Changes from report parliamentary committee draft to plenary report

Added(b) prior to the exercise of the power, procedural requirements to notify any person, including any requirement to publish any notice or prospectus or to file or register any document with any other authority.

AddedPoint (b) of the first subparagraph is without prejudice to the requirements laid down in Articles 61 and 63 and any notification requirements under the Union State aid framework.

Added3. Member States shall ensure that, to the extent that any of the powers listed in paragraph 1 of this Article are not applicable to an entity within the scope of Article 1(1) of this Directive as a result of its specific legal form, resolution authorities shall have powers which are as similar as possible, including in terms of their effects.

Added4. Member States shall ensure that, when resolution authorities exercise the powers laid down in paragraph 3, the safeguards provided for in Chapter V of this Directive, or safeguards that deliver the same effect, shall be applied to the persons affected, including shareholders, creditors, policy holders and counterparties.

AddedAncillary powers

Added1. Member States shall ensure that resolution authorities, when exercising a resolution power, have the power to do all of the following:

Added(a) subject to Article 58, provide for a transfer to take effect, free from any liability or encumbrance affecting the financial instruments, rights, assets or liabilities transferred;;

Added(b) remove rights to acquire any additional shares or other instruments of ownership;

Added(c) require the authority concerned to discontinue or suspend the admission to trading on a regulated market or the official listing of financial instruments pursuant to Directive 2001/34/EC of the European Parliament and of the Council;

Added(d) provide for the recipient to be treated as if that recipient were the undertaking under resolution for the purposes of any rights or obligations of, or actions taken by, the undertaking under resolution, including, subject to the application of the sale of business tool and the bridge undertaking tool referred to in Articles 31 and 32, any rights or obligations relating to participation in a market infrastructure;

Added(e) require the undertaking under resolution or the recipient to provide each other with information and assistance;

Added(f) cancel or modify the terms of a contract to which the undertaking under resolution is a party, or substitute a recipient as a party;

Added(g) transfer any reinsurance rights covering transferred insurance claims without the consent of the reinsurance undertaking where the resolution authority transfers assets and liabilities related to those reinsurance rights of the undertaking under resolution in whole or in part to another entity.

AddedFor the purposes of point (a), any right of compensation provided in accordance with this Directive shall not be considered to be a liability or an encumbrance.

Added2. Resolution authorities shall exercise the powers specified in paragraph 1 where they consider such exercise to be appropriate to ensure that a resolution action is effective or to achieve one or more resolution objectives.

Added3. Member States shall ensure that resolution authorities exercising a resolution power have the power to provide for continuity arrangements necessary to ensure that the resolution action is effective and, where relevant, to ensure that the business transferred may be operated by the recipient. Such continuity arrangements shall include, in particular:

Added(a) the continuity of contracts entered into by the undertaking under resolution, so that the recipient assumes the rights and liabilities of the undertaking under resolution relating to any financial instrument, right, asset or liability that has been transferred and is substituted for the undertaking under resolution, expressly or implicitly in all relevant contractual documents;

Added(b) the substitution of the recipient for the undertaking under resolution in any legal proceedings relating to any financial instrument, right, asset or liability that has been transferred.

Added4. The powers referred to in paragraph 1, point (d), and paragraph 3, point (b), shall not affect the following:

Added(a) the right of an employee of the undertaking under resolution to terminate a contract of employment;

Added(b) subject to Articles 47, 48 and 49, any right of a party to a contract to exercise rights under the contract, including the right to terminate, where entitled to do so in accordance with the terms of the contract by virtue of an act or omission by the undertaking under resolution prior to the relevant transfer, or by the recipient after the completion of the transfer concerned.

AddedSpecial management

Added1. Member States shall ensure that resolution authorities may appoint a special manager to replace the administrative, management or supervisory body of the undertaking under resolution. Member States shall further ensure that the special manager has the qualifications, ability and knowledge to carry out his or her functions.

Added2. The special manager shall have all the powers of the shareholders and of the administrative, management or supervisory body of the insurance or reinsurance undertaking. The special manager shall only exercise those powers under the control of the resolution authority. The resolution authority may limit the actions of the special manager or require prior consent for certain acts.

AddedThe resolution authority shall make public the appointment referred to in paragraph 1 and the terms and conditions attached to that appointment.

Added3. The special manager shall have the statutory duty to take all the measures necessary to promote the resolution objectives referred to in Article 18 and implement resolution actions taken by the resolution authority. In the event of inconsistency or conflict with any other duty of management laid down in the statutes of the undertaking or in national law, that statutory duty shall override such other duty.

Added4. Member States shall require that the special manager shall draw up reports for the appointing resolution authority that appointed them at regular intervals set by the resolution authority and at the beginning and the end of their mandate. Those reports shall describe in detail the financial situation of the undertaking under resolution and state the reasons for the measures taken.

Added5. The resolution authority may remove the special manager at any time.

AddedPower to require the provision of operational services and facilities

Added1. Member States shall ensure that resolution authorities have the power to require an undertaking under resolution, or any of its group entities, to provide any operational services or facilities that are necessary to enable a recipient to operate effectively the business transferred to it effectively, including where the undertaking under resolution or relevant group entity has entered into normal insolvency proceedings.

Added2. Member States shall ensure that their resolution authorities have powers to enforce obligations imposed, pursuant to paragraph 1, on group entities established in their territory by resolution authorities established in other Member States.

Added3. The operational services and facilities provided in accordance with paragraphs 1 and 2 shall be on the following terms:

Added(a) where the operational services and facilities were provided to the undertaking under resolution under an agreement before resolution action was taken and for the duration of that agreement, on the same terms;

Added(b) where there is no agreement or where the agreement has expired, on reasonable terms.

AddedPower to enforce crisis management measures by other Member States

Added1. Member States shall ensure that, where a transfer of shares, other instruments of ownership, or assets, rights or liabilities includes assets that are located in a Member State other than the State of the resolution authority, or includes rights or liabilities under the law of a Member State other than the State of the resolution authority, the transfer has effect in or under the law of that other Member State.

Added2. Member States shall provide the resolution authority that has made, or intends to make, the transfer, with all reasonable assistance to ensure that the shares or other instruments of ownership or assets, rights or liabilities are transferred to the recipient in accordance with any applicable requirements of national law.

Added3. Member States shall ensure that shareholders, creditors and third parties that are affected by a transfer of shares, other instruments of ownership, assets, rights or liabilities as referred to in paragraph 1, are not entitled to prevent, challenge, or set aside the transfer under any provision of law of the Member State where the assets are located or of the law governing the shares, other instruments of ownership, rights or liabilities.

Added4. Member States shall ensure that the principal amount of capital instruments, debt instruments or other eligible liabilities is reduced, or that such liabilities or instruments are converted, in accordance with the exercise of write-down or conversion powers by a resolution authority of another Member State to an undertaking under resolution, where the relevant liabilities or instruments:

Added(a) are governed by the law of the Member State other than the Member State of the resolution authority that exercised the write-down or conversion powers;

Added(b) are owed to creditors located in the Member State other than the Member State of the resolution authority that exercised the write-down or conversion powers.

Added5. Member States shall ensure that creditors that are affected by the exercise of write-down or conversion powers referred to in paragraph 4 are not entitled to challenge the reduction of the principal amount of the instrument or liability or its conversion, as the case may be, under any provision of law of the Member State other than the Member State of the resolution authority that exercised the write-down or conversion powers.

Added6. Each Member State shall ensure that all of the following is determined in accordance with the law of the Member State of the resolution authority:

Added(a) the right for shareholders, creditors and third parties to challenge, by way of appeal as laid down in Article 65, a transfer of shares, other instruments of ownership, assets, rights or liabilities referred to in paragraph 1 of this Article;

Added(b) the right for creditors to challenge, by way of appeal as laid down in Article 65, the reduction of the principal amount, or the conversion, of an instrument or liability covered by paragraph 4 points (a) or (b), of this Article;

Added(c) the safeguards for partial transfers, as referred to in Chapter V, in relation to the assets, rights or liabilities referred to in paragraph 1.

AddedPower in respect of assets, rights, liabilities, shares and other instruments of ownership located in or governed by the law of third countries

Added1. Member States shall provide that, in cases in which resolution action involves action taken in respect of assets located in a third country or shares, other instruments of ownership, rights or liabilities governed by the law of a third country, resolution authorities may require that:

Added(a) the person exercising control over the undertaking under resolution and the recipient take all steps necessary to ensure that the resolution action becomes effective;

Added(b) the person exercising control over the undertaking under resolution hold the shares, other instruments of ownership, assets or rights or discharge the liabilities on behalf of the recipient until the resolution action becomes effective;

Added(c) the reasonable expenses of the recipient properly incurred in carrying out any action required under points (a) and (b) are met in any of the ways referred to in Article 26(5).

Added2. In order to facilitate potential action pursuant to paragraph 1 of this Article, Member States shall require insurance or reinsurance undertakings and entities referred to in Article 1(1), points (b) to (e), to include into the related agreements contractual terms by which shareholders, creditors or parties to the agreement creating the liability recognise that the liability may be subject to write-down or conversion powers and agree to be bound by any reduction of the principal or outstanding amount due, conversion or cancellation that is effected by the exercise of those powers by a resolution authority.

AddedMember States shall ensure that resolution authorities may require insurance or reinsurance undertakings and entities as referred to in Article 1(1), points (b) to (e), to provide those resolution authorities with a reasoned legal opinion by an independent legal expert confirming the legal enforceability and effectiveness of such contractual terms.

Added3. Where a resolution authority assesses that, in spite of all the necessary steps taken by the person exercising control over the undertaking under resolution in accordance with paragraph 1, point (a), it is highly unlikely that the resolution action will become effective in relation to certain assets located in a third country or certain shares, other instruments of ownership, rights or liabilities governed by the law of a third country, the resolution authority shall not proceed with the resolution action. Where the resolution authority has already ordered the resolution action, that order shall be void in relation to the assets, shares, instruments of ownership, rights or liabilities concerned.

AddedExclusion of certain contractual terms

Added1. A crisis prevention measure or a crisis management measure taken in relation to an entity, including the occurrence of any event directly linked to the application of such a measure, shall not, per se, under a contract entered into by the entity concerned, be deemed to be an enforcement event within the meaning of Directive 2002/47/EC or insolvency proceedings within the meaning of Directive 98/26/EC, provided that the substantive obligations under that contract, including payment and delivery obligations and the provision of collateral, continue to be performed.

AddedIn addition, a crisis prevention measure or a crisis management measure shall not, per se, be deemed to be an enforcement event within the meaning of Directive 2002/47/EC or insolvency proceedings within the meaning of Directive 98/26/EC under a contract entered into by:

Added(a) a subsidiary, where the parent undertaking or any group entity guarantees or otherwise supports the obligations under that contract; or

Added(b) any entity of a group, where the contract contains cross-default provisions.

Added2. Where third country resolution proceedings are recognised pursuant to Article 73, or, in the absence of such recognition, where a resolution authority so decides, third country resolution proceedings shall for the purposes of this Article constitute a crisis management measure.