• PART 7: PART 7: FINANCIAL MARKETS AND NETTING

    • Chapter 1 Chapter 1 — Qualified Financial Contract

      • 275. Enforceability of a Qualified Financial Contract

        A qualified financial contract shall not be and shall be deemed never to have been void or unenforceable by reason of the laws of the Abu Dhabi Global Market relating to games, gaming, gambling, wagering or lotteries.

    • Chapter 2 Chapter 2 — Netting

      • 276. Netting Provisions to take effect in accordance with their terms

        (1) The provisions of a netting agreement will be enforceable in accordance with their terms, including against an insolvent party, and, where applicable, against a guarantor or other person providing security for a party (including a guarantor or other person that is insolvent) and will not be stayed, avoided or otherwise limited by —
        (a) the appointment of, or any application for the appointment of, or notice relating to the appointment of, an Office-holder or any action of an Office-holder;
        (b) any other provision of law relating to administration, liquidation, bankruptcy, reorganisation, composition with creditors, receivership, conservatorship or any other Insolvency Proceedings an insolvent party may be subject to; or
        (c) any other provision of law that may be applicable to an insolvent party,
        subject to the conditions contained in the applicable netting agreement.
        (2) After commencement of Insolvency Proceedings in relation to a party, the only obligation, if any, of either party to make payment or delivery under or pursuant to a netting agreement or under or pursuant to any qualified financial contract or contract or transaction to which that netting agreement applies shall be equal to its net obligation to the other party as determined in accordance with the terms of the applicable netting agreement.
        (3) After commencement of Insolvency Proceedings in relation to a party, the only right, if any, of either party to receive payment or delivery under or pursuant to a netting agreement or under or pursuant to any qualified financial contract or contract or transaction to which that netting agreement applies shall be equal to its net entitlement with respect to the other party as determined in accordance with the terms of the applicable netting agreement.
        (4) Any powers of an Office-holder to assume or repudiate individual contracts or transactions will not prevent the termination, liquidation, acceleration and/or conversion of all payment or delivery obligations or entitlements, and all obligations or entitlements relating to the making of payments or deliveries under one or more qualified financial contracts entered into under or in connection with a netting agreement, and will apply, if at all, only to the net amount or net entitlement due in respect of all such qualified financial contracts in accordance with the terms of such netting agreement.
        (5) The provisions of a netting agreement which provide for the determination of a net balance of the close-out values, market values, liquidation values, replacement values or other relevant values calculated in respect of accelerated and/or terminated payment or delivery obligations or entitlements or accelerated and/or terminated obligations or entitlements relating to the making of payments or deliveries in either case, under one or more qualified financial contracts entered into thereunder or to which such netting agreement applies (including a payment or delivery in respect of a contract or transaction required to be entered into under or pursuant to such provisions) will not be affected by any applicable insolvency laws limiting the exercise of rights to set off, offset or net out obligations, payment amounts or termination values owed between an insolvent party and another party.

      • 277. Voidable transactions

        An Office-holder of an insolvent party may not avoid or render ineffective —

        (a) any payment, delivery, transfer, substitution or exchange of cash, collateral or any other interests or property under or in connection with a netting agreement from the insolvent party to the non-insolvent party;
        (b) any obligation incurred by the insolvent party and owing to the non-insolvent party under or in connection with a netting agreement or to which a netting agreement applies to make any payment, transfer, delivery, substitution or exchange of cash, collateral or any other interests or property; or
        (c) any transaction entered into by the insolvent party in accordance with the terms of such netting agreement in order to give effect to the netting provided for by such netting agreement;

        on the grounds of it constituting a preference for the purposes of Section 258 (Preferences) or a transaction at an undervalue for the purposes of Section 257 (Transactions at an undervalue) by the insolvent party to or for the benefit of the non-insolvent party, unless there is clear and convincing evidence that the non-insolvent party made such transfer, payment, delivery, substitution or exchange or incurred such obligation or entered into such transaction with actual intent to hinder, delay, or defraud any person to which the insolvent party was indebted or became indebted, on or after the date such transfer, payment, delivery, substitution or exchange was made or such obligation was incurred or such transaction was entered into.

      • 278. Pre-emption and confirmation of disapplication of certain provisions of these Regulations to netting agreements

        (1) No stay, injunction, avoidance, moratorium, or similar proceeding or order, whether issued or granted by a Court, administrative agency, Office-holder or otherwise, shall limit or delay application of otherwise enforceable netting agreements and transactions entered into thereunder or pursuant thereto or to which an otherwise enforceable netting agreement applies.
        (2) Without prejudice to the foregoing provisions of this Chapter 2 (Netting) —
        (a) in relation to winding-up proceedings of an insolvent party to a netting agreement, Section 209(2) (Consequences of winding-up order) shall not apply (if it would otherwise do so) —
        (i) to any property or security subject to a disposition or transfer or created or otherwise arising under a netting agreement; or
        (ii) to prevent a netting under a netting agreement taking effect in accordance with its terms;
        (b) Section 196 (Avoidance of share transfers after winding-up resolution) shall not apply (if it would otherwise do so) to any transfer of shares under a netting agreement;
        (c) Section 218 (Power to disclaim onerous property) shall not apply to a netting agreement where an insolvent party to such netting agreement is subject to winding-up proceedings;
        (d) paragraphs 24 (Administration: mutual dealings and set-off) and 25 (Winding-up: mutual dealings and set-off) of Schedule 5 (Proofs and Distribution) shall not apply (if they would otherwise do so) to prevent a netting under a netting agreement taking effect in accordance with its terms;
        (e) the following Sections shall not apply to any security created or otherwise arising under a collateral arrangement —
        (i) Section 45(2) (Moratorium on other legal process) including that provision as applied by Section 46 (Interim moratorium);
        (ii) Section 79(2) (Court may limit rights);
        (iii) Section 96(2) (Distribution);
        (iv) Sections 99 (Charged property: floating charge) and 100 (Charged property); and
        (v) Section 143(3) and (4) (Vacation of office: charges and liabilities); and
        (f) Section 43(2) (Dismissal of administrative or other receiver) shall not apply to a receiver appointed under a charge created or otherwise arising under a collateral arrangement.

    • Chapter 3 Chapter 3 — Collateral Arrangements

      • 279. No recharacterisation

        A title transfer collateral arrangement which is not expressed to be by way of security shall not be recharacterised as security over collateral and shall take effect in accordance with its terms.

      • 280. Realisation and liquidation of collateral

        Unless otherwise agreed by the parties, the realisation, appropriation and/or liquidation of collateral under a collateral arrangement shall take effect or occur without any requirement that prior notice shall be given to, or consent be received from, any party, person or entity, provided that this Section is without prejudice to any applicable provision of law requiring that the realization, appropriation and/or liquidation of collateral is conducted in a commercially reasonable manner.

      • 281. No formal act required

        (1) Other than as set out herein, no formal act shall be necessary for the attachment, perfection or enforcement of a collateral arrangement which is by way of security over collateral to the extent it would otherwise be required under Abu Dhabi Global Market legislation.
        (2) Without prejudice to the generality of subsection (1), the following provisions shall not apply (if they would otherwise do so) in relation to a collateral arrangement or any charge created or otherwise arising under a collateral arrangement —
        (a) Section 784 (Charges created by a Company) and section 791 (Consequence of failure to deliver charges) of the Companies Regulations 2015;
        (b) Section 4 of the Statute of Frauds 1677 (No action on a third party's promise unless in writing and signed); and
        (c) Section 152 (Legal assignments of things in action) of the Real Property Regulations 2015.

      • 282. Right of use of a collateral-taker in collateral and obligation to return equivalent assets

        (1) If a collateral arrangement which is by way of security over collateral provides for the collateral-taker to use and dispose of any collateral provided under the collateral arrangement, as if it were the owner of it, the collateral-taker may do so in accordance with the terms of the arrangement.
        (2) The exercise by a collateral-taker of a right of use as described in subsection (1) shall not render invalid or unenforceable any right of the collateral-taker under such a collateral arrangement.
        (3) If a collateral-taker exercises such a right of use, it is obliged to replace the original collateral by transferring equivalent collateral on or before the due date for the performance of the relevant obligations covered by the arrangement or, if the arrangement so provides, it may set off the value of the equivalent collateral against or apply it in discharge of the relevant obligations in accordance with the terms of the arrangement.
        (4) The equivalent collateral which is transferred in discharge of an obligation as described in subsection (3), shall be subject to the same terms of the collateral arrangement as the original collateral was subject to and shall be treated as having been provided under the collateral arrangement at the same time as the original collateral was first provided.
        (5) If a collateral-taker has an outstanding obligation to replace the original collateral with equivalent collateral, that obligation may be the subject of a netting under the applicable netting agreement in accordance with its terms.

      • 283. Appropriation

        (1) Without prejudice to the foregoing Sections of this Part 7 (Financial Markets and Netting), if the collateral arrangement provides for realisation by appropriation of the collateral the subject of such arrangement, then the collateral-taker may so realise the collateral in accordance with the terms of the applicable netting agreement without any order for foreclosure from the Court, as the collateral-taker's own property and setting off its value against, or applying its value in or towards the discharge of, the relevant obligations.
        (2) Upon the exercise by the collateral-taker of the power to appropriate the collateral, the equity of redemption of the collateral-provider shall be extinguished and all legal and beneficial interest of the collateral-provider in the collateral shall vest in the collateral-taker.
        (3) Upon the exercise by a collateral-taker of the power to appropriate the collateral in accordance with subsection (1), the collateral-taker must value the collateral in accordance with the terms of the arrangement and in any event in a commercially reasonable manner.
        (4) Where a collateral-taker exercises such a power and the value of the collateral appropriated differs from the amount of the relevant obligations, then as the case may be, either —
        (a) the collateral-taker must account to the collateral-provider for the amount by which the value of the collateral exceeds the relevant obligations; or
        (b) the collateral-provider will remain liable to the collateral-taker for any amount by which the value of the collateral is less than the relevant obligations.

    • Chapter 4 Chapter 4 — Interpretation

      • 284. Netting agreement containing other provisions

        For the purposes of this Part 7 (Financial Markets and Netting), a netting agreement shall be deemed to be a netting agreement notwithstanding the fact that such netting agreement may contain provisions relating to agreements, contracts or transactions that are not qualified financial contracts, provided, however, that, for the purposes of this Part 7 (Financial Markets and Netting), such netting agreement shall be deemed to be a netting agreement only with respect to those agreements, contracts or transactions that fall within the definition of "qualified financial contract".

      • 285. Collateral arrangement containing other provisions

        For the purposes of this Part 7 (Financial Markets and Netting), a collateral arrangement shall be deemed to be a collateral arrangement notwithstanding the fact that such collateral arrangement may contain provisions relating to agreements, contracts or transactions that are not a netting agreement or qualified financial contract entered into thereunder, provided, however, that, for the purposes of this Part 7 (Financial Markets and Netting), such collateral arrangement shall be deemed to be a collateral arrangement only with respect to those agreements, contracts or transactions that fall within the definition of "netting agreement" or "qualified financial contract" entered into thereunder.

      • 286. Single agreement

        For the purposes of this Part 7 (Financial Markets and Netting), a netting agreement and all qualified financial contracts entered into thereunder shall constitute a single agreement.

      • 287. Application of this Part

        This Part 7 (Financial Markets and Netting) applies to any qualified financial contract, netting agreement or collateral arrangement (including any title transfer collateral arrangement) which is governed by the laws of the Abu Dhabi Global Market or which is entered into by a person incorporated or licensed in the Abu Dhabi Global Market or organised under a law of the Abu Dhabi Global Market, irrespective of the date on which such qualified financial contract, netting agreement or collateral arrangement was entered into.