CHAPTER 87
BUILDING SOCIETIES ACT

[PRINCIPAL LEGISLATION]

ARRANGEMENT OF SECTIONS

   Section

Title

PART I
PRELIMINARY PROVISIONS

   1.   Short title.

   2.   Interpretation.

   3.   Appointment of Registrar.

   4.   Certificates, etc., to be evidence.

   5.   Indemnity of officers.

PART II
FORMATION AND REGISTRATION

   6.   Maintenance of register.

   7.   Formation of building societies.

   8.   Commencement of business.

   9.   Provisions as to names of building societies.

   10.   Contents of rules of building societies.

   11.   Common seal.

   12.   Registered office and postal address.

PART III
MANAGEMENT OF BUILDING SOCIETIES

   13.   Directors.

   14.   Secretary.

   15.   Auditors.

   16.   Officers to give security.

   17.   Officers to account.

   18.   Officers not to accept gifts.

   19.   Restriction on payment of commission.

   20.   Provisions excluding liability of officers forbidden.

   21.   Powers of courts to grant relief.

PART IV
POWERS OF BUILDING SOCIETIES

   22.   Power to borrow.

   23.   Power to hold land.

   24.   Power to make advances to members.

   25.   Power to invest.

   26.   Power to carry on business abroad.

   27.   Dividends only payable out of profits.

PART V
MEETINGS AND PERIODICAL RETURNS

   28.   Annual general meeting.

   29.   Other meetings.

   30.   Annual account and statement.

   31.   Returns of sales and transfers.

PART VI
MISCELLANEOUS PROVISIONS

   32.   Books and records to be kept by building societies.

   33.   Rules to be binding.

   34.   Duty to supply copies of rules.

   35.   Evidence of rules.

   36.   Minors.

   37.   Shares may be held jointly.

   38.   Prohibition of balloting.

   39.   Implied warranty.

   40.   Notice before repayment.

   41.   Payment of small sums on intestacy.

   42.   Exercise of power of sale.

   43.   Withholding or misapplying property of a building society an offence.

PART VII
CHANGES OF NAME, ADDRESS, OFFICERS AND CONSTITUTION

   44.   Change of name.

   45.   Changes of address.

   46.   Changes of directors.

   47.   Alteration of rules.

   48.   Penalties.

PART VIII
AMALGAMATION OF SOCIETIES AND TRANSFER OF ENGAGEMENTS

   49.   Amalgamation of societies.

   50.   Transfer of engagements.

   51.   Special provisions for transfer and amalgamation.

   52.   Registration of unions and transfers of engagements to operate as conveyance.

   53.   Union or transfer of engagements not to prejudice creditors.

PART IX
DETERMINATION OF DISPUTES

   54.   Arbitration.

   55.   Jurisdiction of the High Court.

   56.   Determination to be final.

PART X
POWERS OF THE REGISTRAR

   57.   Power to require production of books, etc.

   58.   Power to cause inspection of books.

   59.   Power to appoint inspector.

   60.   Power to forbid invitations for subscriptions, etc.

   61.   Power to suspend or cancel registration.

PART XI
TERMINATION, DISSOLUTION AND WINDING-UP

   62.   Termination and dissolution.

   63.   Instruments of dissolution.

   64.   Winding-up.

   65.   Obligations of liquidators and trustees.

   66.   Liability of members.

   67.   Account and balance sheet on dissolution.

   68.   Dissolution by award of Registrar.

PART XII
BUILDING SOCIETIES INCORPORATED OUTSIDE TANZANIA

   69.   Registration of foreign building societies.

   70.   Provisions of Act generally to apply to foreign building societies.

PART XIII
RULES AND REGULATIONS

   71.   Rules and regulations.

SCHEDULE

CHAPTER 87
THE BUILDING SOCIETIES ACT

An Act to provide for the formation and registration of building societies and other related matters.

[20th August, 1954]

[R.L. Cap. 340]
Acts Nos.
22 of 1954
17 of 1962
12 of 1966
G.N. No. 473 of 1962

PART I
PRELIMINARY PROVISIONS (ss 1-5)

1.   Short title

   This Act may be cited as the Building Societies Act.

2.   Interpretation

   In this Act, unless the context otherwise requires–

   "basic advance" in relation to any advance made or to be made by a building society for the purpose of its being used in defraying the purchase price of freehold or leasehold land or of a right of occupancy, means the maximum amount which the society would consider proper to advance upon the security of that land or right of occupancy if no other security were taken by the society;

   "building society" means a society formed for the purpose of raising by the subscriptions of members a stock or fund from which to make advances to members and registered in accordance with the provisions of this Act;

   "continuing arrangement" means any arrangement made between a building society and another person whereby, in contemplation of a series of advances comprising excess advances being made by the society to members for the purpose of their being used in defraying the purchase prices of freehold or leasehold lands or right of occupancy, that person undertakes to give to the society a series of guarantees, each of which is to secure sums payable to the society in respect of to such an advance;

   "dispute" means a dispute between a building society and a member or any representative of a member in his capacity as a member of the society, unless by the rules for the time being it shall be otherwise expressly provided, and in the absence of such express provision such rules shall not apply to any dispute between any such society and any member thereof or other person whatever as to the construction or effect of any mortgage deed or any contract contained in any document, other than the rules of the society, and shall not prevent any society, or any member thereof or any person claiming through or under him, from obtaining in the ordinary course of law any remedy in respect of any such mortgage or other contract to which he or the society would otherwise be by law entitled.

   "excess advance" means, in relation to any advance, the amount by which the advance exceeds the basic advance;

   "Minister" means the minister responsible for finance;

   "register" means the register of building societies to be kept by the Registrar under the provisions of section 6;

   "Registrar" means the Registrar of Building Societies appointed under the provisions of section 3 and includes a Deputy Registrar and an Assistant Registrar;

   "right of occupancy" means a right of occupancy granted under the provisions of the Land Act *;

   "special resolution" means a resolution passed by not less than three-fourths of the members of a building society present and entitled to vote at any general meeting of which notice specifying the intention to propose that resolution has been duly given according to the rules of the society.

3.   Appointment of Registrar G.N. No. 478 of 1962">

   The Minister shall appoint a Registrar of Building Societies to perform the duties and exercise the powers imposed and conferred by this Act and may appoint a Deputy Registrar and any number of Assistant Registrars who shall be subject to the directions of the Registrar.

4.   Certificates, etc., to be evidence

   Any certificate of incorporation, certificate of registration or other document relating to a building society purporting to be signed by the Registrar shall, in the absence of any evidence to the contrary, be admissible as evidence without proof of the signature.

5.   Indemnity of officers

   The Registrar shall not, nor shall any person acting under the authority of the Registrar or under any regulation made in pursuance of this Act, be personally liable for or in respect of any act or matter done in good faith in the exercise or exercise of the powers conferred by this Act or by any regulation made in pursuance of this Act.

PART II
FORMATION AND REGISTRATION (ss 6-12)

6.   Maintenance of register

   The Registrar shall keep a register of building societies in which he shall record, in respect of any building societies registered under section 7 or section 69, the following particulars, that is to say:

   (a)   the name of the society;

   (b)   the situation of the registered office and the postal address of the society;

   (c)   such other information as the Registrar may determine.

7.   Formation of building societies

   (1) Any seven or more persons intending to form a building society may in a general meeting adopt rules in compliance with the provisions of section 10 and shall, within fourteen days thereafter or such extended period as the Registrar (either before or after the expiration of such fourteen days) may allow, send to the Registrar an application for registration in the prescribed form accompanied by two copies of the rules.

   (2) If the registrar is satisfied that the application and the rules are in compliance with the provisions of this Act and any regulations made hereunder, he shall enter the prescribed particulars relating thereto in the register and thereupon the society shall become a body corporate by its registered name with perpetual succession until terminated or dissolved under the provisions of this Act.

   (3) The Registrar shall issue a certificate of incorporation in the prescribed form to every building society registered under the provisions of this section.

8.   Commencement of business

   No building society shall commence business until it has obtained a certificate of incorporation issued under the provisions of section 7.

9.   Provisions as to names of building societies

   (1) No building society may be registered with a name identical with that of any building society previously registered and still subsisting or so nearly resembling the same as to be likely to deceive, unless the subsisting society is in course of being terminated or dissolved and consents to the registration, or which is, in the opinion of the Registrar, undesirable.

   (2) The name of every building society shall end with the words "Building Society".

   (3) A building society shall not use any name or title other than its registered name.

10.   Contents of rules of building societies

   The rules of every building society shall set forth–

   (a)   the name of the society and the chief office or place of meeting for the business of the society;

   (b)   the manner in which the stock or funds of the society is or are to be raised;

   (c)   the terms upon which shares are to be issued and withdrawn and the manner in which contributions are to be paid to the society;

   (d)   whether preferential shares are to be issued and, if so, within what limits;

   (e)   the manner in which advances are to be made and repaid; the deductions, if any, for premiums and the conditions upon which a borrower can redeem the amount due from him before the expiration of the period for which the advance was made, with tables, where applicable in the opinion of the registrar, showing the amount due from the borrower after each stipulated payment;

   (f)   the manner in which losses are to be ascertained and provided for;

   (g)   the manner in which membership is to cease;

   (h)   whether the society intends to borrow money and if so, within what limits not exceeding those prescribed by this Act;

   (i)   the purposes to which the funds of the society are to be applied and the manner in which they are to be invested;

   (j)   the manner of altering and rescinding the rules of the society and of making additional rules;

   (k)   the manner of appointing, remunerating and removing the boards of directors, or committee of management, auditors and other officers;

   (l)   the manner of calling general and special meetings of the members;

   (m)   provision for an annual or more frequent audit of the accounts and inspection by the auditors of the mortgages and other securities belonging to the society;

   (n)   whether disputes between the society and any of its members or any person claiming by or through any member or under the rules shall be settled by reference to the High Court or to the Registrar or to arbitration;

   (o)   provision for the device, custody and use of the common seal of the society;

   (p)   provision for the custody of the mortgages and other securities belonging to the society;

   (q)   the powers and duties of the board of directors, or committee of management and other officers;

   (r)   the fines and forfeitures to be imposed on members of the society; and

   (s)   the manner in which the society shall be terminated or dissolved.

11.   Common seal

   (1) Every building society shall have a common seal which shall bear the registered name of the society.

   (2) A building society which is by its rules permitted to carry on its business outside Tanzania may, if authorised by its rules, have for use in any country, district or place not situate in Tanzania an official seal, which shall be facsimile of the common seal of the society, with the addition on this face of the name of every country, district or place where it is to be used.

   (3) A deed or other document to which an official seal is duly affixed shall bind the society as if it had been sealed with the common seal of the society.

12.   Registered office and postal address

   Every building society shall have a registered office and postal address in Tanzania to which all communications and notices may be addressed.

PART III
MANAGEMENT OF BUILDING SOCIETIES (ss 13-21)

13.   Directors

   (1) Every building society shall have a board of directors or committee of management consisting of three or more persons, of whom the secretary may but need not be one.

   (2) The duties of every director, or member of the committee of management of a building society shall include the duty of satisfying himself that the arrangements made for assessing the adequacy of securities to be taken in respect of advances to be made by the society are such as may be reasonably expected to ensure that the adequacy of any security to be so taken will be assessed by a competent and prudent person experienced in the matters relevant to the determination of the value of that security:

   Provided that nothing in this subsection shall be construed as precluding a director or member of the committee of management of a building society from approving such arrangements as aforesaid by reason only that the arrangements provide for the assessment of the adequacy of such security by himself or any other director or member of the committee of management of the society.

14.   Secretary

   (1) Every building society shall have a secretary.

   (2) Anything required or authorised to be done by or to the secretary may, if the office is vacant or there is for any other reason no secretary capable of acting, be done by or to any assistant or deputy secretary, or, if there is no assistant or deputy secretary capable of acting, by or to an officer of the society authorised generally or specifically in that behalf by the board of directors or committee or management.

15.   Auditors

   Every building society shall have one or more auditors, who shall be persons approved for that purpose by the Registrar.

16.   Officers to give security

   Every officer of a building society having the receipt or charge of any money belonging to the society shall before taking upon himself the execution of his office become bound with one sufficient surety at least in a bond according to the prescribed form or give such other security as the society may direct in such sum as the society may require conditioned for rendering a just and true account of all moneys received and paid by him on account of the society and for payment of all sums of money due from him to the society at such times as its rules appoint or as the society may require him to do.

17.   Officers to account

   Every officer of a building society, his executors or administrators shall upon demand made or notice in writing given or left at his last or usual place of residence render an account of all moneys received or paid by him on account of the society and for all moneys, remaining in his hands and shall deliver all securities and effects, books, papers and property of the society in his hands or custody to such person as the society may appoint.

18.   Officers not to accept gifts

   (1) No director, secretary, surveyor, advocate or other officer of a building society shall in addition to the remuneration prescribed or authorised by the rules of the society, receive from any other person any gift, bonus, commission, or benefit for or in connection with any loan made by the society.

   (2) Any person paying or accepting any such gift, bonus, commission or benefit shall be liable on conviction to a fine not exceeding two thousand shillings and in default of payment to imprisonment for a term not exceeding six months and the person accepting the gift, bonus, commission or benefit shall as and when instructed by the court by whom he is convicted, pay over to the society the amount or value of the gift, bonus, commission or benefit, and in default of the payment shall be liable to imprisonment for a term not exceeding six months.

19.   Restriction on payment of commission

   (1) It shall not be lawful–

   (a)   for a person having a financial interest in the disposition of any freehold or leasehold land or of any right of occupancy to receive or to agree to receive any commission or gift from a building society, or from any officer, servant or agent of a building society, in consideration of the introduction of mortgage business to the society in connection with the disposition of the land or right of occupancy or in consideration of a promise to introduce that business to the society; or

   (b)   for a building society, or any officer, servant, or agent of a society, to offer to give or agree to give any commission or gift to any person known to the society, officer, servant, or agent, as the case may be, to have a financial interest in the disposition of any freehold or leasehold land or right of occupancy or to be a servant of a person having such an interest, for any such consideration as is mentioned in paragraph (a).

   (2) For the purposes of this section, a person who is employed, otherwise than in pursuance of a contract of service, in connection with the disposition of any freehold or leasehold land or of a right of occupancy by a person who has a financial interest in that disposition shall be treated, so far as relates to the disposition of that estate, as a servant of the person having the said interest unless he carries on, independently of that person, the business of an advocate, estate agent, surveyor or auctioneer.

   (3) Where a building society has a financial interest in the disposition of any freehold or leasehold land or of a right of occupancy, nothing in this section shall prohibit–

   (a)   the society, or any officer, servant or agent of the society, from offering or giving or agreeing to give, in relation to the disposition of that land or right of occupancy, any commission or gift to a servant of the society (not being a person who, to the knowledge of the society, officer, servant or agent, as the case may be, either himself has a financial interest in the disposition of the land or the right of occupancy or is, in addition to being a servant of the society, also the servant of any person other than the society who has such an interest) for any such consideration as is mentioned in subsection (1); or

   (b)   a servant of the society (not being a person who himself has a financial interest in the disposition of that land or right of occupancy, or who is, in addition to being the servant of the society, also the servant of any person other than the society who has such an interest) from receiving or agreeing to receive, in relation to the disposition of that land or right of occupancy, any commission or gift from the society, or from any officer, servant or agent of the society, for any such consideration as aforesaid.

   (4) Any person who contravenes the provisions of this section commits an offence and is liable upon conviction to a fine not exceeding ten thousand shillings or to imprisonment for a term not exceeding three months or to both such fine and imprisonment.

20.   Provisions excluding liability of officers forbidden

   Any provision, whether contained in the rules of a building society or in any contract with a building society or otherwise, for exempting any director, member of the committee of management, manager or officer of a building society or any person (whether an officer of the society or not) employed by the society as auditor from, or indemnifying him against any liability which by virtue of any rule of law would otherwise attach to him in respect of any negligence, default, breach of duty or breach of trust of which he may be guilty in relation to the society, shall be void:

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