Changes from report parliamentary committee draft to plenary report

Added2. Member States shall ensure that resolution authorities, subject to the right of appeal referred to in Article 65(1), are able to take a resolution action through executive order in accordance with national administrative competences and procedures, without exercising control over the undertaking under resolution.

Added3. Resolution authorities shall decide in each particular case whether it is appropriate to carry out the resolution action through the means specified in paragraph 1 or in paragraph 2, having regard to the resolution objectives referred to in Article 18 and the general principles governing resolution referred to in Article 22, the specific circumstances of the undertaking under resolution in question and the need to facilitate the effective resolution of cross-border groups.

Added4. Resolution authorities shall not be deemed to be shadow directors or de facto directors under national law.

AddedTreatment of shareholders and creditors in the case of partial transfers and application of the write-down or conversion tool

Added1. Member States shall ensure that, where one or more resolution tools as referred to in Article 26(3) have been applied, except in a situation described in the second subparagraph, and where resolution authorities transfer only parts of the rights, assets and liabilities of the undertaking under resolution, the shareholders and the creditors whose claims have not been transferred, receive in satisfaction of their claims at least as much as what they would have received if the undertaking under resolution had been wound up under normal insolvency proceedings at the time when the decision referred to in Article 62 was taken.

Added2. Member States shall ensure that, where one or more resolution tools as referred to in Article 26(3) have been applied and where resolution authorities apply the write-down or conversion tool, the shareholders and creditors whose claims have been written down or converted to equity do not incur greater losses than they would have incurred if the undertaking under resolution had been wound up under normal insolvency proceedings immediately at the time when the decision referred to in Article 62 was taken.

AddedValuation of difference in treatment

Added1. For the purposes of assessing whether shareholders and creditors would have received better treatment if the undertaking under resolution had entered into normal insolvency proceedings, Member States shall ensure that an independent person caries out a valuation as soon as possible after the resolution action or actions have been effected. That valuation shall be distinct from the valuation carried out under Article 23.

Added2. The valuation in paragraph 1 shall determine:

Added(a) the treatment that shareholders and creditors, or the relevant insurance guarantee schemes, would have received if the undertaking under resolution with respect to which the resolution action or actions have been effected had entered normal insolvency proceedings at the time when the decision referred to in Article 62 was taken;

Added(b) the actual treatment that shareholders and creditors have received, in the resolution of the undertaking under resolution;

Added(c) whether there is any difference between the treatment referred to in point (a) and the treatment referred to in point (b).

Added3. The valuation shall:

Added(a) assume that the undertaking under resolution with respect to which the resolution action or actions have been effected, would have entered normal insolvency proceedings at the time when the decision referred to in Article 62 was taken;

Added(b) assume that the resolution action or actions had not been effected;

Added(c) disregard any provision of extraordinary public financial support to the undertaking under resolution.

Added4. EIOPA shall develop draft regulatory technical standards specifying the methodology for carrying out the valuation in this Article, in particular the methodology for assessing the treatment that shareholders and creditors would have received if the undertaking under resolution had entered insolvency proceedings at the time when the decision referred to in Article 62 was taken.

AddedPower is delegated to the Commission to adopt the regulatory technical standards referred to in the first subparagraph in accordance with Articles 10 to 14 of Regulation (EU) No 1094/2010.

AddedSafeguard for shareholders and creditors

AddedMember States shall ensure that where the valuation carried out under Article 54 determines that any shareholder or creditor referred to in Article 53, or, where relevant, the insurance guarantee scheme in accordance with the applicable national law, has incurred greater losses than it would have incurred in a winding up under normal insolvency proceedings, it is entitled to payment of the difference.

AddedSafeguard for counterparties in partial transfers

Added1. Member States shall ensure appropriate protection of the following arrangements and of the counterparties to the following arrangements:

Added(a) security arrangements, under which a person has by way of security an actual or contingent interest in the assets or rights that are subject to transfer, irrespective of whether that interest is secured by specific assets or rights or by way of a floating charge or similar arrangement;

Added(b) title transfer financial collateral arrangements, under which collateral to secure or cover the performance of specified obligations is provided by a transfer of full ownership of assets from the collateral provider to the collateral taker, on terms providing for the collateral taker to transfer assets where those specified obligations are performed;

Added(c) set-off arrangements, under which two or more claims or obligations owed between the undertaking under resolution and a counterparty can be set off against each other;

Added(d) netting arrangements;

Added(e) unit-linked policies or other ring-fenced portfolios;

Added(f) reinsurance agreements;

Added(g) structured finance arrangements, including securitisations and instruments used for hedging purposes which form an integral part of the cover pool and which according to national law are secured, and involve the granting and holding of security by a party to the arrangement or a trustee, agent or nominee.

AddedThe form of protection that is appropriate, for the classes of arrangements specified in points (a) to (g) of this paragraph and shall be chosen in accordance with Articles 57 to 60.

Added2. Member States shall ensure that the protections specified in paragraph 1 apply in the following circumstances:

Added(a) a resolution authority transfers some but not all of the assets, rights or liabilities of an undertaking under resolution to another entity or, in the exercise of a resolution tool as referred to in Article 26(3), from a bridge undertaking or asset and liability management vehicle to another person;

Added(b) a resolution authority exercises the powers specified in Article 41(1), point (f).

Added3. The requirement under paragraph 1 shall apply irrespective of the number of parties involved in the arrangements and of whether the arrangements:

Added(a) are created by contract, trusts or other means, or arise automatically by operation of law;

Added(b) arise under or are governed in whole or in part by the law of another Member State or of a third country.

AddedProtection for financial collateral, set off and netting agreements, and reinsurance agreements

Added1. Member States shall ensure that there is appropriate protection for title transfer financial collateral arrangements, set-off and netting arrangements, and reinsurance agreements so as to prevent the transfer of some, but not all, of the rights and liabilities that are protected under a title transfer financial collateral arrangement, a set-off arrangement, a netting arrangement or a reinsurance agreement between the undertaking under resolution and another person and the modification or termination of rights and liabilities that are protected under such a title transfer financial collateral arrangement, a set-off arrangement, a netting arrangement or a reinsurance agreement through the use of ancillary powers.

AddedFor the purposes of the first subparagraph, rights and liabilities are to be treated as protected under a title transfer financial collateral arrangement, a set-off and netting arrangement and a reinsurance agreement where the parties to the arrangement or arrangement are entitled to set-off or net those rights and liabilities.

Added2. Notwithstanding paragraph 1, where necessary to better achieve the resolution objectives referred to in Article 18 and in particular to ensure a better protection of policy holders, resolution authorities may transfer, modify or terminate assets, rights or liabilities that are part of a title transfer financial collateral arrangement, a set-off and netting arrangement, or a reinsurance agreement.

AddedProtection for security arrangements

Added1. Member States shall ensure that there is appropriate protection for liabilities secured under a security arrangement to prevent one or more of the following:

Added(a) the transfer of assets against which the liability is secured, unless that liability and benefit of the security are also transferred;

Added(b) the transfer of a secured liability, unless the benefit of the security are also transferred;

Added(c) the transfer of the benefit of the security, unless the secured liability is also transferred;

Added(d) the modification or termination of a security arrangement through the use of ancillary powers, where the effect of that modification or termination would be that the liability ceases to be secured.

Added2. Notwithstanding paragraph 1, where necessary in order to better achieve the resolution objectives referred to in Article 18 and in particular ensure a better protection of policy holders, resolution authority may transfer, modify or terminate assets, rights or liabilities that are part of the same arrangement.

AddedProtection for structured finance arrangements and other ring-fenced portfolios

Added1. Member States shall ensure that there is appropriate protection for structured finance arrangements or other ring-fenced portfolios, including arrangements referred to in Article 56(1), points (e) and (g), to prevent either of the following:

Added(a) the transfer of some, but not all, of the assets, rights and liabilities which constitute or form part of a structured finance arrangement or other ring-fenced portfolios, including the arrangements referred to in Article 56(1), points (e) and (g), to which the undertaking under resolution is a party;

Added(b) the termination or modification through the use of ancillary powers of the assets, rights and liabilities which constitute or form part of a structured finance arrangement or other ring-fenced portfolios, including arrangements referred to in Article 56(1), points (e) and (g), to which the undertaking under resolution is a party.

Added2. Notwithstanding paragraph 1, where necessary to better achieve the resolution objectives referred to in Article 18 and in particular to ensure a better protection of policy holders, resolution authorities may transfer, modify or terminate assets, rights or liabilities that are part of the same arrangement.

AddedPartial transfers: protection of trading, clearing and settlement systems

Added1. Member States shall ensure that the application of a resolution tool as referred to in Article 26(3) does not affect the operation of systems and rules of systems covered by Directive 98/26/EC, where the resolution authority does either of the following:

Added(a) transfers some, but not all of the assets, rights or liabilities of an undertaking under resolution to another entity;

Added(b) uses the ancillary powers referred to in Article 41 to cancel or amend the terms of a contract to which the undertaking under resolution is a party or to substitute a recipient as a party.

Added2. A transfer, cancellation or amendment as referred to in paragraph 1 of this Article shall not:

Added(a) revoke a transfer order in contravention of Article 5 of Directive 98/26/EC;

Added(b) modify or negate the enforceability of transfer orders and netting as required by Articles 3 and 5 of Directive 98/26/EC, the use of funds, securities or credit facilities as required by Article 4 of that Directive or the protection of collateral security as required by Article 9 of that Directive.

AddedNotification requirements