Building Societies Act

This section says the Act may be cited as the Building Societies Act.

This section defines terms used in the Act.

The Act applies to every society, and no person may use the name or style “building society” unless registered under section 8.

A terminating society must not carry on business in Malawi.

The Minister must appoint a public officer as Registrar of Building Societies.

The Registrar and people acting under the Registrar’s authority are not personally liable for acts or matters done in good faith while exercising powers under the Act.

A society must be registered to carry on business in Malawi, but an existing society gets a three-month grace period. Existing societies also cannot send back or agree to send back money outside Malawi after commencement if the money was received in Malawi.

People may form a society if at least four persons agree to subscribe £20,000 or more in permanent shares and register under the Act.

A registration certificate issued by the Registrar is conclusive evidence of compliance and registration unless the contrary is proved; other Registrar-signed documents about a building society are admissible as evidence unless there is evidence to the contrary.

The Registrar must keep and maintain a register of societies and record specified details for societies registered under section 8.

Once a society is registered under the Act, it becomes a body corporate with perpetual succession and can do the acts a body corporate may lawfully do, subject to the Act.

Societies must use a registered name that ends with “Building Society,” and they must not be registered under a confusingly similar or deceptive name unless the other society is being dissolved and consents.

Existing societies that want to keep doing business after the first three months must apply to the Registrar for registration within that period.

The Registrar may apply to the High Court to dissolve a society, but only with the Minister’s approval and under rules made by the Chief Justice, when there are reasonable grounds based on the listed grounds.

Every society’s rules must include specified governance, membership, finance, meetings, audit, dispute, seal, custody, charges, and dissolution matters.

Every society must keep a copy of its rules available for inspection during normal business hours by people who deal with the society.

Every society must have a common seal, and the seal must bear the society’s registered name.

Every society must have a board of at least three directors, and directors must check that security-valuation arrangements for society advances are adequate.

Directors are elected by members, vacancies are filled by election or by remaining directors in some cases, and no one becomes a director without written consent.

A director’s acts remain valid even if a defect is later found in the director’s election, appointment, or qualification, but only up to the date that defect is discovered.

Some people are disqualified from being appointed as a director of a society.

A director with a direct or indirect pecuniary interest in a society’s contract or advance must declare that interest and must not vote on the matter.

Every society must have one or more auditors approved by the Registrar.

Some people are disqualified from being appointed as a society auditor, and anyone who acts as auditor while disqualified may be fined £100 and imprisoned for six months.

Certain officers and advisers of a society must not receive gifts or similar benefits linked to society business, and anyone who pays or accepts them may face imprisonment.

The section forbids commissions or gifts tied to introducing mortgage business to a building society, and punishes contraventions with a £500 fine and up to 12 months’ imprisonment.

A building society cannot use rules or contracts to exempt or indemnify directors, managers, officers, or auditors against liability for negligence, default, breach of duty, or breach of trust.

A society may accept deposits, but deposit balances and deposit types are capped unless the Registrar consents in writing. The Minister may also stop a society from taking deposits by Gazette notice, and breaches can trigger fines or personal liability for directors.

A society needs the Registrar’s written consent before acquiring or keeping land or building for its affairs or employees if the value is above the stated limit.

A society may make certain advances and loans against land, buildings, deposits, shares, and other security, but only within stated limits and conditions.

A society’s advance secured on land or buildings counts as a “special advance” if it meets one of the listed conditions.

A society may only make reducible advances, and reducible advances must be repaid within 30 years.

A society may make further advances for certain mortgage-related purposes.

A society may only authorize or make advances and special advances if the securities and percentage limits in this section are met, unless the Registrar authorizes it in writing.

A society may make a special advance to a purchaser in certain foreclosure or insolvency situations if the Registrar first gives written permission.

A society may not make an advance or special advance unless a valuer appointed by the society has valued it. The valuer must inspect the property, and for uncompleted buildings also review the plans and specifications.

A society must not appoint a valuer, and a person must not do a valuation, if they have a direct or indirect pecuniary interest in the advance, except for professional fees.

The Minister may guarantee repayment of certain advances on terms he determines.

An advance, including any additional advance with Minister-guaranteed repayment, must not exceed 95% of the mortgaged property's value in an individual case.

If a society lends for buying land or buildings and takes security from someone other than the borrower, it must give written notice to the borrower and that other person before the repayment contract is signed.

A society may invest only in approved investments, with limited permission to keep cash in bank or Post Office Savings Bank accounts.

A society may only borrow money as a loan with written approval from the Registrar and the Minister’s prior consent, and it may borrow on the security of its assets only if separately authorized in writing.

A society may create a general reserve fund, but money in it must come from realized profits, cannot be used to pay dividends, bonuses, or donations, and must be invested or used to cover certain net losses.

A society may only pay dividends, interest, or bonuses on permanent shares from current-year profits and undistributed profits, and not above 65% of profits after tax per year.

Every society must hold an annual general meeting within five months after the end of each financial year and label it as such in the notice.

The board of directors of a society must call other general meetings when required by the society’s rules or when it considers them desirable, and must call a general meeting if at least half of the total members apply.

Societies must prepare annual accounts and statements, have them signed and countersigned, share copies with members, and file a copy with the Registrar on time.

Every society must prepare and send a prescribed return to the Registrar each financial year, at the same time as its annual account and statement.

Societies must keep specified books and records, and some records must be kept in English.

The society’s registered rules bind its members, officers, shareholders, depositors, and people who received advances under the rules.

Every society must give anyone who asks a printed copy of its rules with the registration certificate attached, and may charge a fee capped by the Minister.

A certified copy of a building society’s rules can be used as prima facie evidence of those rules unless there is evidence to the contrary.

People under 21 may join a society if its rules allow it, and they have some limited member-related powers, but they cannot vote or sign a mortgage for advances from the society.

Two or more persons may jointly make a deposit or deposits in a building society.

A society must not let applicants for advances ballot for precedence or make the grant of an advance depend on chance or lot.

A society that makes an advance for buying land or buildings is treated as warranting to the borrower that the purchase price is reasonable, unless it gives a written prescribed notice before the repayment contract is entered into.

A society that acquires mortgaged land or buildings by foreclosure or surrender must sell and convert them into money within two years, unless the Registrar authorizes more time in writing.

A society may issue a certified copy of a lost or destroyed share-related certificate or receipt if the required evidence and advertisement conditions are met; directors may waive the advertisement step.

Any person may inspect certain society documents at the Registrar’s office or obtain a copy or extract, if the prescribed fees are paid.

A society does not have to pay stamp duty on the listed receipts, repayments, deposits, and share certificates.

Every society must end its financial year on 31 January each year.

A society must not issue deposit application forms unless they include the required notice, must not admit a person as a member without a permanent-share application, and must not issue permanent shares except fully paid and at nominal or face value. It may also capitalize reserves by issuing bonus permanent shares, subject to sections 44 and 63.

A society may issue or transfer permanent shares only with the Registrar’s written consent, and an application for that consent must be signed by all existing permanent-share holders.

A depositor in a society’s savings deposit account may not withdraw more than K100 in one day if less than one month’s notice is given.

A building society may waive notice or a withdrawal limit in a particular case if it is satisfied this is needed to relieve personal hardship or for another humanitarian purpose.

A society must repay fixed-maturity deposits to the depositor on the maturity date unless the depositor consents to convert them into new deposits.

Societies must not publish misleading advertisements, and society names must be clearly stated in related advertisements, prospectuses, or circulars. The Registrar may notify a society about a misleading ad, and the society must stop publication unless the Minister removes the prohibition.

A society may change its name if all members pass a resolution, then it must send the certified resolution to the Registrar within 14 days and later publish a notice after receiving the new certificate.

A society that changes its registered office or postal address must notify the Registrar in the prescribed form within 14 days, and the Registrar must register the change.

A society must tell the Registrar, in the prescribed form, within 14 days when someone becomes or stops being a director.

A society may change its rules by resolution, but the change has no effect until the Registrar approves it.

A society that fails to comply with section 67(2), 68, 69, or 70(2), and its directors, secretary, and other officers, are liable to a fine of £250.

Two or more societies may amalgamate into one society with prior Ministerial approval, notify the Registrar in the prescribed form, and then the Registrar registers the new society.

A society may transfer all or part of its engagements to another society with the Minister’s prior approval and a resolution of all members. The transferee society must send notice to the Registrar, who must register it.

An existing society may transfer its engagements in Malawi with Ministerial approval, and the transferee must notify the Registrar, who must register the notice.

When a new society or a transfer of engagements is registered, the relevant funds, liabilities, assets, and property vest automatically without further assurance.

A qualifying certificate of registration is treated as an effective conveyance and assignment under the Deeds Registration Act, and a certified copy is to be registered without any fee.

Documents or instruments required or authorized under sections 72, 73, 74, or 76 are exempt from stamp duty.

A union of building societies or a transfer of engagements must not affect the rights of any creditor involved.

This section sets rules for arbitration of society disputes, including how arbitrators are appointed, when the Registrar may act as arbitrator, and how awards are filed and enforced.

The High Court may hear and decide a dispute in specified arbitration-related situations or when society rules do not provide for arbitration or High Court referral.

Arbitrators’ determinations are final and binding, with no appeal or court interference, but they may state a case to the High Court on a question of law and may grant discovery.

The Registrar may require a society or related persons to produce business records and information, and non-compliance can lead to a £250 fine.

The Registrar may appoint an inspector to examine a society’s affairs, and the inspector may inspect records and question people on oath.

The Registrar may call a society meeting with the Minister’s consent, and may also decide the meeting’s time, place, and agenda.

A society or existing society may be dissolved only with the Minister’s prior approval and all members’ consent, under High Court supervision, or by the High Court. Notice of commencement and completion of dissolution must be sent to and registered by the Registrar.

An instrument of dissolution must list the society’s assets, liabilities, members’ credits, creditor claims, how funds and property will be divided, and the trustee(s) and their pay.

The High Court may dissolve a society only when a qualifying petition is made.

During a society’s dissolution under section 85(1), this Act applies as if the liquidators, other dissolution handlers, or appointed trustees were the society’s board of directors.

When a society is being dissolved, a member’s liability is capped, and a borrower is not liable to pay except on the stated times and conditions.

When a society is dissolved, the liquidators, trustees, and others managing the dissolution must send the Registrar an account and balance sheet at set intervals.

The Registrar may investigate a society’s affairs after a written application from at least 50 shareholders or depositors, and may order dissolution with the Minister’s approval if the society cannot meet depositors’ claims and dissolution would benefit them.

A person who gets, keeps, misapplies, or uses society property for unauthorized purposes commits an offence and can be fined, imprisoned, and ordered to return or repay the property.

A person must not knowingly make, allow, or alter false statements in certain documents; breach can lead to six months’ imprisonment.

A society, and certain officers or directors, can commit an offence if required notices, returns, documents, acts, or information are not given or done; the usual penalty is a £100 fine unless a special penalty applies.

The Chief Justice may make court rules for High Court proceedings, applications and appeals, and for the related fees.

The Minister may make regulations under this Act.

A society’s advance is not invalid just because the society or an officer broke this Act in connection with it.

A trustee may invest trust funds in fixed deposits in a society designated by the Minister, and the Minister may not designate a society until its liquidity has been guaranteed under section 99.

The Minister may guarantee the liquidity of a society if it is in the public interest and the Government owns permanent shares in that society.

The Minister may allow an act that normally has to be done by all members of a society to be done by fewer members if it is in the public interest.

The Minister may delegate certain Act powers and duties to the Reserve Bank of Malawi by Order published in the Gazette.