Finance (Certain European Union and Intergovernmental Obligations) Act 2016

1. Interpretation

1. (1) In this Act—

“Intergovernmental Agreement” means the Agreement on the Transfer and Mutualisation of Contributions to the Single Resolution Fund done at Brussels on 21 May 2014;

“Loan Facility Agreement” means the agreement, the terms of which are set out in the Schedule, to be made between the Single Resolution Board on the one part and the State on the other part;

“Minister” means Minister for Finance;

“SRM Regulation” means Regulation (EU) No. 806/2014 of the European Parliament and of the Council of 15 July 2014.

(2) A word or expression that is used in any of sections 2 to 7 and—

(a) is also used in the SRM Regulation has the meaning in the section concerned that it has in the SRM Regulation; or

(b) is not used in the SRM Regulation but is used in the Intergovernmental Agreement, has the meaning in the section concerned that it has in the Intergovernmental Agreement.

2. Minister may perform functions for purposes of Loan Facility Agreement

2. All such things as are necessary or expedient to be done for the purposes of the State’s performing its functions under the Loan Facility Agreement may be done by the Minister and there is conferred, by virtue of this section, on the Minister all the powers necessary in that behalf.

3. Decisions varying terms of Loan Facility Agreement

3. The terms in writing of any decision (other than a decision referred to in section 4(2)) to vary the terms of the Loan Facility Agreement shall be laid before each House of the Oireachtas as soon as may be after the decision is made and, if a resolution annulling the decision is passed by either such House within the next 21 days on which that House has sat after its terms have been laid before it, the decision shall be annulled accordingly but without prejudice to the validity of anything previously done thereunder.

4. Payments out of Central Fund

4. (1) Subject to the terms of the Loan Facility Agreement and the approval of the Minister, there may be paid out of the Central Fund or the growing produce of that Fund such sums, not exceeding, in aggregate, a sum of €1,815,000,000, as are required to enable the State to make, to the Single Resolution Board, payments provided for in the foregoing agreement.

(2) Notwithstanding section 2, no decision under the terms of the Loan Facility Agreement to vary the sum specified in subsection (1) shall be made without the prior approval of both Houses of the Oireachtas.

5. Purpose of payments referred to in section 4

5. Payments referred to in section 4 made to the Single Resolution Board (in sections 6 and 7(2) referred to as “loans to the Single Resolution Board”) shall only be made to meet the funding requirements of resolution schemes pursuant to the SRM Regulation and the Intergovernmental Agreement with respect to the State’s compartment for institutions authorised in the State which are the subject of a resolution action.

6. Payments into Exchequer

6. Any moneys received from the Single Resolution Board by or on behalf of the State by way of repayment of loans to the Single Resolution Board or payment of interest on such loans, or of payment of any expenses payable to the State under the Loan Facility Agreement in connection with the foregoing, shall be placed to the credit of the account of the Exchequer and shall form part of the Central Fund and be available in any manner in which that Fund is available.

7. Annual report by Minister to Dáil Éireann

7.(1) In addition to the obligation under the following subsections, the Minister shall, within one month from the date on which a payment of a sum under section 4 of the kind referred to therein is made to the Single Resolution Board, cause a statement of the amount of the payment to be laid before Dáil Éireann.

(2) In respect of each reporting period the Minister shall, as soon as practicable after the end of the period, cause a report to be laid before Dáil Éireann that includes the following information:

(a) the aggregate value of loans to the Single Resolution Board made during the reporting period,

(b) the aggregate amount of moneys referred to in section 6 that is received by the State during the reporting period.

(3) In subsection (2) “reporting period” means—

(a) each of the following periods—

(i) the period from the passing of this Act to 31 December 2016,

(ii) the period in any year after 2016 from 1 January to 31 December,

or

(b) within each period to which paragraph (a) relates, such shorter periods as the Minister may from time to time consider appropriate in the circumstances (provided the combined duration of those shorter periods is equal to the duration of the first-mentioned period in this paragraph).

8. Amendment of Companies Act 2014 with respect to market abuse matters

8. The Companies Act 2014 is amended—

(a) by the substitution of the following section for section 1365:

“1365. (1) In this Chapter—

‘Commission Implementing Directive’ means Commission Implementing Directive (EU) 2015/2392 of 17 December 2015 on Regulation (EU) No. 596/2014 of the European Parliament and of the Council as regards reporting to competent authorities of actual or potential infringements of that Regulation;

‘CSMA Directive’ means Directive 2014/57/EU of the European Parliament and of the Council of 16 April 2014 on criminal sanctions for market abuse (market abuse directive);

‘Irish market abuse law’ means—

(a) regulations for the time being in force under section 3 of the European Communities Act 1972 made for the purpose of giving—

(i) full effect to provisions of the Market Abuse Regulation, or

(ii) effect to provisions of the Commission Implementing Directive or the CSMA Directive,

or both,

(b) any other enactment (other than, save where the context otherwise admits, this Chapter) enacted for the purpose of giving—

(i) full effect to provisions referred to in paragraph (a)(i) of this definition, or

(ii) effect to provisions referred to in paragraph (a)(ii) of this definition,

or both,

(c) any measures directly applicable in the State in consequence of the Market Abuse Regulation, and

(d) any supplementary and consequential measures adopted for the time being by the State in respect of the Market Abuse Regulation or either of the foregoing Directives;

‘Market Abuse Regulation’ means Regulation (EU) No. 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (market abuse regulation) and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC;

‘Minister’ means the Minister for Finance.

(2) A word or expression that is used in this Chapter and is also used in the Market Abuse Regulation, the Commission Implementing Directive or the CSMA Directive shall have, in this Chapter, the same meaning as it has in that Regulation or either of those Directives, unless—

(a) the contrary intention appears, or

(b) Irish market abuse law provides otherwise.”,

(b) by the deletion of sections 1366 and 1367,

(c) by the substitution of the following section for section 1368:

“1368. (1) In this section ‘offence created by Irish market abuse law’ means an offence created by regulations falling within paragraph (a) of the definition of ‘Irish market abuse law’ in section 1365(1).

(2) A person who is guilty of an offence created by Irish market abuse law (being an offence expressed by that law to be an offence to which this section applies) shall—

(a) without prejudice to any penalties provided by that law in respect of a summary conviction for the offence, and

(b) notwithstanding section 3(3) of the European Communities Act 1972,

be liable, on conviction on indictment, to a fine not exceeding €10,000,000 or imprisonment for a term not exceeding 10 years or both.”,

(d) in section 1369—

(i) in subsection (1) by the substitution of “Article 14 of the Market Abuse Regulation” for “a provision of Irish market abuse law (being a provision the purpose of which is expressed by that law to be for the implementation of Article 2, 3 or 4 of the 2003 Market Abuse Directive)”, and

(ii) in subsection (2) by the substitution of “Article 15 of the Market Abuse Regulation” for “a provision of Irish market abuse law (being a provision the purpose of which is expressed by that law to be for the implementation of Article 5 of the 2003 Market Abuse Directive)”,

(e) in section 1370—

(i) in subsection (5) by the substitution of “the Market Abuse Regulation, the Commission Implementing Directive or the CSMA Directive” for “the Market Abuse Directive or the supplemental Directives”, and

(ii) by the deletion of subsections (3) and (8),

(f) in section 1371(1) by the substitution of “Market Abuse Regulation” for “2003 Market Abuse Directive”, and

(g) in paragraph 5(1) of Schedule 6 by—

(i) the substitution of “section 1355 or” for “section 1355, 1367 or”,

(ii) the deletion of clause (b), and

(iii) the substitution of “section 1354 or” for “section 1354, 1366 or”.

9. Expenses

9. The expenses incurred by the Minister in the administration of this Act shall be paid out of moneys provided by the Oireachtas.

10. Short title

10. This Act may be cited as the Finance (Certain European Union and Intergovernmental Obligations) Act 2016.

SCHEDULE Terms of Loan Facility Agreement

EXECUTION VERSION - IRELAND

LOAN FACILITY AGREEMENT

between

IRELAND

as Lender

and

THE SINGLE RESOLUTION BOARD

as Borrower

THIS AGREEMENT (the “Agreement”) is made by and between:

(1) IRELAND, represented by [...], Minister of Finance (hereinafter referred to as the “Lender”); and

(2) THE SINGLE RESOLUTION BOARD, represented by [...] (hereinafter referred to as the “Borrower”).

PREAMBLE

WHEREAS:

(A) On 18 December 2013, in the context of the discussions on the creation of the Single Resolution Mechanism (“SRM”), the Eurogroup and the ECOFIN Ministers adopted a statement on the financing of the Borrower (the “Statement”), according to which, in order to ensure sufficient funding in situations when the Single Resolution Fund (the “SRF”) is not sufficiently funded by the banking sector, especially in the transition period but also in the steady state, Member States participating in the SRM shall put in place a system by which bridge financing would be available as a last resort and in full compliance with State aid rules. In the transition period, bridge financing should be available either from national sources, backed by bank levies, or from the ESM in line with agreed procedures. The arrangements for the transition period should be operational by the time the SRF is established, including the setting up of possibilities for lending between national compartments. The Statement further determines that a common backstop will be developed during the transition period (the “Common Backstop”). In any event, the banking sector will ultimately be liable for repayment by means of levies in all participating Member States, including ex-post. These arrangements will be activated through their agreed rules and shall be fiscally neutral over the medium term so that taxpayers will be protected. The arrangements will also ensure equivalent treatment across all Member States participating in the Single Supervisory Mechanism (“SSM”)/Single Resolution Mechanism (“SRM”), including Member States joining at a later stage, in terms of rights and obligations and both in transition period and once a common backstop has become fully operational. They will respect a level playing field with non-participating Member States, take full advantage of synergies with existing frameworks and safeguard the internal market.

(B) Regulation (EU) No 806/2014 of the European Parliament and of the Council of 15 July 2014 establishing uniform rules and a uniform procedure for the resolution of credit institutions and certain investment firms in the framework of a Single Resolution Mechanism and a Single Resolution Fund and amending Regulation (EU) No 1093/2010 (the “SRMR”) established the Borrower and the SRF.

(C) Recital 107 of the SRMR states that ensuring effective and sufficient financing of the SRF is of paramount importance to the credibility of the SRM. The capacity of the Borrower to contract alternative funding means for the SRF should be enhanced in a manner that optimises the cost of funding and preserves the creditworthiness of the SRF. Immediately after the entry into force of the SRMR, the necessary steps should be taken by the Borrower in cooperation with the participating Member States to develop the appropriate methods and modalities permitting the enhancement of the borrowing capacity of the SRF that should be in place by the date of application of the SRMR.

(D) Pursuant to article 67 paragraph 4 of the SRMR, contributions referred to in articles 70 and 71 of the SRMR shall be raised from institutions referred to in article 2 of the SRMR by national resolution authorities and transferred to the SRF in accordance with the intergovernmental agreement on the transfer and mutualisation of contributions to the SRF dated 14 May 2014 (the “IGA”).

(E) Article 73 of the SRMR provides that the Borrower may contract for the SRF borrowings or other forms of support from those institutions, financial institutions or third parties, which offer better financial terms at the most appropriate time so as to optimise the cost of funding and preserve its reputation in the event that the amounts raised in accordance with articles 70 and 71 of the SRMR are not immediately accessible or do not cover the expenses incurred by the use of the SRF in relation to resolution actions.

(F) Article 74 of the SRMR provides that the Borrower shall contract for the SRF financial arrangements, including, where possible, public financial arrangements regarding the immediate availability of additional means to be used in accordance with the SRMR, where the amounts raised or available under the ex-ante contributions to the SRF set out in article 70 of the SRMR and the ex-post contributions set out in article 71 of the SRMR are not sufficient to meet the Borrower’s obligations.

(G) Article 5(1)(e) of the IGA provides that if the financial means referred to in article 5(1) (a) to (c) are not sufficient to cover the costs of a particular resolution action, and as long as extraordinary ex-post contributions referred to in article 5(d) of the IGA are not immediately accessible, including for reasons relating to the stability of the institutions concerned, the Borrower may exercise its power to contract for the SRF borrowings or other forms of support in accordance with Articles 73 and 74 of the SRMR, or its power to make temporary transfer between compartments in accordance with article 7 of the IGA.

(H) Recital (13) of the IGA acknowledges that there may exist situations where the means available in the SRF are not sufficient to face a particular resolution action and where the ex-post contributions that should be raised in order to cover the necessary additional amounts are not immediately accessible.

(I) Following discussions between Member States and the Borrower, the terms of the Statement referenced in recital (A) hereabove shall be implemented through the availability of loan facilities to be put in place between each Participating Member State and the Borrower on a bilateral basis. For this purpose, the Member States and the Borrower discussed and agreed on a term sheet for national credit lines (the “Term Sheet”) provided by each Participating Member State to the Borrower, which forms the basis for this Agreement. The contractual documentation for such loan facilities has been discussed between the Member States and the Borrower and is with respect to its substance - except for the Fixed Individual Amount and the provisions on national approval, staggered payments and the commitment fee as set out in recital (J) below - identical for each Participating Member State in order to protect the single character of the SRF. The loan facility agreements entered into in this context by each Participating Member State and the Borrower implement the terms of the Statement and of the Term Sheet and are in compliance with the principles set out therein. If applicable and relevant, the Lender could make the financing under this Agreement available through its national resolution fund or another entity as specified in this Agreement.

(J) It is key for the credibility of the SRM as the second pillar of the banking union to have a firmly committed bridge financing arrangement available to the Borrower. This will ensure the effectiveness of resolution actions and safeguard financial stability within the Member States. The Lender shall make payments under this arrangement in the amount and at the time as requested by the Borrower in the utilisation request. In order to cater for concerns on the implications of this Agreement in terms of national cash management and upon request of some Member States, Member States are not required to make the loan in full but can choose to make staggered payments, whereby at least a meaningful percentage of the Fixed Individual Amount (being 50%) would be provided under the first disbursement, followed by a maximum of three subsequent disbursements to be provided thereafter unless exceptional circumstances as defined in this Agreement apply. These conditions are deemed to exist, if the application of the resolution tools under the resolution scheme is necessary in order to avert the immediate default of the institution under resolution and thus avoids spill-over effects. In order to take due account of the funding requirements of the Lender to make loans available under this Agreement, the Borrower commits to setting up an early warning procedure. Furthermore, the procedure for seeking national approval, where necessary at national level, and the disbursement process are separated by the use of a utilisation pre-notification to allow for a additional preparation time for the Lender, where possible. The utilisation pre-notification shall contain the total amount to be drawn under this Agreement for a given resolution scheme. Where necessary for reasons existing at national level, Member States have been able to choose a procedure taking into account the seeking of national approval and staggered payments. Where the respective loan facility agreement contains the option to use staggered payments and national approval, no commitment fee is payable.