Draft Building Societies Act 1986 (Assimilation to Company Law and Changes to Funding Limit) Order 2026 published

The draft Building Societies Act 1986 (Assimilation to Company Law and Changes to Funding Limit) Order 2026 was published and laid before Parliament, alongside an explanatory memorandum. The draft Order amends the Building Societies Act 1986 (BSA 1986) to align the provisions on common seals and the execution of documents by building societies with the equivalent regime under the Companies Act 2006. Building societies will therefore be able to choose whether to execute documents using a common seal or through authorised signatories, bringing them into line with the more flexible arrangements available to companies.

In addition, under section 7 of the BSA 1986, subject to specific exemptions, at least 50% of a building society';s liabilities must be shares owned by individuals (known as "the funding limit"). The draft Order makes provisions to exclude certain sources of funding for the purposes of calculating the funding limit. This includes: liquidity facilities which form part of the BoE's sterling monetary framework; debt instruments issued by building societies to meet BoE's Minimum Requirements for Own Funds and Eligible Liabilities (MREL); and sale and repurchase agreements entered into by building societies using High Quality Liquid Assets held to meet the UK Prudential Regulation Authority's Liquidity Coverage Requirement.

These changes are intended to ensure building societies are not discouraged from practices which support prudent management of liquidity, and that instruments issued to meet MREL requirements are treated appropriately with other excluded regulatory capital instruments. The Order is expected to come into force on 1 January 2027.

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