Legalize / Ireland / Act

ASSET COVERED SECURITIES ACT, 2001

Type Act

Publication 2001-12-18

Last updated 2026-02-13

State Partially repealed superseded text

Text As published

Source Irish Statute Book

PDF Download

articles 106

This is the act as published. Later amendments are not folded into the text below: each one is a separate act in this repository and an entry in this law's history.

18 amending acts · 2026-02-13, S.I. No. 33/2026 - European Union (European Single Access Point) (No. 2) Regulations 2026

Act to facilitate the establishment and operation of a market in Asset Covered Securities, and to amend the Building Societies Act, 1989 and certain other enactments, and to provide for related matters

Reform history JSON API

AN ACT TO FACILITATE THE ESTABLISHMENT AND OPERATION OF A MARKET IN ASSET COVERED SECURITIES, TO PROVIDE FOR THE REGISTRATION OF DESIGNATED CREDIT INSTITUTIONS, TO AMEND THE BUILDING SOCIETIES ACT, 1989, AND CERTAIN OTHER ENACTMENTS, AND TO PROVIDE FOR RELATED MATTERS. [18th December, 2001]

BE IT ENACTED BY THE OIREACHTAS AS FOLLOWS:

PART 1 Preliminary Matters

1 Short title and commencement.

1.—(1) This Act may be cited as the Asset Covered Securities Act, 2001.

(2) This Act comes into operation on such day or days as may be fixed by order or orders made by the Minister, either generally or with reference to any particular purpose or provision. Different days may be fixed for different purposes and different provisions.

2 Purposes of Act.

2.—The purposes of this Act are to facilitate—

(a) the establishment and operation in the State of designated credit institutions, and

(b) the establishment and operation of a market in asset covered securities so as to make available further sources of funds to those institutions.

3 Interpretation.

3.—(1) In this Act, unless the context otherwise requires—

“this Act” includes a regulation made under this Act;

“agricultural land” means land that is used, or set aside for use, primarily for the purpose of growing crops or other agricultural products, or for grazing stock or raising domestic animals or birds, and includes all improvements made to the land for that purpose;

“asset” includes an interest in an asset;

“asset covered securities”—

(a) in relation to a designated or formerly designated mortgage credit institution, means mortgage covered securities issued by the institution, and

(b) in relation to a designated or formerly designated public credit institution, means public credit covered securities issued by the institution;

“Authority” means the Central Bank;

“building” includes a structure other than a building;

“building society” means a building society incorporated under the Building Societies Act, 1989, or deemed by section 124(2) of that Act to be so incorporated;

“category A country” means a country (other than an EEA country) to which section 5(1)(a) relates;

“category B country” means a country to which section 5(1)(b) relates;

“Central Bank” means the Central Bank of Ireland;

“Codified Banking Directive” means Directive 2000/12/EC of the European Parliament and of the Council of the European Union of 20 March 2000 relating to the taking up and pursuit of the business of credit institutions, and includes that Directive as amended or replaced from time to time;

“commercial property” means land that is used, or is set aside to be used, primarily for the purpose of any industry, trade or other business undertaking, but does not include a mine, quarry, agricultural land or residential property;

“Companies Acts” means the Companies Acts, 1963 to 2001, and every enactment that is to be construed as one with those Acts;

“conditions”, in relation to a designated credit institution, means the conditions specified in or accompanying the institution's certificate of designation or, if the conditions are varied under section 16, those conditions as varied under that section;

“cover assets”—

(a) in relation to a designated or formerly designated mortgage credit institution, means mortgage credit assets, cover assets hedge contracts or substitution assets that are held in a cover assets pool maintained by the institution, and

(b) in relation to a designated or formerly designated public credit institution, means public credit assets, cover assets hedge contracts or substitution assets that are held in a cover assets pool maintained by the institution;

“cover assets hedge contract”—

(a) in relation to a designated or formerly designated mortgage credit institution, means a contract of a kind entered into in accordance with section 30(3), and

(b) in relation to a designated or formerly designated public credit institution, means a contract of a kind entered into in accordance with section 45(3);

“cover-assets monitor”, in relation to a designated or formerly designated credit institution, means a person appointed in respect of the institution under Part 5;

“cover assets pool”—

(a) in relation to a designated or formerly designated mortgage credit institution, means the mortgage credit assets, cover assets hedge contracts and substitution assets held by the institution that are recorded in the register of mortgage covered securities business kept by the institution, and

(b) in relation to a designated or formerly designated public credit institution, means the public credit assets, cover assets hedge contracts and substitution assets held by the institution that are recorded in the register of public credit covered securities business kept by the institution;

“credit institution” means any of the following:

(a) the holder of a licence under section 9 of the Central Bank Act, 1971;

(b) a building society;

(d) ACC Bank plc;

(e) a credit institution, as defined in the Codified Banking Directive, that is authorised by a competent authority outside the State for the purposes of that Directive;

“dealing”, in relation to an asset, includes originating, acquiring and disposing of the asset;

“designated credit institution” means either a designated mortgage credit institution or a designated public credit institution;

“designated mortgage credit institution” means an institution designated by the Authority in accordance with Part 3 to carry on the permitted business activities referred to in section 27(1);

“designated public credit institution” means an institution designated by the Authority in accordance with Part 3 to carry on the permitted business activities referred to in section 42(1);

“EEA country” means a country that is a member of the European Economic Area;

“European Central Bank” has the meaning given by the Statute of the European System of Central Banks and of the European Central Bank;

“financial asset” has the meaning given by section 496 of the Taxes Consolidation Act, 1997;

“financial obligation” includes—

(a) an obligation given as a guarantor or surety,

(b) an obligation that is indirect, and

“formerly designated credit institution” means an institution that was formerly registered as either a designated mortgage credit institution or a designated public credit institution;

“functions” includes duties and responsibilities;

“holder”, in relation to an asset covered security, includes any person who has a right to or an interest in the security, whether the right or interest is direct or indirect or is derived through a custodian, intermediary or any system for settling or clearing securities;

“insolvency process” means liquidation, examination, receivership, reorganisation, a moratorium, bankruptcy or any similar process related to the inability of persons to pay their debts, and, in relation to a designated or formerly designated credit institution, includes any process relating to the insolvency or potential insolvency of the institution;

“insolvent”, in relation to a designated or formerly designated credit institution, has the meaning given by section 7;

“manager” means a person appointed in respect of a designated or formerly designated credit institution under Part 6 or Schedule 1;

“the Minister” means the Minister for Finance;

“mortgage covered security”, in relation to a designated or formerly designated mortgage credit institution, means a security that is issued by the institution in accordance with this Act and is secured over the cover assets that are included in a cover assets pool maintained by the institution;

“mortgage credit” has the meaning given by section 4;

“mortgage credit asset” means property or an asset held by a designated mortgage credit institution that comprises one or more mortgage credits;

“national central bank” has the meaning given by the Statute of the European System of Central Banks and of the European Central Bank;

“non-performing” means—

(a) in relation to assets or property of any kind—such of the assets or property as are in the course of being foreclosed or otherwise enforced,

(b) in relation to mortgage credit assets for which the related mortgage credit is of a kind referred to in section 4(1)—such of those assets in relation to which one or more payments of principal or interest payable on that credit are in arrears under the terms of the security documents governing that credit, but only if those payments are referable to a period of 3 months or more, or

(c) in relation to kinds of assets or property, other than mortgage credit assets referred to in paragraph (b)—such of the assets or property in respect of which one or more payments of principal or interest payable on the related credit are in arrears for 10 days or more under the terms of the security documents that govern that credit;

“NTMA” means the National Treasury Management Agency;

“obligation” includes a liability;

“parent entity”, in relation to a designated credit institution, has the same meaning as is given to the expression “parent company” in the European Communities (Credit Institutions: Accounts) Regulations, 1992;

“performing”, in relation to assets or property held by a designated credit institution, means such of the assets or property as are not non-performing assets;

“potentially insolvent”, in relation to a designated or formerly designated credit institution, has the meaning given by section 8;

“power” includes a right and an authority;

“preferred creditor”, in relation to a designated or formerly designated credit institution, means all or any of the following persons—

(a) the holder of an outstanding asset covered security issued by the institution,

(b) a person (other than the holder) who has rights under or in respect of any such security by virtue of any legal relationship with the holder,

(c) a person with whom the institution has entered into a cover assets hedge contract, but only if the person is in compliance with the financial obligations imposed under the contract,

(d) a person who is a super-preferred creditor in relation to the institution;

“property” includes an interest in property;

“property asset”, in relation to a mortgage credit, means a right or interest in the residential or commercial property over which the mortgage credit is secured;

“prudent market value” means—

(a) in relation to a mortgage credit asset or substitution asset held or proposed to be held by a designated mortgage credit institution—the prudent market value as determined in accordance with section 41, and

(b) in relation to a public credit asset or substitution asset held or proposed to be held by a designated public credit institution—the prudent market value as determined in accordance with section 56;

“public credit” has the meaning given by section 5;

“public credit covered security”, in relation to a designated or formerly designated public credit institution, means a security issued by the institution in accordance with this Act that is secured over the cover assets that comprise a cover assets pool maintained by the institution;

“public credit asset” means property or an asset held by a designated or formerly designated public credit institution that comprises one or more public credits;

“record” means any record of information, however compiled, recorded or stored, and includes—

(a) any book, register or other document containing information, and

(b) any disc, tape or other article from which information is capable of being produced in any form capable of being reproduced visually or aurally;

“register of designated mortgage credit institutions” means the register established in accordance with section 17(1);

“register of designated public credit institution” means the register established in accordance with section 17(2);

“register of mortgage covered securities business”, in relation to a designated or formerly designated mortgage credit institution, means the register that the institution is required to keep under section 38;

“register of public credit covered securities business”, in relation to a designated or formerly designated public credit institution, means the register that the institution is required to keep under section 53;

“registered”, in relation to a designated credit institution, means registered under Part 3;

“regulatory notice” means a regulatory notice published by the Authority under a provision of this Act;

“the regulations” means regulations made by the Authority, and in force under this Act;

“related company”, in relation to a designated or formerly designated credit institution, has the meaning given by subsection (6);

“residential property” means a building or part of a building that is used or is suitable for use as a dwelling, and includes the land on which the building is constructed and premises that are used in conjunction with a dwelling, such as a garden, patio, garage or shed;

“secured”—

(a) in relation to asset covered securities issued by a designated credit institution—means secured as provided by Part 7 over the relevant cover assets pool maintained by the institution to protect and satisfy the claims and rights of the holders of those securities,

(b) in relation to cover assets hedge contracts entered into by such an institution—means secured as so provided to protect and satisfy the claims and rights of the persons with whom the institution has entered into those contracts,

(c) in relation to the cover-assets monitor appointed in respect of such an institution under this Act—means secured as so provided to protect and satisfy the claims and rights of the monitor in connection with the monitor's appointment as such, and

(d) in relation to a manager appointed in respect of such an institution under this Act—means secured as so provided to protect and satisfy the claims and rights of the manager in connection with the manager's appointment as such;

“security document” includes any form of visual representation that can be produced electronically or by any other means;

“Statute of the European System of Central Banks and of the European Central Bank” means the statute set out in Protocol (No. 3) (annexed by the Treaty on European Union done at Maastricht on the 7th day of February, 1992) to the Treaty establishing the European Economic Community done at Rome on the 25th day of March, 1957;

“substitution asset” has the meaning given by section 6;

“super-preferred creditor”, in relation to a designated or formerly designated credit institution, means a cover-assets monitor or manager appointed in respect of the institution;

“supervisory enactment” means any of the following:

(a) the Central Bank Acts, 1942 to 2001;

(b) the Building Societies Acts, 1989 to 1992;

(d) the ACC Bank Acts, 1978 to 2001;

(e) regulations made under the European Communities Act, 1972, relating to the regulation or supervision of credit institutions;

(f) supervisory notices issued by the Central Bank giving effect to directives of the European Union relating to the regulation or supervision of credit institutions;

(g) any statute, regulation or notice amending, replacing or supplementing any of those Acts, regulations and notices;

“tier 1 asset” means any property that is designated by the European Central Bank as a tier 1 asset for the purpose of giving effect to the monetary policy of the European System of Central Banks, but, in relation to a designated public credit institution, does not include property that comprises public credit assets; and

“tier 2 asset” means property that is, with the approval of the European Central Bank, included in a national central bank's list of eligible tier 2 assets for the purpose of giving effect to the monetary policy of the European System of Central Banks, but does not include—

(a) in the case of a designated mortgage credit institution— property that comprises a mortgage credit asset or a substitution asset, or

(b) in the case of a designated public credit institution— property that comprises a public credit asset or a substitution asset.

(2) For the purposes of this Act—

(a) the country in which a mortgage credit asset is located is the country in which the property asset that secures the relevant mortgage credit related to the mortgage credit asset is situated, and

(b) the country in which a substitution asset (other than a deposit of money) is located is the country where the entity that has the primary financial obligation in respect of the asset is formed or established, or

(c) the country in which a substitution asset that is a deposit of money is located is the country in which the place of business of the financial institution that is holding the deposit is situated.

(3) In subsection (2)(b), “primary financial obligation” means the financial obligation that enables the asset to qualify as a tier 1 asset.

(4) For the purposes of this Act—

(a) the country in which a public credit asset is located is the country in which the entity that has the primary financial obligation in respect of the asset is formed or established, and

(b) the country in which a substitution asset (other than a deposit of money) is located is the country where the entity that has the primary financial obligation in respect of the asset is formed or established, or

(c) the country in which a substitution asset that is a deposit of money is located is the country in which the place of business of the financial institution that is holding the deposit is situated.

(5) In subsection (4), “primary financial obligation” means the financial obligation that enables the asset to qualify—

(a) as a public credit asset, or

(b) in the case of a substitution asset that is a tier 1 asset, as a tier 1 asset.

(6) For the purposes of this Act, a company is related to a credit institution if—

(a) the institution is its holding company or subsidiary,

(b) more than half in nominal value of the company's equity share capital is held by the institution and companies related to it (whether directly or indirectly, but otherwise than in a fiduciary capacity),

(c) more than half in nominal value of the equity share capital of each of those bodies is held by members of the other (whether directly or indirectly, but otherwise than in a fiduciary capacity),

(d) the institution, or a company or companies related to it or to the institution together with a company or companies that are related to it, are entitled to exercise or control the exercise of more than one half of the voting power at any general meeting of the company,

(e) the businesses of the institution and the company have been so carried on that the separate business of each of them, or a substantial part of it, is not readily identifiable, or

(f) there is another company to which both the institution and the company are related.

(7) For the purposes of subsection (6)—

(a) “company” includes any body that is liable to be wound up under the Companies Acts, and

(b) “holding company”, “subsidiary” and “equity share capital” have the meanings given by section 155 of the Companies Act, 1963.

4 Definition of mortgage credit.

4.—(1) For the purposes of this Act, mortgage credit is any kind of financial obligation in respect of money borrowed or raised that is secured by a mortgage, charge or other security on residential property or commercial property, but only if the property is located in the State or any other EEA country, a category A country or a category B country.

(2) For the purposes of this Act, mortgage credit also includes any kind of credit for the time being designated by order made under subsection (3)(a).

(3) The Minister may, by order notified in Iris Oifigiúil—

(a) designate credit of a specified kind to be mortgage credit for the purposes of this Act, or

(b) declare a credit of a specified kind to be no longer mortgage credit for those purposes.

(4) The Minister may, in an order made under subsection (3)(a), declare—

(a) that section 31(1), 31(2), 32(11) to (13) or 33(2) does not apply to mortgage credit assets consisting of mortgage credits of the kind specified in the order, or

(b) that all or any of those provisions apply to those mortgage credit assets only with such modifications as are so specified.

(5) The Minister may specify in an order made under subsection (3)(a) requirements as to the total prudent market value of relevant mortgage credit assets that can be included in a cover assets pool, expressed as a percentage of the prudent market value of the total mortgage credit assets and substitution assets that are included in the pool. For the purposes of this subsection, mortgage credit assets are relevant mortgage credit assets if they are comprised of mortgage credits of a kind specified in the order.

5 Definition of public credit.

5.—(1) For the purposes of this Act, public credit is any kind of financial obligation in respect of money borrowed or raised, where the person who has the obligation is—

(a) the State or any other EEA country, Canada, Japan, the Swiss Confederation, the United States of America, or a country specified in an order made under subsection (4),

(b) a country, other than a country to which paragraph (a) relates, that is a full member of the Organisation for Economic Co-operation and Development, but only if it has not rescheduled its external debt during the immediately preceding 5 years,

(c) any governmental or public entity established in a country to which paragraph (a) or (b) relates that has, under the law of the country or a region of that country, power to impose taxes (including levies or rates),

(d) subject to subsection (3), any other governmental or public entity established in a country to which paragraph (a) or (b) relates whose financial obligations have a risk weighting of 20 per cent or less for the purposes of the Codified Banking Directive,

(e) the European Communities (or any of them) or the European Investment Bank, or

(f) any other entity established in a country to which paragraph (a) or (b) relates that is prescribed by the regulations for the purposes of this section.

(2) For the purposes of subsection (1), a financial obligation includes a financial obligation that is in the form of a security that represents other public credit that is securitised as well as one that does not.

(3) The reference in subsection (1)(d) to a governmental or public entity does not include a credit institution or other financial institution whose financial obligations have the risk weighting referred to in that paragraph only because of its status as such an institution.

(4) The Minister may, by order notified in Iris Oifigiúil, specify for the purposes of paragraph (a) of subsection (1) a country other than one specified in that paragraph.

(5) For the purposes of this Act, public credit also includes any kind of credit for the time being designated by order made under subsection (6)(a).

(6) The Minister may, by order notified in Iris Oifigiúil—

(a) designate credit of a specified kind to be public credit for the purposes of this Act, or

(b) declare credit of a specified kind to be no longer public credit for those purposes.

(7) The Minister may, in an order made under subsection (6)(a), declare—

(a) that section 46(1) or 48(2) does not apply to public credit assets consisting of public credits of the kind specified in the order, or

(b) that either or both of those provisions apply to those public credit assets only with such modifications as are so specified.

(8) The Minister may specify in an order made under subsection (6)(a) requirements as to the total prudent market value of relevant public credit assets that can be included in a cover assets pool, expressed as a percentage of the prudent market value of the total public credit assets and substitution assets that are included in the pool. For the purposes of this subsection, public credit assets are relevant public credit assets if they are comprised of public credits of a kind specified in the order.

6 Definition of substitution asset.

6.—(1) The following assets are substitution assets for the purposes of this Act—

(a) deposits with an eligible financial institution;

(b) tier 1 assets;

(c) any specified kind of property that is for the time being designated by order made under subsection (3)(a) to be a substitution asset.

(2) The regulations must provide for a financial institution or class of financial institutions to be designated as an eligible financial institution for the purposes of subsection (1).

(3) The Minister may, by order notified in Iris Oifigiúil—

(a) designate a specified kind of property to be a substitution asset for the purposes of this Act, or

(b) declare a specified kind of property to be no longer a substitution asset for those purposes.

7 When designated credit institution becomes insolvent.

7.—A designated credit institution becomes insolvent for the purposes of this Act in any of the following circumstances:

(a) if the appointment of an examiner in respect of the institution under the Companies (Amendment) Act, 1990, is not terminated or stayed within 30 days after the date of the appointment;

(b) if the appointment of a liquidator in respect of the institution is not terminated or stayed within 30 days after the date of the appointment;

(c) if the appointment of a receiver over any part of the property or undertaking of the institution is not terminated or stayed within 30 days after the date of the appointment;

(d) if the institution is a company and the company is deemed to be unable to pay its debts as provided by—

(i) section 2(3)(a) or (b) of the Companies (Amendment) Act, 1990, or

(ii) section 214(b) or (c) of the Companies Act, 1963;

(e) if the institution is a building society and the High Court makes an order under section 109 of the Building Societies Act, 1989, directing the society to be wound up on the ground that it is unable to pay its debts;

(f) if the institution is the holder of a licence issued under section 9 of the Central Bank Act, 1971, and—

(i) the institution is deemed to be unable to meet its obligations under section 28(1) of that Act, or

(ii) the institution is deemed to have committed an act of bankruptcy or to be unable to pay its debts under section 29(4) of that Act;

(g) if the institution has, in relation to an asset covered security that it has issued, failed to pay an amount payable in respect of the security within 30 days after the amount fell due (unless the failure is attributable to administrative difficulties arising from circumstances that are outside the control of the institution).

8 When designated credit institution becomes potentially insolvent.

8.—A designated credit institution becomes potentially insolvent for the purposes of this Act in any of the following circumstances:

(a) if a petition for the appointment of an examiner is presented in relation to the institution under the Companies (Amendment) Act, 1990;

(b) if a petition is presented, or an effective resolution is passed, for the appointment of a liquidator in relation to the institution;

(d) if the institution has, in relation to an asset covered security that it has issued, failed to pay an amount payable in respect of the security within 10 days after the amount fell due (unless the failure is attributable to administrative difficulties arising from circumstances that are outside the control of the institution).

PART 2 Functions and Powers of Authority

9 Functions of Authority under this Act.

9.—(1) The functions of the Authority are as follows—

(a) to designate credit institutions for the purposes of this Act,

(b) to administer the system of supervision and regulation of designated credit institutions in accordance with this Act in order to promote the maintenance of the proper and orderly regulation and supervision of those institutions, and

(2) The Authority is required to perform its functions so as to fulfil the purposes of this Act.

(3) The Authority has, in relation to designated credit institutions and other persons to whom this Act relates, the functions imposed and the powers conferred on the Central Bank by or under the supervisory enactments in relation to credit institutions within the scope of those Acts, except as required or provided by this Act and subject to such modifications to those functions and powers as are necessary in order to adapt those functions and powers for the purposes of this Act.

10 General powers of Authority under this Act.

10.—(1) The Authority has power to do all things necessary or expedient to be done for or in connection with, or incidental to, the performance of its functions.

(2) A power conferred by subsection (1) is not to be taken to be limited merely by implication from another provision, whether of this or any other Act, that confers a power on the Authority.

11 Power of Minister to impose additional functions on Authority.

11.—(1) The Minister may, by order notified in Iris Oifigiúil, impose on the Authority functions additional to those specified in section 9.

(2) In making an order under this section, the Minister is required to have regard to the purposes of this Act and, in particular, section 9.

PART 3 Designation of Credit Institutions

12 Offence to carry on asset covered securities business without designation by Authority.

12.—(1) A person shall not—

(a) purport to issue mortgage covered securities in accordance with this Act,

(b) represent or advertise that the person is a designated mortgage credit institution, or is authorised by this Act to carry on a business involving the issue of mortgage covered securities, or

unless the person is registered as a designated mortgage credit institution in accordance with this Part.

(2) A person shall not—

(a) purport to issue public credit covered securities in accordance with this Act,

(b) represent or advertise that the person is a designated public credit institution, or is authorised by this Act to carry on a business involving the issue of public credit covered securities, or

unless the person is registered as a designated public credit institution in accordance with this Part.

(3) A person who contravenes subsection (1) or (2) commits an offence and is liable—

(a) on conviction on indictment, to a fine not exceeding €250,000 (£196,891), or

(b) on summary conviction, to a fine not exceeding €1,900 (£1,496.37).

13 Application for registration as a designated credit institution.

13.—(1) An eligible person may apply to the Authority to be registered as a designated mortgage credit institution or as a designated public credit institution.

(2) A person is an eligible person for the purposes of this section only if it is a credit institution incorporated or formed in the State that holds an authorisation issued by the Central Bank authorising it to carry on business as a credit institution.

(3) An application must—

(a) be in a form approved by the Authority, and

(b) contain such information, and be accompanied by such documents, as may be requested by the Authority.

(4) The Authority may, by written notice given to an applicant, require the applicant to provide such additional information and documents as is reasonably necessary to enable it to determine the application. If such a requirement is not complied with within a period specified in the notice, not exceeding 60 days, the Authority may reject the application.

(5) Nothing in this section prevents the same person from making an application for registration as a designated mortgage credit institution and an application for registration as a designated public credit institution.

14 Grant and rejection of applications for registration.

14.—(1) The Authority may register an applicant as a designated mortgage credit institution only if it is satisfied that the applicant—

(a) is or will be able to carry out, in a proper manner, the responsibilities that a designated mortgage credit institution is required by this Act to carry out, and

(b) complies with, or will be able to comply with, such requirements (if any) relating to designated mortgage credit institutions as are prescribed by the regulations and by regulatory notices.

(2) The Authority may register an applicant as a designated public credit institution only if it is satisfied that the applicant—

(a) is or will be able to carry out, in a proper manner, the responsibilities that a designated public credit institution is required by this Act to carry out, and

(b) complies with, or will be able to comply with, such requirements (if any) relating to designated public credit institutions as are prescribed by the regulations and by regulatory notices.

(3) In granting an application, the Authority may impose such conditions (other than conditions prescribed by the regulations or by a regulatory notice) on the applicant with respect to the orderly and proper regulation of the applicant's business as it considers appropriate.

(4) On granting an application for registration as a designated mortgage credit institution, the Authority shall—

(a) record the appropriate particulars of the applicant in the register of designated mortgage credit institutions, and

(b) issue the applicant with a certificate of registration as a designated mortgage credit institution,

and, if the Authority has imposed conditions on the applicant under subsection (3), shall specify those conditions in the certificate or in one or more documents that accompany the certificate.

(5) On granting an application for registration as a designated public credit institution, the Authority shall—

(a) record the appropriate particulars of the applicant in the register of designated public credit institutions, and

(b) issue the applicant with a certificate of registration as a designated public credit institution,

and, if the Authority has imposed conditions on the applicant under subsection (3), shall specify those conditions in the certificate or in one or more documents that accompany the certificate.

(6) On granting an application for registration as a designated mortgage credit institution or designated public credit institution, the Authority is also required to give to the Revenue Commissioners written notice of—

(a) the name of the institution concerned, and

(b) the address of the principal place of business of that institution and, if the address of its registered office is different from that address, the address of that office.

(7) The Authority may not reject an application without giving the applicant an opportunity to make representations in writing as to why the application should not be rejected.

(8) If the Authority rejects an application, it shall immediately give to the applicant written notice of the rejection, which must include a statement setting out the reasons for the rejection.

15 Effect and term of registration.

15.—(1) Registration as a designated mortgage credit institution authorises the institution named in the certificate of registration to carry on the business of a designated mortgage credit institution in accordance with this Act.

(2) Registration as a designated public credit institution authorises the institution named in the certificate of registration to carry on the business of a designated public credit institution in accordance with this Act.

(3) A designated credit institution shall comply with the conditions contained in its certificate of registration or in any document that was issued with the certificate.

(4) The fact that the Authority has registered a person as a designated credit institution does not of itself make the Authority liable for any financial loss incurred by a person—

(a) because the institution, any of its officers, employees or agents, or any cover-assets monitor or manager appointed in respect of the institution has contravened or failed to comply with a provision of this Act or any relevant regulatory notice issued under this Act, or any condition of the institution's registration, or

(b) because the institution has become subject to an insolvency process.

(5) The registration of a designated mortgage credit institution or a designated public credit institution remains in force until the registration is revoked under this Part.

16 Authority may vary conditions of registration.

16.—(1) The Authority may from time to time vary a condition of a designated credit institution's registration or impose on the institution a new condition, but only after giving to the credit institution concerned notice in writing of its intention to do so and after giving the institution an opportunity to make written representations to the Authority in relation to the proposed variation or proposed new condition.

(2) This section does not empower the Authority to vary a condition that is imposed on a designated mortgage credit institution or a designated public credit institution by the regulations or by a regulatory notice.

17 Registers of designated credit institutions to be kept.

17.—(1) The Authority is required to establish and keep a register of designated mortgage credit institutions.

(2) The Authority is also required to establish and keep a register of designated public credit institutions.

(3) The register of designated mortgage credit institutions must contain the name and the address of the principal place of business of each designated mortgage credit institution and such other information as the Authority determines.

(4) The register of designated public credit institutions must contain the name and the address of the principal place of business of each designated public credit institution and such other information as the Authority determines.

(5) A register may be in book form, electronic form or such other form as the Authority determines from time to time. If a register is kept in an electronic form that is not visually readable, the register must be capable of being reproduced in a visually readable form.

(6) The registers are to be kept at the head office of the Authority.

(7) Members of the public are entitled, without charge, to inspect either of the registers during the ordinary business hours of the Authority. However, the Authority may impose a reasonable charge for providing a copy of a register or of an entry in a register.

(8) The Authority shall, not less frequently than once during every period of 12 months after the commencement of this section, publish in a publication decided by the Authority a list of designated mortgage credit institutions and designated public credit institutions. If the regulations so require, the list must contain such other particulars as are prescribed by the regulations.

18 Revocation of registration by Authority on application of credit institution.

18.—The Authority may revoke the registration of a designated mortgage credit institution, or a designated public credit institution, on the application of the institution, but only if it is of the opinion that the institution has fully satisfied all claims and liabilities that are secured in respect of the institution as provided by Part 7.

19 Revocation of registration by Authority otherwise than on application of credit institution.

19.—(1) The Authority may revoke the registration of a designated credit institution on being satisfied on reasonable grounds that—

(a) the institution has not begun to carry on any business of a designated credit institution within 12 months after the date on which the registration was notified to the institution,

(b) the institution has not carried on any such business within the immediately preceding 6 months,

(d) the institution has contravened or is contravening, or has failed or is failing to comply with a provision of this Act or a regulatory notice,

(e) the institution has become subject to an insolvency process,

(f) the institution no longer has sufficient “own funds” (as referred to in the Codified Banking Directive),

(g) the cover assets comprised in a cover assets pool maintained by the institution do not comply with any provision of Part 4,

(h) the business of, or the corporate structure of, the institution has been so organised to such an extent that the institution can no longer be supervised to the satisfaction of the Authority,

(i) the institution has come under the control of any other entity that is not supervised by the Authority to such an extent that the institution can no longer be supervised to the satisfaction of the Authority,

(j) since the institution was registered as a designated credit institution, the circumstances under which the registration was given have changed to the extent that an application for registration would be refused had it been made in the changed circumstances, or

(k) the institution, or any of its officers, is convicted on indictment of—

(i) an offence under this Act or under any other enactment prescribed by the regulations for the purpose of this section, or

(ii) an offence involving fraud, dishonesty or breach of trust.

(2) The Authority may revoke the registration of a designated credit institution under this section only with the consent of the Minister.

(3) Before seeking the consent of the Minister to the revocation of the registration of a designated credit institution, the Authority shall, by notice in writing given to the institution, inform the institution of its intention to seek that consent. The notice must specify—

(a) the grounds on which it is proposed to seek the Minister's consent, and

(b) that the institution may, within 21 days after the giving of the notice, make written representations to the Minister showing why the registration should not be revoked.

(4) Not later than 21 days after being given a notice under subsection (3), the institution concerned may make written representations to the Minister showing why the registration should not be revoked.

(5) The Authority may seek the Minister's consent to the revocation of the registration of the institution, and the Minister may give that consent only after having considered any representations made by the institution in accordance with subsection (4).

(6) If the Authority revokes the registration of a designated credit institution under this section, it shall give written notice of the revocation to the institution. The notice must include a statement of the reasons for revoking the registration.

(7) Unless the High Court otherwise orders, revocation of the registration of a designated credit institution under this section takes effect on and from the date of the notice or, if a later date is specified in the notice, on and from that date, irrespective of whether or not the institution appeals against the revocation under section 26.

20 Authority may direct designated credit institution to suspend its business.

20.—(1) If the Authority reasonably believes that there may be grounds for revoking the registration of a designated credit institution under section 19, it may, subject to Part 7, give to the institution a direction in writing prohibiting it from engaging in any specified activity referred to in section 21(5) except with the permission of the Authority.

(2) If a direction given under this section is still in effect—

(a) winding up or bankruptcy proceedings may be initiated in respect of the institution concerned,

(b) a receiver over the assets of that institution may be appointed, and

only if the prior approval of the High Court has been obtained.

(3) The High Court may order that all or any part of proceedings before it under this section may be held in closed court if the Court is satisfied that it would, because of the nature or circumstances of the case or because it would be in the interests of justice, be desirable to make such an order.

(4) The High Court may make a further order revoking or amending an order made under subsection (3).

21 Effect of revocation of registration where credit institution is not a company or building society or is a company or building society other than one that is being wound up.

21.—(1) This section applies to a credit institution if the registration of the institution is revoked under section 19 and the institution—

(a) is not a company or building society, or

(b) is a company or building society but is not being wound up.

(2) A credit institution to which this section applies is required to continue to carry out the financial obligations of the institution that are secured under Part 7 until all of those obligations have been fully discharged to the satisfaction of the Authority.

(3) Within such period as the Authority specifies (not exceeding 30 days) after the institution has been notified that its registration has been revoked, or within such extended period as the Authority may allow, the institution shall give to—

(a) the Authority, and

(b) as far as reasonably practicable, every creditor of the institution,

a notice specifying the measures that it is taking or proposes to take to discharge in full its financial obligations. Those measures must include such measures as are designed to ensure that those obligations in respect of asset covered securities and cover assets hedge contracts will be fully discharged in accordance with the terms of the security documents governing those securities and contracts.

(4) If—

(a) the institution fails to give to the Authority a notice in accordance with subsection (3) within the required period,

(b) the Authority believes that the institution has failed to take reasonable steps to give the notice to all of its creditors, or

(c) the Authority does not believe that the measures specified in a notice given to it under that subsection are satisfactory,

the Authority may, subject to Part 7, give the institution a direction in writing prohibiting the institution from engaging in a specified activity without having first obtained the Authority's permission.

(5) The following activities are specified for the purposes of this section and section 20—

(a) dealing with the institution's assets generally or dealing with any specified class of assets or any specified asset,

(b) engaging in transactions generally or engaging in any specified class of transactions or any specified transaction,

(6) Subject to Part 7, the Authority may, either in a direction given under subsection (4) or in a later direction, require the institution concerned to prepare and submit to it for its approval within 2 months after the direction, a scheme for the orderly discharge of the institution's obligations to its creditors.

22 Provisions applying to directions given under sections 20 and 21.

22.—(1) A direction given under section 20 or 21—

(a) must include a statement of the Authority's reasons for giving the direction, and

(b) remains in force for such period (not exceeding 6 months) as is specified in the direction.

(2) Unless the High Court otherwise orders, a direction given under section 20 or 21 takes effect from the date of the direction or, if a later date is specified in the direction, from that date, irrespective of whether or not the institution appeals against the direction under section 26.

(3) The Authority may, by notice in writing given to the institution concerned, amend or revoke a direction given under this section.

(4) Without limiting subsection (3), the Authority may from time to time, by notice in writing given to the institution concerned, extend the period during which a direction remains in force by one further period not exceeding 6 months.

(5) A direction given under section 20 ceases to have effect—

(a) at the end of the period specified in the direction, or if the period is extended under subsection (4), at the end of the extended period,

(b) on the making of a winding up order in respect of the institution,

(d) on being revoked by an order of the High Court,

whichever first occurs.

(6) A direction given under section 21 ceases to have effect—

(a) at the end of the period specified in the direction, or if the period is extended under subsection (4), at the end of the extended period, or

(b) on being revoked by an order of the High Court,

whichever first occurs.

(7) A credit institution that fails within the permitted period to comply with a direction given under section 20 or 21 commits an offence and is liable on summary conviction to a fine not exceeding €1,900 (£1,496.37).

23 Effect of revocation of registration where credit institution is a company or building society that is being wound up.

23.—(1) This section applies to a credit institution whose registration is revoked under section 19 and the institution is a company or building society that is being wound up.

(2) Except as otherwise provided by this Act, the liquidator of a credit institution to which this section applies has a duty to ensure that the institution performs the obligations imposed on the institution by or under this Act.

(3) The duty imposed by subsection (2) is in addition to the liquidator's duties in respect of the winding up of the institution.

24 Authority may substitute other duties for duties of liquidator of credit institution.

24.—If a liquidator is appointed in respect of a credit institution whose registration is revoked under this Part, the Authority may, by notice in writing given to the liquidator, substitute for the obligation imposed on the liquidator to comply with section 23 such other obligations of a similar nature as the Authority specifies in the notice.

25 Provisions of certain other Acts not affected.

25.—If the registration of an institution is revoked under this Part and the institution is—

(a) the holder of a licence issued under the Central Bank Act, 1971,

(b) a trustee savings bank,

(d) ACC Bank plc,

the power of the Authority to exercise in relation to the institution any power conferred on it by the supervisory enactments is affected only in so far as the exercise of that power would be inconsistent with this Act.

26 Right to appeal against certain decisions of the Authority.

26.—(1) If the Authority—

(a) rejects an application made under section 13, or

(b) grants the application but imposes conditions (not being conditions prescribed by the regulations) with which the applicant is dissatisfied,

the applicant may appeal to the High Court against the decision of the Authority rejecting the application or imposing the conditions.

(2) If a designated credit institution is dissatisfied with a decision of the Authority varying the conditions of registration under section 16, the institution may appeal to the High Court against the decision.

(3) If the Authority revokes the registration of a designated credit institution under section 19, the institution may appeal to the High Court against the decision of the Authority revoking the registration.

(4) If the Authority gives a direction under section 20 or 21 in respect of a designated credit institution, the institution may appeal to the High Court against the direction.

(5) An appeal under this section can be made only within 42 days after the decision of the Authority has been notified to the applicant or credit institution concerned.

(6) The High Court may hear an appeal made under this section only if it is satisfied that a copy of the notice of appeal has been served on the Authority.

(7) The Authority is entitled to appear as respondent at the hearing of an appeal made under this section.

(8) An appeal made under this section is to be dealt with by way of rehearing.

(9) On the hearing of an appeal, the High Court may make one of the following orders—

(a) an order confirming the decision appealed against,

(b) an order quashing that decision, or

(10) The High Court may also make such ancillary orders as it thinks appropriate.

PART 4 Regulation of Designated Credit Institutions

Chapter 1 Issue of asset covered securities by designated mortgage credit institutions

27 Interpretation (Chapter 1).

27.—(1) For the purposes of this Chapter, the following activities are permitted business activities but only if carried out in accordance with this Act—

(a) providing mortgage credit and dealing in and holding mortgage credit assets,

(b) dealing in and holding substitution assets,

(c) dealing in and holding assets of a kind that, in accordance with a requirement of the Authority made under the supervisory enactments, designated mortgage credit institutions are required to hold for regulatory purposes,

(d) dealing in and holding credit transaction assets,

(e) dealing in and holding tier 2 assets,

(f) engaging in activities connected with financing or refinancing assets of a kind mentioned in paragraphs (a) to (e),

(g) entering into contracts in accordance with section 30 for the purpose of hedging risks associated with any other activity of a kind mentioned in paragraphs (a) to (f), and

(h) engaging in activities that are incidental or ancillary to carrying on any other activity mentioned in paragraphs (a) to (g).

(2) The activities referred to in subsection (1)(f) include (but are not limited to)—

(a) taking deposits or other repayable funds from the public, and

(b) issuing asset covered securities.

(3) For the purposes of this Chapter—

“credit transaction”, in relation to a designated mortgage credit institution, means—

(a) placing a deposit with an eligible financial institution designated or of a class designated under subsection (4), or

(b) dealing with or holding a financial asset, or

“credit transaction asset” means an asset derived from having engaged in a credit transaction (not being a hedge contract entered into in accordance with section 30), but does not include a mortgage credit asset, substitution asset or tier 2 asset.

(4) The regulations must provide for one or more financial institutions, or financial institutions of one or more specified classes, to be designated as eligible financial institutions for the purposes of paragraph (a) of the definition of “credit transaction” in subsection (3).

(5) The Minister may, by order notified in Iris Oifigiúil—

(a) designate a transaction of a specified kind to be a credit transaction for the purposes of the definition of “credit transaction” in subsection (3), or

(b) declare a transaction of a specified kind to be no longer a credit transaction for those purposes.

28 Designated mortgage credit institution to carry on permitted business activities only.

28.—A designated mortgage credit institution may not carry on a business activity other than a permitted business activity. However, this section does not prevent such an institution that is also a designated public credit institution from carrying on business activities that can be lawfully carried on by a designated public credit institution.

29 Power of designated mortgage credit institution to issue mortgage covered securities.

29.—(1) A designated mortgage credit institution may issue mortgage covered securities, but only in accordance with this Act.

(2) A designated mortgage credit institution that issues a mortgage covered security shall ensure that the relevant security document states—

(a) that the security is a mortgage covered security, and

(b) that the financial obligations of the institution under the security are secured on the cover assets that comprise a cover assets pool maintained by the institution in accordance with this Act.

30 Designated mortgage credit institution may enter into certain kinds of contracts.

30.—(1) A designated mortgage credit institution may enter into one or more contracts the purpose or effect of which is to reduce or minimise the risk of financial loss or exposure liable to arise from—

(a) fluctuations in interest rates or currency exchange rates,

(b) credit risks, or

(2) The Authority may, by regulatory notice published in Iris Oifigiúil, specify for the purpose of this section requirements as to—

(a) the kind of contracts that a designated mortgage credit institution may enter into under subsection (1), and

(b) the terms and conditions under which those contracts, or any class of those contracts, may be entered into.

(3) If a contract of a kind referred to in subsection (1) relates to asset covered securities issued by, and mortgage credit assets or substitution assets that are included in a cover assets pool maintained by, a designated mortgage credit institution, the institution shall ensure that the contract complies with the requirements of subsections (4) and (5).

(4) A contract of the kind referred to in subsection (3) may relate only to—

(a) mortgage covered securities issued by the institution, and

(b) mortgage credit assets or substitution assets that are included in a cover assets pool maintained by it.

(5) A contract of the kind referred to in subsection (3) must—

(a) state that the contract is a cover assets hedge contract entered into in accordance with this Act and that the financial obligations of the institution under the contract are secured on the cover assets comprised in a cover assets pool maintained by the institution in accordance with this Act, and

(b) comply with the requirements (if any) specified in any relevant regulatory notice published under subsection (2).

(6) As soon as practicable after entering into a contract of a kind referred to in subsection (3), a designated mortgage credit institution shall ensure that particulars of the contract are entered into its register of mortgage covered securities business.

(7) A designated mortgage credit institution must comply with any requirements imposed under subsection (2).

(8) A designated mortgage credit institution shall remove from its register of mortgage covered securities business the entry relating to a contract of the kind referred to in subsection (3), but only if—

(a) the contract has been discharged, or

(b) the person with whom the contract was entered into has agreed.

(9) Subsection (5) ceases to apply to a contract of the kind referred to in subsection (3) when the entry relating to the contract is removed from a register of mortgage covered securities business in accordance with subsection (8).

31 Restrictions on business activities of designated mortgage credit institution.

31.—(1) A designated mortgage credit institution shall ensure that the ratio of the total principal amounts of all mortgage credit assets that it holds to the total prudent market value of the related property assets does not exceed the prescribed percentage. For the purposes of this subsection, the prescribed percentage is 80 per cent or, if the regulations prescribe some other percentage, that other percentage.

(2) If a designated mortgage credit institution holds mortgage credit assets or substitution assets that are located in one or more category B countries, the institution shall ensure that the total prudent market value of those assets, expressed as a percentage of the total prudent market value of all of the mortgage credit assets and substitution assets held by the institution at the relevant time, does not at any time exceed the prescribed percentage. For the purposes of this subsection, the prescribed percentage is 10 per cent or, if an order under subsection (4) specifies some other percentage, that other percentage.

(3) A designated mortgage credit institution shall ensure that the total value of the credit transaction assets and tier 2 assets that it holds, expressed as a percentage of the total value of all of the institution's assets, does not at any time exceed the prescribed percentage. For the purposes of this subsection—

(a) “value” means the value determined in accordance with section 41(5), and

(b) the prescribed percentage is 10 per cent or, if an order under subsection (4) specifies some other percentage, that other percentage.

(4) The Minister may, by order notified in Iris Oifigiúil, vary the percentage referred to in subsection (2) or (3).

(5) For the purpose of ensuring the proper and orderly regulation of designated mortgage credit institutions, the Authority may, by notice in writing given to the institution or institutions concerned, impose on any specified designated mortgage credit institution, or on any class of designated mortgage credit institutions, requirements or restrictions as to the kinds of credit transaction assets or tier 2 assets that the institution or institutions may hold. Any designated mortgage credit institution to which such a notice is given is required to comply with the notice.

32 Designated mortgage credit institution to establish and maintain cover assets pool.

32.—(1) A designated mortgage credit institution may issue mortgage covered securities only if it is maintaining a related cover assets pool that complies with this Chapter.

(2) After a designated mortgage credit institution is registered, the institution may, for the purpose of establishing a cover assets pool and enabling it to make an initial issue of mortgage covered securities, include in its register of mortgage covered securities business mortgage credit assets or substitution assets in accordance with this Chapter.

(3) If a designated mortgage credit institution wishes at any time to issue further mortgage covered securities, it may include in the relevant cover assets pool mortgage credit assets or substitution assets as security for those securities in accordance with this Chapter.

(4) Subject to subsection (7), a mortgage credit asset or a substitution asset referred to in subsection (2) or (3) forms part of the relevant cover assets pool only if its inclusion has been approved by the relevant cover-assets monitor.

(5) A designated mortgage credit institution may not include a mortgage credit asset or substitution asset in a cover assets pool in the circumstances referred to in subsection (2) or (3) if—

(a) the mortgage credit asset or substitution asset is currently included in a different cover assets pool maintained by the institution,

(b) the mortgage credit asset or substitution asset is non-performing,

(d) the Authority has given the institution a relevant direction, the effect of which is to prohibit the asset from being recorded in the institution's register of mortgage covered securities business,

(e) the Authority has given the institution a notice under section 19(3) informing the institution that the Authority intends to seek the consent of the Minister to the revocation of the registration of the institution as a designated credit institution, or

(f) the Authority has given a direction under section 20 or 21, the effect of which is to prohibit the asset from being recorded in the institution's register of mortgage covered securities business.

(6) For the purposes of subsection (5)(d), “relevant direction” means a direction issued under—

(a) section 11 or 21 of the Central Bank Act, 1971,

(b) section 26 of the Trustee Savings Banks Act, 1989, or

(7) A designated mortgage credit institution may not, without the consent of the Authority, include a mortgage credit asset or substitution asset in a cover assets pool maintained by the institution in the circumstances contemplated by subsection (2) or (3) if—

(a) the institution is potentially insolvent, or

(b) there is currently no cover-assets monitor appointed in respect of the institution.

(8) A designated mortgage credit institution shall ensure—

(a) that a cover assets pool maintained by the institution has a duration of not less than that of the mortgage covered securities that relate to the pool,

(b) that the prudent market value of the pool is greater than the total of the principal amounts of those securities,

This document does not substitute the official text published in the Irish Statute Book. We accept no responsibility for any inaccuracies arising from the transcription of the original into this format.

This text is published under Irish Statute Book's own terms of reuse, not a Legalize or public-domain licence. Irish Statute Book
CC-BY 4.0 (Oireachtas Open Data PSI Licence)
Contains Irish Public Sector Information licensed under the Oireachtas (Houses of the Oireachtas) Open Data PSI Licence / Creative Commons Attribution 4.0 International, sourced from https://www.irishstatutebook.ie.