Asset Covered Securities Act, 2001

Interpretation.

3.—(1) In this Act, unless the context otherwise requires—

“this Act” includes a regulation made under this Act;

“agricultural land” means land that is used, or set aside for use, primarily for the purpose of growing crops or other agricultural products, or for grazing stock or raising domestic animals or birds, and includes all improvements made to the land for that purpose;

“asset” includes an interest in an asset;

“asset covered securities”—

(a) in relation to a designated or formerly designated mortgage credit institution, means mortgage covered securities issued by the institution, and

(b) in relation to a designated or formerly designated public credit institution, means public credit covered securities issued by the institution;

“Authority” means the Central Bank;

“building” includes a structure other than a building;

“building society” means a building society incorporated under the Building Societies Act, 1989 , or deemed by section 124(2) of that Act to be so incorporated;

“category A country” means a country (other than an EEA country) to which section 5 (1)(a) relates;

“category B country” means a country to which section 5 (1)(b) relates;

“Central Bank” means the Central Bank of Ireland;

“Codified Banking Directive” means Directive 2000/12/EC of the European Parliament and of the Council of the European Union of 20 March 2000 relating to the taking up and pursuit of the business of credit institutions, and includes that Directive as amended or replaced from time to time;

“commercial property” means land that is used, or is set aside to be used, primarily for the purpose of any industry, trade or other business undertaking, but does not include a mine, quarry, agricultural land or residential property;

“Companies Acts” means the Companies Acts, 1963 to 2001, and every enactment that is to be construed as one with those Acts;

“conditions”, in relation to a designated credit institution, means the conditions specified in or accompanying the institution's certificate of designation or, if the conditions are varied under section 16 , those conditions as varied under that section;

“cover assets”—

(a) in relation to a designated or formerly designated mortgage credit institution, means mortgage credit assets, cover assets hedge contracts or substitution assets that are held in a cover assets pool maintained by the institution, and

(b) in relation to a designated or formerly designated public credit institution, means public credit assets, cover assets hedge contracts or substitution assets that are held in a cover assets pool maintained by the institution;

“cover assets hedge contract”—

(a) in relation to a designated or formerly designated mortgage credit institution, means a contract of a kind entered into in accordance with section 30 (3), and

(b) in relation to a designated or formerly designated public credit institution, means a contract of a kind entered into in accordance with section 45 (3);

“cover-assets monitor”, in relation to a designated or formerly designated credit institution, means a person appointed in respect of the institution under Part 5;

“cover assets pool”—

(a) in relation to a designated or formerly designated mortgage credit institution, means the mortgage credit assets, cover assets hedge contracts and substitution assets held by the institution that are recorded in the register of mortgage covered securities business kept by the institution, and

(b) in relation to a designated or formerly designated public credit institution, means the public credit assets, cover assets hedge contracts and substitution assets held by the institution that are recorded in the register of public credit covered securities business kept by the institution;

“credit institution” means any of the following:

(a) the holder of a licence under section 9 of the Central Bank Act, 1971 ;

(b) a building society;

(c) a trustee savings bank that holds a licence issued under the Trustee Savings Banks Act, 1989 ;

(d) ACC Bank plc;

(e) a credit institution, as defined in the Codified Banking Directive, that is authorised by a competent authority outside the State for the purposes of that Directive;

“dealing”, in relation to an asset, includes originating, acquiring and disposing of the asset;

“designated credit institution” means either a designated mortgage credit institution or a designated public credit institution;

“designated mortgage credit institution” means an institution designated by the Authority in accordance with Part 3 to carry on the permitted business activities referred to in section 27 (1);

“designated public credit institution” means an institution designated by the Authority in accordance with Part 3 to carry on the permitted business activities referred to in section 42 (1);

“EEA country” means a country that is a member of the European Economic Area;

“European Central Bank” has the meaning given by the Statute of the European System of Central Banks and of the European Central Bank;

“financial asset” has the meaning given by section 496 of the Taxes Consolidation Act, 1997 ;

“financial obligation” includes—

(a) an obligation given as a guarantor or surety,

(b) an obligation that is indirect, and

(c) an obligation that is contingent on the happening of some event;

“formerly designated credit institution” means an institution that was formerly registered as either a designated mortgage credit institution or a designated public credit institution;

“functions” includes duties and responsibilities;

“holder”, in relation to an asset covered security, includes any person who has a right to or an interest in the security, whether the right or interest is direct or indirect or is derived through a custodian, intermediary or any system for settling or clearing securities;

“insolvency process” means liquidation, examination, receivership, reorganisation, a moratorium, bankruptcy or any similar process related to the inability of persons to pay their debts, and, in relation to a designated or formerly designated credit institution, includes any process relating to the insolvency or potential insolvency of the institution;

“insolvent”, in relation to a designated or formerly designated credit institution, has the meaning given by section 7 ;

“manager” means a person appointed in respect of a designated or formerly designated credit institution under Part 6 or Schedule 1;

“the Minister” means the Minister for Finance;

“mortgage covered security”, in relation to a designated or formerly designated mortgage credit institution, means a security that is issued by the institution in accordance with this Act and is secured over the cover assets that are included in a cover assets pool maintained by the institution;

“mortgage credit” has the meaning given by section 4 ;

“mortgage credit asset” means property or an asset held by a designated mortgage credit institution that comprises one or more mortgage credits;

“national central bank” has the meaning given by the Statute of the European System of Central Banks and of the European Central Bank;

“non-performing” means—

(a) in relation to assets or property of any kind—such of the assets or property as are in the course of being foreclosed or otherwise enforced,

(b) in relation to mortgage credit assets for which the related mortgage credit is of a kind referred to in section 4 (1)—such of those assets in relation to which one or more payments of principal or interest payable on that credit are in arrears under the terms of the security documents governing that credit, but only if those payments are referable to a period of 3 months or more, or

(c) in relation to kinds of assets or property, other than mortgage credit assets referred to in paragraph (b)—such of the assets or property in respect of which one or more payments of principal or interest payable on the related credit are in arrears for 10 days or more under the terms of the security documents that govern that credit;

“NTMA” means the National Treasury Management Agency;

“obligation” includes a liability;

“parent entity”, in relation to a designated credit institution, has the same meaning as is given to the expression “parent company” in the European Communities (Credit Institutions: Accounts) Regulations, 1992;

“performing”, in relation to assets or property held by a designated credit institution, means such of the assets or property as are not non-performing assets;

“potentially insolvent”, in relation to a designated or formerly designated credit institution, has the meaning given by section 8 ;

“power” includes a right and an authority;

“preferred creditor”, in relation to a designated or formerly designated credit institution, means all or any of the following persons—

(a) the holder of an outstanding asset covered security issued by the institution,

(b) a person (other than the holder) who has rights under or in respect of any such security by virtue of any legal relationship with the holder,

(c) a person with whom the institution has entered into a cover assets hedge contract, but only if the person is in compliance with the financial obligations imposed under the contract,

(d) a person who is a super-preferred creditor in relation to the institution;

“property” includes an interest in property;

“property asset”, in relation to a mortgage credit, means a right or interest in the residential or commercial property over which the mortgage credit is secured;

“prudent market value” means—

(a) in relation to a mortgage credit asset or substitution asset held or proposed to be held by a designated mortgage credit institution—the prudent market value as determined in accordance with section 41 , and

(b) in relation to a public credit asset or substitution asset held or proposed to be held by a designated public credit institution—the prudent market value as determined in accordance with section 56 ;

“public credit” has the meaning given by section 5 ;

“public credit covered security”, in relation to a designated or formerly designated public credit institution, means a security issued by the institution in accordance with this Act that is secured over the cover assets that comprise a cover assets pool maintained by the institution;

“public credit asset” means property or an asset held by a designated or formerly designated public credit institution that comprises one or more public credits;

“record” means any record of information, however compiled, recorded or stored, and includes—

(a) any book, register or other document containing information, and

(b) any disc, tape or other article from which information is capable of being produced in any form capable of being reproduced visually or aurally;

“register of designated mortgage credit institutions” means the register established in accordance with section 17 (1);

“register of designated public credit institution” means the register established in accordance with section 17 (2);

“register of mortgage covered securities business”, in relation to a designated or formerly designated mortgage credit institution, means the register that the institution is required to keep under section 38 ;

“register of public credit covered securities business”, in relation to a designated or formerly designated public credit institution, means the register that the institution is required to keep under section 53 ;

“registered”, in relation to a designated credit institution, means registered under Part 3;

“regulatory notice” means a regulatory notice published by the Authority under a provision of this Act;

“the regulations” means regulations made by the Authority, and in force under this Act;

“related company”, in relation to a designated or formerly designated credit institution, has the meaning given by subsection (6);

“residential property” means a building or part of a building that is used or is suitable for use as a dwelling, and includes the land on which the building is constructed and premises that are used in conjunction with a dwelling, such as a garden, patio, garage or shed;

“secured”—

(a) in relation to asset covered securities issued by a designated credit institution—means secured as provided by Part 7 over the relevant cover assets pool maintained by the institution to protect and satisfy the claims and rights of the holders of those securities,

(b) in relation to cover assets hedge contracts entered into by such an institution—means secured as so provided to protect and satisfy the claims and rights of the persons with whom the institution has entered into those contracts,

(c) in relation to the cover-assets monitor appointed in respect of such an institution under this Act—means secured as so provided to protect and satisfy the claims and rights of the monitor in connection with the monitor's appointment as such, and

(d) in relation to a manager appointed in respect of such an institution under this Act—means secured as so provided to protect and satisfy the claims and rights of the manager in connection with the manager's appointment as such;

“security document” includes any form of visual representation that can be produced electronically or by any other means;

“Statute of the European System of Central Banks and of the European Central Bank” means the statute set out in Protocol (No. 3) (annexed by the Treaty on European Union done at Maastricht on the 7th day of February, 1992) to the Treaty establishing the European Economic Community done at Rome on the 25th day of March, 1957;

“substitution asset” has the meaning given by section 6 ;

“super-preferred creditor”, in relation to a designated or formerly designated credit institution, means a cover-assets monitor or manager appointed in respect of the institution;

“supervisory enactment” means any of the following:

(a) the Central Bank Acts, 1942 to 2001;

(b) the Building Societies Acts, 1989 to 1992;

(c) the Trustee Savings Banks Acts, 1989 and 2001;

(d) the ACC Bank Acts, 1978 to 2001;

(e) regulations made under the European Communities Act, 1972 , relating to the regulation or supervision of credit institutions;

(f) supervisory notices issued by the Central Bank giving effect to directives of the European Union relating to the regulation or supervision of credit institutions;

(g) any statute, regulation or notice amending, replacing or supplementing any of those Acts, regulations and notices;

“tier 1 asset” means any property that is designated by the European Central Bank as a tier 1 asset for the purpose of giving effect to the monetary policy of the European System of Central Banks, but, in relation to a designated public credit institution, does not include property that comprises public credit assets; and

“tier 2 asset” means property that is, with the approval of the European Central Bank, included in a national central bank's list of eligible tier 2 assets for the purpose of giving effect to the monetary policy of the European System of Central Banks, but does not include—

(a) in the case of a designated mortgage credit institution— property that comprises a mortgage credit asset or a substitution asset, or

(b) in the case of a designated public credit institution— property that comprises a public credit asset or a substitution asset.

(2) For the purposes of this Act—

(a) the country in which a mortgage credit asset is located is the country in which the property asset that secures the relevant mortgage credit related to the mortgage credit asset is situated, and

(b) the country in which a substitution asset (other than a deposit of money) is located is the country where the entity that has the primary financial obligation in respect of the asset is formed or established, or

(c) the country in which a substitution asset that is a deposit of money is located is the country in which the place of business of the financial institution that is holding the deposit is situated.

(3) In subsection (2)(b), “primary financial obligation” means the financial obligation that enables the asset to qualify as a tier 1 asset.

(4) For the purposes of this Act—

(a) the country in which a public credit asset is located is the country in which the entity that has the primary financial obligation in respect of the asset is formed or established, and

(b) the country in which a substitution asset (other than a deposit of money) is located is the country where the entity that has the primary financial obligation in respect of the asset is formed or established, or

(c) the country in which a substitution asset that is a deposit of money is located is the country in which the place of business of the financial institution that is holding the deposit is situated.

(5) In subsection (4), “primary financial obligation” means the financial obligation that enables the asset to qualify—

(a) as a public credit asset, or

(b) in the case of a substitution asset that is a tier 1 asset, as a tier 1 asset.

(6) For the purposes of this Act, a company is related to a credit institution if—

(a) the institution is its holding company or subsidiary,

(b) more than half in nominal value of the company's equity share capital is held by the institution and companies related to it (whether directly or indirectly, but otherwise than in a fiduciary capacity),

(c) more than half in nominal value of the equity share capital of each of those bodies is held by members of the other (whether directly or indirectly, but otherwise than in a fiduciary capacity),

(d) the institution, or a company or companies related to it or to the institution together with a company or companies that are related to it, are entitled to exercise or control the exercise of more than one half of the voting power at any general meeting of the company,

(e) the businesses of the institution and the company have been so carried on that the separate business of each of them, or a substantial part of it, is not readily identifiable, or

(f) there is another company to which both the institution and the company are related.

(7) For the purposes of subsection (6)

(a) “company” includes any body that is liable to be wound up under the Companies Acts, and

(b) “holding company”, “subsidiary” and “equity share capital” have the meanings given by section 155 of the Companies Act, 1963 .