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Make provision to enable the Treasury in certain circumstances to make an |
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order relating to the transfer of securities issued by, or of property, rights or |
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liabilities belonging to, an authorised deposit-taker; to make further provision |
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in relation to building societies; and for connected purposes. |
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Be it enacted by the Queen’s most Excellent Majesty, by and with the advice and |
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consent of the Lords Spiritual and Temporal, and Commons, in this present |
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Parliament assembled, and by the authority of the same, as follows:— |
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1 | Meaning of “authorised UK deposit-taker” |
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(1) | In this Act “authorised UK deposit-taker” means a UK undertaking that under |
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Part 4 of FSMA 2000 has permission to accept deposits. |
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(2) | That expression does not, however, include such an undertaking with |
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permission to accept deposits only for the purposes of, or in the course of, an |
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activity other than accepting deposits. |
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2 | Cases where Treasury’s powers are exercisable |
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(1) | The power of the Treasury to make an order under— |
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(a) | section 3 (transfer of securities issued by an authorised UK deposit- |
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(b) | section 6 (transfer of property, rights and liabilities of an authorised UK |
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| is exercisable in relation to an authorised UK deposit-taker if (and only if) it |
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appears to the Treasury to be desirable to make the order for either or both of |
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| This is subject to subsection (7). |
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(a) | maintaining the stability of the UK financial system in circumstances |
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where the Treasury consider that there would be a serious threat to its |
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stability if the order were not made; |
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(b) | protecting the public interest in circumstances where financial |
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assistance has been provided by the Treasury to the deposit-taker for |
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the purpose of maintaining the stability of the UK financial system. |
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(3) | The reference in subsection (2)(b) to the provision of financial assistance by the |
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Treasury to the deposit-taker includes— |
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(a) | any case where the Bank of England has provided financial assistance |
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to the deposit-taker and— |
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(i) | the Treasury have assumed a liability in respect of the |
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(ii) | the liability is of a kind of which the Treasury are expected to |
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give relevant notice, and |
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(iii) | the Treasury have given relevant notice of the liability; |
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(b) | any case where the Chancellor of the Exchequer has announced that the |
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Treasury (whether acting alone or with the Bank of England) would, if |
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necessary, put in place relevant guarantee arrangements in relation to |
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the deposit-taker (as well as any case where any such arrangements |
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have been put in place, whether or not following such an |
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(4) | For the purposes of subsection (3) the Treasury give “relevant notice” of a |
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(a) | they lay a Minute before the House of Commons containing |
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information about the liability, or |
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(b) | they give written notice containing such information to the person who |
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chairs the House of Commons Committee of Public Accounts and the |
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person who chairs the House of Commons Treasury Committee. |
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(5) | It is immaterial whether the notice or announcement mentioned in subsection |
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(3) is given or made before or after the passing of this Act. |
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(6) | In this Act “relevant guarantee arrangements”, in relation to any authorised |
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UK deposit-taker, means any guarantee arrangements for protecting some or |
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all of the depositors or other creditors of the deposit-taker. |
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(7) | Where an order has been made under section 3 or 6 in relation to any |
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authorised UK deposit-taker, subsection (1) does not apply in relation to any |
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subsequent exercise of the power to make an order under either of those |
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sections in relation to that deposit-taker. |
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(8) | The power of the Treasury to make an order under section 3 or 6 in relation to |
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an authorised UK deposit-taker may not be exercised after the end of the |
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period of one year beginning with the day on which this Act is passed. |
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(9) | Subsection (8) does not affect the continuation in force or effect of any order |
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made or other thing done by virtue of either of those sections before the end of |
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(10) | In this section “the UK financial system” means the financial system in the |
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(11) | Section 13 of the National Audit Act 1983 (c. 44) (interpretation of references to |
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Committee of Public Accounts) applies for the purposes of this section, but as |
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(a) | the references in that section to that Act were to this Act, and |
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(b) | the references in that section to the House of Commons Committee of |
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Public Accounts included the House of Commons Treasury |
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(1) | The Treasury may, in relation to all or any securities of a specified description |
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that have been issued by an authorised UK deposit-taker, by order make |
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provision for or in connection with, or in consequence of, the transfer of the |
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securities to any of the following— |
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(b) | a nominee of the Treasury; |
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(c) | a company wholly owned by the Bank of England or the Treasury; |
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(d) | any body corporate not within paragraph (c). |
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(2) | Schedule 1 specifies particular kinds of provisions that may be included in an |
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order under this section. |
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(3) | Where an order providing for the transfer of any securities has been made |
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under this section, the power to make an order under this section may be |
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subsequently exercised so as to make provision in connection with, or in |
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consequence of, the transfer (including provision of a kind specified in |
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Schedule 1) even though the order does not itself provide for the transfer of any |
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(4) | Where an order under this section or section 6 (“the initial order”) has been |
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made in relation to an authorised UK deposit-taker, the power to make an |
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order under this section may be subsequently exercised in relation to that |
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deposit-taker whether or not any transfer of securities provided for by the |
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order is to the person to whom any transfer was made by or under the initial |
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(5) | For the purposes of this section any provision made by an order under this |
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section in relation to any transaction or event taking place while securities |
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transferred by such an order are held by a person within subsection (1)(a), (b) |
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or (c) is to be regarded as provision made in consequence of the transfer. |
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4 | Extinguishment of subscription rights |
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(1) | This section applies where the Treasury make, or have made, an order under |
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section 3 providing for the transfer of securities issued by an authorised UK |
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(2) | The Treasury may by order make provision for and in connection with, or in |
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consequence of, the extinguishment of rights of any specified description to |
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subscribe for, or otherwise acquire, securities of— |
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(a) | the deposit-taker, or |
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(b) | any of its subsidiary undertakings. |
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(3) | Subsection (2) applies whether the rights have been granted by the deposit- |
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(4) | Where an order providing for the extinguishment of any rights has been made |
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under this section, the power to make an order under this section may be |
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subsequently exercised so as to make provision in connection with, or in |
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consequence of, the extinguishment of those rights even though the order does |
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not itself provide for any rights to be extinguished. |
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5 | Compensation etc. for securities transferred etc. |
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(1) | The Treasury must by order— |
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(a) | in relation to an order under section 3 that transfers securities only to the |
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public sector, make a scheme for determining the amount of any compensation |
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payable by the Treasury to persons who held the securities immediately before |
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they were so transferred; |
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(b) | in relation to an order under section 3 that transfers securities only to a |
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private sector body, make provision for determining the amount of any |
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consideration payable by the body to persons who held the securities |
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immediately before they were so transferred; |
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(c) | in relation to an order under section 3 that transfers securities both to the |
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public sector and a private sector body, make provision for determining— |
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(i) | the amount of any compensation payable by the Treasury, and |
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(ii) | the amount of any consideration payable by the private sector body |
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| to persons who held the securities immediately before they were so transferred. |
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(2) | The Treasury must by order make provision for determining the amount of |
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any compensation payable to persons whose rights are extinguished by virtue |
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of an order under section 4 (a “section 4 order”) and— |
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(a) | in any case where the section 4 order is made in consequence of an order under |
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section 3 that transfers securities only to the public sector, the order must |
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provide for any compensation to be payable by the Treasury; |
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(b) | in any case where the section 4 order is made in consequence of an |
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order under section 3 that transfers securities only to a private sector |
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body, the order must provide for any compensation to be payable by |
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the private sector body concerned; |
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(c) | in any case where the section 4 order is made in consequence of an order under |
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section 3 that transfers securities both to the public sector and a private sector |
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body, the order must make provision for determining the amount of any |
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compensation payable by the Treasury or the private sector body concerned (or |
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(3) | An order under this section may also make provision for extending provisions |
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of the order, in any specified circumstances, to persons otherwise affected by |
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any provision made in an order under section 3 or 4. |
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(4) | In determining the amount of any compensation payable by the Treasury by |
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virtue of any provision in an order under this section, it must be assumed— |
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(a) | that all financial assistance provided by the Bank of England or the |
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Treasury to the deposit-taker in question has been withdrawn (whether |
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by the making of a demand for repayment or otherwise), and |
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(b) | that no financial assistance would in future be provided by the Bank of |
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England or the Treasury to the deposit-taker in question (apart from |
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ordinary market assistance offered by the Bank of England subject to its |
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(5) | For the purposes of subsection (4)— |
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(a) | the references to the provision of financial assistance by the Treasury to |
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the deposit-taker include any case where the Chancellor of the |
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Exchequer announces that the Treasury (whether acting alone or with |
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the Bank of England) would, if necessary, put in place relevant |
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guarantee arrangements in relation to the deposit-taker (as well as any |
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case where any such arrangements are put in place, whether or not |
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following such an announcement); |
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(b) | “ordinary market assistance” means assistance provided as part of the |
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Bank’s standing facilities in the sterling money markets or as part of the |
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Bank’s open market operations in those markets. |
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(6) | It is immaterial whether the announcement mentioned in subsection (5)(a) is |
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made before or after the passing of this Act. |
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(a) | any reference to any transfer of securities to the public sector is a |
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reference to the transfer of any securities to any person within |
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paragraphs (a) to (c) of subsection (1) of section 3; |
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(b) | any reference to any transfer of securities to a private sector body is a |
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reference to the transfer of any securities to any body corporate within |
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paragraph (d) of that subsection. |
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(8) | An order under subsection (1) or (2) must be made within the period of 3 |
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(a) | the day on which the order under section 3 is made (in the case of an |
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order under subsection (1)), or |
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(b) | the day on which the order under section 4 is made (in the case of an |
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order under subsection (2)). |
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(9) | But nothing in subsection (8) prevents the making at any time after the end of |
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that period of a second or subsequent order under this section in relation to the |
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order under section 3 or 4. |
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Transfer of property etc. |
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6 | Transfer of property, rights and liabilities |
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(1) | The Treasury may by order make provision for or in connection with, or in |
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consequence of, the transfer of property, rights and liabilities of an authorised |
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UK deposit-taker to either (or each) of the following— |
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(a) | a company wholly owned by the Bank of England or the Treasury; |
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(b) | a body corporate not within paragraph (a). |
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(2) | An order under this section may define the property, rights and liabilities to be |
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transferred in one or more of the following ways— |
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(a) | by specifying or describing the property, rights and liabilities in |
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(b) | by referring to all the property, rights and liabilities comprised in the |
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whole or a specified part of the deposit-taker’s business; |
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(c) | by identifying the manner in which the property, rights and liabilities |
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to be transferred are to be determined. |
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(3) | Schedule 2 specifies particular kinds of provisions that may be included in an |
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order under this section. |
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(4) | Where an order providing for the transfer of any property, rights or liabilities |
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has been made under this section, the power to make an order under this |
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section may be subsequently exercised so as to make provision in connection |
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with, or in consequence of, the transfer (including provision of a kind specified |
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in Schedule 2) even though the order does not itself provide for the transfer of |
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any property, rights or liabilities. |
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(5) | Where an order under this section or section 3 (“the initial order”) has been |
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made in relation to an authorised UK deposit-taker, the power to make an |
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order under this section may be subsequently exercised in relation to that |
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deposit-taker whether or not any transfer of property, rights or liabilities |
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provided for by the order is to the person to whom any transfer was made by |
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or under the initial order. |
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(6) | A second or subsequent order made under this section in relation to an |
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authorised UK deposit-taker may make provision for any of the property, |
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rights or liabilities transferred by or under a previous order under this section |
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to be transferred back to the deposit-taker. |
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(7) | The provisions of this section and Schedule 2 apply for the purposes of |
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subsection (6) with any necessary modifications. |
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(8) | For the purposes of this section any provision made by an order under this |
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section in relation to any transaction or event taking place while property, |
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rights or liabilities transferred by or under such an order are held by a |
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company within subsection (1)(a) is to be regarded as provision made in |
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consequence of the transfer. |
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7 | Compensation etc. for property etc. transferred |
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(1) | The Treasury must by order make provision— |
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(a) | in relation to an order under section 6 providing for the transfer of property, |
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rights or liabilities to a company within subsection (1)(a) of that section, for |
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determining the amount of any compensation payable by the Treasury to the |
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authorised UK deposit-taker concerned; |
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(b) | in relation to an order under section 6 providing for the transfer of |
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property, rights or liabilities to any other body, for determining the |
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amount of any consideration payable by the transferee to the |
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authorised UK deposit-taker concerned. |
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(2) | An order under this section may also make provision for extending provisions |
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of the order, in any specified circumstances, to persons otherwise affected by |
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any provision made in an order under section 6. |
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(3) | In determining the amount of any compensation payable by the Treasury by |
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virtue of any provision in an order under this section, it must be assumed— |
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(a) | that all financial assistance provided by the Bank of England or the |
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Treasury to the deposit-taker in question has been withdrawn (whether |
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by the making of a demand for repayment or otherwise), and |
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(b) | that no financial assistance would in future be provided by the Bank of |
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England or the Treasury to the deposit-taker in question (apart from |
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ordinary market assistance offered by the Bank of England subject to its |
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(4) | For the purposes of subsection (3)— |
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(a) | the references to the provision of financial assistance by the Treasury to |
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the deposit-taker include any case where the Chancellor of the |
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Exchequer announces that the Treasury (whether acting alone or with |
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the Bank of England) would, if necessary, put in place relevant |
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guarantee arrangements in relation to the deposit-taker (as well as any |
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case where any such arrangements are put in place, whether or not |
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following such an announcement); |
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(b) | “ordinary market assistance” means assistance provided as part of the |
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Bank’s standing facilities in the sterling money markets or as part of the |
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Bank’s open market operations in those markets. |
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(5) | It is immaterial whether the announcement mentioned in subsection (4)(a) is |
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made before or after the passing of this Act. |
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(6) | An order under subsection (1) must be made within the period of 3 months |
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beginning with the day on which the order under section 6 is made. |
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(7) | But nothing in subsection (6) prevents the making at any time after the end of |
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that period of a second or subsequent order under this section in relation to the |
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8 | Further transfers following transfer to public sector |
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(1) | Subsection (2) applies where any securities issued by an authorised UK |
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deposit-taker have been transferred to a person within section 3(1)(a) to (c) by |
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an order under section 3. |
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(2) | In such a case the Treasury may by order make provision for and in connection |
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with, or in consequence of, the transfer to a specified person of any of the |
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(a) | any of the securities transferred as mentioned in subsection (1); |
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(b) | any securities issued by the deposit-taker at any time after the transfer |
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mentioned in that subsection; |
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(c) | any of the property, rights and liabilities of the deposit-taker; |
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(d) | any of the property, rights and liabilities of any UK undertaking which |
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is a subsidiary undertaking of the deposit-taker; |
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(e) | where the securities so transferred were transferred to a company |
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(i) | any securities issued by the company; |
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(ii) | any property, rights and liabilities of the company. |
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(3) | Subsection (4) applies where any property, rights or liabilities have been |
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transferred to a company within section 6(1)(a) (“the company”) by or under |
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an order under section 6. |
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(4) | In such a case the Treasury may by order make provision for and in connection |
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with, or in consequence of, the transfer to a specified person of any of the |
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(a) | any property, rights and liabilities of the company; |
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(b) | any property, rights and liabilities of any UK undertaking which is a |
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subsidiary undertaking of the company; |
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(c) | any securities issued by the company. |
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