CHAPTER 32:01
BUILDING SOCIETIES

ARRANGEMENT OF SECTIONS

   SECTION

PART I
PRELIMINARY

   1.   Short title

   2.   Interpretation

   3.   Application

   4.   Prohibition of terminating societies

   5.   Appointment of Registrar

   6.   Indemnity of the Registrar

PART II
FORMATION AND REGISTRATION

   7.   Prohibition of unregistered society

   8.   Formation of societies

   9.   Certificates, etc., to be evidence

   10.   Maintenance of register

   11.   Effect of registration

   12.   Names of societies

   13.   Registration of existing societies

   14.   Application by Registrar for winding up

   15.   Contents of rules of societies

   16.   Rules to be open

   17.   Common seal

PART III
MANAGEMENT OF SOCIETIES

   18.   Directors

   19.   Election of directors

   20.   Validity of acts of directors

   21.   Disqualification for appointment as director

   22.   Duty of director to disclose interest

   23.   Auditors

   24.   Disqualifications for appointment as auditor

   25.   Officers, etc., not to accept gifts

   26.   Restriction of payment of commissions

   27.   Provisions excluding liability of officers forbidden

PART IV
POWERS OF SOCIETIES

   28.   Power to borrow

   29.   Restriction on acquiring land, etc.

   30.   Power to make advances

   31.   Special advance

   32.   Advances to be reducible advances

   33.   Society may make further advances for certain purposes

   34.   Limitation on making advances

   35.   Special advances on default of debtor

   36.   Valuation of property for purposes of advance

   37.   Valuer must have no pecuniary interest in advance

   38.   Minister may guarantee repayment of advances

   39.   Limit of amount of advance when Minister has guaranteed repayment

   40.   Notice to be given where security for advance is taken from a third party

   41.   Power to invest

   42.   Restrictions on borrowing

   43.   General reserve fund

   44.   Restriction on payment of dividends

PART V
MEETINGS AND PERIODICAL RETURNS

   45.   Annual general meeting

   46.   Other meetings

   47.   Annual account and statement

   48.   Returns of sales and transfers

PART VI
MISCELLANEOUS PROVISIONS

   49.   Books and records to be kept by society

   50.   Rules to be binding on members and others

   51.   Duty to supply copy of rules

   52.   Evidence of rules

   53.   Persons under 21

   54.   Deposits may be held jointly

   55.   Prohibition of balloting

   56.   Implied warranty

   57.   Exercise of power of sale

   58.   Lost or destroyed share certificates, etc.

   59.   Inspection of documents by public

   60.   Exemptions from stamp duty

   61.   Financial year of society

   62.   Conditions relating to deposits and permanent shares

   63.   Conditions relating to the issue and transfer of permanent shares

   64.   Conditions relating to savings deposits

   64A.   Waiver of condition or limitation

   65.   Repayment of deposits at maturity

   66.   Misleading advertisements

PART VII
CHANGE OF NAME, ADDRESS, OFFICERS AND CONSTITUTION

   67.   Change of name

   68.   Change of address

   69.   Change of directors

   70.   Alteration of rules

   71.   Penalties

PART VIII
AMALGAMATION OF SOCIETIES AND TRANSFER OF ENGAGEMENTS

   72.   Amalgamation of Societies

   73.   Transfer of engagements

   74.   Transfer of engagements by an existing society

   75.   Registration of transfers, etc., to operate as conveyance

   76.   Registration of certificates under Deeds Registration Act

   77.   Exemption from stamp duty, etc.

   78.   Creditors not prejudiced

PART IX
DETERMINATION OF DISPUTES

   79.   Determination of disputes

   80.   Determination of disputes by the High Court

   81.   Determination of disputes by arbitrators to be final

PART X
POWERS OF THE REGISTRAR

   82.   Powers to require production of book, etc.

   83.   Inspection

   84.   Power of Registrar to call a meeting

PART XI
DISSOLUTION

   85.   Dissolution

   86.   Instruments of dissolution

   87.   Dissolution by the High Court

   88.   Powers of liquidators and trustees

   89.   Liabilities of members and others on dissolution

   90.   Account and balance sheet sent on dissolution

   91.   Dissolution by order of Registrar

PART XII
OFFENCES

   92.   Withholding or misapplying property of a society an offence

   93.   False statements

   94.   General penalty

PART XIII
GENERAL

   95.   Rules of court

   96.   Regulations

   97.   Non-compliance not to invalidate advance

   98.   Investments in societies to be trustee securities

   99.   Minister may guarantee liquidity of a society

   100.   Power of Minister to permit act by less than all members

   101.   Delegation of certain of the Minister’s powers and duties to the Reserve Bank

      Schedule

11 of 1964(N)
1 of 1965
2 of 1967
25 of 1968
39 of 1968
51 of 1971
39 of 1981
9 of 1985
22 of 1989
9 of 1998
G.N. 219/1964(N)
121/1981
44/1992

An Act to amend and consolidate the law relating to building societies and to amend the law relating to the investment of trust moneys by trustees and for matters incidental thereto and connected therewith

[1ST FEBRUARY 1964]

PART I
PRELIMINARY

1.    Short title

   This Act may be cited as the Building Societies Act.

2.   Interpretation

   In this Act, unless the context otherwise requires—

   “additional advance” means a sum of money lent by a society under section 30 (3) (b);

   “advance” means a sum of money lent by a society under section 30 (3) (a);

   “approved investment” means an investment by a society, other than an investment in another society, being an investment for the time being authorized by law in Malawi for investment of trust moneys;

   “Board of directors”, in relation to a society, means the managing body thereof by whatever name called;

   “building society” means a society formed for the purpose of raising a stock or fund from which to make advances upon security by way of mortgage of lands or buildings and which is registered in accordance with section 8;

   “deposit” means an amount accepted as an investment by a society either as a fixed deposit, an investment deposit or a savings deposit;

   “depositor” means a person who is entered in the books of a society as the owner of, or person beneficially entitled to, a fixed deposit, an investment deposit or a savings deposit;

   “existing society” means any society, association, partnership or company, whether incorporated or registered in or outside Malawi, which was registered under section 5 of the Building Societies Ordinance, 1952 (now repealed) immediately before the date of the coming into operation of this Act;

   “fixed deposit” means a deposit for a stated period which is not less than six months;

   “general reserve fund” means any reserve fund established by a society out of profits and not set aside for any specific purpose;

   “investment deposit” means an amount accepted as an investment by a society and which is repayable after a period of notice;

   “land” includes buildings, whether the same were erected before, or are erected during, the period for which any mortgage on such land in favour of a society subsists;"loan” means an amount borrowed by a society under section 42;

   “member”, in relation to a society, means a person who holds permanent shares therein which participate in the profits thereof whether or not such shares are held by the society as security for an advance;

   “mortgage commitment” means the amount of money authorized by a board of directors to be advanced on the security of mortgages, which moneys have not been taken up by the persons to whom the advances have been approved;

   “officer”, in relation to a society, means any director, manager, secretary, clerk, agent or other employee of the society but does not include an auditor of the society;

   “permanent share” means a fully paid up share of which the owner shall not be entitled at any time to demand redemption, except on dissolution of the society, but which may be transferred to another person or member, provided that the number of members is not thereby reduced below four;

   “permanent-share capital” means the total nominal value of permanent shares issued by a society;

   “person” includes the Government;

   “reducible advance” means an advance made by a society on terms and conditions which provide for the reduction of the capital amount advanced by periodical payments;

   “Registrar” means the Registrar of Building Societies appointed under section 5;

   “savings deposit” means a deposit other than a fixed deposit or an investment deposit;

   “secretary”, in relation to a society, includes any executive officer of the society acting in the capacity of secretary;

   “society” means a building society;

   “terminating society” means an association which by its rules, is bound to terminate on the expiry of a fixed period or upon the occurrence of an event specified, or the rules of which provide for the organization of its members in sections, for the separate administration of the affairs of each section or the joint administration of the affairs of all sections and for the termination of each section upon expiry of a fixed period or upon the occurrence of an event specified in the rules;

   “shareholder” means the owner of a permanent share.

3.   Application

   (1) This Act shall apply to every society.

   (2) No person shall use the name or style of “building society” unless such person is a society registered under section 8.

   (3) Every person who contravenes subsection (2) shall be liable to a fine of £500 and £50 for each day for which such contravention continues.

4.   Prohibition of terminating societies

   (1) No terminating society shall carry on business in Malawi.

   (2) Any society which contravenes subsection (1) shall be liable to a fine of £500, and £50 for each day for which such contravention continues.

5.   Appointment of Registrar

   The Minister shall appoint a public officer to be Registrar of Building Societies to perform the duties and exercise the powers imposed and conferred upon the Registrar by this Act.

6.   Indemnity of the Registrar and other persons

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

PART II
FORMATION AND REGISTRATION

7.   Prohibition of unregistered society

   (1) No person shall carry on business in Malawi as a society unless it is registered under this Act:

   Provided that an existing society may carry on business in Malawi for a period of three months from the date of the coming into operation of this Act notwithstanding that it is not registered under this Act.

   (2) An existing society shall not, after the date of coming into operation of the Act, pay or repay, or agree to pay or repay, outside Malawi any sums of money received by it in Malawi, whether such sums were received before or after such date.

   (3) Any person who contravenes subsections (1) and (2) shall be liable to a fine of £500, and £50 for each day for which such contravention continues.

8.   Formation of societies

   (1) Any four or more persons who agree jointly to subscribe to permanent shares of the society to an amount of not less than £20,000 may form a society by subscribing their names and addresses to rules agreed by them for the government of such society and by obtaining registration under this Act.

   (2) Subject to this section, persons intending to form a society shall apply to the Registrar for registration in the prescribed form, accompanied by two copies of such rules.

   (3) Every application for registration under subsection (2) shall be accompanied by such registration fee as may be prescribed.

   (4) If the Registrar is satisfied that the application and such rules are in compliance with this Act, he shall enter the prescribed particulars relating thereto in the register:

   Provided that the Minister may, if he is satisfied that it is in the public interest so to do—

   (a)   by order published in the Gazette suspend the registration of new societies either indefinitely or for a stated period and during such period the Registrar shall not register any new society;

   (b)   in any particular case direct the Registrar that registration of a proposed society shall be refused.

   (5) The Registrar shall issue a certificate of registration in the prescribed form to every society under this section.

9.   Certificates, etc., to be evidence

   (1) A certificate of registration of a society issued by the Registrar shall, upon its mere production, be conclusive evidence, unless the contrary be proved, that all the requirements of this Act in respect of registration and of matters precedent and incidental thereto have been complied with and that the society is duly registered.

   (2) Any other document relating to a building society and purporting to be signed by the Registrar shall, in the absence of any evidence to the contrary, be admissible as evidence in any court without proof of the signature.

10.   Maintenance of register

   The Registrar shall keep and maintain a register of societies in which he shall record, in respect of all societies registered under section 8, the following particulars, that is to say—

   (a)   the name of the society;

   (b)   the situation and postal address of the head office in Malawi of the society;

   (c)   the permanent-share capital of the society;

   (d)   the names and addresses of members and their holdings of permanent shares;

   (e)   such other information as may be prescribed.

11.   Effect of registration

   From the date of registration of a society under this Act, such society shall be a body corporate by its registered name with perpetual succession and, subject to this Act, shall be capable of doing all such acts as a body corporate may by law perform.

12.   Names of societies

   (1) No society shall be registered by a name which is identical with that of any other society previously registered, or by a name which so nearly resembles the same as to be likely to deceive, unless such other society is in course of being dissolved and consents to such registration.

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

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

   (4) The Registrar may, with the approval of the Minister, refuse to register a society by a name which in his opinion is likely to deceive or to cause offence to any person or class of persons.

13.   Registration of existing societies

   Every existing society shall, if it intends to carry on business after the expiration of a period of three months from the date of coming into operation of this Act, within that period apply to the Registrar for registration in like manner as a society making application under section 8.

14.   Application by Registrar for winding up

   Where the Registrar has reasonable grounds for believing—

   (a)   that a certificate of registration has been obtained for a society by fraud or granted by mistake;

   (b)   that a society exists for an illegal purpose;

   (c)   that a society has wilfully and after notice from the Registrar contravened any of the provisions of this Act;

   (d)   that a society has ceased to conduct business as a building society; or

   (e)   that a society has commenced operations as a building society outside Malawi,

he may, with the approval of the Minister, and in accordance with rules made by the Chief Justice, apply to the High Court for an order for the dissolution of the society.

15.   Contents of rules of societies

   The rules of every society shall set forth—

   (a)   the name of the society and the location and postal address of the head office of the society;

   (b)   the objects of the society;

   (c)   the manner in which a person may become a member, and may cease to be a member, of the society;

   (d)   the manner in which permanent shares may be issued or transferred;

   (e)   the manner in which the funds of the society are to be raised, the purposes to which they are to be applied and the manner in which surplus funds are to be invested;

   (f)   the terms upon which the society will accept and repay deposits;

   (g)   the manner in which and the conditions upon which advances upon the security of a mortgage or otherwise are to be made and repaid, 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;

   (h)   the manner in which profits or losses are to be ascertained and dealt with or provided for;

   (i)   the borrowing powers of the society within this Act;

   (j)   the limits, if any, on the amount of deposits which may be held or made by any one person;

   (k)   the manner of altering the rules of the society;

   (l)   the manner of appointing, remunerating and removing the directors, their qualifications, powers and duties, and the manner of appointing, remunerating and removing auditors and officers of the society;

   (m)   the manner of calling meetings of the members, the quorum for such meetings and the right to attend and the manner of voting thereat;

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

   (o)   the manner of settling disputes between the society and any persons;

   (p)   the device, custody and use of the common seal of the society;

   (q)   provision for the custody of mortgages, and other securities held by the society;

   (r)   the charges, fees, fines and forfeitures which may be demanded from or imposed on depositors with and borrowers from the society;

   (s)   the manner in which the society may be dissolved;

   (t)   such other matters as may be prescribed.

16.   Rules to be open

   Every society shall make a copy of its rules available for inspection by such persons as have dealings with the society during the normal business hours of the society.

17.   Common seal

   Every society shall have a common seal which shall bear the registered name of the society.

PART III
MANAGEMENT OF SOCIETIES

18.   Directors

   (1) Every society shall have a board of directors consisting of three or more persons.

   (2) The remuneration payable to the directors in any financial year shall not exceed in total 10 per centum of the permanentshare capital of the society, or one half of one per centum of the mortgage assets at the end of the previous financial year, whichever is the less:

   Provided that the remuneration payable to each director shall not be reduced below £300 per annum by the operation of this provision.

   (3) The duties of every director of a society shall include the duty of satisfying himself that the arrangements made for valuing the adequacy of any security to be taken in respect of any advance 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 valued by a competent and prudent person experienced in the matters relevant to the determination of the value of that security.

19.   Election of directors

   (1) The directors shall be elected by the members for a period not exceeding three years, and shall be eligible for re-election.

   (2) Whenever a casual vacancy occurs, a person may be appointed by the remaining directors to fill the vacancy until the next annual general meeting.

   (3) Vacancies in the board of directors shall be filled at the annual general meeting by election by a majority of the members.

   (4) No person shall become a director until after he has given his consent in writing to his being elected or appointed as such.

20.   Validity of acts of directors

   The acts of a director shall be valid notwithstanding any defect that may afterwards be discovered in his election or appointment or qualification, but shall not be valid after the date of the discovery of such defect.

21.   Disqualification for appointment as director

   The following persons shall be disqualified from being appointed a director of a society—

   (a)   a person who is not a member of the society;

   (b)   a member who holds permanent shares in the society to a value of less than £500;

   (c)   a body corporate;

   (d)   a minor or any other person under legal disability;

   (e)   any person who at any time has been adjudged bankrupt by a competent court, whether in Malawi or elsewhere, or who, whether in Malawi or elsewhere, has made an arrangement or composition with his creditors;

   (f)   any person who has at any time been convicted (whether in Malawi or elsewhere) of theft, any offence involving an element of fraud, forgery, uttering a forged document, or perjury or any similar offence, by whatever name called, and has been sentenced therefor to serve a term of imprisonment without the option of a fine, or to a fine exceeding £50;

   (g)   any person removed by a competent court, whether in Malawi or elsewhere, from an office of trust on account of misconduct.

22.   Duty of director to disclose interest

   (1) Any director of a society who has any direct or indirect pecuniary interest in any contract which the society proposes to enter into, or in the granting of an advance shall declare the nature and extent of such interest at any meeting of the Board of Directors of the society at which the proposed contract or the granting of such advance or the valuation of property offered as security for such advance is considered, and shall not vote on any such matter in which he has such interest.

   (2) Any person who contravenes any of the provisions of this section shall be liable to a fine of £500.

23.   Auditors

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

24.   Disqualifications for appointment as auditor

   (1) The following persons shall be disqualified from being appointed an auditor of a society—

   (a)   an officer or servant of the society;

   (b)   a person who is a partner of an officer or servant of the society;

   (c)   a person who is an employer or an employee of an officer or servant of the society;

   (d)   a body corporate.

   (2) Any person who acts as auditor of a society when disqualified as aforesaid shall be liable to a fine of £100 and to imprisonment for six months.

25.   Officers, etc., not to accept gifts

   (1) No director, secretary or other officer of a society, nor any surveyor or valuer or legal practitioner retained by it, shall, in addition to the remuneration prescribed or authorized by the rules of the society, receive from any other person any gift, bonus, commission or benefit for or in connexion with any transaction whatsoever relating to the business of the society.

   (2) Any person who pays or accepts any such gift, bonus, commission or benefit shall be liable to imprisonment for two years, and the person accepting any such gift, bonus, commission or benefit shall, if ordered so to do by the court by whom he is convicted, pay over to the society the amount or value of such gift, bonus, commission or benefit, and in default of so doing shall be guilty of a further offence and shall be liable to imprisonment for a further six months.

   (3) This section shall not apply to the payment of a bonus gratuity or other award in appreciation of long, good or special services rendered to the society where such payment is authorized by the rules of the society.

26.   Restriction of payment of commissions

   (1) It shall not be lawful—

   (a)   for any person 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 or in consideration of a promise to introduce such business to the society; or

   (b)   for a building society, or any officer, servant or agent of a building society, to offer to give or agree to give any commission or gift to any person for any such consideration as is mentioned in paragraph (a).

   (2) Any person who contravenes this section shall be liable to a fine of £500 and to imprisonment for twelve months.

27.   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, for exempting any director, manager or officer of a building society, or any person (whether an officer of the society or not) employed by the society as an 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.

PART IV
POWERS OF SOCIETIES

28.   Power to borrow

    (1) Subject to this Act, and without prejudice to any other powers of the society, a society may accept deposits to be applied to the purposes of the society.

   (2) A society may allow any person to—

   (a)   maintain a credit balance in his savings deposit account not exceeding Kl,000,000;

   (b)   hold investment deposits to a value not exceeding K2,000,000; and

   (c)   hold fixed deposits to a value not exceeding K3,000,000:

   Provided that the Registrar may, subject to such conditions as he may determine, consent in writing to a society allowing a person to maintain a credit balance in his savings deposit and to hold investment deposits and fixed deposits in excess of the amounts set forth in this subsection.

   (3) Notwithstanding subsection (2) a society may accept deposits from a trustee for different trusts which exceed in the aggregate the limits specified in that section if the amount deposited in respect of each individual trust does not exceed such limits.

   (4) The Minister may, if he considers it in the public interest so to do, by notice published in the Gazette, prohibit a society from accepting any or any further deposits.

   (5) If a society contravenes this section or section 42, the society and every director, secretary or other officer of the society who is a party to the contravention shall be liable to a fine of K200.

   (6) If any society receives deposits in excess of the limits prescribed by this section or borrows money by way of loan contrary to section 42 every director of the society shall, if the society is unable to meet its obligations, be personally liable for the amount so received in excess or contrary to section 42, as the case may be.

29.   Restriction on acquiring land, etc.

   No society shall, without the consent in writing of the Registrar, acquire or retain land or erect buildings for the administration of the society’s affairs or for the housing of its employees to a value exceeding, at the time that the acquisition is made or the buildings are erected, an amount equal to 20 per centum of its permanent-share capital together with the amount standing to the credit of a reserve fund appropriated out of profits for that purpose, or three per centum of the society’s total assets, whichever is the less.

30.   Power to make advances

   (1) A society may, subject to this section and section 34, make advances or special advances out of its funds upon the security of lands or buildings:

   Provided that no society shall advance money on the security of any lands or buildings which are subject to a prior mortgage, unless the society making the advance is the mortgagee under such prior mortgage.

   (2) If any advance is made in contravention of subsection (1), the directors of the society who authorized the advance shall be jointly and severally liable for any loss on the advance occasioned to the society.

   (3)(a)   Subject to paragraph (b) no society shall, on the security of a mortgage, make an advance in excess of such amount as may from time to time be determined by the Minister or 75 per centum of the value of the lands or buildings mortgaged as determined at the time of making the advance, whichever is the less:

      Provided that where a society exercises its right of foreclosure, or exercises its power of sale, in respect of lands or buildings mortgaged to it such society may make a reducible advance, secured by a further mortgage, to the purchaser of such lands or buildings in an amount not exceeding the amount owing to the society at the date of such foreclosure or sale, as the case may be, or the amount determined by the Minister or 75 per centum of the value of the lands or buildings mortgaged by such further mortgage, whichever is the greater.

   (b)   A society may, in conjunction with an advance made on the security of lands or buildings, make an additional advance—

      (i)   against additional security as specified in the Schedule, in an amount not exceeding the value of the additional security, or 15 per centum of the value of the lands or buildings mortgaged, whichever is the less; or

      (ii)   against a guarantee given by the Minister for and in the name of the Government in respect of the additional advance, in an amount not exceeding 20 per centum of the value of the lands or buildings mortgaged.

   (4) Where a charge upon a policy of life assurance is taken as additional security for an advance, the value of the policy shall be assessed at an amount not exceeding the surrender value thereof at the time when the advance is made.

   (5) A society may, in accordance with any general or special directions of the Minister, lend money—

   (a)   to members and depositors on the security of their deposits; and

   (b)   to members on the security of their shares.

31.   Special advance

   (1) A special advance is an advance made by a society on the security of lands or buildings being an advance of one of the following descriptions, that is to say:

   (a)   an advance of any amount to a body corporate;

   (b)   an advance of a sum exceeding K150,000, or such other sum as may be prescribed by the Minister, to a person other than a body corporate;

   (c)   an advance of any amount to a person other than a body corporate being a person who after the advance is made to him is indebted to the society in an amount exceeding K150,000, or such other sum as may be prescribed by the Minister.

   (2) An advance made jointly to two or more persons shall be deemed to be a special advance if an advance of the same amount under like conditions to any one of those persons would be a special advance.

32.   Advances to be reducible advances

   (1) No society shall make any advance other than a reducible advance.

   (2) The terms of a reducible advance shall provide for the annual reduction of the capital amount outstanding and for the repayment of the total capital amount within a period of not more than 30 years. If any portion of the capital amount advanced has been repaid to the society and the society has readvanced an amount equal to the portion so repaid to the person who repaid it, the capital amount of the original advance still outstanding and the amount so readvanced shall be repaid within a period of not more than 30 years calculated from the date of the original advance.

33.   Society may make further advances for certain purposes

   Notwithstanding section 30, a society may for the purpose of protecting lands and buildings mortgaged to it or for the purpose of maintaining the security held by it for the repayment of an advance, make further advances in respect of—

   (a)   premiums on insurance policies designed to provide further security for the repayment of an advance;

   (b)   rates, taxes and other charges on the property;

   (c)   the maintenance and repair of the property,

and such further advances shall be a charge on the property and shall form part of the moneys secured by the mortgage.

34.   Limitation on making advances

   (1) No advance or special advance shall be authorized by the Board of Directors of a society unless, at the close of business on the business day immediately preceding the day on which such advance or special advance is considered by the Board for authorization, the society held securities equivalent to the aggregate value of 15 per centum of the liability of the society in respect of deposits and 50 per centum of the society’s mortgage commitments:

   Provided that the liability of the society calculated for the purpose of this subsection shall be reduced by the amount owing on the loans, together with interest accrued thereon, made by the society under section 30 (5).

   (2) For the purpose of subsection (1) “securities” mean—

   (a)   cash;

   (b)   deposits in any commercial bank registered in Malawi;

   (c)   Malawi Government Treasury Bills;

   (d)   any trustee securities issued by the Government of Malawi or any securities for which the Government of Malawi is responsible, due for payment or maturing within the next ensuing five years; and

   (e)   any other trustee securities which have been approved for the purpose by the Minister,

and the value of such securities shall be the cost thereof to the society or the market value thereof, whichever is the lower, and for the purpose of determining the aggregate value of such securities there shall be deducted from the aggregate thereof the amount of any loan owing by the society.

   (3) No society may make a special advance during the 12 months subsequent to the society’s registration under this Act.

   (4) No society may make special advances during its second or subsequent financial year if the total value of special advances at the end of the preceding financial year exceeded 25 per centum of the mortgage assets of the society.

   (5) No society may make special advances during a financial year to an amount exceeding 5 per centum of the total amount of all advances made during that financial year if the total value of special advances at the end of the preceding financial year exceeded 10 per centum of the mortgage assets of the society.

   (6) No society may make special advances during a financial year to an amount exceeding 10 per centum of the total amount of all advances made during that financial year.

   (7) A society which accepts a transfer of engagements from an existing society under section 74 may do so notwithstanding that the total of special advances included in those engagements exceeds 25 per centum of the total advances taken over but the society shall not then make any special advances until the total special advances of the society falls below 25 per centum of the society’s total advances.

   (8) A society may make an advance or a special advance notwithstanding this section if it is authorized so to do in writing by the Registrar.

35.   Special advances on default of debtor

   (1) Where a special advance has been made on the security of lands or buildings mortgaged to a society and the society exercises its right of foreclosure in respect of such lands or buildings or where such lands or buildings have been sold in execution or upon insolvency or under the authority of the debtor granted subsequent to his default on the mortgage, the society may make a special advance to a purchaser, notwithstanding section 34 if the permission of the Registrar is first obtained in writing.

   (2) The Registrar may, in his discretion, authorize in writing any special advance permitted by him under subsection (1) to be left out of account when determining the limits provided in section 34 (3), (4), (5) and (6).

36.   Valuation of property for purposes of advance

   (1) No society shall make any advance or special advance unless it is based upon a valuation made by a person (hereinafter called a valuer) appointed by the society for the purpose of making such a valuation.

   (2) Every valuer shall make a personal inspection of the lands or buildings offered as security for an advance and in the case of an uncompleted building, shall also examine the building plans and specifications.

   (3) Every valuer shall record his valuation and the date of his inspection on the prescribed form and shall sign such form.

   (4) If an advance is authorized on the security of a building to be completed and such advance is to be paid by instalments to be paid during the period of construction of such building the valuer shall make a personal inspection of such building prior to the payment of each instalment, and the amount of such instalment shall be based on his valuation at such inspection.

37.   Valuer must have no pecuniary interest in advance

   (1) No society shall appoint as a valuer, under section 36 (1), any person who has any direct or indirect pecuniary interest, other than the payment of fees for professional services, in the granting of an advance.

   (2) No person shall make any valuation for the purposes of section 36 (1) if he has any direct or indirect pecuniary interest, other than the receipt of fees for professional services, in the granting of an advance.

   (3) Any society which, or person who, contravenes this section shall be liable to a fine of £500.

38.   Minister may guarantee repayment of advances

   The Minister may, for and in the name of the Government, on such terms and conditions as he may determine, guarantee the repayment of advances made by a society on the security of lands or buildings.

39.   Limit of amount of advance when Minister has guaranteed repayment

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