HBOS Group Reorganisation Act 2006
Encyclopedia
The HBOS Group Reorganisation Act 2006 is a private Act of Parliament
, passed by the Parliament of the United Kingdom
in June 2006. The aim of the act was to provide HBOS plc, a banking and insurance group in the UK, the legal authority to reorganise its subsidiaries into a simplified structure. It came into effect on 17 September 2007.
and Halifax plc. These two banks are the main UK subsidiaries of HBOS, although they themselves operate various other subsidiary companies. The Bank of Scotland was incorporated by an Act of the Parliament of Scotland
in 1695, and operates under the authority of this Act and subsequent other Acts passed in 1873, 1920, 1954 and 1970. Halifax is a public limited company
and was created in 1997 from the demutualisation of the Halifax Building Society to plc status.
HBOS Group wished to restructure the Bank into a plc governed under the Companies Act 1985
, and transfer the assets and liabilities of its other UK subsidiaries with a banking licence (Capital Bank, Halifax plc and HBOS Treasury Service plc) to the new Bank of Scotland plc. By doing it could save the costs of maintaining four banking licences, and the need for four separate companies, each with their own board of directors.
The transfer of assets and liabilities from one bank to another also requires the consent of the account holders. For institutions such as the Halifax, this would involve seeking the consent of millions of people, and would be impractical. Thus an Act of Parliament gives HBOS the statutory authority to transfer accounts without seeking individual account holder approval.
The Act also allowed the company to retain the right to print banknotes.
Local and Personal Acts of Parliament in the United Kingdom
Local and Personal Acts of Parliament are laws in the United Kingdom which apply to a particular individual or group of individuals, or corporate entity. This contrasts with a Public General Act of Parliament which applies to the entire community...
, passed by the Parliament of the United Kingdom
Parliament of the United Kingdom
The Parliament of the United Kingdom of Great Britain and Northern Ireland is the supreme legislative body in the United Kingdom, British Crown dependencies and British overseas territories, located in London...
in June 2006. The aim of the act was to provide HBOS plc, a banking and insurance group in the UK, the legal authority to reorganise its subsidiaries into a simplified structure. It came into effect on 17 September 2007.
Background
HBOS plc is a banking and insurance holding company and was created on 10 September 2001 from the merger of the Governor and Company of the Bank of ScotlandBank of Scotland
The Bank of Scotland plc is a commercial and clearing bank based in Edinburgh, Scotland. With a history dating to the 17th century, it is the second oldest surviving bank in what is now the United Kingdom, and is the only commercial institution created by the Parliament of Scotland to...
and Halifax plc. These two banks are the main UK subsidiaries of HBOS, although they themselves operate various other subsidiary companies. The Bank of Scotland was incorporated by an Act of the Parliament of Scotland
Parliament of Scotland
The Parliament of Scotland, officially the Estates of Parliament, was the legislature of the Kingdom of Scotland. The unicameral parliament of Scotland is first found on record during the early 13th century, with the first meeting for which a primary source survives at...
in 1695, and operates under the authority of this Act and subsequent other Acts passed in 1873, 1920, 1954 and 1970. Halifax is a public limited company
Public limited company
A public limited company is a limited liability company that sells shares to the public in United Kingdom company law, in the Republic of Ireland and Commonwealth jurisdictions....
and was created in 1997 from the demutualisation of the Halifax Building Society to plc status.
Aims of the Act
The main aim of the Act is to simplify HBOS’s operating structure, namely:- changing the legal status of the Governor and Company of the Bank of Scotland to a public limited company (Bank of Scotland plc);
- transferring the assets and liabilities of HBOS's UK banking subsidiaries (Halifax plc, Capital Bank plc, and HBOS Treasury Services plc) to the new company ;
- transferring the remaining assets of the Clerical, Medical and General Life Assurance SocietyClerical MedicalClerical Medical is a British life insurance, pensions and investments company founded in 1824.In 1824, Dr George Pinckard formed a committee of physicians and members of the clergy which published a pamphlet called 'Prospectus for the Establishment of a new Assurance Office with Improved...
to HBOS's subsidiairy, Clerical Medical Investment Group Limited and dissolve the Society. The bulk of the Society's assets were acquired by Halifax plc in 1997, although some residual assets were not transferred at that time.
Bank of Scotland plc
The Governor and Company of the Bank of Scotland was unusual in its legal structure, as it was a company formed under statute, the 1695 Act, and was governed under the provisions of that Act and successive Acts of Parliament relating to the Bank. The most important was the Bank of Scotland Act 1920, which set out the bank's business objectives and its regulations.HBOS Group wished to restructure the Bank into a plc governed under the Companies Act 1985
Companies Act 1985
The Companies Act 1985 is an Act of the Parliament of the United Kingdom of Great Britain and Northern Ireland, enacted in 1985, which enabled companies to be formed by registration, and set out the responsibilities of companies, their directors and secretaries.The Act was a consolidation of...
, and transfer the assets and liabilities of its other UK subsidiaries with a banking licence (Capital Bank, Halifax plc and HBOS Treasury Service plc) to the new Bank of Scotland plc. By doing it could save the costs of maintaining four banking licences, and the need for four separate companies, each with their own board of directors.
The transfer of assets and liabilities from one bank to another also requires the consent of the account holders. For institutions such as the Halifax, this would involve seeking the consent of millions of people, and would be impractical. Thus an Act of Parliament gives HBOS the statutory authority to transfer accounts without seeking individual account holder approval.
The Act also allowed the company to retain the right to print banknotes.