Building Societies Act

This section provides definitions of terms used in the Act, including 'basic advance', 'building society', 'continuing arrangement', 'dispute', 'excess advance', 'land', 'Minister', 'register', 'registrar', and 'special resolution'.

The Minister must appoint a registrar of building societies; the registrar must perform the duties and exercise the powers imposed and conferred by the Act; the Minister may appoint a deputy registrar and assistant registrars; assistant registrars shall be subject to the registrar's directions.

Certificates or other documents related to a building society that purport to be signed by the registrar are admissible as evidence without proof of the signature.

The registrar and persons acting under the registrar's authority are not personally liable for acts or matters done in good faith when exercising powers under this Act or its regulations.

Every building society must have a common seal showing its registered name; societies permitted by their rules to operate outside Uganda may (if authorised by their rules) use an official facsimile seal for those places; a document with an official seal duly affixed binds the society as if sealed with the common seal.

Every building society must have a registered office and postal address in Uganda for communications and notices.

The registrar must keep a register of building societies and record specified particulars (name, registered office location and postal address, and other information the registrar may determine) for societies registered under section 6 or 68.

Seven or more persons forming a building society may adopt compliant rules and must apply to the registrar for registration within fourteen days (subject to registrar extension); the registrar must enter particulars if satisfied and issue a certificate of incorporation.

A building society must not commence business until it has obtained a certificate of incorporation issued under section 6.

Building societies must end their registered name with "Building Society"; they must not use any other name; and no society may be registered with an identical or confusingly similar name unless specified exceptions apply.

Requires the rules of every society to set forth specified items including the society's name and chief office, how stock or funds are to be raised, terms for issuing and withdrawing shares and payment of contributions, whether and limits on preferential shares, how advances are made and repaid (including deductions for premiums and redemption conditions with tables where applicable), how losses are ascertained and provided for, how membership ceases, whether and within what limits the society intends to borrow, purposes and investment of funds, procedures for altering rules, appointment/removal/remuneration of directors and officers, calling meetings, audit and inspection provisions, dispute resolution method, custody and use of the common seal, custody of mortgages and securities, powers and duties of management, fines on members, and manner of termination or dissolution.

Every building society must have a board of directors or committee of management of three or more persons; directors must ensure arrangements for assessing securities will result in assessment by a competent and prudent person; directors are not precluded from approving arrangements even if the assessment is by themselves or another director; the secretary may but need not be a member.

Every building society must have a secretary; if the office is vacant or no secretary can act, an assistant, deputy, or authorised officer may perform the secretary's duties and powers.

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

Officers of a building society who will handle the society's money must, before assuming office, provide a bond with at least one sufficient surety or other security in the sum the society requires.

Officers (and their executors or administrators) must, on demand or written notice from the society's board or management committee, provide accounts of monies held or transacted for the society and hand over all society securities, books, papers and property to a person the society appoints.

Officers of a building society (directors, secretary, surveyor, advocate or other officers) must not, beyond their authorised remuneration, receive any gift, bonus, commission or benefit in connection with loans made by the society.

Restricts giving or receiving commissions in relation to the disposition of land by building societies: societies and their officers/agents must not give commissions to servants of the society (with a specified exception), and certain servants must not receive commissions; contraventions are an offence punishable by fine or imprisonment.

Any provision that exempts or indemnifies directors, committee members, managers, officers or auditors of a building society from liabilities for negligence, default, breach of duty or breach of trust is void; however a building society may indemnify such persons for liabilities incurred in defending proceedings where judgment is in their favour, they are acquitted, or where relief is granted under section 20.

Courts may relieve certain persons (directors, officers, committee members, members, auditors) from liability for negligence, default, breach of duty or trust if they acted honestly and reasonably and it is fair to excuse them; such persons may apply to the High Court for relief, and the High Court has the same power on application.

A building society may take deposits or loans to apply to its purposes, but the total outstanding deposits or loans must not at any time exceed two‑thirds of the amount secured by members' mortgages.

A building society may acquire and hold land for business premises or staff housing, acquire mortgaged land by foreclosure or surrender, and may let parts of business premises not immediately required, subject to any law dealing with land.

Building societies may make advances to members on the security of land, subject to restrictions on prior mortgages, limits on taking additional security into account, valuation rules for life policies, percentage caps when guarantees are taken, and a 20-year limit on payments where guarantees are used.

A building society may invest funds not immediately required, subject to its rules, in authorised stocks, shares, securities or other classes of investment authorised by the Minister; and a building society that advances on land to non-members may not take additional security for that advance.

A building society may operate and invest abroad (if its rules allow) but may not invest more in a foreign territory than its share capital, loans and deposits raised there plus one-fifth of its Uganda capital assets unless the Minister consents.

A building society must not pay any dividend or interest on its shares except out of profits earned by the society.

If disputes are referred to arbitration under a society's rules, arbitrators must not be beneficially interested in the society's funds; where an arbitrator dies, refuses or neglects to act the society at a general meeting must name and elect a replacement; the High Court may enforce arbitrators' awards on petition where proof is shown of the award and refusal to comply.

The High Court may hear and determine disputes in specified cases.

Determinations of disputes by arbitrators, the High Court, or the registrar under this Act are final, binding on all parties, not subject to appeal, and not removable or restrainable by injunction.

Every building society must hold a general meeting each calendar year as its annual general meeting and must state that in the notices calling the meeting; but a society incorporated after 30th September need not hold an annual general meeting in that year.

The board of directors or committee of management of a building society must call other general or special meetings required by the society's rules or as they consider desirable, and must call a meeting on application by one-tenth of members (or 100 members if the society has more than 1,000 members).

Requires building societies to prepare audited annual accounts each year and to send a certified copy to the registrar within specified time limits; members, depositors and creditors are entitled to receive a copy; non-compliance is an offence punishable by a daily fine.

Every building society must prepare and send to the registrar, each calendar year and at the same time as its annual account and statement, a prescribed-form return with prescribed particulars about properties sold as mortgagee and mortgages transferred during the period.

Every building society must keep specified minute books, a register of directors/members, books of account showing receipts, expenditures and balances, records for advances on land including assessment amount and assessor, and particulars of additional security.

Members, officers and persons claiming under a member are bound by the registered rules of the building society.

Every building society must provide any person requesting it a complete printed copy of its rules with the certificate of incorporation attached, and is entitled to charge up to two shillings.

A copy of a building society's rules that is certified by the society's secretary or other officer as a true copy of the registered rules is admissible as evidence of those rules, unless there is evidence to the contrary.

Members and persons under twenty-one have limited capacities: persons under 21 may be admitted subject to society rules; members under 21 may give acquittances, consent to dissolution, and by next friend petition for winding up; members under 21 may not vote, hold office, transfer shares, or mortgage to secure advances.

Two or more persons may jointly hold a share in a building society.

Building societies are prohibited from causing or permitting applicants for advances to ballot for precedence or from making the granting of an advance depend on chance or lot.

When a building society advances money to a member to help pay for land, the society is treated as warranting that the purchase price is reasonable unless it gives the member a written notice before any repayment contract saying no such warranty is implied.

A building society must not accept deposits except on terms allowing the society to require not less than one month's notice before repayment or withdrawal; contravention is an offence punishable by a fine not exceeding four hundred shillings.

A building society may pay up to one thousand shillings from its funds to a person who appears to its directors or committee to be entitled where the depositor or member died intestate, on receipt of satisfactory evidence of death and a statutory declaration.

Building societies exercising a power of sale must take reasonable care to obtain the best reasonable price and must send a prescribed notice by registered post within fourteen days after completion; agreements that relieve this obligation are void; contravention of the notice requirement is an offence punishable by fines.

Any person who obtains, withholds, misapplies or wilfully applies a building society's monies, securities, books, papers or other effects contrary to the society's rules and this Act commits an offence and faces fines, orders to repay/deliver up, and imprisonment if they do not comply.

A building society may change its name by special resolution with the registrar's prior written approval; if it does so it must send the registrar two certified copies within fourteen days, and the registrar must register one copy and return the other endorsed; the change does not affect rights or proceedings.

Every building society that changes its registered office or postal address must, within fourteen days after the change, send the registrar notice of the change in the prescribed form.

A building society must notify the registrar, in the prescribed form, within fourteen days whenever a person becomes or ceases to be a director or member of the committee of management.

A building society may alter, rescind or add rules by special resolution; it must send two certified copies of the resolution to the registrar within fourteen days, and the registrar shall register one copy and return the other if satisfied the change conforms with the Act.

If a building society fails to comply with sections 43(2), 44, 45 or 46(2), the society and its officers commit an offence and each is liable on conviction to a fine not exceeding one hundred shillings for every day the default continues.

Two or more building societies may unite and become one society if agreed by specified member majorities; they may adopt an approved name; notice must be sent to the registrar in the prescribed form.

Building societies may transfer or assume engagements by special resolution; the transferring society must send notice of the transfer to the registrar; transfers do not take effect without written consent of holders of not less than two-thirds of shares.

A building society may apply to the registrar to confirm a union, transfer or undertaking; the registrar has the power to confirm it.

When the registrar registers or confirms a union or a transfer of engagements between building societies (under sections 48–50), that registration or confirmation operates as an effective transfer and assignment of the societies' funds, properties and assets as at the date of registration or confirmation.

A union of building societies or a transfer of engagements from one building society to another must not affect the rights of any creditor of either society.

The registrar may, by written notice served on a building society or its officers, require production of books and information and may require statutory verification; failure to comply is an offence punishable by a fine up to one hundred shillings per day.

The registrar may appoint an accountant or actuary to inspect a society's books on the application of ten qualifying members; applicants must deposit a security and meet inspection costs as directed; an appointed person may copy and extract from books; the registrar must communicate the inspection results to applicants and the society.

The registrar may, with the Minister's consent and on specified member applications or in specified cases, appoint an inspector or call a special meeting; the registrar must require security for costs and applicants must support applications with evidence.

The registrar may order that a building society must not invite subscriptions, acquisitions, loans or deposits while the order remains in force; before making such an order the registrar must give written notice to the society, consider representations within thirty days and, if requested, allow the society to be heard. A person who contravenes the order commits an offence punishable by up to two years' imprisonment or a fine up to ten thousand shillings or both.

The registrar may cancel or suspend a building society's registration for specified grounds (including fraud, illegality, wilful breach or cessation), must give at least two months' written notice before doing so, must publish notice after action, societies may appeal to the High Court, and cancelled/suspended societies lose the Act's privileges.

A building society may terminate or be dissolved in specified ways including upon events in its rules, by dissolution in prescribed manner, by three‑quarters member consent with at least two‑thirds shareholding, or by winding up under or by the High Court.

An instrument of dissolution must set out detailed liabilities, members and credits, creditors' claims and provisions for payment, intended appropriation of funds, and trustees; it must be signed in duplicate and sent to the registrar within fourteen days, after which one copy is registered and the other returned; when registered it binds all members.

The High Court may act on a petition for winding up brought by an authorised member (authorized by three-fourths of members at a specially called general meeting) or by a judgment creditor owed at least one thousand shillings.

When a building society is being dissolved under its rules or by a special resolution, the Act continues to apply to the liquidators, other persons conducting the dissolution, and trustees as if they were the society's board of directors or committee of management.

Members' liability for shares is limited: for unpaid shares up to amounts unpaid until fully paid; for shares with advances, limited to amounts payable under the mortgage, security or society rules. When the society is dissolved or wound up, members who received advances are not liable to pay those amounts except at the times and subject to the conditions stated in the mortgage, security or rules.

When a building society is dissolved under its rules or by special resolution, the liquidators, trustees and other persons managing the dissolution must, within twenty-eight days from the termination of the dissolution, send the registrar an account and balance sheet signed and certified as correct showing the society's assets and liabilities at commencement of the dissolution and how they were applied and discharged.

The registrar may investigate and, if satisfied the society cannot meet member claims, may award its dissolution, direct winding up, and must give prior written notice of at least two months before investigating; the registrar must advertise any dissolution award within twenty-one days but may suspend an award to allow rule changes.

Rules for registration of building societies incorporated outside Uganda: the registrar may accept or refuse applications; if allowed the registrar must enter particulars and issue a certificate; aggrieved persons may appeal to the Minister within one month or an extended period the Minister may allow; societies must not commence business until they have the certificate.

Building societies registered under section 68 must maintain an office and postal address in Uganda, keep separate books and prepare separate and consolidated accounts for their Ugandan business, and may not invest abroad without the Minister's prior approval any monies raised in Uganda exceeding one-fifth of the society's Uganda capital assets.

The Chief Justice may make rules of court for regulating proceedings before the High Court and related appeals and fees; the Minister may, subject to subsection (1), make regulations to prescribe matters required by the Act and to provide for registry procedure, hours, forms and fees.

Directors, members of the committee of management, secretaries and other officers of a society have a defence to charges for society acts or omissions if they can prove lack of knowledge and that they used all due diligence to prevent the offence.