Financial Sector (Transfer and Restructure) Act 1999

PART 4 - COMPULSORY TRANSFERS  

Division 4 - Effect of compulsory transfer on contracts  

SECTION 36AB   PARTIAL TRANSFER OF NETTING CONTRACTS VOID  

36AB(1)    
This section applies if:

(a) a certificate of transfer comes into force in respect of a partial transfer; and

(b) just before the partial transfer, the transferring body is a party to:

(i) a close-out netting contract; or

(ii) a security given over financial property, in respect of an obligation of the transferring body under a close-out netting contract; or

(iii) a market netting contract; or

(iv) a security given over property, in respect of an obligation of the transferring body under a market netting contract; or

(v) an approved netting arrangement; and

(c) the partial transfer covers some (but not all) of the following assets and liabilities:

(i) the assets and liabilities the body has, under the close-out netting contract, market netting contract or approved netting arrangement, with respect to another party to the contract or arrangement (the counterparty );

(ii) those assets that are property over which security is given in respect of an obligation of the transferring body under the close-out netting contract or the market netting contract.

Note:

The Payment Systems and Netting Act 1998 affects what the assets and liabilities of a party to a close-out netting contract, market netting contract or approved netting arrangement are taken to include.

36AB(2)    
The partial transfer is void:

(a) to the extent of the assets or liabilities the transferring body has, just before the partial transfer, under the close-out netting contract, market netting contract or approved netting arrangement, with respect to the counterparty; and

(b) if security is given over financial property in respect of an obligation of the transferring body under a close-out netting contract - to the extent that the assets are financial property in the possession or control of one of the following persons just before the partial transfer:

(i) the counterparty;

(ii) another person (who is not the transferring body) on behalf of the counterparty, under the terms of an arrangement evidenced in writing; and

(c) if security is given over property in respect of an obligation of the transferring body under a market netting contract - to the extent that the assets are that property.