Clause 27

In this Division, unless the context otherwise requires —“appointed date”, in relation to a bail‑in certificate, means the date appointed for it to take effect, as specified in the notification under section 75(2);“bail-in certificate” means a bail‑in certificate issued under section 75(1);“determination” means a determination made by the Authority under section 73(1);“Division 4A FI” or “Division 4A financial institution”, means a pertinent financial institution that belongs to a class of pertinent financial institutions prescribed by regulations made under section 126 as Division 4A financial institutions;“eligible instrument” means an instrument or a liability within a class of instruments or liabilities that are prescribed by regulations made under section 126 as eligible instruments;“pre-resolution creditor” means any person who was a creditor of a Division 4A FI immediately before the date of publication in the Gazette of the bail‑in certificate;“pre-resolution shareholder” means any person who, immediately before the date of publication in the Gazette of the bail‑in certificate, held shares or other instrument conferring or representing a legal or beneficial ownership interest in a Division 4A FI;“resulting FI” or “resulting financial institution”, in relation to a Division 4A FI, means an entity established or incorporated to do one or both of the following:

temporarily hold and manage the assets and liabilities of the Division 4A FI;

do any act for the orderly resolution of the Division 4A FI,and which issued or must issue a share or other similar instrument representing a legal or beneficial ownership interest, pursuant to a provision of a bail‑in certificate issued for that Division 4A FI;“significant shareholder”, in relation to a Division 4A FI or resulting FI, means any person falling within a description of shareholders of the Division 4A FI or resulting FI prescribed by regulations made under section 126 as its significant shareholders;“significant shareholder provision” means a provision of any written law that is prescribed by regulations made under section 126 as a significant shareholder provision.(2) For the purposes of this Division, a reference to cancelling an eligible instrument includes cancelling it in whole or in part.(3) For the purposes of this Division, a reference to modifying, converting, or changing the form of an eligible instrument is a reference to —

converting the whole or a part of the eligible instrument from one form or class to another;

replacing the whole or a part of the eligible instrument with another instrument or liability of a different form or class;

creating a new instrument (of any form or class) or liability in connection with the modification of the eligible instrument; or

converting the whole or a part of the eligible instrument into shares or other similar instrument issued by a resulting FI.Exercise of powers under this Division72.—

In exercising any power under this Division, the Authority must have regard to the desirability of giving each pre‑resolution creditor or pre‑resolution shareholder of a Division 4A FI the priority and treatment the pre‑resolution creditor or pre‑resolution shareholder would have enjoyed had the Division 4A FI been wound up.(2) In determining whether to exercise its powers in accordance with the priority and treatment a pre‑resolution creditor or pre‑resolution shareholder of a Division 4A FI would have enjoyed had the Division 4A FI been wound up, the Authority may consider the following:

any widespread adverse impact that the Division 4A FI’s failure would have on the financial system in Singapore or the economy of Singapore, or both;

the need to maximise value for the benefit of all creditors of the Division 4A FI as a whole;

the public interest;

any other matter that the Authority considers relevant.(3) Any exercise of a power under this Division does not prevent the exercise of any other power of the Authority or the Minister under this Act or the relevant Act applicable to the Division 4A FI or resulting FI.Determination by Authority73.—

Subject to subsection (2), the Authority may make one or more of the following determinations concerning one or more eligible instruments issued by a Division 4A FI, or to which it is a party or is subject:

that the eligible instrument or instruments should be cancelled;

that the eligible instrument or instruments should be modified, converted or changed in form;

that the eligible instrument or instruments should have effect as if a right of modification, conversion or change of its or their form had been exercised.(2) The Authority may make the determination in subsection (1) if —

any ground exists for the Authority to exercise any power under the relevant provisions applicable to the Division 4A FI, whether or not the Authority has exercised the power; and

the Authority is of the opinion that —

the eligible instrument or instruments ought to be bailed in to facilitate the orderly resolution of the Division 4A FI; or

the Division 4A FI’s available assets do not or are unlikely to support payment of its liabilities, as they become due and payable.(3) The Authority may, before making a determination, appoint one or more persons —

to perform an independent assessment of the extent to which the acts mentioned in subsection (1)(a), (b) and (c) should be carried out for all or any eligible instruments; and

to furnish to the Authority a report on the assessment.(4) The remuneration and expenses of any person appointed under subsection (3) are to be paid by the Division 4A FI.(5) The Authority must serve a copy of any report furnished under subsection (3) on the Division 4A FI.(6) Upon making a determination, the Authority must submit the determination to the Minister for approval.Approval by Minister of determination74.—

Before approving a determination of the Authority, the Minister must, unless the Minister decides that it is not practicable or desirable to do so —

publish in the Gazette and in such newspaper or newspapers as the Minister determines, a notice specifying —

the Minister’s intention to approve the determination;

the date by which the holder of an eligible instrument that is the subject of the determination may make written representations to the Minister; and

such other particulars as the Minister considers appropriate; and

give to the Division 4A FI written notice specifying —

the Minister’s intention to approve the determination;

the date by which the Division 4A FI may make written representations to the Minister; and

such other particulars as the Minister considers appropriate.(2) In determining the period within which written representations have to be made under subsection (1), the Minister must take into account the need for the measures proposed by the determination to be effected expeditiously in the interest of the stability of the financial system in Singapore.(3) The Minister must consider all written representations for the purpose of deciding whether to approve the determination.(4) The Minister may —

approve the determination without modification;

approve the determination subject to any modification the Minister considers appropriate; or

refuse to approve the determination.(5) Any approval under subsection (4) may be subject to such conditions as the Minister may determine to be necessary to give effect to the determination, and the Minister may add to, vary or revoke any such condition.(6) The Division 4A FI must comply with every condition mentioned in subsection (5) that applies to it and of which it has been given written notice by the Authority.(7) A person that contravenes subsection (6) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $250,000 and, in the case of a continuing offence, to a further fine not exceeding $25,000 for every day or part of a day during which the offence continues after conviction.Bail-in certificate75.—

If the Minister approves a determination, the Minister must, as soon as practicable, issue a bail‑in certificate.(2) The bail-in certificate comes into effect on such date as the Minister appoints by notification in the Gazette.(3) The bail-in certificate may make provision for one or more of the following:

the cancellation of one or more eligible instruments;

the modification, conversion, or change in form of one or more eligible instruments;

that one or more eligible instruments is or are to have effect as if a right of modification, conversion or change of its or their form had been exercised under it or them;

where provision under paragraph (c) is made, the details of the modification, conversion or change of the form of the eligible instrument or instruments;

incidental, consequential and supplementary matters, including a requirement that the Division 4A FI or any other person must comply with a general or specific direction set out in the certificate.(4) The bail-in certificate must include such information as may be prescribed by regulations made under section 126.(5) The bail-in certificate may —

make provision generally or only for specified purposes, cases or circumstances; and

make different provision for different purposes, cases or circumstances.(6) The Minister may, at any time before the appointed date, add to, vary or revoke any matter specified in the bail‑in certificate.(7) On or before the appointed date, the Authority must cause the bail‑in certificate and every addition, variation or revocation mentioned in subsection (6) to be —

served on the Division 4A FI; and

published in the Gazette and in such newspaper or newspapers as the Minister may determine.Effects of bail-in certificate76.—

A provision in a bail-in certificate has effect despite any restriction arising by reason of contract, any written law or rule of law in force before the appointed date of the bail-in certificate, or the constitution of the Division 4A FI.(2) Where a bail-in certificate provides for the cancellation of an eligible instrument —

the cancellation takes effect without other or further act by the Division 4A FI; and

the certificate has effect according to its tenor and is binding on any person affected by it.(3) Where a bail-in certificate provides for the modification, conversion, or change in form of an eligible instrument —

the modification, conversion, or change in form takes effect without other or further act by the Division 4A FI or resulting FI; and

the certificate has effect according to its tenor and is binding on any person affected by it.(4) Where a bail‑in certificate provides that an eligible instrument is to have effect as if a specified right had been exercised under it —

the eligible instrument has effect as if the specified right had been exercised under it without other or further act by the Division 4A FI or resulting FI; and

the certificate has effect according to its tenor and is binding on any person affected by it.(5) A reference in subsections (1) to (4) to anything taking or having effect is a reference to that thing taking or having effect from (and including) the appointed date.(6) A person that fails to comply with any direction given to the person in the bail-in certificate shall be guilty of an offence and shall be liable on conviction —

in the case of an individual, to a fine not exceeding $125,000 or to imprisonment for a term not exceeding 3 years or to both and, in the case of a continuing offence, to a further fine not exceeding $12,500 for every day or part of a day during which the offence continues after conviction; or

in any other case, to a fine not exceeding $250,000 and, in the case of a continuing offence, to a further fine not exceeding $25,000 for every day or part of a day during which the offence continues after conviction.(7) Where a person is charged with an offence under subsection (6), it is a defence for the person to prove that —

the person was not aware of the contravention of the direction; and

the person complied with the direction within a reasonable time after becoming aware of the contravention.(8) Except as provided in subsection (7), it is not a defence for the person mentioned in that subsection that the person did not intend to or did not knowingly contravene the direction.Moratorium77.—

Despite section 53(2) but subject to section 125, during the period beginning on the date of publication of the notice in section 74(1)(a) in the Gazette or, where the notice is not published in the Gazette, the date of publication of the bail‑in certificate in the Gazette under section 75(7), and ending on the appointed date of the certificate —

no resolution may be passed, and no order may be made, for the winding up of the Division 4A FI;

no judicial management order under Part VIIIA of the Companies Act (Cap. 50) may be made in relation to the Division 4A FI;

no civil proceedings may be commenced or continued against the Division 4A FI in respect of any business of the Division 4A FI;

no execution, distress or other legal process may be commenced, levied or continued against any property of the Division 4A FI;

no steps may be taken to enforce any security over any property of the Division 4A FI; and

any sale, transfer, assignment or other disposition of any property of the Division 4A FI is void, except for (where the pertinent financial institution is an insurer licensed under the Insurance Act (Cap. 142)) any payment of claims to policy owners or claimants, other than policy owners who are related corporations of the Division 4A FI.(2) No shareholder of a Division 4A FI or resulting FI may exercise any voting power in the Division 4A FI or resulting FI during the period beginning on —

the date the notice in section 74(1)(a) is published in the Gazette; or

where that notice is not published in the Gazette, the date the bail‑in certificate is published in the Gazette under section 75(7),and ending on the date on which the Minister publishes a notice in the Gazette that this subsection ceases to apply.(3) Subsection (2) has effect despite anything in the Companies Act or the constitution of the Division 4A FI or resulting FI.Significant shareholder by reason of bail-in certificate78.—

Where any person becomes a significant shareholder of a Division 4A FI or resulting FI as a result of a provision of a bail‑in certificate, that person —

is treated as having obtained the approval of the Minister or the Authority, as the case may be, under the significant shareholder provisions applicable to the Division 4A FI or the resulting FI, in respect of the person becoming a significant shareholder; and

is not required to make a take-over offer or to acquire the shares of the other shareholders of the Division 4A FI or resulting FI (as the case may be), despite anything in the Companies Act (Cap. 50) or the Take‑over Code.(2) The person mentioned in subsection (1) must comply with such conditions as the Minister may reasonably impose on the person, including but not limited to the following:

a condition restricting the person’s disposal or further acquisition of shares or voting power in the Division 4A FI or resulting FI, as the case may be;

a condition restricting the person’s exercise of voting power in the Division 4A FI or resulting FI, as the case may be.(3) The Minister may, at any time, add to, vary or revoke any condition imposed under subsection (2).(4) Any condition imposed under subsection (2) has effect despite anything in the Companies Act or the constitution of the Division 4A FI or resulting FI.(5) Despite subsection (1)(a), the Minister may serve a written notice on the person mentioned in subsection (1) if —

the Authority is not satisfied that —

the person is, in accordance with the Guidelines on Fit and Proper Criteria, a fit and proper person to be a significant shareholder; and

having regard to the likely influence of the person on it, the Division 4A FI or resulting FI will or will continue to conduct its business prudently and comply with the provisions of this Act and the relevant Act applicable to it; or

the Minister is not satisfied that —

in a case where the Division 4A FI or resulting FI is a bank incorporated in Singapore, it is in the national interest for the person to remain a significant shareholder of the Division 4A FI or resulting FI, as the case may be; or

in any other case, it is in the public interest for the person to remain a significant shareholder of the Division 4A FI or resulting FI, as the case may be.(6) The written notice in subsection (5) is one that requires the person to take such steps within a reasonable time as are necessary to cease to be a significant shareholder of the Division 4A FI or resulting FI, as the case may be.(7) Before serving the notice in subsection (5), the Minister must (unless the Minister decides that it is not practicable or desirable to do so) cause to be given to the person a written notice of the Minister’s intention to serve the notice in that subsection, and specifying a date by which the person may make written representations.(8) Upon receipt of any written representation, the Minister must consider it for the purpose of determining whether to serve the notice in subsection (5).(9) Where the Minister has served a notice in subsection (5) on a person, then, until the person has disposed of or transferred the shares specified in the notice and in accordance with the notice —

no voting rights are exercisable in respect of the specified shares except with the permission of the Minister, whether or not a notice under section 77(2) is published that the provision has ceased to apply;

no shares of the Division 4A FI or resulting FI (as the case may be) may be issued or offered (whether by way of rights, bonus or otherwise) in respect of the specified shares except with the permission of the Minister; and

except in a liquidation of the Division 4A FI or resulting FI (as the case may be), the Division 4A FI or resulting FI may not make any payment (whether by way of dividends or otherwise) in respect of the specified shares except with the permission of the Minister.(10) Subsection (9) has effect despite anything in the Companies Act or the constitution of the Division 4A FI or resulting FI.(11) In this section, “Guidelines on Fit and Proper Criteria” means the document by that title issued by the Authority and published on its website, as revised from time to time.Directions for disposal79.—

If the Minister is satisfied that any person has failed to comply with a condition imposed on the person in section 78(2), or if the Minister has served a notice on the person in section 78(5), the Minister may, by notice in writing —

direct the transfer or disposal of all or any of the shares in the Division 4A FI or resulting FI held by the person within such time and in such manner as the Minister considers appropriate;

restrict the transfer or disposal of those shares; or

make such other direction as the Minister considers appropriate.(2) Any person to whom a notice is given under subsection (1) must comply with each direction specified in the notice.Offence

in the case of an individual, to a fine not exceeding $125,000 and, in the case of a continuing offence, to a further fine not exceeding $12,500 for every day or part of a day during which the offence continues after conviction; or

in any other case, to a fine not exceeding $250,000 and, in the case of a continuing offence, to a further fine not exceeding $25,000 for every day or part of a day during which the offence continues after conviction.Restriction on eligible instruments81.—

To ensure the effective operation of the provisions of this Division on an eligible instrument, the Authority may make regulations under section 126 to impose a requirement on a Division 4A FI to ensure that the contract governing the eligible instrument contains a provision to the effect that the parties to the contract agree for the eligible instrument to be the subject of a bail‑in certificate.(2) The regulations may —

specify the eligible instruments or class of eligible instruments, and Division 4A FI or class of Division 4A FIs, to which the requirement applies;

require a Division 4A FI bound by the requirement to provide a legal opinion as to the enforceability of the provision required to be included in the contract in a specified jurisdiction; and

provide for incidental, consequential or transitional matters.Division 4B — Termination rightsInterpretation of this Division

to maintain financial stability;

to deal with any serious problem in a financial institution of that country or territory which affects the ability of the financial institution to continue its business or operations as a financial institution, and which, if not dealt with, may cause the financial institution to be no longer able to continue its business or operations as a financial institution;“foreign resolution authority”, in relation to a foreign country or territory, means an authority of the foreign country or territory which, whether alone or together with one or more other authorities of the foreign country or territory, is responsible for a foreign resolution, or for preparing plans for a foreign resolution;“group of companies”, in relation to a pertinent financial institution, means —

the pertinent financial institution;

the entities that are subsidiaries of the pertinent financial institution; and

the entity that is the holding company of the pertinent financial institution, and the entities that are subsidiaries of that holding company;“operator” and “settlement institution” have the meanings given to those terms in section 2(1) of the Payment Systems (Oversight) Act;“reinsurance contract” means any contract or arrangement involving the reinsurance of liabilities under insurance policies;“resolution measure” means —

the making of a determination under Division 2, 3, 4, 4A or 5A, the issue of any certificate under Division 2, 3, 4 or 4A, the making of an order under Division 5A, or the exercise of any power under any such certificate or order; or

the exercise of any power under any relevant provision applicable to the pertinent financial institution concerned;“termination right” means —

a right to terminate a contract;

a right to accelerate, close out, set off or net an obligation under a contract that would result in a suspension or modification or the extinguishment of the obligation;

a right to suspend, modify or extinguish an obligation of a party to a contract; or

in the case of a reinsurance contract, a right of the reinsurer to terminate or not to reinstate coverage under the contract.Effect of resolution measure on contracts where substantive obligations continue to be performed83.—

This section applies to a contract that satisfies both of the following:

one of the parties to the contract is —

a pertinent financial institution that is the subject of a resolution measure; or

an entity that is part of the same group of companies as that of a pertinent financial institution where —

the pertinent financial institution is the subject of a resolution measure; and

the obligations of the entity under the contract are guaranteed or otherwise supported by the pertinent financial institution;

the substantive obligations of the contract (including all applicable basic substantive obligations) continue to be performed by the parties to the contract.(2) Despite any provision of any rule of law, written law or contract —

the resolution measure, and the occurrence of any event directly linked to it, are to be disregarded in determining the applicability of a provision in the contract enabling a party to exercise a termination right; and

any purported exercise of that termination right in reliance on that provision in the contract on the basis of either of those grounds in paragraph (a) has no effect.(3) For the purposes of subsection (1)(b), a basic substantive obligation of a pertinent financial institution (being an approved clearing house or an operator or a settlement institution of a designated payment system) under a contract is not considered to be no longer performed, by reason only that the institution allocates any loss to its participants, or uses collateral provided by or on behalf of its participants —

under its margin rules or default arrangements; or

pursuant to a resolution measure.Right to temporarily suspend termination right for contracts because of resolution measure84.—

This section applies to a contract one of the parties to which is —

a pertinent financial institution that is the subject or proposed subject of a resolution measure;

a pertinent financial institution in respect of which a foreign resolution authority of a foreign country or territory has carried out, or has informed the Authority that it has grounds to carry out, a foreign resolution; or

an entity that is part of the same group of companies as that of a pertinent financial institution where —

the pertinent financial institution is the subject or proposed subject of a resolution measure;

the contract has a termination right that is exercisable if the pertinent financial institution becomes insolvent or is in a certain financial condition; and

the obligations of the entity under the contract are guaranteed or otherwise supported by the pertinent financial institution.(2) The Authority may, by notice in writing to the parties to the contract, suspend the exercise of any termination right in the contract for a specified period.(3) The notice under subsection (2) does not apply to —

a termination right under the contract which becomes exercisable for a breach of a basic substantive obligation only;

a termination right under a contract between the pertinent financial institution and a person prescribed for the purposes of this paragraph by regulations made under section 126; or

a termination right under a contract, or a contract within a class of contracts, prescribed for the purposes of this paragraph by regulations made under section 126.(4) When exercising a power under subsection (2), the Authority must have regard to its impact on the safe and orderly functioning of the financial market and financial market infrastructures operating in Singapore.(5) The notice under subsection (2) —

may relate to all or any class or description of parties to a contract;

may make different provisions for different classes or descriptions of parties to a contract; and

may be of general or specific application.(6) A copy of the notice under subsection (2) must be published —

by the Authority in the Gazette and on its website; and

by the pertinent financial institution on its website.(7) In this section, a pertinent financial institution is a proposed subject of a resolution measure if the Authority is satisfied that there is a basis for that action under section 50 in relation to that pertinent financial institution.When suspension takes effect85.—

A suspension by a notice under section 84 takes effect from (and including) the time of publication of the notice under that section in the Gazette or a time on another date specified in the notice, and —

if the contract is not a reinsurance contract, expires no later than the same time on the second business day after —

the date of publication of the notice; or

the other date specified in the notice,as the case may be; or

if the contract is a reinsurance contract, expires no later than the time and date prescribed for the purposes of this paragraph by regulations made under section 126.(2) During the period of suspension of a termination right under a contract and despite any provision of any rule of law, written law or contract, any purported exercise of that right has no effect.(3) A person whose termination right under a contract is suspended under section 84 may (in accordance with the terms of the contract) exercise that right before the expiry of the suspension if the Authority gives the person written notice that the person may exercise that right because —

the contract does not or will not form part of the business of the pertinent financial institution to be transferred under section 58; or

the Authority has decided not to make a determination under Division 4A in relation to the pertinent financial institution.(4) On the expiry of the period of suspension under section 84 of a termination right under a contract, the person who holds that right may (if it had not already been exercised under subsection (3)) exercise that right in accordance with the terms of the contract, but not on any of the following grounds:

a resolution measure taken in relation to the pertinent financial institution;

the occurrence of an event directly linked to such resolution measure;

if the contract forms part of any business of the pertinent financial institution that has been transferred to another person pursuant to a certificate of transfer under section 58 or an onward transfer certificate under section 64, any act of the pertinent financial institution before the transfer;

the suspension itself.”.