 as amended by SD2015/0276. 4
Subs (6) amended by SD2015/0090 as amended by SD2015/0276. 5
Subs (6) amended by Companies (Transfer of Functions) Act 2000 Sch 1, by
Interpretation Act 1976 s 16A and by SD155/10 Sch 2. 6
Subs (2) amended by Statute Law Revision Act 1997 Sch 1. 7
Para (b) amended by SD2015/0090 as amended by SD2015/0276. 8
Para (b) amended by SD2015/0090 as amended by SD2015/0276. 9
Subs (1) amended by SD2015/0090 as amended by SD2015/0276. 10
Subs (4) amended by SD2015/0090 as amended by SD2015/0276. 11
Subs (4) amended by SD2015/0090 as amended by SD2015/0276. 12
Subs (3) amended by SD2015/0090 as amended by SD2015/0276. 13
Subs (5) amended by SD2015/0090 as amended by SD2015/0276. 14
Subs (6) amended by SD2015/0090 as amended by SD2015/0276. 15
Para (b) amended by Statute Law Revision Act 1997 Sch 1. 16
Subs (4) amended by SD2015/0090 as amended by SD2015/0276. 17
Subs (2) amended by SD2015/0090 as amended by SD2015/0276. 18
Para (b) amended by Statute Law Revision Act 1997 Sch 1. 19
Subs (7) amended by SD2015/0090 as amended by SD2015/0276. 20
Subs (1) amended by SD2015/0090 as amended by SD2015/0276. 21
Para (b) amended by Statute Law Revision Act 1997 Sch 1. 22
Subs (4) amended by SD2015/0090 as amended by SD2015/0276. 23
Subs (1) amended by Statute Law Revision Act 1997 Sch 1 and by SD2015/0090 as
amended by SD2015/0276. 24
Para (c) amended by SD2015/0090 as amended by SD2015/0276. 25
Para (d) amended by Insurance Act 2008 Sch 8. 26
Subs (3) amended by SD2015/0090 as amended by SD2015/0276. 27
Subs (4) amended by SD2015/0090 as amended by SD2015/0276. 28
Para (a) amended by Insurance Act 2008 Sch 8. 29
Para (b) amended by SD2015/0090 as amended by SD2015/0276. 30
Para (c) amended by SD2015/0090 as amended by SD2015/0276. 31
Subs (1) amended by SD2015/0090 as amended by SD2015/0276. 32
Subs (2) amended by Statute Law Revision Act 1997 Sch 1. 33
Subs (6) amended by SD2015/0090 as amended by SD2015/0276. 34
Cross-heading substituted by SD2015/0090 as amended by SD2015/0276. 35
Subs (1) amended by SD2015/0090 as amended by SD2015/0276. 36
Subs (3) amended by SD2015/0090 as amended by SD2015/0276.
Endnotes Credit Unions Act 1993


Page 32 AT 19 of 1993 c

37
Subs (4) amended by SD2015/0090 as amended by SD2015/0276. 38
Subs (1) amended by SD2015/0090 as amended by SD2015/0276. 39
Subs (2) amended by SD2015/0090 as amended by SD2015/0276. 40
Subs (4) amended by SD2015/0090 as amended by SD2015/0276. 41
Subs (1) amended by SD2015/0090 as amended by SD2015/0276. 42
Subs (2) amended by SD2015/0090 as amended by SD2015/0276. 43
Subs (4) amended by SD2015/0090 as amended by SD2015/0276. 44
Para (a) amended by SD2015/0090 as amended by SD2015/0276. 45
Para (b) amended by SD2015/0090 as amended by SD2015/0276. 46
Para (c) amended by SD2015/0090 as amended by SD2015/0276. 47
Subs (2) amended by SD2015/0090 as amended by SD2015/0276. 48
Subs (3) amended by SD2015/0090 as amended by SD2015/0276. 49
Subs (2) amended by SD2015/0090 as amended by SD2015/0276. 50
S 26 substituted by Financial Services Act 2008 Sch 6. 51
S 28 amended by SD2015/0090 as amended by SD2015/0276. 52
Para (a) substituted by Financial Services Act 2008 Sch 6. 53
Definition of “Authority” inserted by SD2015/0090 as amended by SD2015/0276. 54
Definition of “civil partner” inserted by Civil Partnership Act 2011 Sch 14. 55
Definition of “the Commission” repealed by SD2015/0090 as amended by
SD2015/0276. 56
Para (a) amended by Civil Partnership Act 2011 Sch 14. 57
Para (b) amended by Civil Partnership Act 2011 Sch 14. 58
Para (c) amended by Civil Partnership Act 2011 Sch 14. 59
Subs (3) amended by SD2015/0090 as amended by SD2015/0276. 60
ADO (whole Act) 27/6/1994 (SD170/94). 61
Para 1 amended by SD2015/0090 as amended by SD2015/0276. 62
Subpara (1) amended by SD2015/0090 as amended by SD2015/0276. 63
Subpara (2) amended by SD2015/0090 as amended by SD2015/0276. 64
Subpara (1) amended by SD2015/0090 as amended by SD2015/0276. 65
Subpara (2) amended by SD2015/0090 as amended by SD2015/0276. 66
Subpara (3) amended by SD2015/0090 as amended by SD2015/0276. 67
Subpara (4) amended by SD2015/0090 as amended by SD2015/0276. 68
Subpara (6) amended by SD2015/0090 as amended by SD2015/0276.