Building Societies Act

Section Interpretation Section In this Act, unless the context otherwise requires— " basic advance ", in relation to any advance made or to be made by a building society for the purpose of its being used in defraying the purchase price of land , means the maximum amount which the society would consider proper to advance upon the security of that land if no other security were taken by the society; " building society " means a society formed for the purpose of raising by the subscriptions of members a stock or fund from which to make advances to members and registered in accordance with this Act; " continuing arrangement " means any arrangement made between a building society and another person by which, in contemplation of a series of advances comprising excess advances being made by the society to members for the purpose of their being used in defraying the purchase prices of lands, that person undertakes to give to the society a series of guarantees, each of which is to secure sums payable to the society in respect of such an advance; " dispute " means a dispute between a building society and a member or any representative of a member in his or her capacity of a member of the soc...

Section Appointment of registrar of building societies Section The Minister shall appoint a registrar of building societies to perform the duties and exercise the powers imposed and conferred by this Act, and may appoint a deputy registrar and any number of assistant registrars who shall be subject to the directions of the registrar of building societies.

Section Certificates, etc. to be evidence Section Any certificate of incorporation, certificate of registration or other document relating to a building society purporting to be signed by the registrar shall, in the absence of any evidence to the contrary, be admissible as evidence without proof of the signature.

Section Indemnity of officers Section The registrar shall not, nor shall any person acting under the authority of the registrar or under any regulation made in pursuance of this Act, be personally liable for or in respect of any act or matter done in good faith in the exercise or supposed exercise of the powers conferred by this Act or by any regulation made in pursuance of this Act.

Section Common seal Section Every building society shall have a common seal which shall bear the registered name of the society. A building society which is by its rules permitted to carry on its business outside Uganda may, if authorised by its rules, have for use in any territory, district or place not situate in Uganda an official seal, which shall be a facsimile of the common seal of the society, with the addition on its face of the name of every territory, district or place where it is to be used. A deed or other document to which an official seal is duly affixed shall bind the society as if it had been sealed with the common seal of the society.

Section Registered office Section Every building society shall have a registered office and postal address in Uganda to which all communications and notices may be addressed.

Section Maintenance of register Section The registrar shall keep a register of building societies in which he or she shall record, in respect of all building societies registered under section 6 or 68 , the following particulars— the name of the society; the situation of the registered office and the postal address of the society; such other information as the registrar may determine.

Section Formation of building societies Section Any seven or more persons intending to form a building society may in general meeting adopt rules in compliance with section 9 and shall within fourteen days thereafter, or such extended period as the registrar (either before or after the expiration of such fourteen days) may allow, send to the registrar an application for registration in the prescribed form accompanied by two copies of such rules. If the registrar is satisfied that the application and the rules are in compliance with this Act and any regulations made under it, he or she shall enter the prescribed particulars relating to it in the register ; and thereupon the society shall become a body corporate by its registered name with perpetual succession until terminated or dissolved under the provisions of this Act. The registrar shall issue a certificate of incorporation in the prescribed form to every building society registered under the provisions of this section.

Section Commencement of business Section No building society shall commence business until it has obtained a certificate of incorporation issued under the provisions of section 6 .

Section Provisions as to names Section No building society may be registered with a name identical with that of any building society previously registered and still subsisting, or so nearly resembling the same as to be likely to deceive unless such subsisting society is in course of being terminated or dissolved and consents to such registration, or which is, in the opinion of the registrar , undesirable. The name of every building society shall end with the words "Building Society". A building society shall not use any name or title other than its registered name.

Section Contents of rules Section The rules of every society shall set forth— the name of the society and the chief office or place of meeting for the business of the society; the manner in which the stock or funds of the society is or are to be raised; the terms upon which shares are to be issued and withdrawn and the manner in which contributions are to be paid to the society; whether preferential shares are to be issued and, if so, within what limits; the manner in which advances are to be made and repaid; the deductions, if any, for premiums and the conditions upon which a borrower can redeem the amount due from him or her before the expiration of the period for which the advance was made, with tables, where applicable in the opinion of the registrar , showing the amount due from the borrower after each stipulated payment; the manner in which losses are to be ascertained and provided for; the manner in which membership is to cease; whether the society intends to borrow money and if so, within what limits not exceeding those prescribed by this Act; the purposes to which the funds of the society are to be applied and the manner in which they are to be invested; the manner of alte...

Section Directors Section Every building society shall have a board of directors or committee of management consisting of three or more persons, of whom the secretary may but need not be one. The duties of every director or member of the committee of management of a building society shall include the duty of satisfying himself or herself that the arrangements made for assessing the adequacy of securities to be taken in respect of advances to be made by the society are such as may be reasonably expected to ensure that the adequacy of any security to be so taken will be assessed by a competent and prudent person experienced in the matters relevant to the determination of the value of that security. Nothing in this subsection shall be construed as precluding a director or member of the committee of management of a building society from approving arrangements referred to in subsection (2) by reason only that the arrangements provide for the assessment of the adequacy of such security by himself or herself or any other director or member of the committee of management of the society.

Section Secretary Section Every building society shall have a secretary. Any duty or power authorised to be done or exercised by the secretary may, if the office is vacant or there is for any other reason no secretary capable of acting, be done or exercised by any assistant or deputy secretary capable of acting, or by an officer of the society authorised generally or specially in that behalf by the board of directors or committee of management.

Section Auditors Section Every building society shall have one or more auditors, who shall be persons approved for that purpose by the registrar .

Section Officers to give security Section Every officer of a building society having the receipt or charge of any money belonging to the society shall before taking upon himself or herself the execution of his or her office become bound with one sufficient surety at least in a bond according to the prescribed form or give such other security as the society may direct in such sum as the society may require conditioned for rendering a just and true account of all monies received and paid by the officer on account of the society and for payment of all sums of money due from him or her to the society at such times as its rules appoint or as the society may require.

Section Officers to account Section Every officer of a building society , his or her executors or administrators shall upon demand made or notice in writing given or left at his or her last or usual place of residence by or on behalf of the board of directors or committee of management of the society render an account of all monies received or paid by him or her on account of the society and for all monies remaining in his or her hands and shall deliver all securities and effects, books, papers and property of the society in his or her hands or custody to such person as the society may appoint.

Section Officers not to accept gifts Section No director, secretary, surveyor, advocate or other officer of a building society shall, in addition to the remuneration prescribed or authorised by the rules of the society, receive from any other person any gift, bonus, commission or benefit for or in connection with any loan made by the society. Any person paying or accepting any such gift, bonus, commission or benefit commits an offence and is liable on conviction to a fine not exceeding two thousand shillings or to imprisonment for a period not exceeding six months, and the person accepting any such gift, bonus, commission or benefit shall as and when instructed by the court by whom he or she is convicted, pay over to the society the amount or value of such gift, bonus, commission or benefit, and in default of such payment is liable to imprisonment for a period not exceeding six months.

Section Restriction of payment of commissions Section It shall not be lawful— Where a building society has a financial interest in the disposition of any land , nothing in this section shall prohibit— for a person having a financial interest in the disposition of any land to receive or to agree to receive any commission or gift from a building society or from any officer, servant or agent of a building society , in consideration of the introduction of mortgage business to the society in connection with the disposition of the land or in consideration of a promise to introduce such business to the society; or for a building society , or any officer, servant or agent of a society, to offer to give or agree to give any commission or gift to any person known to the society, officer, servant or agent, as the case may be, to have a financial interest in the disposition of any land or to be a servant of a person having such an interest, for any such consideration as is mentioned in paragraph (a) of this subsection. For the purposes of this section, a person who is employed otherwise than in pursuance of a contract of service in connection with the disposition of any land by a person who ha...

Section Provisions excluding liability of officers forbidden Section Any provision, whether contained in the rules of a building society or in any contract with a building society or otherwise, for exempting any director, member of the committee of management, manager or officer of a building society or any person (whether an officer of the society or not) employed by the society as auditor from, or indemnifying him or her against, any liability which by virtue of any rule of law would otherwise attach to him or her in respect of any negligence, default, breach of duty or breach of trust of which he or she may be guilty in relation to the society shall be void. A building society may, in pursuance of any provision mentioned in subsection (1), indemnify any such director, member of the committee of management, manager, officer or auditor against any liability incurred by him or her in defending any proceedings, whether civil or criminal, in which judgment is given in his or her favour or in which he or she is acquitted or in connection with any application under section 20 in which relief is granted to him or her by the court.

Section Powers of courts to grant relief Section If in any proceedings for negligence, default, breach of duty or breach of trust against any person to whom this section applies, it appears to the court hearing the case that that person is or may be liable in respect of the negligence, default, breach of duty or breach of trust, but that he or she has acted honestly and reasonably and that having regard to all the circumstances of the case, including those connected with his or her appointment, he or she ought fairly to be excused for the negligence, default, breach of duty or breach of trust, the court may relieve the person either wholly or partly from his or her liability on such terms as the court may think fit. Where any person to whom this section applies has reason to apprehend that any claim will or might be made against him or her in respect of any negligence, default, breach of duty or breach of trust, he or she may apply to the High Court for relief; and the High Court on any such application shall have the same power to relieve him or her as under this section as it would have had if it had been a court before which proceedings against that person for negligence, defaul...

Section Power to borrow Section In calculating the amount for the time being secured to a building society by mortgages from its members for the purposes of subsection (1), there shall be disregarded— A building society may receive deposits or loans at interest from the members or from other persons to be applied to the purposes of the society; but the total amount received on deposit or loan and not repaid by the society shall not at any time exceed two-thirds of the amount for the time being secured to the society by mortgages from its members. the amount secured on properties the payments in respect of which were upwards of twelve months in arrear at the date of the society's last preceding annual account and statement; and the amount secured on properties of which the society had been twelve months in possession at the date of such account and statement. Money deposited with a building society as security for an advance made by the society to a member, or as security for any guarantee given in respect of such an advance, shall be deemed to be money borrowed by the society.

Section Power to hold land Section Subject to the provisions of any law dealing with land , it shall be lawful for a building society — to acquire and hold any land with any title which the society requires for its business premises or for the housing of its staff; and to acquire by foreclosure or surrender any land mortgaged to the society, A building society may let any part of its business premises which is not required for the immediate use of the society.

Section Power to make advances to members Section A building society may make advances to its members out of its funds upon the security of any land ; except that no building society shall advance money on the security of any land which is subject to a prior mortgage, unless the prior mortgage is in favour of the society making the advance, and if any advance is made in contravention of this provision, the directors of the society or the members of the committee of management, as the case may be, who authorised the advance shall be jointly and severally liable for any loss on the advance occasioned to the society. In determining the amount of any advance by a building society to one of its members upon the security of any land , the society shall not take into account the value of any additional security taken by the society for the advance, other than a security of a class specified in the Schedule to this Act. Where a charge upon a policy of life assurance is taken as additional security for such an advance as aforesaid, the value of the policy shall be assessed at an amount not exceeding its surrender value at the time when the advance is made. Where a guarantee given in pursuan...

Section Power to invest Section A building society may, from time to time as its rules permit, invest any portion of its funds not immediately required for its purposes, in or upon any stock, shares or securities for the time being authorised by law for the investment of trust monies or in any other classes of investment authorised by the Minister by statutory instrument. A building society which makes any advance upon the security of any land to any person other than a member of the society shall have no power to take any additional security for the advance.

Section Power to carry on business abroad Section A building society shall have power, provided that its rules so allow, to carry on business in any territory, district or place not situate in Uganda and to invest any portion of its funds not immediately required for its purposes in advances upon the security of land in any such territory, district or place; but the amount which a building society may invest in any such territory, district or place shall not, without the consent of the Minister , exceed the sum of its share capital, loans and deposits raised in that territory, district or place by more than one-fifth of its capital assets for the time being in Uganda.

Section Dividends payable out of profits Section Notwithstanding anything to the contrary contained in its rules, no building society shall pay any dividend or interest on any of its shares, whether preferential or not, otherwise than out of profits earned by the society.

Section Arbitration Section Where the rules of a building society direct disputes to be referred to arbitration, arbitrators shall be named and elected in the manner the rules provide, or if there is no such provision, at the first general meeting of the society, none of the arbitrators being beneficially interested, directly or indirectly in its funds, of whom a certain number, not less than three shall be chosen by ballot in each case of dispute , the number of the arbitrators and mode of ballot being determined by the rules of the society. In the case of the death or refusal or neglect of any of the arbitrators to act, the society at a general meeting shall name and elect an arbitrator to act in the place of the arbitrator dying, or refusing or neglecting to act. The names of all arbitrators elected to act under the foregoing provisions shall be entered in the minute book of the society. The award made by the arbitrators or the major part of them according to the true purport and meaning of the rules of the society shall determine the dispute ; and should either of the parties to the dispute refuse or neglect to comply with or conform to such award within a time to be limited th...

Section Jurisdiction of the High Court Section The High Court may hear and determine disputes in the following cases— if it shall appear to the court upon the petition of any person concerned that application has been made by either party to the dispute to the other party for the purpose of having the dispute settled by arbitration under the rules of the society and that such application has not been complied with within forty days, or that the arbitrators have refused or for a period of twenty-one days have neglected to make any award; or where the rules of the society direct disputes to be referred to the High Court.

Section Determination to be final Section Every determination by arbitrators or by the High Court or by the registrar under this Act of a dispute shall be binding and conclusive on all parties and shall be final to all intents and purposes and shall not be subject to appeal and shall not be removed or removable into any court or restrained or restrainable by the injunction of any court; but the arbitrators or the registrar , as the case may be, may at the request of either party state a case for the opinion of the High Court on any question of law (but shall not be compelled to do so) and shall have power to grant to either party in the dispute such discovery as to documents and otherwise as might be granted by the High Court, such discovery to be made on behalf of the society by such officer of the society as the arbitrators or the registrar may determine.

Section Annual general meeting Section Every building society shall in each calendar year hold a general meeting as its annual general meeting in addition to any other meetings in that year, and shall specify the meeting as such in the notices calling it; except where a building society is incorporated after the 30th September in any year, it shall not be required to hold an annual general meeting during that year.

Section Other meetings Section The board of directors or committee of management of a building society shall call such other general or special meetings as may be required by the rules of the society or as they may consider desirable, and shall, notwithstanding anything contained in the rules of the society, call a general or special meeting on the application of one-tenth of the members or, in the case of a society consisting of more than one thousand members, of one hundred members.

Section Annual account and statement Section Every such account and statement shall be in such form and shall contain such particulars as may be prescribed and, without prejudice to the generality of the foregoing, shall show— Every building society shall, as soon as is practicable and not more than three months after the expiration of every calendar year, cause to be prepared an account of all the receipts and expenditure of the society during that year and a general statement of its funds and effects, liabilities and assets. Every account and statement prepared under subsection (1) shall be attested by the auditors of the society and shall be countersigned by two directors or two members of the committee of management. the amounts due to the holders of the various classes of shares respectively; the amounts due to depositors and creditors for loans; the balance due or outstanding on mortgage securities (not including prospective interest); and the amount invested by the society in other securities, showing separately investments in and investments outside Uganda. Every auditor in attesting any such annual account or statement shall either certify that it is correct, duly vouched...

Section Returns of sales and transfers Section Every building society shall, in respect of each calendar year, cause to be prepared and sent to the registrar at the same time as its annual account and statement is so sent, a return in such form as may be prescribed containing such particulars as may be prescribed with respect to— every property which has, during the period to which the return relates, been sold by the society in the exercise of its powers as mortgagee thereof; and every mortgage which has been transferred by the society during that period.

Section Books and records to be kept Section Every building society shall keep the following books— Every building society shall cause to be kept records showing with respect to every advance made by the society on the security of any land — a minute book recording all proceedings of general meetings; a minute book recording all proceedings of the board of directors or committee of management, as the case may be; a register of directors or members of the committee of management, as the case may be, showing the full names of every director or member, his or her usual residential address, his or her nationality, and, if that nationality is not his or her nationality of origin, his or her nationality of origin, the date of his or her appointment and the date he or she ceased to hold office as such director or member; and such books of account as may be necessary to show the receipts and expenditure of the society, the amounts due to the holders of the various classes of shares respectively and to depositors and creditors for loans, the balance due or outstanding on mortgage securities and the amount invested by the society. the amount at which the land was assessed and the name of the...

Section Rules to be binding Section The rules of a building society as for the time being registered under this Act shall be binding on the several members and officers of the society and on all persons claiming on account of a member or under the rules, all of whom shall be deemed and taken to have full notice of them.

Section Duty to supply copies of rules Section Every building society shall supply to any person requiring the same a complete printed copy of its rules, with a copy of the certificate of incorporation appended thereto, and shall be entitled to charge for the same a sum not exceeding two shillings.

Section Evidence of rules Section A copy of the rules of a building society , certified by the secretary or other officer of the society to be a true copy of its registered rules, shall, in the absence of any evidence to the contrary, be admissible as evidence of the rules.

Section Minors Section A member of a building society while under the age of twenty-one years may— A member of a building society while under the age of twenty-one years may not— Any person under the age of twenty-one years may be admitted as a member of any building society the rules of which do not prohibit such admission. give all necessary acquittances; consent to the dissolution of the society; and by his or her next friend, present a petition for winding up. vote at any meeting of the society; hold any office in the society; transfer any share standing in his or her name; or execute a valid mortgage to secure advances made to him or her by the society.

Section Shares may be held jointly Section Two or more persons may jointly hold a share in a building society .

Section Prohibition of balloting Section No building society shall cause or permit applicants for advances to ballot for precedence or in any way make the granting of an advance depend on any chance or lot.

Section Implied warranty Section Where a building society makes to a member an advance for the purpose of its being used in defraying the purchase price of land , the society shall be deemed to warrant to the member that the purchase price is reasonable unless, before any contract requiring the member to repay the advance is entered into, the society gives to the member a notice in writing in such form as may be prescribed stating that the making of the advance implies no such warranty.

Section Notice before repayment Section A building society shall not accept any deposit except on the terms that not less than one month's notice may be required by the society before repayment or withdrawal. If a building society contravenes this section, the society and every director, member of the committee of management, secretary or other officer of the society commits an offence and is liable on conviction to a fine not exceeding four hundred shillings.

Section Payment of small sums on intestacy Section If any member of or depositor with a building society having in the funds thereof a sum of money not exceeding one thousand shillings dies intestate, the amount due may be paid to the person who appears to the directors or committee of management of the society to be entitled to receive the same, notwithstanding that letters of administration have not been taken out, upon the society receiving satisfactory evidence of death and a statutory declaration that the member or depositor died intestate and that the person so claiming is so entitled. Any payment made under the provisions of subsection (1) shall be valid and effectual with respect to any demand from any other person as next of kin or as the legal personal representative of such deceased member or depositor against the funds of the society, but, nevertheless, such next of kin or representative shall have his or her lawful remedy for the amount of such payment against the person who has received the same.

Section Exercise of power of sale Section A building society exercising its power of sale of any land mortgaged to it shall take reasonable care to ensure that in the exercise of the power the price at which the land is sold is the best price which can reasonably be obtained, and any agreement if and so far as it relieves or may have the effect of relieving a society from the obligation imposed by this section shall be void. Where a building society has exercised its power of sale of any land mortgaged to it, it shall, within fourteen days from the completion of the sale, send by registered post to the person who immediately before the sale was the owner of the land at his or her last known address a notice containing such particulars relating to the sale as may be prescribed. Nothing in subsection (2) shall affect the operation of any rule of law relating to the duty of a mortgagee to account to a mortgagor. If a building society contravenes the provisions of subsection (2), the society and every director, member of the committee of management, secretary or other officer of the society commits an offence and is liable on conviction to a fine not exceeding eight hundred shillings a...

Section Withholding or misapplying property Section Proceedings under subsection (1) may be taken by or at the instance of— If any person by false representation or imposition obtains possession of any monies, securities, books, papers or other effects of a building society , or, having the same in his or her possession, withholds or misapplies the same, or wilfully applies any part of them to purposes other than those expressed or directed in the rules of the society and authorised by this Act, he or she commits an offence and is liable on conviction to a fine not exceeding eight hundred shillings and to be ordered to deliver up to the society all such monies, securities, books, papers or other effects and to repay the amount of money applied improperly, and in default of such delivery of effects or repayment of such amount of money is liable to imprisonment for a period not exceeding six months. the society; any member authorised by the society or by its board of directors or committee of management or by the registrar ; or the registrar .

Section Change of name Section A building society may, by special resolution and with the previous approval of the registrar signified in writing, change its name. A society which changes its name in accordance with the provisions of subsection (1) shall, within fourteen days from the date of the meeting at which the resolution was adopted, send to the registrar two copies of the resolution certified in such manner as may be prescribed. The registrar shall register one copy of the resolution and return the other to the society endorsed with a certificate of registration. A change of name by a building society in accordance with this section shall not affect any rights or obligations of the society, or render defective any legal proceedings by or against the society, and any legal proceedings that might have been continued or commenced against it by its former name may be continued or commenced against it by its new name.

Section Change of address Section Every building society which changes the situation of its registered office or its postal address shall within fourteen days after such change send to the registrar notice of the change in the prescribed form.

Section Change of directors Section Whenever any person is appointed a director or member of the committee of management of a building society or ceases for any reason to be a director or member of the committee of management of a building society , the society shall within fourteen days after such happening send to the registrar notice of it in the prescribed form.

Section Alteration of rules Section A building society may, by special resolution , alter or rescind any of its rules or make any additional rule; but no such special resolution shall have any validity until registered under the provisions of subsection (3). Where a building society has altered or rescinded any of its rules or made any additional rule, it shall, within fourteen days from the date of the meeting at which the resolution was adopted, send to the registrar two copies of the resolution, certified in such manner as may be prescribed. If the registrar is satisfied that the alteration, addition or rescission is in conformity with this Act, he or she shall register one copy of the resolution and return the other to the society endorsed with a certificate of registration.

Section Offences and penalties Section If any building society fails to comply with the provisions of section 43 (2), 44 , 45 or 46 (2), the society and every director, member of the committee of management, secretary and other officers of the society commits an offence and each is liable on conviction to a fine not exceeding one hundred shillings for every day during which the default continues.