S.I. No. 289/2015 - European Union (Bank Recovery and Resolution) Regulations 2015

• (d) the conversion of relevant capital instruments or eligible liabilities of an institution under resolution into ordinary shares or other instruments of ownership of that institution or entity referred to in Regulation 2(1)(b) to (i), a relevant parent institution or a bridge institution to which assets, rights or liabilities of the institution or the entity referred to in Regulation 2(1)(b) to (i) are transferred;

• (e) the cancellation of debt instruments issued by an institution under resolution except for secured liabilities, subject to Regulation 80(2);

• (f) the reduction, including the reduction to zero, of the nominal amount of shares or other instruments of ownership of an institution under resolution or the cancellation of such shares or other instruments of ownership;

• (g) the imposition of a requirement for an institution under resolution or a relevant parent institution to issue new shares, or other instruments of ownership, or other capital instruments, including preference shares or contingent convertible instruments;

• (h) the amendment or alteration of the maturity of relevant capital instruments, debt instruments and other eligible liabilities issued by an institution under resolution, or the amendment of the amount of interest payable under such instruments and other eligible liabilities, or amendment of the date on which the interest becomes payable (including by suspending payment for a temporary period) except for secured liabilities subject to Regulation 80(2);

• (i) the close out or termination of financial contracts or derivatives contracts for the purposes of applying Regulation 88;

• (j) the removal or replacement of the members of the management body of an institution under resolution;

• (k) the appointment of a special manager in accordance with Regulation 115;

• (l) the authorisation of the resolution authority to exercise any of the powers or take any of the actions specified in Regulation 114, without any requirement for further Court application or approval;

• (m) any incidental, consequential and supplemental provisions for implementing the resolution action and securing that it is fully and effectively carried out;

• (n) variation or amendment in accordance with Regulation 108, 109 or 110 to provide for any of the matters referred to in this paragraph.

• (2) Where the resolution order provides for a transfer in accordance with paragraph (1)(a) or (b), the resolution order shall set out—

• (a) the names of the institution under resolution and the recipient or recipients, which may include a bridge institution or asset management vehicle, and any other parties to the transfer,

• (b) the shares, other instruments of ownership, assets, rights or liabilities, or the kinds and classes (specified by means of any common characteristic) of such shares, other instruments of ownership, assets, rights or liabilities, to be transferred,

• (c) the consideration for the transfer, or a means of determining that consideration, including that a named person or a person in a class of persons is to determine the consideration payable under it, and

• (d) any other terms and conditions of the transfer.

• (3) Where any of the provisions in paragraph (1) are not capable of being applied to an institution or entity within the scope of Regulation 2(1) as a result of its specific legal form, the resolution order may make provision which is as similar as possible and has an equivalent effect to the provision which is not capable of being applied.

• (4) Where paragraph (3) applies, the safeguards provided for in these Regulations, or safeguards that deliver the same effect, shall apply to the persons affected, including shareholders, creditors and counterparties.

• (5) In paragraph (1)(e) and (h), “debt instruments” means bonds and other forms of transferable debt, instruments creating or acknowledging a debt, and instruments giving rights to acquire debt instruments.

Ancillary powers of Court in making resolution order.

• (a) subject to paragraph (4) and Regulations 137 to 142, that a transfer shall take effect free from any liability or encumbrance affecting the financial instruments, rights, assets or liabilities transferred;

• (b) the removal or suspension of rights of any person to acquire further shares or other instruments of ownership;

• (c) that the recipient be treated as if it were the institution under resolution for the purposes of any rights or obligations of, or actions taken by, the institution under resolution including, subject to Regulations 69 and 71, any rights or obligations relating to a market infrastructure;

• (d) the cancellation or modification of the terms of a contract to which the institution under resolution is a party or, to any extent that Regulation 75 or 76 does not so provide, the substitution of a recipient as a party;

• (e) variation or amendment in accordance with Regulation 108, 109 or 110 to provide for any of the matters referred to in this paragraph.

• (2) For the purposes of paragraph (1)(a), any right of compensation under these Regulations shall not be considered to be a liability or an encumbrance.

• (3) The exercise of the powers set out in paragraph (1)(c), and the application of Regulations 75 and 76, shall not affect the following:

• (a) the right of an employee of the institution under resolution to terminate a contract of employment;

• (b) subject to Regulations 129 to 131, any right of a party to a contract to exercise rights under the contract, including the right to terminate, where entitled to do so in accordance with the terms of the contract by virtue of an act or omission—

• (i) by the institution under resolution prior to the relevant transfer, or

• (ii) by the recipient after the relevant transfer.

• (4) The resolution authority may propose that the resolution order provides for any of the measures in paragraph (1) where, in the opinion of the resolution authority, that measure is appropriate to ensure that a resolution action is effective or to achieve one, or more, resolution objectives.

Rights of shareholders during resolution period.

• (2) Where the rights of shareholders are suspended under paragraph (1), the resolution order shall provide that either—

• (a) the resolution authority, exercising its powers under Regulation 123, or

• (b) a special manager, in accordance with Regulation 115,

may substitute its own decision for any decision that would otherwise be made by the shareholders of the institution under resolution, and where it does, the decision shall be taken to be the decision of the shareholders.

Oversight of resolution action during resolution period — general.

• (2) The resolution authority may perform its functions under paragraph (1) in one, or more, of the following ways:

• (a) by issuing directions to the institution under resolution or its management body under paragraph (4);

• (b) by exercising its powers under these Regulations and financial services legislation, including the powers specified in Regulations 123 and 124;

• (c) by overseeing the special manager’s performance of his or her functions in accordance with Regulation 118.

• (3) In deciding the means by which to oversee the implementation of resolution action and exercise control over the institution under paragraph (2), the resolution authority shall have regard to the following:

• (a) the relevant resolution objectives;

• (b) the general principles governing resolution;

• (c) the specific circumstances of the institution under resolution;

• (d) the need to facilitate the effective resolution of cross-border groups;

• (e) any other matters which it considers relevant.

• (4) During the resolution period, the resolution authority may direct the institution under resolution or its management body to do anything within its power to give effect to the resolution action, including the following:

• (a) operate and conduct the activities and services of the institution under resolution in a particular manner;

• (b) manage and dispose of the assets of an institution under resolution in a particular manner.

• (5) When applying for, or implementing, a resolution order, the resolution authority shall not be subject to any of the following requirements that would otherwise apply by virtue of law or contract or otherwise:

• (a) requirements to obtain approval or consent from any person either public or private, including the shareholders or creditors of the institution under resolution;

• (b) procedural requirements to notify any person prior to the application of the resolution tools or exercise of the resolution powers, including any requirement to publish any notice or prospectus or to file or register any document with any other authority;

• (c) any restriction on, or requirement for consent for, transfer of the financial instruments, shares or other instruments of ownership, rights, assets or liabilities in question that might otherwise apply.

• (6) Paragraph (5)(b) is without prejudice to the requirements set out in Regulations 143 and 145 and any notification requirements under the Union State aid framework.

• (7) The resolution authority, its agents, or a special manager shall not be considered a shadow director or de facto director of the institution under resolution.

Chapter 6 Special management

Special management — general.

• (a) manage the institution under resolution by replacing the management body of the institution, and

• (b) facilitate the implementation of the resolution action.

• (2) The person named in the resolution order as the special manager shall be a person who has, in the resolution authority’s opinion, the requisite qualifications, ability and knowledge required to carry out his or her functions and is free of any conflicts of interest.

• (3) The resolution order shall—

• (a) specify the name of the special manager,

• (b) fix the basis of the calculation of the costs, expenses and remuneration payable to the special manager, and may do so in respect of work done before the making of the resolution order, and

• (c) include the terms of appointment of the special manager including the requirement to comply with applicable company law, and shall specify his or her functions based on what is proportionate in the circumstances including setting limits on his or her actions and may require that certain acts of the special manager be subject to the resolution authority’s prior written consent.

• (4) Where the resolution authority and a Union resolution authority both intend to appoint, or intend to propose the appointment of, a special manager to entities affiliated to the same group, the resolution authority shall, together with the Union resolution authority, consider whether it is more appropriate to appoint the same special manager to all entities concerned in order to facilitate measures to restore the financial soundness of the entities concerned.

Publication of appointment of special manager.

Duties of special manager.

• (2) Where necessary, the duty referred to in paragraph (1) shall take precedence over any other duty of management in accordance with law or with the constitution of the institution under resolution, insofar as they are inconsistent.

• (3) Without limitation of the generality of paragraph (2), the measures referred to in paragraph (1) may include one or more of the following:

• (a) an increase in the capital of the institution under resolution;

• (b) the reorganisation of the ownership structure of the institution under resolution;

• (c) the facilitation of a transfer to a recipient, in accordance with the resolution tools referred to in Chapter 3;

• (d) the operation of the activities and services of the institution under resolution;

• (e) the management, acquisition or disposal of, or creation of a charge or security over, the assets and liabilities of an institution under resolution;

• (f) any measures necessary for, or incidental to, the special manager’s functions, including the sole authority and direction over and direction of all officers and employees of the institution under resolution.

• (4) The special manager shall draw up reports for the resolution authority on the economic and financial situation of the institution under resolution and on the acts performed in the conduct of his or her duties—

• (a) at regular intervals as agreed with the resolution authority, and

• (b) at the beginning and the end of his or her appointment.

• (5) Where, subsequent to resolution action, an institution is wound up under normal insolvency proceedings upon petition by the resolution authority, the resolution authority may propose to the Court in its petition that the existing special manager is appointed as liquidator of that institution.

Oversight by resolution authority of special management.

• (2) Where the resolution authority is of the opinion that it is necessary for the achievement of one or more of the resolution objectives, it may direct a special manager to take or to refrain from taking any action in connection with the resolution.

• (3) The resolution authority may set limits to the functions of the special manager or require that certain acts be subject to the resolution authority’s prior written consent.

• (4) A special manager shall comply with instructions issued, direction given or limit set under this Regulation.

Effect of special management.

• (a) that institution shall not convene or hold any general meeting other than where the special manager so directs,

• (b) the rights and powers of shareholders and members under any enactment or contract stand suspended and are not exercisable,

• (c) section 212 of the Act of 2014 does not apply, and

• (d) no derivative action may be brought in respect of that institution under resolution.

• (2) The special management of the institution under resolution has effect notwithstanding anything in—

• (a) the Act of 1989, the Act of 2014 or the Central Bank Acts 1942 to 2014,

• (b) any other rule of law or equity,

• (c) any code of practice made under an enactment,

• (d) the listing rules of any regulated market or the rules of any other market on which the shares of an institution or entity may be traded from time to time,

• (e) the constitution of the institution under resolution, or

• (f) any agreement to which that institution under resolution is bound or has an interest in, except to any extent to which the resolution order expressly provides otherwise.

• (3) Where the resolution order so provides, the special manager shall assume the powers of shareholders and may substitute his or her own decision for any decision that would otherwise be made by the shareholders of the institution under resolution, and where he or she does, the decision shall be taken to be the decision of the shareholders.

• (4) Where the resolution authority requires the removal of the management of the institution in advance of the appointment of the special manager or directs the special manager to remove that management, it shall do so only in accordance with the procedures for a resolution order set out in Chapter 5.

• (5) All functions which, but for this Regulation, would be vested in the management body of the institution under resolution (whether by virtue of its constitution or otherwise) vest in the special manager for the duration of the special management.

Duration of special management.

• (2) The special manager shall be appointed for the period of the special management set out in the resolution order.

• (3) A special manager shall not be appointed for more than one year but that period may be renewed by the Court, on an exceptional basis, where the resolution authority determines that the reasons for appointment of a special manager continue to exist and applies to vary the resolution order under Regulation 108.

• (4) The resignation or removal of, or inability to act by, a special manager under this Chapter does not of itself terminate the special management of the institution under resolution.

• (5) The special management of an institution or entity terminates—

• (a) at the end of the period referred to in paragraphs (1) or (3), as the case may be,

• (b) on the setting aside of the resolution order,

• (c) on the making of an order for the winding up of the institution under resolution,

• (d) on the making of an order appointing an examiner to the institution under resolution, or

• (e) where the resolution authority so orders.

Resignation, vacancy in office, remuneration, etc., of special manager.

• (2) The resolution authority may remove a special manager by way of written notice at any time for any reason.

• (3) Where a special manager resigns, is removed or is otherwise unable to act, the resolution authority may apply to the Court to vary the resolution order appointing the special manager under Regulation 108 to appoint another special manager.

• (4) The resignation, removal or inability to act of a special manager under this Regulation does not of itself terminate the special management of the institution concerned.

• (5) A special manager is entitled to be paid his or her reasonable costs, expenses and remuneration, and to retain the amount of those costs, expenses and remuneration, out of the revenue of the business of the institution under resolution or the proceeds of the realisation of the assets or other funds available to the institution under resolution, subject to the prior approval of the resolution authority in writing.

Performance of functions of special manager.

Chapter 7 Resolution authority powers

Powers of resolution authority during resolution period — general.

• (a) require the relevant authority to discontinue or suspend the admission to trading on a regulated market or the official listing of financial instruments pursuant to Directive 2001/34/EC;

• (b) require the competent authority to assess the buyer of a qualifying holding in a timely manner by way of derogation from the time-limits set out in—

• (i) Regulation 14 of the Capital Requirements Regulations, and

• (ii) Regulation 181 of the MiFID I Regulations;

• (c) direct an institution under resolution, or any of its group entities, to provide services or facilities to a recipient in accordance with Regulation 125(1);

• (d) impose a requirement under Regulation 127(3);

• (e) direct an institution under resolution or the recipient to provide to the other such information or assistance as that other may reasonably require for the purpose of its obligations under these Regulations.

• (2) The powers set out in this Regulation are in addition and without prejudice to the other powers of the resolution authority under—

• (a) these Regulations, and

• (b) financial services legislation.

• (3) A person that fails to comply with a direction of the resolution authority under paragraph (1)(e) commits an offence.

Powers of resolution authority under resolution order.

• (a) the resolution order has authorised the resolution authority to exercise that power during the resolution period, and

• (b) in the opinion of the resolution authority, the exercise of that power is appropriate to ensure that a resolution action is effective or to achieve one or more resolution objectives.

• (2) The powers referred to in paragraph (1) are:

• (a) the power to substitute its own decision for a decision of the shareholders of the institution under resolution;

• (b) the power to exercise the powers of the management body of the institution under resolution;

• (c) the power to suspend payment or delivery obligations under Regulation 129;

• (d) the power to restrict the enforcement of security interests under Regulation 130;

• (e) the power to suspend termination rights under Regulation 131;

• (f) the power to create temporary instruments representing an interest in the institution under resolution and issue those instruments to affected shareholders or creditors.

• (3) When exercising any of the powers referred to in paragraph (2)(c), (d) or (e), the resolution authority shall have regard to the impact the exercise of that power might have on the orderly functioning of the financial markets.

Chapter 8 Resolution powers

Power to require the provision of services and facilities.

• (2) The power in paragraph (1) shall be exercisable notwithstanding that the institution under resolution or relevant group entity has entered into normal insolvency proceedings.

• (3) Where a Union resolution authority has requested that obligations be imposed pursuant to Article 65(1) of the Bank Recovery and Resolution Directive on a group entity authorised in the State, the resolution authority may direct that group entity to provide any services or facilities necessary to give effect to that request.

• (4) The services and facilities referred to in paragraphs (1) and (3) shall be restricted to operational services and facilities and shall not include any form of financial support.

• (5) Any services and facilities provided in accordance with paragraph (1) or (3) shall be provided on the following terms:

• (a) where immediately before the resolution action was taken, the services and facilities were provided to the institution under resolution under an agreement, on the same terms applicable under that agreement;

• (b) where there is no agreement, referred to in subparagraph (a) or where the agreement has expired, on reasonable terms.

Power of another Member State to enforce crisis management measures or crisis prevention measures.

• (a) a Union resolution authority directs a transfer of shares, other instruments of ownership, assets, rights or liabilities, and

• (b) the transfer includes either—

• (i) assets that are located in the State, or

• (ii) rights or liabilities which are governed by the law of the State,

that transfer shall have effect in the State.

• (2) In cases to which paragraph (1) applies, the resolution authority shall provide all reasonable assistance to that other resolution authority in order to ensure that the shares or other instruments of ownership or assets, rights or liabilities are transferred to the recipient, in accordance with applicable legal requirements.

• (3) Where paragraph (1) applies, shareholders, creditors and third parties that are affected by the transfer shall not be entitled to prevent, challenge, or set aside the transfer under any provision of the law of the State.

• (4) Where a Union resolution authority exercises the write-down or conversion powers, including in relation to capital instruments in accordance with Regulation 95, and the eligible liabilities or relevant capital instruments of the institution under resolution include—

• (a) instruments or liabilities that are governed by the law of the State, or

• (b) liabilities owed to creditors located in the State,

the principal amount of those liabilities or instruments shall be reduced, or the liabilities or instruments shall be converted, in accordance with the exercise of the write-down or conversion powers by that resolution authority.

• (5) Where paragraph (4) applies, affected creditors shall not be entitled to challenge the reduction of the principal amount, or the conversion, of the instrument or liability under any provision of the law of the State.

• (6) Where resolution action is taken by a Union resolution authority, the following matters shall be determined under the law of the Member State where that other resolution authority is located:

• (a) the right of shareholders, creditors or third parties to challenge, by way of appeal pursuant to Article 85 of the Bank Recovery and Resolution Directive, a transfer of shares, other instruments of ownership, assets, rights or liabilities referred to in paragraph (1);

• (b) the right of creditors to challenge, by way of appeal pursuant to Article 85 of the Bank Recovery and Resolution Directive, the reduction of the principal amount, or the conversion, of an instrument or liability covered by paragraph (4)(a) or (b);

• (c) the safeguards for partial transfers, as referred to in Chapter VII of Title IV of the Bank Recovery and Resolution Directive, in relation to assets, rights or liabilities referred to in paragraph (1).

Assets, rights, liabilities, shares and other instruments of ownership located in third countries.

• (a) where the law governing the transfer of the foreign liability permits the transfer or assignment of that liability, the institution under resolution and recipient shall do everything required by that law to give effect to the transfer or assignment, and

• (b) to any extent that that law does not permit the transfer or assignment of the foreign liability, the recipient is responsible for discharging the obligations of the institution under resolution under that liability.

• (2) To the extent that an asset expressed to be transferred by a resolution order is, or includes, a foreign asset—

• (a) where the law governing the transfer or assignment of the foreign asset permits the transfer or assignment of that asset, the institution under resolution shall do everything required by that law to give effect to the transfer, and

• (b) to the extent that that law does not permit the transfer or assignment of the foreign asset, the institution under resolution shall do all that is possible to do under that law to assign to the recipient the greatest possible interest in the foreign asset.

• (3) Where a resolution action involves action taken in respect of—

• (a) assets located in a third country, or

• (b) shares, other instruments of ownership, rights or liabilities governed by the law of a third country,

the resolution authority may require the following:

• (i) that the institution under resolution, the person appointed to exercise control of that institution under Regulation 114 or 115 or the recipient takes any steps necessary to ensure that the transfer, write-down, conversion or action becomes effective under the law of that third country;

• (ii) that the institution under resolution or the person appointed to exercise control of that institution under Regulation 114 or 115 holds the shares or other instruments of ownership, assets or rights on trust for, or discharges the liabilities on behalf of, the recipient until the transfer, write-down, conversion or action becomes effective.

• (4) Where the resolution authority has required pursuant to paragraph (3)(ii) that the institution under resolution holds a share, instrument of ownership, asset or right on trust, the institution under resolution—

• (a) is subject to duties, obligations and liabilities as nearly as possible corresponding to those of a trustee in relation to that share, instrument of ownership, asset or right, and

• (b) shall hold that share, instrument of ownership, asset or right for the benefit and to the direction of the recipient, in each case so far as possible consistent with the nature of, and the terms and conditions of the transfer of, that share, instrument of ownership, asset or right.

• (5) Where a recipient has incurred expenses in carrying out any action required under paragraph (3)(i) or (ii), the resolution authority may direct that the recipient may recover any reasonable expenses properly incurred by employing one, or more, of the following methods:

• (a) as a deduction from any consideration paid by the recipient to the institution under resolution or, as the case may be, to the owners of the shares or other instruments of ownership;

• (b) from the institution under resolution, as a preferred creditor;

• (c) from any proceeds generated as a result of the termination of the operation of the bridge institution or the asset management vehicle, as a preferred creditor.

• (6) Where the resolution authority assesses that, in spite of all the necessary steps taken in accordance with paragraph (3), it is highly unlikely that the transfer, write-down, conversion or action will become effective in relation to certain assets located in a third country or certain shares, other instruments of ownership, rights or liabilities under the law of a third country, the resolution authority shall not proceed with the transfer, write-down, conversion or action.

• (7) Where the resolution authority has made an assessment referred to in paragraph (6) and the resolution order has already ordered the transfer, write-down, conversion or action, referred to in that paragraph, the resolution authority shall apply to revoke or vary that order in relation to the assets, shares, instruments of ownership, rights or liabilities concerned.

Exclusion of certain contractual terms in early intervention and resolution.

• (a) an enforcement event within the meaning of Directive 2002/47/EC, or

• (b) insolvency proceedings within the meaning of Directive 98/26/EC,

provided that the substantive obligations under the contract, including payment and delivery obligations and the provision of collateral, continue to be performed.

• (2) A crisis prevention measure or crisis management measure, including the occurrence of any event directly linked to the application of such a measure, shall not, by itself, be taken to be an enforcement event or insolvency proceedings under a contract entered into by—

• (a) a subsidiary, the obligations under which are guaranteed or otherwise supported by the parent undertaking or by any group entity, or

• (b) any entity of a group which includes cross-default provisions.

• (3) Where third-country resolution proceedings are recognised pursuant to Regulation 158, or otherwise where a Union resolution authority or the resolution authority so decides, such proceedings shall for the purposes of this Regulation constitute a crisis management measure.

• (4) Where the substantive obligations under the contract, including payment and delivery obligations and the provision of collateral, continue to be performed, a crisis prevention measure or a crisis management measure, including the occurrence of any event directly linked to the application of such measure, shall not, by itself, make it possible for a person to—

• (a) exercise any termination, suspension, modification, netting or set-off rights, including in relation to a contract entered into by one of the following:

• (i) a subsidiary, the obligations under which are guaranteed or otherwise supported by a group entity;

• (ii) any group entity which includes cross-default provisions,

• (b) obtain possession, exercise control or enforce any security over any property of the institution or the entity referred to in Regulation 2(1)(b) to (i) concerned or any group entity in relation to a contract which includes cross-default provisions, or

• (c) affect any contractual rights of the institution or the entity referred to in Regulation 2(1)(b) to (i) concerned or any group entity in relation to a contract which includes cross-default provisions.

• (5) This Regulation shall not affect the right of a person to take an action referred to in paragraph (4) where that right arises by virtue of an event other than a crisis prevention measure, a crisis management measure or the occurrence of any event directly linked to the application of such measure.

• (6) A suspension or restriction under Regulation 129, 130 or 131 shall not constitute non-performance of a contractual obligation for the purposes of paragraphs (1) to (4).

• (7) This Regulation shall be considered to be an overriding mandatory provision, within the meaning of Article 9 of Regulation (EC) No 593/2008 of the European Parliament and of the Council of 17 June 2008²³ .

Power to suspend certain obligations.

• (2) Where payment or delivery would have fallen due during the suspension period, such payment or delivery shall fall due immediately upon expiry of the suspension period.

• (3) Where the payment or delivery obligations, of an institution under resolution, under a contract are suspended under paragraph (1), the payment or delivery obligations of the counterparties of that institution under that contract shall stand suspended for the suspension period.

• (4) Any suspension under paragraph (1) shall not apply to the following:

• (a) eligible deposits;

• (b) payment and delivery obligations owed to—

• (i) systems or operators of systems designated for the purposes of Directive 98/26/EC,

• (ii) central counterparties, or

• (iii) central banks;

• (c) eligible claims for the purpose of Directive 97/9/EC.

Power to restrict enforcement of security interests.

• (2) The resolution authority shall not exercise the power referred to in paragraph (1) in relation to any security interest of—

• (a) systems or operators of systems designated for the purposes of Directive 98/26/EC,

• (b) central counterparties, or

• (c) central banks,

over assets pledged or provided by way of margin or collateral by the institution under resolution.

• (3) Where Regulation 142 applies, the resolution authority shall ensure that any restrictions imposed pursuant to the power referred to in paragraph (1) are consistent for all group entities in relation to which a resolution action is taken.

Power to temporarily suspend termination rights.

• (2) The resolution authority shall have the power, where authorised by the resolution order, to suspend the termination rights of any party to a contract with a subsidiary of an institution under resolution where—

• (a) the obligations under that contract are guaranteed or are otherwise supported by the institution under resolution,

• (b) the termination rights under that contract are based solely on the insolvency or financial condition of the institution under resolution, or

• (c) where the transfer power has been or may be exercised in relation to the institution under resolution, either—

• (i) all the assets and liabilities of the subsidiary relating to that contract have been or may be transferred to and assumed by the recipient, or

• (ii) the resolution order or the resolution authority provides in any other way adequate protection for such obligations.

• (3) The suspension referred to in paragraph (1) or (2) shall take effect from the publication of the notice pursuant to Regulation 145(4) until midnight on the business day following that publication.

• (4) Any suspension under paragraph (1) or (2) shall not apply to—

• (a) systems or operators of systems designated for the purposes of Directive 98/26/EC,

• (b) central counterparties, or

• (c) central banks.

• (5) A person may exercise a termination right under a contract before the end of the period referred to in paragraph (1) or (2) where that person receives notice from the resolution authority that the rights and liabilities covered by the contract shall not be—

• (a) transferred to another entity, or

• (b) subject to write-down or conversion on the application of the bail-in tool in accordance with Regulation 79(1)(a).

• (6) Where the resolution authority exercises the power specified in paragraph (1) or (2) to suspend termination rights, and where no notice has been given pursuant to paragraph (5), those rights may be exercised on the expiry of the period of suspension, subject to Regulation 128, as follows:

• (a) where the rights and liabilities covered by the contract have been transferred to another entity, a counterparty may exercise termination rights in accordance with the terms of that contract only on the occurrence of any continuing or subsequent enforcement event by the recipient entity;

• (b) where the rights and liabilities covered by the contract remain with the institution under resolution and the resolution authority has not applied the bail-in tool in accordance with Regulation 79(1)(a) to that contract, a counterparty may exercise termination rights in accordance with the terms of that contract on the expiry of a suspension under paragraph (1).

• (7) The competent authority or the resolution authority may direct an institution or an entity referred to in Regulation 2(1)(b) to (i) in writing to maintain detailed records of financial contracts.

• (8) Upon the requirement of the competent authority or the resolution authority, a trade repository shall make all necessary information available to the competent authority or the resolution authority, as the case may be, to enable them to fulfil their respective responsibilities and mandates in accordance with Article 81 of Regulation (EU) No 648/2012.

Chapter 9 Safeguards

Treatment of shareholders and creditors in case of partial transfers and application of the bail-in tool.

• (a) other than where paragraph (b) applies, where the resolution order transfers only part of the rights, assets and liabilities of the institution under resolution, the shareholders and those creditors whose claims have not been transferred receive in satisfaction of their claims at least as much as what they would have received if the institution under resolution had been wound up under normal insolvency proceedings at the time when the decision referred to in Regulation 144 was taken;

• (b) where the resolution order applies the bail-in tool, the shareholders and creditors whose claims have been written down or converted to equity do not incur greater losses than they would have incurred if the institution under resolution had been wound up under normal insolvency proceedings at the time when the decision referred to in Regulation 144 was taken.

Valuation of difference in treatment.

• (2) The valuation under paragraph (1) shall be distinct from the valuation carried out under Regulation 65 or 66.

• (3) The valuation under paragraph (1) shall determine the following:

• (a) the treatment that shareholders and creditors, or the deposit guarantee scheme, would have received if the institution under resolution had entered normal insolvency proceedings at the time when the decision referred to in Regulation 144 was taken;

• (b) the actual treatment that shareholders and creditors have received in the resolution of the institution under resolution;

• (c) whether there is any difference between the treatment referred to in subparagraph (a) and the treatment referred to in subparagraph (b).

• (4) The valuation under paragraph (1) shall—

• (a) assume that the institution under resolution would have entered normal insolvency proceedings at the time when the decision referred to in Regulation 144 was taken,

• (b) assume that the resolution action or actions had not been effected, and

• (c) disregard any provision of extraordinary public financial support to the institution under resolution.

Safeguard for shareholders and creditors.

• (2) Any affected shareholder or creditor, or the Bank on behalf of the deposit guarantee scheme, may apply to the valuer appointed under Regulation 133 for compensation in accordance with paragraph (1).

• (3) The valuer to whom an application is made shall determine the amount of compensation due to any person who has made an application under paragraph (2).

• (4) Before any determination under paragraph (3) has been made, the following persons may make submissions to the valuer concerned and the valuer shall consider any such submissions:

• (a) the competent authority;

• (b) the resolution authority;

• (c) the Minister;

• (d) any affected shareholders or creditors;

• (e) the deposit guarantee scheme.

• (5) Where the valuer has determined, in accordance with paragraph (3), the amount of compensation, if any, payable to each person who has applied for it, the valuer shall report in writing to the resolution authority the following:

• (a) the name of each such person;

• (b) whether compensation is payable to each such person;

• (c) the amount of compensation, if any, payable to each such person.

• (6) A report under subsection (5) shall set out the following:

• (a) a summary of the evidence on which the valuer relied in making his or her determination;

• (b) the valuer’s reasons for making the determination.

• (7) The resolution authority shall make such arrangements as are necessary for sufficient funds to be made available out of the Fund to enable payments of compensation to be made in accordance with the valuer’s report under paragraph (5).

• (8) The resolution authority shall cause the valuer’s report under paragraph (5) to be published as soon as is practicable.

• (9) As soon as practicable after the publication of the valuer’s report, the resolution authority shall—

• (a) notify each applicant in writing whether or not compensation has been determined to be payable to him, and

• (b) pay compensation in accordance with the report to each person to whom compensation has been so determined to be payable.

Appeal of valuation under Regulation 133.

• (2) This Regulation applies to the resolution authority in the same manner as it applies to a shareholder or creditor who has or claims a right to compensation.

• (3) The independent valuer is to be the respondent to an appeal under paragraph (1).

• (4) On hearing an appeal under paragraph (1), the Tribunal may substitute its own determination or confirm, annul or vary the determination appealed from and may make any other consequential order.

• (5) The Tribunal shall determine an appeal under paragraph (1) as expeditiously as possible consistent with fairness and on the basis of the material that was before the independent valuer other than where the Tribunal is of the opinion that a further submission or submissions should be sought.

• (6) In deciding, for the purposes of an appeal under paragraph (1), whether the independent valuer’s determination should be confirmed, annulled or varied, the test to be applied by the Tribunal is whether the appellant has established, as a matter of probability, taking into account the degree of expertise and specialist knowledge possessed by the independent valuer and taking the process as a whole, that the determination was vitiated by a serious and significant error or a series of such errors.

• (7) Regulation 133 applies to the Tribunal in making its decision in an appeal under paragraph (1) to the same extent as it did to the independent valuer in making his or her determination under that Regulation.

• (8) The provisions (other than subsections (1) and (4) of section 57L and the definition of “appealable decision” in section 57A) of Chapter 3 of Part VIIA (inserted by section 28 of the Act of 2003) of the Act of 1942 apply to an appeal under this Regulation, except that—

• (a) references in that Chapter to the Bank are to be read as references to the independent valuer, and

• (b) references in that Chapter to a decision or an appealable decision of the Bank are to be read as references to a determination of the independent valuer.

• (9) For the purposes of determining an appeal under this Regulation, the Tribunal may refer a question of law to the Court in accordance with section 57AJ (inserted by section 28 of the Act of 2003) of the Act of 1942.

• (10) Where the Tribunal is satisfied, on examining the documents in relation to an appeal under paragraph (1), that the appeal raises no issue that the Tribunal has not already determined in connection with another such appeal, it may—

• (a) strike out the first-mentioned appeal, or

• (b) determine it without a hearing.

• (11) In addition, where the Tribunal is satisfied that a number of appeals before it raise substantially the same issues—

• (a) it may select one of those appeals as representative of all, and

• (b) it may treat its decision on that appeal as determining those issues, or some of them, in each of the other appeals.

• (12) The Tribunal may dismiss an appeal at any stage where the Tribunal is of the opinion that it has been made in bad faith or is frivolous, vexatious, misconceived or relates to a trivial matter.

• (13) The decision of the Tribunal—

• (a) on an appeal under this Regulation (including a decision made under paragraph (10) without a hearing), and

• (b) on a particular appeal under paragraph (11) to determine an issue or issues in a number of appeals,

is final.

Definitions for Regulations 138 to 142.

• (a) a “partial property transfer” occurs where a resolution order transfers some but not all of the assets, rights or liabilities of an institution under resolution to another person or entity or, in the exercise of a resolution tool, from a bridge institution or asset management vehicle to another person or entity;

• (b) a “modification of contracts” occurs where a resolution order, pursuant to Regulation 112 cancels or modifies the terms of a contract to which the institution under resolution is a party or substitutes a recipient as a party.

Safeguard for counterparties in partial transfers.

• (a) the arrangements set out in paragraph (3), and

• (b) the counterparties to the arrangements referred to in subparagraph (a).

• (2) The protections referred to in paragraph (1) shall apply—

• (a) where a modification of contracts occurs, or

• (b) to all partial property transfers, irrespective of the number of parties involved in the arrangements and of whether the arrangements—

• (i) are created by contract, trusts or other means, or arise automatically by operation of law, or

• (ii) arise under, or are governed in whole or in part by, the law of another Member State or of a third country.

• (3) The arrangements referred to in paragraph (1) are the following:

• (a) security arrangements, under which a person has by way of security an actual or contingent interest in the assets or rights that are subject to transfer, irrespective of whether that interest is secured by specific assets or rights or by way of a floating charge or similar arrangement;

• (b) title transfer financial collateral arrangements under which collateral to secure or cover the performance of specified obligations is provided by a transfer of full ownership of assets from the collateral provider to the collateral taker, on terms providing for the collateral taker to transfer assets if those specified obligations are performed;

• (c) set-off arrangements under which 2 or more claims or obligations owed between the institution under resolution and a counterparty can be set off against each other;

• (d) netting arrangements;

• (e) covered bonds;

• (f) structured finance arrangements, including securitisations and instruments used for hedging purposes which form an integral part of the cover pool and which are secured in a way similar to the covered bonds, which involve the granting and holding of security by a party to the arrangement or a trustee, agent or nominee.

Protection for financial collateral, set-off and netting agreements.

• (a) set-off arrangement,

• (b) netting arrangement, or

• (c) title transfer financial collateral arrangement,

(inthis Regulation referred to as the “arrangements”) between the institution under resolution and another person, the following protections shall apply:

• (i) the transfer shall not operate to transfer some, but not all, of the rights and liabilities under the arrangements;

• (ii) a modification of contracts in respect of the arrangements shall not be permitted.

• (2) Notwithstanding paragraph (1), where necessary in order to ensure availability of covered deposits, a resolution order may—

• (a) transfer covered deposits which are part of any of the arrangements, mentioned in paragraph (1), without transferring other assets, rights or liabilities that are part of the same arrangement, or

• (b) transfer, modify or terminate those assets, rights or liabilities without transferring the covered deposits.

• (3) Nothing in these Regulations shall affect the application of section 4 of the Netting and Financial Contracts Act 1995 (No. 25 of 1995) to a partial property transfer or a modification of contracts.

Protection for security arrangements.

• (a) a partial property transfer shall not operate to permit a—

• (i) transfer of the assets against which the liability is secured unless that liability and benefit of the security are also transferred,

• (ii) transfer of a secured liability unless the benefit of the security is also transferred,

• (iii) transfer of the benefit of the security unless the secured liability is also transferred,

and

• (b) a modification of contracts shall not operate to permit a modification or termination of a security arrangement, where the effect of that modification or termination is that the liability ceases to be secured against the property or right concerned.

• (2) Notwithstanding paragraph (1), where necessary in order to ensure availability of covered deposits, a resolution order may—

• (a) transfer covered deposits which are part of any of the arrangements mentioned in paragraph (1) without transferring other assets, rights or liabilities that are part of the same arrangement, or

• (b) transfer, modify or terminate those assets, rights or liabilities, referred to in subparagraph (a), without transferring the covered deposits.

• (3) For the purposes of paragraph (1), a property transfer instrument or order or modification of contracts which purports to transfer any assets, rights or liabilities shall be treated as having done so effectively (and so not give rise to a contravention of paragraph (1)), notwithstanding the possibility that any of those assets, rights or liabilities are located in or are subject to the law of a third country and may not have been effectively transferred under the law of that third country.

Protection for structured finance arrangements and covered bonds.

• (a) a partial property transfer shall not operate to permit the transfer of some, but not all, of the assets, rights and liabilities which constitute or form part of a structured finance arrangement (including arrangements referred to in Regulation 137(3)(e) and (f)) to which the institution under resolution is a party, or

• (b) a modification of contracts shall not operate to permit the termination or modification through the use of ancillary powers of the assets, rights and liabilities which constitute or form part of a structured finance arrangement (including arrangements referred to in Regulation 137(3)(e) and (f)) to which the institution under resolution is a party.

• (2) Notwithstanding paragraph (1), where necessary in order to ensure availability of covered deposits, a resolution order may—

• (a) transfer covered deposits which are part of any of the arrangements mentioned in paragraph (1) without transferring other assets, rights or liabilities that are part of the same arrangement, or

• (b) transfer, modify or terminate those assets, rights or liabilities without transferring the covered deposits.

• (3) For the purposes of paragraph (1), a property transfer instrument, or order, or modification of contracts which purports to transfer all of the assets, rights and liabilities which are or form part of a structured finance arrangement to which the institution under resolution is a party shall be treated as having done so effectively (and so not give rise to a contravention of paragraph (1)), notwithstanding the possibility that any of those assets, rights or liabilities are located in or are subject to the law of a third country and may not have been effectively transferred under the law of that third country.

Application to set aside partial property transfer or modification of contracts.

• (2) An application under paragraph (1) shall be made by motion on notice grounded upon affidavit not later than 48 hours after publication, in accordance with Regulation 107, of the relevant resolution order.

• (3) The Court shall in hearing an application under paragraph (1) act as expeditiously as possible consistent with the proper administration of justice and may, subject to Regulation 150, give such directions as it considers appropriate in the circumstances.

• (4) On an application under paragraph (1), the Court may set aside the partial property transfer or modification of contracts to the extent of the contravention only where it is of the opinion that the resolution order was made in contravention of any of the requirements of Regulations 137 to 140.

• (5) The Court may, instead of setting aside the partial property transfer or modification of contracts, make an order varying or amending the transfer or modification in the manner it considers appropriate where the Court is satisfied that—

• (a) the resolution order was made in contravention of any of the requirements of Regulations 137 to 140,

• (b) it would be appropriate to do so, having regard to the circumstances of the case, and

• (c) to do so is necessary to secure the achievement of the purposes of Articles 76 to 79 of the Bank Recovery and Resolution Directive.

• (6) Where an order is made under paragraph (5) to vary or set aside a partial property transfer or modification of contracts, the order shall have effect from the date the original transfer or modification was made.

Partial transfers — protection of trading, clearing and settlement systems.

• (a) transfers some but not all of the assets, rights or liabilities of an institution under resolution to another entity, or

• (b) uses powers under Regulation 112 to cancel or amend the terms of a contract to which the institution under resolution is a party or to substitute a recipient as a party.

• (2) A transfer, cancellation or amendment referred to in paragraph (1) shall not—

• (a) revoke a transfer order in contravention of Article 5,

• (b) modify or negate the enforceability of transfer orders and netting as required by Articles 3 and 5,

• (c) modify or negate the protection of collateral security as required by Article 9, or

• (d) prevent the use of funds, securities or credit facilities as required by Article 4,

of Directive 98/26/EC.

• (3) Where a partial property transfer or a modification of contracts has been made in contravention of this Regulation, the partial property transfer or modification of contracts is void in so far as it is made in such contravention.

Chapter 10 Procedural obligations

Notification requirements.

• (2) The competent authority, on receipt of a notification under paragraph (1), shall inform the resolution authority of the following:

• (a) the fact of notification received under paragraph (1);

• (b) any crisis prevention measures taken by the competent authority;

• (c) any action referred to in Regulation 92 of the Capital Requirements Regulations which the competent authority requires the institution or entity concerned to take.

• (3) Where the competent authority following a notification under paragraph (1) or on its own initiative, in relation to an institution or entity referred to Regulation 2(1)(b) to (i)—

• (a) determines after consultation with the resolution authority that the condition referred to in Regulation 62(1)(a) is met, and

• (b) forms the opinion that the condition referred to in Regulation 62(1)(b) is met,

it shall communicate that determination and opinion without delay to the following:

• (i) the resolution authority,

• (ii) the Union competent authority of any branch of the notifying institution or entity;

• (iii) the Union resolution authority of any branch of the notifying institution or entity;

• (iv) the deposit guarantee scheme to which the notifying institution or entity is affiliated, where necessary to enable the functions of the deposit guarantee scheme to be discharged;

• (v) the Minister;

• (vi) where applicable, the group-level resolution authority of the notifying institution or entity;

• (vii) where applicable, the consolidating supervisor of the notifying institution or entity;

• (viii) the European Systemic Risk Board and the national macroprudential authority.

Decision of resolution authority.

• (2) Any decision made by the resolution authority under paragraph (1) shall contain the following information:

• (a) the reasons for that decision, including the determination that the institution or the entity concerned meets or does not meet the conditions for resolution;

• (b) the action that the resolution authority intends to take including, where appropriate, the decision to petition for the winding up of the institution or entity, an application to appoint an examiner or administrator, or any other insolvency measure.

Procedural obligations of resolution authority.

• (a) the competent authority;

• (b) the Union competent authority of any branch of the institution under resolution;

• (c) the deposit guarantee scheme to which a credit institution is affiliated;

• (d) the Minister;

• (e) where applicable, the group-level resolution authority of the institution or entity concerned;

• (f) where applicable, the consolidating supervisor of the institution or entity concerned;

• (g) the European Systemic Risk Board (established by Regulation (EU) No 1092/2010 of the European Parliament and of the Council of 24 November 2010²⁴ ) and the national macroprudential authority;

• (h) the European Commission;

• (i) the European Central Bank;

• (j) the European Securities and Markets Authority (established by Regulation (EU) No 1095/2010);

• (k) the European Insurance and Occupational Pensions Authority (established by Regulation (EU) No 1094/2010);

• (l) the European Banking Authority;

• (m) where the institution under resolution is an institution as defined in Article 2(b) of Directive 98/26/EC, the operators of the systems in which it participates.

• (2) The notification referred to in paragraph (1) shall include a copy of any order or instrument by which the relevant powers are exercised and indicate the date from which the resolution action or actions are effective.

• (3) As soon as reasonably practicable after taking a resolution action, the resolution authority shall publish or ensure the publication of the following:

• (a) a copy of the order or instrument by which the resolution action is taken;

• (b) a summary of the effects of the resolution action and, in particular, the effects on retail customers, and

• (c) if applicable, the terms and period of suspension or restriction referred to in Regulations 129 to 131.

• (4) The information specified in paragraph (3) shall be published by the following means:

• (a) on the website of the Bank;

• (b) on the website of the institution under resolution;

• (c) where the shares, other instruments of ownership or debt instruments of the institution under resolution are admitted to trading on a regulated market, by the means used for the disclosure of regulated information concerning the institution under resolution in accordance with Article 21(1) of Directive 2004/109/EC of the European Parliament and of the Council of 15 December 2004²⁵ ;

• (5) Where the shares, instruments of ownership or debt instruments, referred to in paragraph (4)(c), are not admitted to trading on a regulated market, the resolution authority shall ensure that the documents referred to in paragraph (3) are sent to the shareholders and creditors of the institution under resolution which are known through the registers or databases of the institution under resolution which are available to the resolution authority.

Confidentiality.

• (a) the resolution authority;

• (b) the competent authority;

• (c) the Minister;

• (d) special managers or temporary administrators appointed under these Regulations or the Bank Recovery and Resolution Directive;

• (e) independent valuers appointed under these Regulations or the Bank Recovery and Resolution Directive;

• (f) the institution under resolution, or any institution or entity in respect of which the resolution authority plans or intends to take resolution action;

• (g) potential acquirers that are contacted by the competent authority or solicited by the resolution authority, irrespective of whether—

• (i) that contact or solicitation was made as preparation for the use of the sale of business tool, or

• (ii) the solicitation resulted in an acquisition;

• (h) auditors, accountants, legal and professional advisors, valuers and other experts directly or indirectly engaged by the Minister, competent authority, resolution authority or by the potential acquirers referred to in subparagraph (g);

• (i) the deposit guarantee scheme;

• (j) the Investor Compensation Company Limited;

• (k) central banks and other authorities involved in the resolution process;

• (l) a bridge institution;

• (m) an asset management vehicle;

• (n) any other persons who provide or have provided services directly or indirectly, permanently or occasionally, to persons referred to in subparagraphs (a) to (m);

• (o) the members of the management body, senior management, and employees of the bodies or entities referred to in subparagraphs (a) to (m) before, during and after their appointment.

• (2) For the purposes of ensuring that the confidentiality requirements set out in paragraphs (1) and (3) are met, the persons referred to in paragraph (1)(a), (b), (c), (i), (j), (k), (l) and (m) shall ensure that there are internal rules in place, including rules to secure secrecy of information between persons directly involved in the resolution process.

• (3) Without prejudice to the generality of the requirements under paragraph (1) and subject to paragraph (4), the persons referred to in paragraph (1) shall be prohibited from disclosing confidential information received either—

• (a) during the course of their professional activities, or

• (b) from the competent authority or the resolution authority (including a Union competent authority or a Union resolution authority) in connection with its functions under these Regulations or the Bank Recovery and Resolution Directive, to any person or authority.

• (4) The disclosure of confidential information under paragraph (3) shall not be prohibited where the information is disclosed—

• (a) in the exercise of a person’s functions under these Regulations or the Bank Recovery and Resolution Directive,