Asset Covered Securities (Amendment) Act 2007

1. Definition of “Principal Act”.

1.— In this Act, “Principal Act” means the Asset Covered Securities Act 2001.

2. Amendment of section 3 of Principal Act.

2.— Section 3(1) of the Principal Act is amended—

(a) by inserting the following after the definition of “agricultural land”:

“ ‘article 22(4) securities’ mean bonds which come within the terms of the first sub-paragraph of Article 22(4) of Council Directive 85/611/EEC of 20 December 1985 on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities (UCITS) [^1] (as inserted by Council Directive 88/220/EC of 22 March 1988 amending, as regards the investment policies of certain UCITS, Directive 85/611/EEC on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investments in transferable securities (UCITS) [^2]);”,

(b) in the definition of “asset covered securities”—

(i) in paragraph (a), by deleting “and”, and

(ii) by inserting the following after paragraph (a):

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

(c) by substituting the following for the definition of “category A country”:

“ ‘ category A country ’ means a country to which section 5(1)(b) or (c) relates;”,

(d) by substituting the following for the definition of “category B country”:

“ ‘category B country’ means a country (other than an EEA country or a category A country) that—

(a) is a full member of the Organisation for Economic Co-operation and Development, and

(b) has not rescheduled its external debt at any time during the immediately preceding 5 years;”,

(e) by substituting the following for the definitions of “Codified Banking Directive” and “commercial property”:

“ ‘Codified Banking Directive’ means Directive 2006/48/EC of the European Parliament and of the Council of 14 June 2006 relating to the taking up and pursuit of the business of credit institutions (recast) [^3] as amended or replaced from time to time by any directive or regulation made by competent organs of the European Union which has been implemented under the laws of the State;

‘ commercial mortgage covered security ’, in relation to a designated or formerly designated commercial mortgage credit institution, means a security that is—

(a) issued by the institution in accordance with this Act, and

(b) secured over the cover assets that are comprised in a cover assets pool maintained by the institution;

‘ commercial mortgage credit ’ means mortgage credit which is secured on commercial property;

‘commercial mortgage credit asset’ —

(a) subject to paragraph (b), means property or an asset—

(i) held or to be held by a designated or formerly designated commercial mortgage credit institution, and

(ii) which comprises one or more commercial mortgage credits,

(b) does not include property or an asset which comprises all or any part of any pool hedge collateral;

‘commercial property’ —

(a) subject to paragraph (b)—

(i) means a building or part of a building fixed on land that is used, or is set aside to be used, primarily for the purpose of any industry, trade or other business undertaking, and

(ii) includes—

(I) the land on which such building or such part of a building, as the case may be, is located, and

(II) the fixtures that are used in conjunction with such building or such part of a building, as the case may be,

(b) does not include either—

(i) a building or part of a building that is fixed on land that is used, or is set aside to be used, primarily for the purpose of any mine, quarry or agriculture, or

(ii) subject to section 4(6) and (7), a building or part of a building that is residential property;”,

(f) in the definition of “cover assets”—

(i) in paragraph (a), by deleting “and”,

(ii) in paragraph (b), by substituting “institution, and” for “institution;”, and

(iii) by inserting the following after paragraph (b):

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

(g) in the definition of “cover assets hedge contract”—

(i) in paragraph (a), by deleting “and”,

(ii) in paragraph (b), by substituting “section 45(3), and” for “section 45(3);”, and

(iii) by inserting the following after paragraph (b):

“(c) in relation to a designated or formerly designated commercial mortgage credit institution, means a contract of a kind entered into in accordance with section 30(3) as applied and modified by section 41B;”,

(h) in the definition of “cover assets pool”—

(i) in paragraph (a), by substituting “institution,” for “institution, and”,

(ii) in paragraph (b) by substituting “institution, and” for “institution;”, and

(iii) by inserting the following after paragraph (b):

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

(i) in the definition of “credit institution”, by deleting paragraph (d),

(j) by substituting the following for the definition of “designated credit institution”:

“ ‘designated credit institution’ means—

(a) a designated mortgage credit institution,

(b) a designated commercial mortgage credit institution, or

(c) a designated public credit institution;”,

(k) by inserting the following after the definition of “dealing”:

“ ‘designated commercial 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) as applied and modified by section 41B;”,

(l) by inserting the following after the definition of “European Central Bank”:

“ ‘exposure’ has the meaning given to it by Regulation 20 of the European Communities (Capital Adequacy of Credit Institutions) Regulations 2006 (S.I. No. 661 of 2006);”,

(m) by substituting the following for the definition of “formerly designated credit institution”:

“ ‘formerly designated credit institution’ means an institution that was formerly registered as—

(a) a designated mortgage credit institution,

(b) a designated commercial mortgage credit institution, or

(c) a designated public credit institution;”,

(n) by inserting the following after the definition of “holder”:

“ ‘include’ , in relation to an asset or property and a cover assets pool, register of mortgage covered securities business, register of commercial mortgage covered securities business or register of public credit covered securities business—

(a) subject to paragraph (b), means—

(i) the insertion of that asset or property, as the case may be, into that pool, or

(ii) the insertion of an entry in that register in respect of that asset or property, as the case may be,

as the case requires,

(b) does not include—

(i) if paragraph (a)(i) is applicable, the continued maintenance of that asset or property, as the case may be, in that pool after it has been inserted therein,

(ii) if paragraph (a)(ii) is applicable, the continued maintenance of that entry in that register after it has been inserted therein,

and ‘included’ and ‘inclusion’ shall be construed accordingly;”,

(o) by substituting the following for the definition of “mortgage credit asset”:

“ ‘mortgage credit asset’ —

(a) subject to paragraph (b), means—

(i) an asset or property—

(I) held or to be held by a designated or formerly designated mortgage credit institution, and

(II) that comprises one or more mortgage credits, or

(ii) an asset or property—

(I) held or to be held by a designated or formerly designated commercial mortgage credit institution, and

(II) that comprises one or more commercial mortgage credits,

(b) does not include an asset or property which comprises all or any part of any pool hedge collateral;”,

(p) by inserting the following after the definition of “national central bank”:

“ ‘non-commercial administrative bodies’ include commercial undertakings, or undertakings with non-commercial and commercial activities, owned or controlled by central governments or regional governments or local authorities where the debt concerned of the undertaking is used directly or indirectly for the purpose of complying with public service obligations;”,

(q) in the definition of “non-performing”, in paragraph (b), by inserting “(but disregarding, for the purposes of this paragraph, section 4(4))” after “section 4(1)”,

(r) by inserting the following after the definition of “performing”:

“ ‘pool hedge collateral’ , in relation to a cover assets hedge contract, means any asset or property provided to a designated credit institution by or on behalf of any other contracting party to that contract where the terms of the contract—

(a) provide for an absolute transfer of the asset or property, as the case may be, to the institution by way of collateral but not by way of security within the meaning of section 58, or

(b) both—

(i) provide for the transfer of the asset or property, as the case may be, to the institution by way of security within the meaning of section 58, and

(ii) give the institution the right to deal with the asset or property, as the case may be, under that security as if the institution were the absolute owner of that asset or property, as the case may be;”,

(s) in the definition of “prudent market value”—

(i) in paragraph (a), by deleting “and”, and

(ii) by inserting the following after paragraph (a):

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

(t) by substituting the following for the definition of “public credit asset”:

“ ‘public credit asset’ —

(a) subject to paragraph (b), means an asset or property held by a designated or formerly designated public credit institution that comprises one or more public credits,

(b) does not include an asset or property that comprises all or any part of any pool hedge collateral;

‘ public sector entities ’ mean—

(a) non-commercial administrative bodies responsible to—

(i) central governments, regional governments or local authorities, or

(ii) authorities that are regarded by the competent authority (within the meaning of Regulation 2 of the European Communities (Capital Adequacy of Credit Institutions) Regulations 2006), for the purposes of the Codified Banking Directive, as exercising the same responsibilities as regional governments or local authorities,

(b) non-commercial undertakings owned by central governments that have explicit guarantee arrangements, or

(c) self-administered bodies governed by law that are under public supervision;”,

(u) by inserting the following after the definition of “record”:

“ ‘register of commercial mortgage covered securities business’ , in relation to a designated or formerly designated commercial mortgage credit institution, means the register that the institution is required to keep under section 38 as applied and modified by section 41B;

‘register of designated commercial mortgage credit institutions’ means the register established in accordance with section 17(1A);”,

(v) in the definition of “residential property”, by inserting“, subject to section 4(6) and (7),” after “means”,

(w) by inserting the following after the definition of “secured”:

“ ‘securitised mortgage credit asset’ means an asset which qualifies as a mortgage credit asset by virtue of section 4(4);”,

(x) in the definition of “super-preferred creditor”, by inserting “, subject to section 88(5),” after “means”, and

(y) in the definition of “supervisory enactment”, by deleting paragraph (d).

3. Amendment of section 4 of Principal Act.

3.— Section 4 of the Principal Act is amended—

(a) by substituting the following for subsection (4):

“(4) For the purposes of subsection (1), a financial obligation includes a financial obligation that is in the form of security that represents an interest in other mortgage credit that is securitised.”,

(b) in subsection (5), by substituting “comprised” for “included” in the 2 places where it occurs, and

(c) by inserting the following after subsection (5):

“(6) Where a mortgage credit asset secured on residential property would, but for the exclusion of residential property from the definition of ‘commercial property’ in section 3(1), also be secured on commercial property, a designated commercial mortgage credit institution may, for the purposes of this Act, treat that asset as if it were secured on commercial property rather than residential property.

(7) Where a mortgage credit asset is secured on a single property asset that would, but for this subsection, constitute commercial property in part and residential property in part, then that mortgage credit asset shall, for the purposes of this Act, be regarded, in relation to that property asset, as secured only on commercial property.

(8) In this section—

‘ other security ’, in relation to residential or commercial property located outside the State, means a kind of security interest over that property that is recognised as a valid security interest under the lex situs of that property;

‘securitised’ shall be construed in accordance with Article 4(36) of the Codified Banking Directive.”.

4. Amendment of section 5 of Principal Act.

4.— Section 5 of the Principal Act is amended—

(a) in subsection (1)—

(i) by substituting “is any one of the following:” for “is—”,

(ii) by substituting the following for paragraphs (a) to (f):

“(a) central governments, central banks, public sector entities, regional governments or local authorities in the State or in any other EEA country,

(b) central governments and central banks in Australia, Canada, Japan, New Zealand, the Swiss Confederation, the United States of America or a country specified in an order made under subsection (3),

(c) public sector entities, regional governments and local authorities in Australia, Canada, Japan, New Zealand, the Swiss Confederation, the United States of America or a country specified in an order made under subsection (3),

(d) (i) multilateral development banks which qualify as such for the purposes of the Codified Banking Directive, or

(ii) international organisations which qualify as such for the purposes of the Codified Banking Directive,

(e) central governments, central banks, public sector entities, regional governments or local authorities in a category B country, or

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

(b) in subsection (2), by inserting “an interest in” after “represents”,

(c) by substituting the following for subsection (3):

“(3) The Minister may, by order notified in Iris Oifigiúil, specify, for the purposes of paragraph (b) or (c) of subsection (1), a country other than—

(a) a country referred to in the paragraph concerned, or

(b) an EEA country.”,

(d) by deleting subsections (4) and (5), and

(e) by substituting the following for subsections (7) and (8):

“(7) Subject to subsection (8), where, but for this subsection, a credit qualifies in part only as a public credit, a designated public credit institution may treat all of that credit as public credit for the purposes of this Act.

(8) For the purposes of—

(a) section 47(8) and (11),

(b) any contractual undertaking referred to in section 47(13) of the institution, or

(c) section 56(1),

a designated public credit institution shall not treat, as public credit pursuant to subsection (7), any part of any credit which would not qualify as public credit but for that subsection.”.

5. Amendment of section 6 of Principal Act.

5.— Section 6 of the Principal Act is amended—

(a) in subsection (1), by inserting “(other than such assets that comprise any pool hedge collateral)” after “following assets”, and

(b) by inserting the following after subsection (3):

“(4) Property referred to in subsection (3)(a) shall be an exposure to an institution within the meaning of Article 4(6) of the Codified Banking Directive.”.

6. Amendment of section 11 of Principal Act.

6.— Section 11(1) of the Principal Act is amended by inserting “after consulting the Authority,” after “may,”.

7. Amendment of section 12 of Principal Act.

7.— Section 12 of the Principal Act is amended—

(a) by inserting the following after subsection (1):

“(1A) A person shall not—

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

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

(c) claim to have the benefits conferred on designated commercial mortgage credit institutions by or under this Act,

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

and

(b) in subsection (3), by inserting “, (1A)” after “subsection (1)”.

8. Amendment of section 13 of Principal Act.

8.— Section 13 of the Principal Act is amended—

(a) in subsection (1), by inserting “, as a designated commercial mortgage credit institution” after “mortgage credit institution”, and

(b) by substituting the following for subsection (5):