Housing and Regeneration Act 2008

Chapter 4 – Registered providers

General provisions

Section 122 - Payments to members etc.

283.This section derives from paragraph 1 of Part 1 of Schedule 1 to the 1996 Act.

284.Subsection (1) restricts the making of gifts and the payment of dividends and bonuses by a non-profit registered provider to –

• a member or former member of the registered provider,

• a member of the family of a member or former member,

• a company which has as a director such a person.

285.Subsection (2) states that gifts may only be made, or dividends of bonuses paid if they fall within the three classes defined in subsections (3) to (5).

286.Subsections (3) to (5) broadly replicate the effects of paragraphs 1(2)(a) to (c) of the Part mentioned above.

287.Subsection (6) states that if a registered company or industrial and provident society contravenes this section –

• it may recover the wrongful gift or payment as a debt from the recipient; and

• the regulator may require it to take action to recover the gift or payment.

Section 123 - Disposal of property

288.This section cross-refers to the provisions in Chapter 5 (disposal of property).

Section 124 – Complaints

289.Section 124 amends section 51 of, and Schedule 2 to, the Housing Act 1996 (schemes for investigation of complaints by housing ombudsman). This ensures that the former registered providers of social housing, and bodies formerly registered with the Housing Corporation, are only required to remain members of a housing ombudsman scheme while they continue to own publicly-funded dwellings.

Section 125 - Voluntary undertaking

290.This section sets out the nature of voluntary undertakings made to the regulator by registered providers.

291.Subsection (1) provides that a registered provider may give an undertaking in respect of any matter concerning social housing.

292.Subsection (2) provides that the regulator may prescribe a procedure to be followed in giving an undertaking.

293.Subsections (3) and (4) provide that the regulator must have regard to any undertaking made in this way by a registered provider when exercising a power under Chapters 6 or 7 of this Part of the Act. The regulator may also take into account the extent to which undertakings having been made in this way by a registered provider, have been honoured by the provider, when deciding whether to exercise powers under Chapters 6 or 7.

294.One of the purposes of this provision is to enable registered providers to formally notify the regulator of actions that they propose to take, and believe are necessary to ensure that their affairs are managed in accordance with the standards set by the regulator under sections 193 and 194. It provides a mechanism by which such commitments can be brought to the attention of the regulator, and require the regulator to take account of those undertakings when determining whether to investigate the performance of providers, and to take enforcement action where providers have not complied with regulatory requirements.

Section 126 – Sustainable community strategies

295.This section specifies that a registered provider must co-operate with a local authority if invited to participate in the preparation or modification of a sustainable community strategy under section 4 of the Local Government Act 2000.

Accounts

296.Sections 127 to 143 broadly replicate the effect of Part 3 of Schedule 1 to the 1996 Act.

Section 127 - Directions

297.Subsections (1), (2)and (3) give the regulator the power to give directions to registered providers about the preparation of accounts for the purpose of ensuring that accounts are prepared in a proper form and that they present a true and fair view of a registered provider’s state of affairs as far as it concerns social housing, including its present and past social housing assets and funds. This broadly replicates the effect of paragraph 16(1) of Schedule 1 to the 1996 Act. A direction may be given to a profit-making registered provider only in so far as its accounts relate to social housing activities.

298.Subsection (4) provides that a direction may provide specifically for how registered providers that are charities should distinguish in their accounts between social housing activities and other matters. This broadly replicates the effect of paragraph 16(2) of Schedule 1 to the 1996 Act.

299.Subsection (5) provides that directions under this power may make general provision, or provision specific to particular cases, and that provision may vary according to different cases or types of provider.

300.Subsection (6) provides that where directions relate to more than one provider, those directions must first be consulted on by the regulator with bodies appearing to represent the interests of registered providers.

301.Subsection (7) requires the regulator to make arrangements to ensure that providers to whom directions apply are made aware of their requirements.

Section 128 - Submission to regulator

302.This section broadly replicates the effect of paragraphs 16(5) to 16(8) of Schedule 1 to the 1996 Act. It requires all registered providers to send a copy of their accounts to the regulator within six months of the end of the year to which they relate. These accounts must be accompanied by an auditor’s report, or, if an enactment requires a report other than an auditor’s report, that other report. The report must specify whether the accounts comply with any relevant directions under section 127.

Section 129 - Companies exempt from audit

303.This section applies in relation to a registered provider which is a registered company, other than a registered charity, which is exempt from the audit requirements of the Companies Act 2006 by virtue of section 477 of that Act, because it is a small company. Registered providers in this category must cause an accountant’s report to be prepared, in accordance with section 130 and made to the company’s members in respect of the company’s individual accounts for any financial year in which the company takes advantage of its exemption from audit. ‘Individual accounts’ has the same meaning as in section 396 of the Companies Act 2006.

Section 130 - Exempt companies: accountant’s report

304.Subsection (1) of this section specifies that the report required by section 129 must be prepared by a reporting accountant eligible under section 131.

305.Subsection (2) requires the report to state whether the individual accounts are in accordance with the company’s accounting records kept under section 386 of the Companies Act 2006.

306.Subsection (3) requires that on the basis of information contained in the accounting records the report must also state whether the accounts comply with Part 15 of the Companies Act 2006, and whether the company is entitled to exemption from audit under section 477 of that Act (small companies’ exemption) for the year in question.

307.Subsection (4) requires that the report must give the name of the reporting accountant and be signed and dated.

308.Subsection (5) requires that the report is signed by the reporting accountant (where it is an individual) or an authorised person (where the reporting accountant is a firm).

309.Subsection (6) defines the meaning of ‘firm’.

Section 131 - Exempt companies: reporting accountant

310.This section specifies who is eligible to act as a reporting accountant for a company. Under subsections (1) to (3), a person is eligible if the person is not prohibited from acting as an auditor and is:

311.Subsection (4) lists the professional accountancy bodies mentioned in subsections (1) to (3). Subsection (5) allows the Secretary of State to amend the list by order.

312.Subsection (6) defines the rules of those bodies, which are rules which the body has power to enforce and which are relevant for the purposes of Part 42 of the Companies Act 2006 (statutory auditors) or this section.

313.Subsection (7) specifies that an individual or a firm may be appointed as a reporting accountant; and that section 1216 of the Companies Act 2006 applies to the appointment of a partnership constituted under the law of England and Wales, Northern Ireland, or any other country or territory in which a partnership is not a legal person.

Section 132 - Application of Companies Act

314.This section specifies the provisions of the Companies Act 2006 which apply to the reporting accountant and to the report as they apply to an auditor of the company and an auditor’s report on the company’s accounts (with any necessary modifications). The provisions, listed in subsection (2) are.

315.Subsection (3) specifies that in sections 505 and 506 of the Companies Act 2006 as they apply by virtue of this section in a case where the reporting accountant is a firm, any reference to the senior statutory auditor shall be read as a reference to the person who signed the report on behalf of the firm.

Section 133 - Exempt companies: extraordinary audit

316.This section applies where, in accordance with section 129 a company appoints a reporting accountant to prepare a report in respect of its accounts for any year. The regulator may require the company to cause a qualified auditor to audit its accounts and balance sheet for that year, and to send a copy of the report to the regulator by a specified date. A requirement may not be imposed before the end of the financial year to which it relates. Subsection (4) of the section also defines ‘qualified auditor’ in relation to a company.

Section 134 - Non-audited industrial and provident society

317.This section broadly replicates the effect of paragraph 17 of Schedule 1 to the 1996 Act. Subsection (1) provides that this section applies only to industrial and provident societies. Subsection (2) provides that an accountant’s report is required even where the society’s turnover does not exceed a sum specified in the Friendly and Industrial and Provident Societies Act 1968, that would otherwise allow the society to disapply the requirement for an accountant’s report.

318.Subsections (3) and (4) give the regulator a power to require the society to appoint a qualified auditor to audit their accounts, and to send to the regulator a copy of the auditor’s report, when the society has disapplied the requirement to appoint a qualified auditor under section 4A of the Friendly and Industrial and Provident Societies Act 1968. The regulator may only use this power in the year following the year to which the accounts relate.

319.Subsection (5) defines “qualified auditor” and “year of account” for the purposes of this section.

Section 135 - Charity

320.This section broadly replicates the effect of part of paragraph 18 of Schedule 1 to the 1996 Act.

321.Subsection (1) specifies that this section relates to non-profit registered providers that are registered charities. Subsection (2) requires such providers to keep accounting records and maintain systems of control in relation to housing activities.

322.Subsection (3) requires such providers to prepare a revenue account giving a true and fair view of its housing activities and a balance sheet giving a true and fair view of its activities as a whole for each accounting period. Subsection (4) requires that the reports specified in subsection (3) must be signed by at least two of the provider’s directors or trustees.

323.Subsection (5) defines “period of account” for the purposes of this section.

324.Subsection (6) specifies that this section does not override other provisions relating to charity accounts in the Charities Act 1993.

Section 136 - Charity: audit

325.This section broadly replicates the effect of part of paragraph 18 of Schedule 1 to the 1996 Act.

326.The purpose of this section is to define whether a charity must appoint an auditor to produce a report under section 137 or a reporting accountant to produce a report under section 138 on the accounts required under subsection (3) of section 135.

327.Subsection (2) specifies that if either of the conditions specified in subsection (4) or subsection (5) are met, then the requirements for an auditor’s report under section 137 apply. Otherwise, the requirements for an accountant’s report under section 138 apply.

328.Subsection (4) is the first condition which is that the charity’s gross income in relation to housing activities for a period exceeds the amount specified in section 43(1)(a) of the Charities Act 1993.

329.Subsection (5) is the second condition which is that the charity’s gross income in relation to housing activities for a period is greater than the amount specified in section 43(1) of the Charities Act 1993, and that, at the end of that period, the aggregate value of assets (before deduction of liabilities) that relate to housing is greater than the sum specified in section 43(1)(b) of the Charities Act 1993.

330.Subsections (6) and (7) define “gross income” and “qualified person” for the purposes of this section.

Section 137 - Charity:  auditor’s report

331.This section broadly replicates the effect of part of paragraph 18 of Schedule 1 to the 1996 Act.

332.Where an auditor has been appointed under either section 136 or 139, the auditor’s report on the charity’s accounts must meet the requirements of this section.

333.Subsection (2) requires that the report must state whether the revenue account gives a true and fair view of the charity’s income and expenditure in relation to its housing activities, and whether the balance sheet also gives a true and fair view of the charity’s state of affairs at the end of the period to which it relates.

334.Subsection (3) requires the report to give the auditor’s name and for it to be signed.

335.Subsection (4) specifies that the auditor will carry out such investigations as are necessary to reach an opinion on whether the charity has complied with section 135 (2), and whether the accounts are consistent with the accounting records that the charity is required to keep.

336.Subsection (5) requires the auditor to state in the auditor’s report if the opinion arising from investigations under subsection (4) is that the requirements specified there have not been complied with.

337.Subsection (6) requires that where the auditor has not obtained all of the information or explanations that the auditor thinks necessary for the purposes of the audit, this must be stated in the auditor’s report.

Section 138 - Charity:  accountant’s report

338.This section broadly replicates the effect of paragraph 18A of Schedule 1 to the 1996 Act.

339.The section specifies the requirements for an accountant’s report on the charity’s accounts as required by section 136(3).

340.Subsection (2) specifies that the report must say whether the accounts are consistent with the accounting records of the charity.

341.Subsection (3) specifies that the report must say whether, on the basis of the accounting records, the accounts comply with the requirements of the Charities Act 1993 and that the basis on which an accountant’s report rather than an auditor’s report is permitted, as set out in section 136, has been correctly established.

342.Subsection (4) requires the report to give the reporting accountant’s name and for it to be signed.

343.Subsection (5) requires that where the reporting accountant has not obtained all of the information or explanations that the reporting accountant thinks necessary for the purposes of the report, this must be stated in the report.

Section 139 - Charity:  extraordinary audit

344.Where under section 136(3) the charity is required to appoint a reporting accountant, this section provides that the regulator has the power to require the charity also to appoint a qualified auditor to audit the accounts, and to send to the regulator a copy of the auditor’s report. The regulator may only use this power in the year following the year to which the accounts relate.

345.Subsection (4) defines “qualified person” and “period of account” for the purposes of this section.

Section 140 - Charity:  auditor’s powers

346.This section requires that a charity must give a person appointed to prepare a report on the charity’s accounts under section 136 or 139, whether they are an auditor or a reporting accountant, access to documents that relate to the charity’s social housing activities, and must provide to that person such information or explanation as they require

Section 141 – Offences

347.This section broadly replicates the effect of aspects of paragraph 19 of Schedule 1 to the 1996 Act.

348.Subsection (1) specifies certain offences in relation to the accounting requirements.

349.Subsection (4)specifies that where one of the offences in subsection (1) is committed by a registered provider, then every officer of the registered provider is guilty of an offence. Subsection (5) specifies that it is a defence for an officer to show that he or she has done everything that could be reasonably expected to ensure compliance by the registered provider.

350.Subsection (6) provides that a person guilty of an offence under this section is liable on summary conviction to a fine not exceeding level 5 (currently £5000) on the standard scale.

351.Subsection (7) provides that proceedings for the offences under this section may only be brought by, or with the consent of, either the regulator or the Director of Public Prosecutions.

Section 142 - High Court

352.This section broadly replicates the effect of sub-paragraph (5) of paragraph 19 of Schedule 1 to the 1996 Act.

353.Where a registered provider has failed to do one of the things listed in section 141(1), the regulator may apply to the High Court for an order for the purpose of remedying the failure. A High Court order for this purpose may make provision for costs.

Section 143 - Disclosure

354.This section broadly replicates the effect of paragraph 19A of Schedule 1 to the 1996 Act, concerning the disclosure of information by auditors and reporting accountants.

355.Subsection (1) specifies that this section applies to information that a person has received while acting either as an auditor or a reporting accountant of a registered provider.

356.Subsection (2) permits persons in receipt of information as described in subsection (1) to disclose that information to the regulator for a purpose connected with the regulator’s functions even if there is otherwise a duty of confidentiality on those persons, and regardless of whether or not the regulator has requested the information.

357.Subsection (3) clarifies that disclosure of information in this way includes expression of an opinion on that information.

358.Subsection (4) defines “reporting accountant” for the purposes of this section.

Insolvency etc.

359.These sections broadly replicate the effects of sections 39 to 45 of the 1996 Act.

Section 144 - Preparatory steps:  notice

360.This section provides that specified steps are effective only if the person specified in respect of those steps has given the regulator notice. The steps and the persons who must give notice in respect of those steps are set out in the table in this section. This section broadly replicates the effect of sections 40(1) to 40(5) of the 1996 Act.

361.The steps and the relevant persons who must give notice are as follows.

362.Any step to enforce security over land held by a registered provider must be notified by the person taking that step. The step must be of a description prescribed for the purpose by the Secretary of State by order - this broadly replicates the effect of section 39(3) of the 1996 Act.

363.The presenting of a petition for the winding up of a registered provider that is either a registered company or an industrial and provident society must be notified by the petitioner.

364.The passing of a resolution for the winding up of a registered provider that is a registered company or an industrial and provident society must be notified by the registered provider. The exception to this is the passing of a resolution for winding up that requires the regulator’s consent under section 162 or 164. This exception broadly replicates the effect of section 40(5) of the 1996 Act.

365.An application for an administration order in respect of a registered provider that is a registered company under paragraph 12 of Schedule B1 to the Insolvency Act 1986 must be notified by the applicant for the administration order.

366.The appointment of an administrator in respect of a registered provider that is a registered company, under paragraph 14 (i.e. the holder of a qualifying floating charge) or paragraph 22 (i.e. the company itself or its directors) of Schedule B1 to the Insolvency Act 1986 must be notified by the person making the appointment.

367.The filing with the court of a copy of a notice of intention to appoint an administrator in respect of a registered provider that is a registered company under paragraph 14 or paragraph 22 of Schedule B1 to the Insolvency Act 1986 must be notified by the person filing the notice.

368.This section ensures that if the regulator presents a petition for the winding up of a registered provider under section 165 this does not trigger a moratorium on the disposal of the provider’s land.

Section 145 - Moratorium

369.Subsection (1) of this section and section 146 provide that a moratorium on the disposal of land by a registered provider begins when one of the specified steps is taken in respect of that registered provider. This broadly replicates the effect of section 42(1) of the 1996 Act.

370.The steps and the person taking them are set out in a table in this section. This table broadly replicates the effect of section 42(2) to 42(4) of the 1996 Act.

371.Subsection (2) requires that where a step specified in the table in this section is taken in respect of a registered provider, the person specified in the table for that kind of step must give the regulator notice that they have taken that step as soon as reasonably practicable. This broadly replicates the effect of section 41(1) of the 1996 Act.

372.Subsection (3) provides that the step taken is not itself invalidated if the notice required in subsection (2) is not given to the regulator but that the end of the moratorium period specified in section 146(2) depends upon the notice being given to the regulator. This subsection broadly replicates the effect of section 41(5) of the 1996 Act.

373.Subsection (4) requires the regulator to give the HCA a copy of any notice received under section 145.

374.The steps and the relevant persons who must give notice are as follows.

375.Any step to enforce security over land held by a registered provider must be notified by the person taking that step if the step is of a description by the Secretary of State by order - this broadly replicates the effect of section 39(3) of the 1996 Act.

376.The presenting of a petition for the winding up of a registered provider that is a registered company or an industrial and provident society (but not by the directors or other governing body of the provider) must be notified by the petitioner.

377.The passing of a resolution for the winding up of a registered provider that is a registered company or an industrial and provident society must be notified by the registered provider.

378.This section provides that if the regulator presents a petition for the winding up of a registered provider under section 165 this does not trigger a moratorium on the disposal of the provider’s land.

379.A decision by the directors or other governing body of a registered provider to move a resolution for the winding up of the registered provider (where it is a registered company or an industrial and provident society) must be notified by the registered provider.

380.The making of an administration order in respect of a registered provider that is a registered company in accordance with paragraph 13 of Schedule B1 to the Insolvency Act 1986 must be notified by the person who applied for the administration order.

381.The appointment of an administrator in respect of a registered provider that is a registered company, under paragraph 14 (i.e. the holder of a qualifying floating charge) or paragraph 22 (i.e. the company itself or its directors) of Schedule B1 to the Insolvency Act 1986 must be notified by the person making the appointment.

Section 146 - Duration of moratorium

382.This section broadly replicates the effect of sections 43(1) to 43(6) of the 1996 Act.

383.Subsection (1) specifies that the moratorium begins when one of the steps specified in section 145 is taken.

384.Subsection (2) specifies that the moratorium ends 28 working days after the regulator has received notice under section 145(2) unless the moratorium is extended as provided for in subsection (3) of this section or cancelled as provided for in subsection (5) of this section. “Working day” is defined by section 275.

385.Subsection (3) allows the regulator to extend the moratorium for a specified period provided that the registered provider’s secured creditors, who the regulator is able to locate following reasonable enquiries, have consented to the extension. There is no limit to the number of extensions that may occur provided the secured creditors consent to those extensions.

386.Subsection (4) requires that, when the moratorium is extended, the regulator must notify the registered provider, and any liquidator, administrator, administrative receiver or receiver appointed in respect of the registered provider or its land, and the HCA.

387.Subsection (5) allows the regulator to cancel the moratorium if it is satisfied that it is unnecessary to make proposals under section 152.

388.Subsection (6) requires the regulator to consult the person who took the step specified in section 145 that triggered the moratorium before cancelling the moratorium as provided for in subsection (5).

389.Subsection (7) requires the regulator to give notice to the registered provider and those of its secured creditors the regulator is able to locate after making reasonable enquiries when the moratorium ends and to provide an explanation of the effects of section 147. The latter requirement does not apply where the regulator has cancelled the moratorium under subsection (5).

390.Subsection (8) sets out that the regulator must notify the HCA when a moratorium ends.

391.Subsection (9) specifies that any further steps taken during a moratorium do not have the effect of either starting a new moratorium or of altering the existing moratorium’s duration as defined in this section.

Section 147 - Further moratorium

392.This section broadly replicates the effect of sections 43(7) and (8) of the 1996 Act.

393.Subsection (1) of the section defines when the provisions of this section apply. It applies if a moratorium ends other than by cancellation by the regulator under section 146(5), and a further step specified in section 145 is taken in relation to the same registered provider within 3 years from the end of that moratorium.

394.Subsection (2) provides that a further step of this kind does not automatically trigger a further moratorium.

395.Subsection (3) allows the regulator to impose a further moratorium for a specified period but only if all of the registered provider’s secured creditors whom the regulator is able to locate after making reasonable enquiries consent to that further moratorium.

396.Subsection (4) requires the regulator to notify the registered provider, and any liquidator, administrator, administrative receiver, receiver appointed in respect of the registered provider or its land, and the HCA if it imposes a further moratorium under subsection (3).

397.Subsection (5) provides that the provisions in sections 144 to 159 apply to a further moratorium imposed by the regulator under this section as they would to a first moratorium, except for section 146(2).

Section 148 - Effect of moratorium

398.This section together with section 149 broadly replicates the effect of section 42(2) to 42(6) of the 1996 Act. Section 148 provides that during a moratorium certain disposals of land by a registered provider require the regulator’s prior consent.

399.Subsection (1) provides that the HCA may not give the registered provider a direction under section 32(4) (to repay or reapply grant) and may not take steps to enforce such a direction against the registered provider, during a moratorium.

400.Subsection (2) provides that the registered provider’s land may not be disposed of without the regulator’s prior written consent during a moratorium.

401.Subsection (3) provides that section 149 sets out the exceptions to subsection (1), and are therefore disposals which do not require the regulator’s prior written consent during a moratorium.

402.Subsection (4) provides that the regulator’s consent may be given before the moratorium begins and may be subject to conditions.

403.Subsection (5) provides that the requirement for the regulator’s prior written consent under this section does not prevent a liquidator from disclaiming land as onerous property during a moratorium.

404.Subsection (6) includes within the definition of “land” in this section any present or future interest in rent or other receipts arising from land.

Section 149 - Exempted disposals

405.Subsection (1) provides that the list of exceptions set out in this section do not require the regulator’s prior written consent under section 148. This broadly replicates the effect of section 42(3) of the 1996 Act.

406.Subsections (2) to (8) set out the following exceptions:

• a letting under an assured tenancy or an assured agricultural occupancy

• a letting under what would be an assured tenancy or an assured agricultural occupancy but for the provisions of paragraphs 4 to 8, 12(1)(h) and 12ZA to 12B of Schedule 1 to the Housing Act 1988 (this schedule sets out tenancies which cannot be assured tenancies)

• a letting under a secure tenancy

• a letting under what would be a secure tenancy but for any of paragraphs 2-12 of Schedule 1 to the Housing Act 1985 (this schedule sets out tenancies which are not secure tenancies)

• a disposal to which section 81 or 133 of the Housing Act 1988 or section 173 of the Local Government and Housing Act 1989 applies (as consent is already required for disposal by those Acts)

• a disposal under the right to buy

• a disposal under a tenant’s right to acquire.

This list of exceptions broadly replicates the effect of section 42(3) of the 1996 Act.

Section 150 - Disposals without consent

407.Section 150 clarifies that a disposal without consent under section 148 is void. A disposal is not void if it is of a single dwelling and the registered provider reasonably believes at the time of the disposal that the buyer intends to use the dwelling as the buyer’s principal residence.

Section 151 – interim manager

408.This section gives the regulator power to appoint an interim manager during a moratorium. The appointment of an interim manager comes to an end at the end of the moratorium, on a date specified in the appointment, or on the agreement of proposals under section 152. Proposals themselves may provide for the appointment of a manager under section 155.

409.Subsection (5) provides that an interim manager shall have any power specified in the appointment, and any other power in relation to the registered provider’s affairs required by the manager for the purposes specified in the appointment. However, subsection (6) provides that an interim manager’s powers are more limited than those of a manager appointed under section 155; an interim manager may not dispose of land or grant security over land.

Section 152 - Proposals

410.Subsection (1) gives the regulator the power to make proposals about the future ownership and management of the registered provider’s property during a moratorium with the objective of ensuring that the property will be properly managed by a registered provider. This broadly replicates the effect of section 44(1) of the 1996 Act.

411.Subsection (2) specifies that, when making proposals, the regulator must:

• have regard to the interests of all of the registered providers’ creditors (broadly replicates the effect of section 44(2)(b) of the 1996 Act),

• as far as reasonably possible, avoid making the position of unsecured creditors worse (broadly replicates the effect of section 44(5) of the 1996 Act).

412.Subsection (3) allows the proposals to include the appointment of a manager as described in section 155 to implement some or all of the regulator’s proposals.

413.Subsection (4) specifies things that the regulator’s proposals must not include. This broadly replicates the effect of section 44(4) of the 1996 Act. The things that may not be included in proposals are:

• a preferential debt being paid other than in priority to a non-preferential debt,

• any preferential creditor being paid a lesser proportion of their preferential debt than any other preferential creditor.

414.Subsection (5) provides that where the registered provider is a charity, the regulator’s proposals may not require the charity to act outside the terms of its trusts, and that the proposals may provide for the disposal of the registered provider’s accommodation only to another charity whose objects are similar to those of the registered provider. This subsection broadly replicates the effect of section 44(6) of the 1996 Act.

Section 153 - Proposals: procedure

415.Subsection (1) requires the regulator to consult the following before making proposals:

• the registered provider (broadly replicates the effect of section 44(2)(a) of the 1996 Act),

• its tenants as far as it is reasonably practicable (broadly replicates the effect of section 44(2)(a) of the 1996 Act),

• the Financial Services Authority, if the registered provider is an industrial and provident society (broadly replicates the effect of section 44(3)(a) of the 1996 Act),

• the Charity Commission, if the registered provider is a registered charity (broadly replicates the effect of section 44(3)(b) of the 1996 Act).

416.Subsection (2) requires the regulator to send a copy of its proposals to-

• the registered provider and its officers,

• such of its secured creditors as the regulator is able to locate after making reasonable enquires, and

• any liquidator, administrator, administrative receiver or receiver appointed in respect of the registered provider or its land.

417.Subsection (3) requires the regulator to make arrangements for the proposals to be brought to the attention of –

• the members and officers of the registered provider,

• its tenants, and

• its unsecured creditors.

418.Subsections (2) and (3) broadly replicate the effect of the provisions of section 44(7) of the 1996 Act.

419.Subsection (4) specifies that the regulator’s proposals have effect if all of the registered provider’s secured creditors to whom proposals were sent agree to those proposals by giving written notice to that effect to the regulator.

420.Subsection (5) provides that further modifications to the proposals may be made and that these shall also have effect if all of the registered provider’s secured creditors to whom the proposals were sent agree to those modifications by giving written notice to that effect to the regulator, and the regulator consents.

421.Subsections (4) and (5) broadly replicate the effect of section 45(1) of the 1996 Act.

422.Subsection (6) requires the regulator to send a copy of the proposals agreed under subsections (4) or (5) to the following:

• the registered provider and its officers,

• its secured creditors to whom the original proposals were sent,

• any liquidator, administrator, administrative receiver or receiver appointed in respect of the registered provider or its land,

• the Financial Services Authority, if the registered provider is an industrial and provident society,

• the Charity Commission, if the registered provider is a registered charity.

423.Subsection (7) requires the regulator to make arrangements for bringing the agreed proposals to the attention of the following:

• the members of the registered provider,

• its tenants, and

• its unsecured creditors.

424.Subsections (6) and (7) replace the provisions of section 45(4) of the 1996 Act.

425.Subsection (8) allows for the proposals to be amended by agreement between the regulator and the secured creditors to whom the original proposals were sent. Where such amendments are made and agreed, the provisions of sections 151 and 152 apply to the amended proposals as they did to the original proposals. This broadly replicates the effect of section 45(5) of the 1996 Act.

Section 154 - Proposals: effect

426.Subsection (1) lists those who are obliged to implement agreed proposals. This broadly replicates the effect of section 45(2) of the 1996 Act. The list is as follows:

• the regulator,

• the registered provider,

• its creditors,

• any liquidator, administrator, administrative receiver or receiver appointed in respect of the registered provider or its land.

427.Subsection (2) lists those who are obliged to co-operate with the implementation of the agreed proposals. They are the members of the governing body of the registered providers as follows:

• for a registered charity, its trustees,

• for an industrial and provident society, its committee members, and

• for a registered company, its directors.

428.Subsection (3) provides that subsection (2) does not oblige or permit those who are expected to co-operate to breach a fiduciary duty to the registered provider or other duty.

429.Subsections (2) and (3) broadly replicate the effect of sections 45(2) and 45(3) of the 1996 Act.

Section 155 - Manager:  appointment

430.This section broadly replicates the effect of section 46 of the 1996 Act.

431.Subsection (1) provides that this section applies where agreed proposals provide for the appointment of a manager.

432.Subsection (2) specifies that the proposals must provide for the manager to be paid reasonable remuneration and expenses.

433.Subsection (3) provides that the regulator will appoint the manager.

434.Subsection (4) provides that the regulator may give directions to the manager which may be general or specific in nature, or both.

435.Subsection (5) provides that the manager may apply to the High Court for directions, and that the directions of the regulator under subsection (4) are subject to directions of the High Court.

436.Subsection (6) provides that the regulator must notify the Charity Commission that a manager has been appointed, if the registered provider is a charity.

437.Subsection (7) provides that the regulator may appoint a new manager in place of a person who ceases to be a manager under this section for whatever reason, and that the new manager’s terms of appointment will be as specified in the proposals, or as determined by the regulator.

Section 156 - Manager:  powers

438.This section broadly replicates the effect of section 47 of the 1996 Act.

439.Subsection (1) expresses the manager’s general powers as follows:

• the manager may do anything necessary for the purpose of the appointment,

• the manager acts as the registered provider’s agent, and is not personally liable on a contract, and

• the manager has ostensible authority to act for the registered provider with the effect that a person dealing with the manager in good faith and for value does not need to further inquire into the manager’s powers.

440.Subsection (2) sets out a list of the specific powers that the terms of a manager’s appointment may confer as follows:

441.Subsection (3) requires the manager to consult and inform the registered provider’s tenants as far as it is reasonably practicable to do so about any exercise of power that is likely to affect them.

Section 157 - Manager of industrial and provident society: extra powers

442.This section broadly replicates the effect of section 48 of the 1996 Act.

443.Subsection (1) specifies that this section applies to a manager appointed under section 155 to implement proposals where the registered provider is an industrial and provident society.

444.Subsection (2) specifies that the appointment of the manager may include the power to make and execute on behalf of the registered provider an instrument that has the effect of transferring its engagements, or providing for its amalgamation with another industrial and provident society.

445.Subsection (3) provides that an instrument for amalgamation has the same effect as a resolution under section 50 of the Industrial and Provident Societies Act 1965.

446.Subsection (4) provides that an instrument for transferring engagements has the same effect as a transfer of engagements under sections 51 and 52 of the Industrial and Provident Societies Act 1965.

447.Subsection (5)requires a copy of the instrument to be sent to and registered by the Financial Services Authority.

448.Subsection (6) specifies that the instrument does not take effect until the copy is registered.

449.Subsection (7) specifies that the copy must be sent to the Financial Services Authority for registration within 14 days of the execution of the instrument, but that the copy registered is not invalid if it is registered after that time.

Section 158 - Assistance by regulator

450.This section broadly replicates the effect of section 49 of the 1996 Act.

451.Subsection (1) gives the regulator the power to give financial or other assistance to a registered provider for the purpose of maintaining its position while the regulator develops proposals under section 152.

452.Subsection (2) gives the regulator the power to give financial or other assistance either to a registered provider or to a manager appointed under section 155 to assist or facilitate the implementation of proposals agreed in accordance with section 152.

453.Subsection (3) specifies that such assistance under subsections (1) and (2) may include the regulator lending staff or arranging the payment of a manager’s remuneration and expenses.

454.Subsection (4) specifies a list of things that the regulator may do by way of giving assistance that require the consent of the Secretary of State. Those things are:

• making grants,

• making loans,

• indemnifying a manager,

• making payments in connection with secured loans, and

• guaranteeing payments in connection with secured loans.

Section 159 - Applications to court

455.This section broadly replicates the effect of section 50 of the 1996 Act.

456.Subsection (1) gives the registered provider the right to apply to the High Court where it thinks that an action taken by a manager appointed under section 159 is not in accordance with agreed proposals.

457.Subsection (2) gives a similar right to a creditor of a registered provider.

458.Subsection (3) provides that where an application is made to the High Court under subsection (1) or (2), the High Court can:

• confirm, annul, or modify an act of the manager

• give the manager directions,

• make any other order.

459.Subsection (4) gives a person who is bound by agreed proposals the right to apply to the High Court if that person thinks that another person who is obliged to implement or co-operate with agreed proposals under section 154 has breached the requirements of that section.

460.Subsection (5) provides that where an application is made to the High Court under subsection (4), the High Court can:

• confirm the action, modify the action or annul it,

• grant relief by way of injunction, damages or otherwise.

Restructuring and dissolution

Sections 160 to 166

461.These sections re-enact the powers of the Housing Corporation in paragraphs 12 to 14 of Schedule 1 to the 1996 Act as powers of the regulator. These powers relate to the restructuring and dissolution of non-profit registered providers of social housing.

Section 160 - Company: arrangements and reconstructions

462.Subsection (1) specifies that the effect of this section is restricted to non-profit registered providers that are registered companies.

463.The effect of subsections (2) to (4) is to render the arrangements under various statutory provisions ineffective without the consent of the regulator.

464.The arrangements in this section for which the regulator’s consent is required are:

• voluntary arrangements made by the directors of a company with its creditors under Part 1 of the Insolvency Act 1986. (This broadly replicates the effect of section 13(5) of Schedule 1 to the 1996 Act).

• an agreement or compromise with creditors that has been sanctioned by a court order in accordance with section 899 of the Companies Act 2006 (this broadly replicates the effect of paragraph 13(2) of Schedule 1 to the 1996 Act which relates to the such arrangements made under section 425 of the Companies Act 1985). Subsection (3)(b) also requires that a copy of the consent should be delivered to the registrar of companies before the court order is effective.

• an agreement under section 900 of the Companies Act 2006 where the application to the court for an order sanctioning an agreement under section 899 of the Companies Act 2006 is in respect of an agreement to reconstruct a company or amalgamate two or more companies and it provides for the transfer of the whole or part of the undertaking or property of one or more of the companies involved in the scheme (this broadly replicates the effect of the first sentence of paragraph 13(3) of Schedule 1 to the 1996 Act which related to the arrangements made under section 427 of the Companies Act 1985).

465.Subsection (5) provides that a court order for the arrangements in subsection (4), and which section 900(6) of the Companies Act 2006 requires to be sent to the registrar of companies, must also be accompanied by a copy of the regulator’s consent (this broadly replicates the effect of the second sentence of paragraph 13(3) of Schedule 1 to the 1996 Act which related to the such arrangements made under section 427 of the Companies Act 1985).

Section 161 - Company:  conversion into industrial and provident society

466.Subsection (1) specifies that the effect of this section is restricted to non-profit registered providers that are registered companies.

467.Subsection (2) specifies that where there is a resolution to convert a company into an industrial and provident society under section 53 of the Industrial and Provident Societies Act 1965, the registrar of companies may only register that resolution if the regulator has consented in writing to the resolution and a copy of that consent accompanies the resolution sent to the registrar of companies. This broadly replicates the effect of paragraph 13(4) of Schedule 1 to the 1996 Act.

468.Subsection (3) requires that where an industrial and provident society is created by such a resolution, the regulator must register the body created and designate it as a non-profit organisation on the register.

469.Subsection (4) further provides that the effects of subsection (3) will be immediate for the purposes of the regulator’s functions and powers, pending the completion of the registration process by the regulator. This broadly replicates the effect of paragraph 13(8) of Schedule 1 to the 1996 Act.

Section 162 - Company:  winding up

470.Subsection (1) specifies that the effect of this section is restricted to non-profit registered providers that are companies.

471.Subsection (2) provides that the regulator must first consent in writing before a special resolution for the voluntary winding up of a company under the Insolvency Act 1986 is effective. This broadly replicates the effect of paragraph 13(6)(a) of Schedule 1 to the 1996 Act.

472.Subsection (3) provides that the requirement to send a copy of the special resolution to the registrar of companies under section 30 of the Companies Act 2006 is satisfied only if a copy of the regulator’s consent accompanies the special resolution. Failure to comply with section 30 of the Companies Act 2006 is an offence. Subsection (3) broadly replicates the effect of paragraph 13(6)(b) of Schedule 1 to the 1996 Act which referred to the earlier equivalent provision in section 380 of the Companies Act 1985.

Section 163 - Industrial and provident society:  restructuring

473.Subsection (1) specifies that the effect of this section is restricted to non-profit registered providers that are industrial and provident societies.

474.Subsections (2) and (3) re-enact paragraph 12(2) of Schedule 1 to the 1996 Act.

475.Subsection (2) provides that the Financial Services Authority, which is the registrar for industrial and provident societies, may register resolutions passed by an industrial provident society for the purposes of the restructuring provisions identified in subsection (3), only if the regulator has consented in writing to the resolution, and a copy of that consent accompanies the resolution sent to the Financial Services Authority.

476.Subsection (3) identifies the restructuring provisions for industrial and provident societies for the purposes of this section as the following sections of the Industrial and Provident Societies Act 1965:

• section 50 which is for the amalgamation of two or more societies,

• section 51 which is for the transfer of engagements from one society to another,

• section 52 which is for the conversion into, amalgamation with or transfer of engagements to, a company by an industrial and provident society.

477.Subsection (4) broadly replicates the effect of paragraph 12(3) of Schedule 1 to the 1996 Act. It provides that where a resolution is registered by the Financial Services Authority, any body that is created by the resolution, or to which there is a transfer of engagements as a result of the resolution, will be:

• registered by the regulator as a registered provider, and be designated as a non-profit provider in accordance with section 115, and that

• for the purposes of the regulator’s functions and powers, pending the completion of the registration process by the regulator of the new body, the new body will be treated as if it were registered already as a non-profit organisation.

Section 164 - Industrial and provident society:  winding up

478.Subsection (1) specifies that the effect of this section is restricted to non-profit registered providers that are industrial and provident societies.

479.Subsections (2) and (3) re-enact paragraph 12(4) of Schedule 1 to the 1996 Act.

480.Subsection (2) provides that the regulator must first consent before a resolution for the voluntary winding up of a society under the Insolvency Act 1986 is effective.

481.Subsection (3) refers to the requirement to send a copy of a winding up resolution to the Financial Services Authority under section 30 of the Companies Act 2006. It specifies that this requirement is only satisfied if the resolution is accompanied by a copy of the regulator’s consent. This requirement of the Companies Act 2006 is applied to industrial and provident societies by section 55 of the Industrial and Provident Societies Act 1965, and section 84(3) of the Insolvency Act 1986. Failure to comply with section 30 of the Companies Act 2006 is an offence.

Section 165 - Industrial and provident society:  dissolution

482.This section broadly replicates the effect of paragraph 12(5) of Part II of Schedule 1 to the 1996 Act.

483.Subsection (1) specifies that the effect of this section is restricted to non-profit registered providers that are both industrial and provident societies and are to be dissolved by an instrument of dissolution as defined in section 58 of the Industrial and Provident Societies Act 1965.

484.Subsection (2) provides that the instrument of dissolution may only be registered by the Financial Services Authority under section 58(5) of the Industrial and Provident Societies Act 1965 or be advertised by the authority as it is required to do under section 58(6) of the same Act if the regulator has first consented in writing to the dissolution and a copy of the consent has accompanied the instrument of dissolution sent to the Financial Services Authority.

Section 166 - Winding up petition by the regulator

485.This section broadly replicates the effect of paragraph 14 of Schedule 1 to the 1996 Act.

486.Subsection (1) specifies that the effect of this section is restricted to non-profit registered providers that are either registered companies, or industrial and provident societies.

487.Subsection (2) provides that the regulator may present a petition for the registered provider to be wound up under the Insolvency Act 1986 on one of the grounds specified in subsections (3) to (5) which are that:

• the registered provider is not carrying out the objects specified in its constitution, or

• the registered provider is unable to pay its debts as that inability is defined in section 123 of the Insolvency Act 1986, or

• the regulator has directed the registered provider to transfer its land to another person under the power conferred on it by section 253.

Section 167 - Transfer of property

488.Subsection (1) specifies that the provisions of this section apply where a non-profit registered provider-

• which is an industrial and provident society is dissolved in accordance with sections 55(a) or 55(b) of the Industrial and Provident Societies Act 1965, or

• which is a registered company is wound up under the Insolvency Act 1986.

489.Subsection (2) provides that in either of the two cases in subsection (1), any surplus property remaining after the registered provider’s liabilities have been satisfied will either be transferred to the regulator, or, if the regulator directs, to another registered provider that it specifies.

490.Subsection (3) provides that that if the registered provider that has been dissolved or wound up under subsection (1) must sell any of its lands in order to satisfy its liabilities, the regulator may discharge those liabilities instead so as to ensure that the land that would otherwise have to be sold is instead transferred as provided for in subsection (2).

491.Subsection (4) provides that if the registered provider dissolved or wound up under subsection (1) is a charity, the registered provider that the regulator may specify as the recipient of surplus assets after its liabilities have been satisfied must also be a charity whose objects the regulator is satisfied are similar to those of the charity being dissolved or wound up.

492.Subsection (5) specifies that the provisions of this section override any provisions in the following legislation:

• Industrial and Provident Societies Act 1965,

• Insolvency Act 1986,

• Companies Act 2006.

493.It also specifies that the section overrides any provisions in the constitution of the registered provider that is being dissolved or wound up.

Section 168 - Section 167: supplemental

494.Subsection (1) specifies that this section applies to property transferred to the regulator in accordance with section 167(2)(a).

495.Subsection (2) specifies that the regulator may only dispose of property transferred to it under section 167(2)(a) to another registered provider.

496.Subsection (3) applies if the registered provider dissolved or wound up under section 167(1) is a charity. It specifies that any property transferred to the regulator under section 167(2)(a) from a charity may only be disposed of to a registered provider that is both a charity and has objects that are similar to those of the charity from which the property was transferred to the regulator.

497.Subsection (4) provides that if the property transferred to the regulator from the charity wound up or dissolved under section 167(1) is subject to a mortgage or charge, the regulator may either dispose of that land subject to that mortgage or charge, or subject to a new mortgage or charge in favour of the regulator.

Section 169 - Extension of sections 167 and 168

498.This section confers a power on the Secretary of State to provide by regulations for sections 167 and 168 to apply in relation to a registered provider which is a charity but not a registered company, both in specified circumstances and with specified modifications.