Financial Collateral Arrangements (Amendments) Regulations,

Suppliment tal-Gazzetta tal-Gvern ta’ Malta, Nru. 17,642, 24 ta’ Awissu, 2004

L.N. 388 of 2004

SET-OFF AND NETTING ON INSOLVENCY ACT

(CAP. 459)

Financial Collateral Arrangements (Amendments) Regulations,

IN exercise of the powers conferred by article 7 of the Set-Off and

Netting on Insolvency Act, the Prime Minister and Minister of Finance

has made the following regulations>-

(1) The title of these regulations is the Financial Collateral Citation.

Arrangements (Amendments) Regulations, 2004, and they shall be read

and construed as one with the Financial Collateral Arrangements

Regulations, 2004, hereinafter referred to as the principal regulations. L.N. 177 of 2004.

(2) These regulations shall be deemed to have come into

force on the 1st May, 2004.

Immediately after the definition “provision” in regulation 2 Amends regulation

of the principal regulations, there shall be inserted the following new 2 regulations.

definitions>

“ “publicly guaranteed undertakings” means any company or

partnership whose obligations are by law guaranteed by the

Government<

“registered instrument” means an instrument in respect of

which the owner’s name is recorded on the books of the issuer or

the issuer’s agent<”.

Immediately after regulation 3 of the principal regulations there Adds new

regulation 3A to

shall be inserted the following new regulation>-

the principal

regulations.

(1) A financial collateral arrangement shall be

“Validity of

financial

valid

and enforceable in accordance with its terms and with

collateral

arrangement. these regulations.

(2) Article 1357 (2) of the Civil Code shall not

apply to a financial collateral arrangement and the terms

agreed upon between the parties shall prevail.

(3) Where any of the provisions of the Civil Code, the

Code of Organization and Civil Procedure, the Companies

Act or any other law is incompatible with any of these

regulations, these regulations shall prevail.”.

For regulation 4 of the principal regulations, there shall be

substituted the following>

“4. (1) For the purposes of these regulations, both the

collateral taker and the collateral provider shall be>

(a)

a public authority, including>

(i) public sector bodies of Member States

charged with or intervening in the management of

public debt< and

(ii) public sector bodies of Member States

authorised to hold accounts for customers<

(b) a central bank, the European Central Bank,

the Bank for International Settlements, a multilateral

development bank, the International Monetary Fund and

the European Investment Bank<

(c) a credit institution as defined in Article 1(1)

of Directive 2000#12#EC, including the institutions listed

in article 2 (3) of that Directive<

(d) an investment firm as defined in Article 1 (2)

of Council Directive 93#22#EC of the 10th May, 1993

on investment services in the securities field<

(e) a financial institution as defined in Article 1(5)

of Directive 2000#12#EC<

(f) an insurance undertaking as defined in Article

1(a) of Council Directive 92#49#EEC of the 18th June,

1992 on the coordination of laws, regulations and

administrative provisions relating to direct insurance

other than life assurance and a life assurance undertaking

as defined in Article 1(a) of Council Directive 92#96#EEC

of the 10th November, 1992 on the coordination of laws,

regulations and administrative provisions relating to

direct life assurance<

(g) an undertaking for collective investment in

transferable securities (UCITS) as defined in Article 1

(2) of Council Directive 85#611#EEC of the 20th

December, 1985 on the coordination of laws, regulations

and administrative provisions relating to undertakings

for collective investment in transferable securities

(UCITS)<

(h) a management company as defined in Article

1a(2) of Directive 85#611#EEC as amended by Directive

2001#107#EC< or

(i) a central counterparty, settlement agent or

clearing house and a person, other than a natural person,

who acts in a trust or representative capacity on behalf

of any one or more persons that includes any bondholders

or holders of other forms of securitised debt or any

institution as defined in paragraphs (a) to (i).

(2) For the purposes of subregulation (1), “public

authority” shall not include publicly guaranteed undertakings

except for those falling within the meaning of paragraphs (b)

to (i) of subregulation (1) hereof.”.

Regulation 5 of the principal regulations shall be renumbered Amends regulation

5 of the principal

as sub-regulation (1) thereof and immediately after sub-regulation 5 regulations.

(1) as renumbered there shall be inserted added the following new

“(2) For the purposes of this regulation, “formal act”

includes any judicial act, registration, notification, note in any

public registry, acknowledgement, advertisement published in any

newspaper or journal, any form of delivery, or any similar act upon

which the creation, validity, perfection, enforceability or

admissibility in evidence of a financial collateral arrangement or

the provision of financial collateral under a financial collateral

arrangement may be dependent>

Provided that any act required by law as a condition for

effecting the transfer or creation of a security interest on

instruments, other than book entry securities, including

endorsement in the case of credit instruments, or any recording on

the issuer’s register in the case of registered instruments, shall not

be considered as a formal act.”.

For regulation 9 of the principal regulations, there shall be

substituted the following regulation>

(1) Notwithstanding the provisions of article 122

“Realisation

or valuation.

(7) of the Companies Act, on the occurrence of a specified

event, the collateral taker shall ensure that any action taken

in terms of these regulations, including any realisation or

valuation of the financial collateral, be conducted in

accordance with the terms of the financial collateral

arrangement and in any event in a commercially reasonable

manner and in good faith so as to ensure fair treatment to the

collateral provider.

(2) Where a collateral taker carries out the

realisation or valuation in terms of sub-regulation (1) and the

value of the financial collateral differs from the amount of

the relevant financial obligations then, as the case may be,

the following shall apply>

(a) the collateral taker shall reimburse to the

collateral provider the amount by which the value of the

financial collateral exceeds the relevant financial

obligations< or

(b) the collateral provider shall remain liable to

the collateral taker for any amount remaining outstanding

between the relevant financial obligations and the value

of the financial collateral.”.

7. For the marginal note to regulation 10 of the principal

regulations, there shall be substituted the words “Enforceability of

financial collateral arrangements.”.

Mitbug[ fl-Istamperija tal-Gvern — Printed at the Government Printing Press