Part 1

Special Resolution Regime
Chapter 3

Special resolution action

Incidental functions

General continuity obligation: share transfers
66
1
In this section and section 67—
a
“transferred bank” means a bank all or part of the ownership of which has been transferred in accordance with section 11(2)(a), 12(2)(a) or 13(2), or which falls within subsection (1A),
b
“former group company” means anything which was a group undertaking in relation to the transferred bank immediately before the transfer (whether or not it is also a group undertaking in relation to the transferred bank immediately after the transfer),
c
“group undertaking” has the meaning given by section 1161(5) of the Companies Act 2006 (interpretation), and
d
“the continuity authority” means—
i
the Bank of England, where ownership was transferred in accordance with section 11(2)(a), 12(2)(a), or in a case falling within subsection (1A), and
ii
the Treasury, where ownership was transferred in accordance with section 13(2).
1ZA
In this section a reference to insolvency includes a reference to (i) liquidation, (ii) bank insolvency, (iii) administration, (iv) bank administration, (v) receivership, (vi) composition with creditors and (vii) a scheme of arrangement.
1A
A bank falls within this subsection if a
mandatory reduction instrument or
resolution instrument (or supplemental resolution instrument) has changed the ownership of the bank (wholly or partly) by providing for the transfer, cancellation or conversion from one form or class to another of securities issued by the bank (and the reference in subsection (1)(b) to “
the transfer
” includes such a cancellation or conversion).
2
Each former group company must provide such services and facilities as are required to enable the transferred bank to operate effectively.
3
The duty under subsection (2) (the “continuity obligation”) may be enforced as if created by contract between the transferred bank and the former group company.
3A
The continuity obligation continues to apply despite the former group company entering insolvency, and may not be disclaimed by a liquidator under section 178(2) of the Insolvency Act 1986 or Article 152(1) of the Insolvency (Northern Ireland) Order 1989.
4
The duty to provide services and facilities in pursuance of the continuity obligation is subject to a right to receive reasonable consideration.
4A
But if the services and facilities provided in pursuance of the continuity obligation were provided to the transferred bank, under an agreement with that bank, before the share transfer instrument or order or the resolution instrument providing for the transfer was made, they are to continue for the duration of that agreement to be provided on the terms set out in that agreement (and subsection (4) does not apply).
5
The continuity obligation is not limited to the provision of services or facilities directly to the transferred bank.
6
The continuity authority may by notice to a former group company state that in the authority's opinion—
a
specified activities are required to be undertaken in accordance with the continuity obligation;
b
activities are required be undertaken in accordance with the continuity obligation on specified terms.
7
A notice under subsection (6) shall be determinative of the nature and extent of the continuity obligation as from the time when the notice is given.
8
The Bank of England may act under or by virtue of subsection (6) only with the consent of the Treasury.
S. 66 in force at 21.2.2009 by S.I. 2009/296, art. 3, Sch. para. 1
Pt. 1 restricted (7.1.2010) by Banking Act 2009 (Exclusion of Insurers) Order 2010 (S.I. 2010/35), arts. 1, 2
Pt. 1: power to amend conferred (1.3.2014) by Financial Services (Banking Reform) Act 2013 (c. 33), ss. 17(3)(f), 148(5); S.I. 2014/377, art. 2(1)(b), Sch. Pt. 2
S. 66(1A) inserted (31.12.2014) by Financial Services (Banking Reform) Act 2013 (c. 33), s. 148(5), Sch. 2 para. 18(c); S.I. 2014/3160, art. 2(1)(b)
Words in s. 66(1)(a) inserted (31.12.2014) by Financial Services (Banking Reform) Act 2013 (c. 33), s. 148(5), Sch. 2 para. 18(a); S.I. 2014/3160, art. 2(1)(b)
Words in s. 66(1)(d)(i) inserted (31.12.2014) by Financial Services (Banking Reform) Act 2013 (c. 33), s. 148(5), Sch. 2 para. 18(b); S.I. 2014/3160, art. 2(1)(b)
S. 66(1ZA) inserted (1.1.2015) by The Bank Recovery and Resolution Order 2014 (S.I. 2014/3329), arts. 1(2), 74(3)
S. 66(3A) inserted (1.1.2015) by The Bank Recovery and Resolution Order 2014 (S.I. 2014/3329), arts. 1(2), 74(5)
S. 66(4A) inserted (1.1.2015) by The Bank Recovery and Resolution Order 2014 (S.I. 2014/3329), arts. 1(2), 74(6)
Words in s. 66(1)(a) inserted (1.1.2015) by The Bank Recovery and Resolution Order 2014 (S.I. 2014/3329), arts. 1(2), 74(2)(a)
Words in s. 66(1)(d) inserted (1.1.2015) by The Bank Recovery and Resolution Order 2014 (S.I. 2014/3329), arts. 1(2), 74(2)(b)
Words in s. 66(1A) inserted (1.1.2015) by The Bank Recovery and Resolution Order 2014 (S.I. 2014/3329), arts. 1(2), 74(4)
Pt. 1 Ch. 3 formed from ss. 4-83 (1.1.2015) by The Bank Recovery and Resolution Order 2014 (S.I. 2014/3329), arts. 1(2), 7