Explanatory Note
(This note is not part of the Regulations)
The Regulations apply with modifications certain provisions of Part VII of the Companies Act 1989 (c. 40) (“Part VII”) to certain charges (and to property subject to those charges) granted in favour of those who undertake assured payment obligations in connection with the settlement of transactions through a relevant system in respect of which an Operator has been approved under the Uncertificated Securities Regulations 1995 (S.I. 1995/3272). The provisions applied are ones which modify the way in which the charges in question are treated in the event of an administration or certain kinds of receivership under the Insolvency Act 1986 (c. 45) and ones which modify the way in which rights of persons other than the chargee may be exercised in relation to property subject to those charges.
Regulation 2 defines certain expressions used elsewhere in the regulations. It provides that a charge to which the relevant provisions of Part VII are extended is referred to in the regulations as a “system-charge”. Regulation 2 also provides that certain of the expressions used in the regulations have the same meaning as in the Uncertificated Securities Regulations 1995.
Regulations 3 and 4 apply the relevant provisions of Part VII (as modified by the regulations) in relation to system-charges and to property subject to such charges if the conditions mentioned in regulation 4 are met.
Regulation 5 provides that Part VII applies in relation to a system-charge only to the extent that it is a charge over property of particular kinds and is granted to secure obligations of particular kinds.
Regulations 6 and 7 limit the disapplication of certain provisions of the Insolvency Act 1986 in relation to system-charges. The provisions in question are ones which restrict the ability of persons to take steps to enforce any security they have over the property of a company during the course of administration proceedings under the Insolvency Act.
Regulation 8 makes provision as to the ability of an administrator and certain kinds of receiver to recover property subject to a system-charge after a particular period if the property is not required for one of the purposes specified in the regulation.
The Regulations (regulation 9) also make provision clarifying the effect of those provisions of Part VII which require investment exchanges and clearing houses recognised under the Financial Services Act 1986 to have default rules enabling them to deal with certain contracts into which they enter on recognised investment exchanges and recognised clearing houses which do not enter into contracts of the relevant kind.