[CFM71070] Other tax rules on corporate finance: building society transfers of business: bonus payments and dividends
Building society transfers of business: bonus payments and dividends
Members vote for a ‘Transfer of Engagements’ under section 96 Building Societies Act 1986 (BSA86/S96). As an inducement to vote for the transfer, it is common for one or both societies to make a distribution of funds. This is usually referred to as a bonus. BSA86/S96 does not prescribe which society is to make the distribution, or the manner of distribution.
The term ‘members’ may include both shareholders and borrowers depending upon the society's rules. Societies normally pay a cash bonus to shareholders. Some societies may also allow borrowers a temporary reduction in their mortgage rate.