Funds are raised by the issue of shares to members who usually pay for them by subscription over time. The funds are used to provide financial services of a wide definition including, traditionally, mortgage advances for the purchase of house properties.
Types of building societies
A building society may be either a terminating society or a permanent society.
- Terminating societies terminate on a date fixed by their rules or when certain conditions are met.
- Permanent societies comprise all other building societies.
Why register a building society
A building society is a mutual organisation (owned by its members) that offers financial services to its members. In order to commence business, a building society must obtain a certificate of incorporation from the Registrar of Building Societies (section 28 of the Act).
Its functions are to provide services of any kind for its members or other persons, including:
- lending money
- providing credit
- giving guarantees and indemnities
- dealing in financial transactions
- trusteeships and
- foreign exchange.
The Act gives building societies the necessary powers to carry out these functions, subject to compliance with all relevant legislation.