# The Bank Recovery and Resolution (No. 2) Order 2014

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U.K.

Statutory Instruments

# 2014 No. 3348

Financial Services And Markets

# The Bank Recovery and Resolution (No. 2) Order 2014

Made

18th December 2014

Laid before Parliament

19th December 2014

Coming into force in accordance with article 1(2) and (3)

The Treasury make the following Order in exercise of the powers conferred by section 2(2) of the European Communities Act                           1972 F1, section 192B(4) of the Financial Services and Markets Act 2000 F2 and section 230 of the Banking Act 2009 F3.                        

The Treasury are designated F4 for the purposes of the European Communities Act 1972 in relation to financial services.                        

F11972 c. 68. Section 2(2) was amended by the Legislative and Regulatory Reform Act 2006 (c. 51), **section 27(1)(a)**, and by the European Union (Amendment) Act 2008 (c. 7), **section 3** and the Schedule, Part 1. By virtue of the amendment of section 1(2) by section 1 of the European Economic Area Act 1993 (c. 51), an order may be made under section 2(2) of the European Communities Act 1972 to implement obligations of the United Kingdom                              created or arising by or under the Agreement on the European Economic Area signed at Oporto on 2nd May 1992 (Cm 2073) and                              the Protocol adjusting the Agreement signed in Brussels on 17th March 1993 (Cm 2183).

F22000 c. 8. Section 192B was inserted by the Financial Services Act 2012 (c. 21), **section 27**, which inserted Part 12A of FSMA.

F32009 c. 1.

F4S.I. 2012/1759.

## **PART 1**U.K.Introductory provisions

### Citation and commencementU.K.

### InterpretationU.K.

F5OJ No. L 176, 27.6.2013, p. 338. For corrigenda see OJ No. L 208, 2.8.2013, p. 73.

F6OJ No. L 176, 27.6.2013, p. 1-137. For corrigenda see OJ No. L 208, 2.8.2013, p. 68 and OJ No. L 321, 30.11.2013, p. 6.

F7For the meaning of “resolution college” see the recovery and resolution directive, Article 2.1, point (46).

F8For the meaning of “resolution authority” see the recovery and resolution directive, Article 2.1, point (18).

F9OJ No. L 287, 29.10.2013, p. 63.

F10For the meaning of “institution” see the recovery and resolution directive, Article 2.1, point (23).

F11Section 7 was amended by the Financial Services Act 2012, Schedule 17, paragraphs 1 and 8, and by S.I. 2014/3329.

F12Section 81B was inserted by the Financial Services Act 2012, section 100; and was amended by S.I. 2014/3329. Section 81ZBA was inserted by S.I. 2014/3329. Section 81BA was inserted by the Financial Services (Banking Reform) Act 2013 (c. 33), **Schedule 2**, paragraphs 1 and 7(1); and was amended by S.I. 2014/3329.

F13For the meaning of “controlled” (in the definition of “consolidating supervisor”) see the definition of “control” in point                              (37) of Article 4.1 of the capital requirements regulation.

F14Section 3 was amended by the Financial Services Act 2012, section 96(2) and Schedule 17, paragraphs 1 and 4, and by S.I. 2014/3329.

F15OJ No. L 201, 27.7.2012, p. 1-59.

F16OJ No. L 331, 15.12.2010, p. 12.

F171998 c. 11. Section 9B was inserted by the Financial Services Act 2012, section 4(1).

F18For the meaning of “resolution action” see the recovery and resolution directive, Article 2.1, point (40).

F19For the meaning of “resolution power” see the recovery and resolution directive, Article 2.1, point (20).

F201986 c. 45.

F21Section 2B was substituted by the Financial Services Act 2012, section 6(1), which substituted Part 1A of FSMA.

F22OJ No. L 173, 12.6.2014, p. 190.

F23For the meaning of “group” see the recovery and resolution directive, Article 2.1, point (26).

F24Section 4 was amended by S.I. 2014/3329.

F25For the meaning of these tools see the recovery and resolution directive, Article 2.1, points (58), (60), (55) and (57).

F26Section 1(3) was substituted by the Financial Services (Banking Reform) Act 2013, Schedule 2, paragraphs 1 and 12(1) and (3); and was                              amended by S.I. 2014/3329. Paragraphs (a), (b), (ba) and (c) refer to four of the five stabilisation options, namely transfer to a private sector purchaser,                              transfer to a bridge bank, the bail-in option and transfer to an asset management vehicle (the fifth option is transfer to                              temporary public ownership referred to in paragraph (d)).

F27Section 31 was amended by the Financial Services Act 2012, section 11(1).

### Application of OrderU.K.

## **PART 2**U.K.Designation of authorities and competent ministry

### Designation of the Bank as resolution authorityU.K.

### Designation for the purposes of Article 59 of the recovery and resolution directiveU.K.

F28For the meaning of “credit institution” see the recovery and resolution directive, Article 2.1, point (2).

F29Section 83A was inserted by the Financial Services Act 2012, Schedule 17, paragraphs 1 and 28; and was amended by S.I. 2014/3329.

F30Section 89A was inserted by the Financial Services Act 2012, section 101(1) and (5); and was amended by S.I. 2014/3329.

### Designation of the Treasury as the ministry responsible for exercising the functions of the competent ministryU.K.

F31For the meaning of “competent ministries” see the recovery and resolution directive, Article 2.1, point (22).

## **PART 3**U.K.Recovery and resolution planning

### Recovery planning: preparatory steps and simplified obligationsU.K.

### Resolution planning: preparatory steps and simplified obligationsU.K.

### Consultation with the Financial Policy CommitteeU.K.

F32Section 9C was inserted by the Financial Services Act 2012, section 4(1).

### Provision of information to EBAU.K.

## **PART 4**U.K.Recovery plans

### CHAPTER 1U.K.Assessment of recovery plan drawn up by an institution

#### Application and interpretation of Chapter 1U.K.

#### Assessment of planU.K.

F33For the meaning of “significant branch” see the recovery and resolution directive, Article 2.1, point (34).

#### Criteria for assessmentU.K.

#### Revision of planU.K.

#### Business changes and relevant measuresU.K.

### CHAPTER 2U.K.Assessment of group recovery plan where the PRA or FCA is the consolidating supervisor

#### Application and interpretation of Chapter 2U.K.

#### Duty to transmit a copy of group recovery planU.K.

F34Section 348 was amended by the Financial Services Act 2010 (c. 28), **section 24(1)** and (2) and Schedule 2, paragraphs 1 and 26; by the Financial Services Act 2012, section 41 and Schedule 12, paragraph 18,                              and by the Financial Services (Banking Reform) Act 2013, section 129 and Schedule 8, paragraph 5.

#### Assessment of group recovery planU.K.

#### Purpose of assessmentU.K.

#### Assessment of plan where every group institution is a UK authorised personU.K.

#### Joint assessment of planU.K.

#### Revision of planU.K.

#### Business changes and relevant measuresU.K.

#### Recovery plan for group institutionU.K.

#### References to EBAU.K.

#### Requesting the assistance of EBAU.K.

### CHAPTER 3U.K.Assessment of group recovery plan where neither the PRA nor the FCA is the consolidating supervisor

#### Application and interpretation of Chapter 3U.K.

#### Purpose of assessmentU.K.

#### Joint assessment of planU.K.

#### Assessment of recovery plans drawn up on an individual basisU.K.

#### References to EBAU.K.

#### Requesting the assistance of EBAU.K.

### CHAPTER 4U.K.Review of recovery plans and group recovery plans

#### Review of recovery planU.K.

#### Review of group recovery plan assessed under Chapter 2U.K.

#### Review of group recovery plan assessed under Chapter 3U.K.

## **PART 5**U.K.Resolution plans

### CHAPTER 1U.K.Resolution plans for institutions

#### Interpretation of Chapter 1U.K.

#### The Bank's duty to draw up resolution plansU.K.

#### Duty to transmit a copy of the resolution planU.K.

### CHAPTER 2U.K.Group resolution plan where the PRA or FCA is the consolidating supervisor

#### Application of Chapter 2U.K.

#### The Bank's duty to draw up group resolution plansU.K.

#### Information to be transmitted for the purpose of drawing up group resolution plansU.K.

F35Section 89L was inserted by S.I. 2014/3329.

#### Joint decision on adoption of group resolution planU.K.

#### References to EBAU.K.

#### Requesting the assistance of EBAU.K.

#### Duty to transmit a copy of the group resolution planU.K.

### CHAPTER 3U.K.Group resolution plan where neither the PRA nor the FCA is the consolidating supervisor

#### Application and interpretation of Chapter 3U.K.

#### Joint decision on adoption of group resolution planU.K.

F36For the meaning of “group-level resolution authority” see the recovery and resolution directive, Article 2.1, point (44).

#### Failure to reach joint decision: disagreement by the Bank with a joint proposalU.K.

#### Failure to reach joint decision: agreement by the Bank with a joint proposalU.K.

#### Resolution plan for group entityU.K.

#### References to EBAU.K.

#### Requesting the assistance of EBAU.K.

### CHAPTER 4U.K.Review of resolution plans and group resolution plans

#### Review of resolution planU.K.

#### Review of group resolution plan drawn up by the BankU.K.

#### Review of group resolution plan drawn up by another resolution authorityU.K.

### CHAPTER 5U.K.Information and records for resolution planning

#### Information required for resolution planningU.K.

F37Section 3A was substituted by the Financial Services Act 2012, section 6(1), which substituted Part 1A of FSMA.

F38Section 137K was substituted by the Financial Services Act 2012, section 24(1), which substituted Part 9A of FSMA; and, together with                              the heading, is amended by paragraph 3 of Schedule 3 to this Order.

#### Notice of matters which could necessitate an amendment of a planU.K.

#### Records of financial contractsU.K.

F39For the meaning of “financial contracts” see the recovery and resolution directive, Article 2.1, point (100).

## **PART 6**U.K.Assessment of resolvability and removal of impediments to resolvability

### CHAPTER 1U.K.Assessment of resolvability of institutions

#### Application and interpretation of Chapter 1U.K.

F40For the meaning of “resolution action” see the recovery and resolution directive, Article 2.1, point (40).

#### Assessment of resolvabilityU.K.

F41For the meaning of “extraordinary public financial support” and “emergency liquidity assistance” see the recovery and resolution                              directive, Article 2.1, points (28 and (29).

### CHAPTER 2U.K.Assessment of resolvability of groups

#### Application and interpretation of Chapter 2U.K.

#### Assessment of group resolvability where the PRA or FCA is the consolidating supervisorU.K.

#### Assessment of group resolvability where neither the PRA nor the FCA is the consolidating supervisorU.K.

F42For the meaning of “group-level resolution authority” see the recovery and resolution directive, Article 2.1, point (44).

### CHAPTER 3U.K.Removal of impediments to resolvability of institutions

#### Application and interpretation of Chapter 3U.K.

F43Section 3A was inserted by S.I. 2014/3329.

#### Notice of determinationU.K.

#### Effect of notice of determinationU.K.

#### Right of appealU.K.

F44This definition was inserted by S.I. 2010/22.

### CHAPTER 4U.K.Removal of impediments to resolvability of group entities where the PRA or FCA is the consolidating supervisor

#### Application and interpretation of Chapter 4U.K.

F45Section 192B was inserted by the Financial Services Act 2012, section 27, which inserted Part 12A of FSMA.

#### Report on substantive impediments to the resolvability of group entitiesU.K.

#### Suspension of requirement to draw up or review group resolution planU.K.

#### Determining remedial measuresU.K.

F46For the meaning of “supervisory college” see the recovery and resolution directive, Article 2.1, point (52).

#### Joint decision on impediments to group resolvability and remedial measuresU.K.

#### References to EBAU.K.

#### Requesting the assistance of EBAU.K.

### CHAPTER 5U.K.Removal of impediments to resolvability of groups where neither the PRA nor the FCA is the consolidating supervisor

#### Application and interpretation of Chapter 5U.K.

#### Suspension of requirement to draw up or review group resolution planU.K.

#### Determining remedial measuresU.K.

#### Joint decision on impediments to group resolvability and remedial measuresU.K.

#### Failure to reach joint decision: disagreement by the Bank with joint proposalsU.K.

#### Failure to reach joint decision: agreement by the Bank with joint proposalsU.K.

#### References to EBAU.K.

#### Requesting the assistance of EBAU.K.

## **PART 7**U.K.Intra-group financial support

### CHAPTER 1U.K.Authorisation of agreement for group financial support where the PRA or FCA is the consolidating supervisor

#### Application and interpretation of Chapter 1U.K.

#### Review of group financial support agreement and decision on authorisationU.K.

#### Duty to transmit a copy of applicationU.K.

#### Joint decision with other competent authoritiesU.K.

#### References to EBAU.K.

#### Requesting the assistance of EBAU.K.

#### Duty to transmit a copy of authorised agreementU.K.

#### Amendment of authorised agreementU.K.

### CHAPTER 2U.K.Authorisation of agreement for group financial support where neither the PRA nor the FCA is the consolidating supervisor

#### Application and interpretation of Chapter 2U.K.

#### Review of group financial support agreement and decision on authorisationU.K.

#### Joint decision with other competent authoritiesU.K.

#### References to EBAU.K.

#### Requesting the assistance of EBAU.K.

#### Amendment of authorised agreementU.K.

### CHAPTER 3U.K.Approval of authorised agreements by the members of a UK group entity

#### Interpretation of Chapter 3U.K.

F471986 c. 53.

#### Requirement for approval of authorised agreementU.K.

#### Revocation of authorised agreementU.K.

#### Obligation to provide annual reportU.K.

### CHAPTER 4U.K.Provision of group financial support

#### Interpretation of Chapter 4U.K.

F48For the meaning of “supervisory college” see the recovery and resolution directive, Article 2.1, point (52).

#### Relevant notice from UK group entity: decision by the PRA or FCAU.K.

#### Duties of consolidating supervisor where financial support agreed, prohibited or restrictedU.K.

#### Re-assessment of recovery plans by the PRA or FCA where it is not the consolidating supervisorU.K.

#### Requesting the assistance of EBAU.K.

#### Reciprocal supportU.K.

## **PART 8**U.K.Early intervention

### CHAPTER 1U.K.Early intervention with respect to an institution

#### Interpretation of Chapter 1U.K.

F49OJ No. L 176, 27.6.2013, p. 338. For corrigenda see OJ No. L 208, 2.8.2013, p. 73.

#### Notice that institution meets the conditions for early interventionU.K.

#### Deadline for compliance with measure for early interventionU.K.

### CHAPTER 2U.K.Early intervention with respect to groups where the PRA or FCA is the consolidating supervisor

#### Application and interpretation of Chapter 2U.K.

#### Procedure for early intervention in respect of a UK group entityU.K.

#### Procedure for early intervention in respect of a non-UK group entityU.K.

#### Joint decisions about early interventionU.K.

#### References to EBAU.K.

#### Requesting the assistance of EBAU.K.

### CHAPTER 3U.K.Early intervention with respect to groups where neither the PRA nor the FCA is the consolidating supervisor

#### Application and interpretation of Chapter 3U.K.

#### Procedure for early intervention in respect of a UK group entityU.K.

#### Joint decisions about early interventionU.K.

#### References to EBAU.K.

#### Requesting the assistance of EBAU.K.

## **PART 9**U.K.Minimum requirement for own funds and eligible liabilities

### CHAPTER 1U.K.Determination of minimum requirement for an institution

#### Interpretation of Chapter 1U.K.

#### Review of minimum requirementU.K.

### CHAPTER 2U.K.Determination of minimum consolidated requirement where the PRA or FCA is the consolidating supervisor

### CHAPTER 3U.K.Determination of minimum consolidated requirement where neither the PRA nor the FCA is the consolidating supervisor

#### Application and interpretation of Chapter 3U.K.

#### Review of minimum consolidated requirementU.K.

### CHAPTER 4U.K.Determination of minimum requirements for group institutions where the PRA or FCA is the consolidating supervisor

#### Application and interpretation of Chapter 4U.K.

#### Duties of the Bank in relation to minimum requirementU.K.

#### Joint determination of minimum requirementsU.K.

#### References to EBA: determination of minimum requirementU.K.

#### Review of minimum requirementsU.K.

### CHAPTER 5U.K.Determination of minimum requirements for group institutions where neither the PRA nor the FCA is the consolidating supervisor

#### Application and interpretation of Chapter 5U.K.

#### Duties of the Bank in relation to minimum requirementU.K.

#### Joint determination of minimum requirementsU.K.

#### References to EBA: determination of minimum requirementU.K.

#### Review of minimum requirementsU.K.

### CHAPTER 6U.K.Minimum requirement for own funds and eligible liabilities: other provisions

#### Waiver of application of Chapter 4 or 5U.K.

#### Meeting minimum requirement through contractual bail-in instruments etcU.K.

## **PART 10**U.K.Requirement to write down or convert capital instruments

### Application and interpretation of PartU.K.

### Determinations pursuant to Article 59.3 of the recovery and resolution directive: preliminary steps for UK group entitiesU.K.

F62Section 6B was inserted by S.I. 2014/3329.

### Regulator to take alternative measuresU.K.

### Determination that Case 2, 3, 4 or 5 is satisfiedU.K.

### Joint determination under Article 59(3)(c) of the recovery and resolution directive in relation to a non-UK group entityU.K.

## **PART 11**U.K.Removal of procedural impediments to application of bail-in tool

### Interpretation of PartU.K.

F63This definition was inserted by S.I. 2014/3329.

### Requirement to increase or remove limit on share capitalU.K.

F64For the meaning of “resolution action” see the recovery and resolution directive, Article 2.1, point (40).

F65Sections 12A, 48B and 81BA were inserted by the Financial Services (Banking Reform) Act 2013, Schedule 2, paragraphs 1, 2, 4 and 7(1); and                              were amended by S.I. 2014/3329.

### Removal of impediments to the conversion of liabilities into sharesU.K.

## **PART 12**U.K.Treatment of derivative contracts where bail-in option is applied

### Application and interpretation of PartU.K.

### Liabilities arising from derivative contractsU.K.

F66Section 6E was inserted by S.I. 2014/3329.

F67Section 48X was inserted by S.I. 2014/3329.

## **PART 13**U.K.Preparation of business reorganisation plans after application of bail-in tool

### CHAPTER 1U.K.Assessment of business reorganisation plan drawn up by an institution

#### Application and interpretation of Chapter 1U.K.

F68Section 12A was inserted by the Financial Services (Banking Reform) Act 2013, Schedule 2, paragraphs 1 and 2; and was amended by S.I. 2014/3329.

F69Section 62B was inserted by S.I. 2014/3329.

#### Assessment of business reorganisation planU.K.

#### Purpose of assessmentU.K.

F70For the meaning of “Union State aid framework” see the recovery and resolution directive, Article 2.1, point (53).

#### Revision of planU.K.

### CHAPTER 2U.K.Assessment of business reorganisation plan drawn up by a single group entity

#### Application and interpretation of Chapter 2U.K.

#### Assessment etc of business reorganisation planU.K.

### CHAPTER 3U.K.Assessment of business reorganisation plan drawn up for relevant group where the PRA or FCA is the consolidating supervisor

#### Application and interpretation of Chapter 3U.K.

F71Section 192B was inserted by the Financial Services Act 2012, section 27. For Condition C (a parent undertaking must be a financial institution                              of a prescribed kind (section 192B(4)) see S.I. 2013/165.

#### Duty to transmit a copy of business reorganisation planU.K.

F72For the meaning of “significant branch” see the recovery and resolution directive, Article 2.1, point (34).

F73Section 348 was amended by the Financial Services Act 2010, section 24(1) and (2) and Schedule 2, paragraphs 1 and 26, by the Financial                              Services Act 2012, section 41 and Schedule 12, paragraph 18, and by the Financial Services (Banking Reform) Act 2013, section                              129 and Schedule 8, paragraph 5.

#### Assessment of business reorganisation planU.K.

#### Purpose of assessmentU.K.

#### Assessment of plan where every group entity is set up in the United KingdomU.K.

#### Joint assessment of planU.K.

#### Revision of planU.K.

#### Assessment of business reorganisation plans drawn up on an individual basisU.K.

#### References to EBAU.K.

#### Requesting the assistance of EBAU.K.

### CHAPTER 4U.K.Assessment of business reorganisation plan drawn up for relevant group where neither the PRA nor the FCA is the consolidating                        supervisor

#### Application and interpretation of Chapter 4U.K.

F74For the meaning of “group-level resolution authority” see the recovery and resolution directive, Article 2.1, point (44).

#### Purpose of assessmentU.K.

#### Joint assessment of planU.K.

#### Assessment of business reorganisation plans drawn up on an individual basisU.K.

#### References to EBAU.K.

#### Requesting the assistance of EBAU.K.

## **PART 14**U.K.Procedural obligations where an undertaking is failing or likely to fail

### Interpretation of PartU.K.

### Matters to be notified by the regulator to the BankU.K.

F75For the meaning of “crisis prevention measures” see the recovery and resolution directive, Article 2.1, point (101).

### Notification that an undertaking is failing or likely to failU.K.

F76OJ No. L 331, 15.12.2010, p. 1.

### Duty to send copy of share transfer instrument etc to members and creditors of institutionU.K.

F771986 c. 53.

F78Section 33 was amended by S.I. 2014/3329.

F79Section 41A was inserted of the Financial Services (Banking Reform) Act 2013, Schedule 2, paragraphs 1 and 5(1); and was amended by S.I. 2014/3329.

F80Section 42 was amended by S.I. 2014/3329.

F81Section 42A was inserted by the Financial Services Act 2012, section 97(1) and (5).

F82Section 43 was amended by the Financial Services Act 2012, Schedule 17, paragraph 22, and by S.I. 2014/3329.

F83Section 44 was amended by the Financial Services Act 2012, section 97 and Schedule 17, paragraph 23, by the Financial Services (Banking                              Reform) Act 2013, Schedule 2, paragraph 16, and by S.I. 2014/3329.

F84Section 44A was inserted of the Financial Services (Banking Reform) Act 2013, Schedule 2, paragraphs 1 and 5(3); and was amended by S.I. 2014/3329.

F85Sections 12A, 48U, 48V and 48W were inserted of the Financial Services (Banking Reform) Act 2013, Schedule 2, paragraphs 1, 2 and 4; and were amended                              by S.I. 2014/3329.

F86Section 26 was amended by the Financial Services Act 2012, Schedule 17(1), paragraph 14, and by S.I. 2014/3329.

F87Section 26A was inserted by the Financial Services Act 2012, section 97(1) and (2).

F88Section 30 was amended by the Financial Services Act 2012, Schedule 17(1), paragraph 18, and by S.I. 2014/3329.

F89Section 31 was amended by the Financial Services Act 2012, section 97(4)(a) and (b), section 97(4)(c) and Schedule 17(1), paragraph                              12, and by S.I. 2014/3329.

F90Section 13 was amended by the Financial Services (Banking Reform) Act 2013, Schedule 2, paragraph 13, and by S.I. 2014/3329.

F91Section 27 was amended by the Financial Services Act 2012, Schedule 17(1), paragraph 15.

F92Section 28 was amended by the Financial Services Act 2012, Schedule 17(1), paragraph 16.

F93Section 29 was amended by the Financial Services Act 2012, section 97(3) and Schedule 17(1), paragraph 17.

F94Section 89I was inserted by S.I. 2014/3329.

## **PART 15**U.K.Applications to the court in relation to resolution action

### Stay of legal proceedingsU.K.

F95Section 2 was amended by the Financial Services Act 2012, sections 101(1) and (3) and 102(1) and (3) and Schedule 17, paragraph 3,                              and by S.I. 2011/2832.

F96Section 81D was inserted by the Financial Services Act 2012, section 100(5); and was amended by the Financial Services (Banking Reform)                              Act 2013, Schedule 2, paragraphs 1 and 7(3), and by S.I. 2014/3329.

F97Section 6B was inserted by S.I. 2014/3329.

F98Section 1(4) was substituted by the Financial Services (Banking Reform) Act 2013, Schedule 2, paragraphs 1 and 12(1) and (4); and was                              amended by S.I. 2014/3329.

### Remedies on judicial reviewU.K.

F99Section 29A was inserted by S.I. 2014/3329.

F100Section 244 was amended by the Financial Services Act 2012, Schedule 2, paragraph 3, and by S.I. 2014/3329.

## **PART 16**U.K.Cross-border group resolution

### CHAPTER 1U.K.General provisions

#### Principles for reaching decisions which may have an impact in two or more EEA StatesU.K.

#### Information exchangeU.K.

F101For the meaning of “resolution college” see the recovery and resolution directive, Article 2.1, point (46).

F102For the meaning of “European resolution college” see Article 89.1 of the recovery and resolution directive.

#### Requirements for group resolution schemesU.K.

F103For the meaning of “group resolution scheme” see the recovery and resolution directive, Article 2.1, point (45).

F104For the meaning of “resolution action” see the recovery and resolution directive, Article 2.1, point (40).

### CHAPTER 2U.K.Resolution colleges

#### Application of Chapter 2U.K.

#### Duty to establish a resolution collegeU.K.

F105For the meaning of “group-level resolution authority” see the recovery and resolution directive, Article 2.1, point (44).

F106For the meaning of “group resolution” see the recovery and resolution directive, Article 2.1, point (42).

#### Membership of resolution collegeU.K.

F107For the meaning of “significant branch” see the recovery and resolution directive, Article 2.1, point (34).

F108For the meaning of “competent ministries” see the recovery and resolution directive, Article 2.1, point (22).

F109For the meaning of “deposit guarantee scheme” see the recovery and resolution directive, Article 2.1, point (72).

#### Functioning of resolution collegeU.K.

#### Use of an existing resolution collegeU.K.

### CHAPTER 3U.K.European resolution colleges

#### Application of Chapter 3U.K.

F110For the meaning of “third-country institution”, “third-country parent undertaking” and “Union subsidiary” see the recovery                              and resolution directive, Article 2.1, points (86), (87) and (84).

#### Establishment and functioning of a European resolution collegeU.K.

#### Recognition of third-country resolution actionU.K.

F111Section 89H was inserted by S.I. 2014/3329.

#### Use of an existing resolution collegeU.K.

### CHAPTER 4U.K.Group resolution involving a group subsidiary where the PRA or FCA is the consolidating supervisor

#### Application and interpretation of Chapter 4U.K.

#### Assessment of impact of notified measuresU.K.

#### Joint decision on adoption of group resolution schemeU.K.

#### Requesting the assistance of EBAU.K.

### CHAPTER 5U.K.Group resolution involving a group subsidiary where neither the PRA nor the FCA is the consolidating supervisor

#### Application Chapter 5U.K.

#### Bank decision that group subsidiary meets the conditions for resolutionU.K.

#### Joint decision on adoption of group resolution schemeU.K.

#### Failure to reach joint decision: disagreement by the Bank with joint proposalsU.K.

F112For the meaning of “resolution power” see the recovery and resolution directive, Article 2.1, point (20).

#### Requesting the assistance of EBAU.K.

### CHAPTER 6U.K.Group resolution where EEA parent undertaking is set up in the United Kingdom

#### Application and interpretation of Chapter 6U.K.

#### Bank decision that EEA parent undertaking meets the conditions for resolutionU.K.

#### Joint decision on adoption of group resolution schemeU.K.

#### Requesting the assistance of EBAU.K.

### CHAPTER 7U.K.Group resolution where EEA parent undertaking is set up in another EEA State

#### Application of Chapter 7U.K.

#### Joint decision on adoption of group resolution schemeU.K.

#### Failure to reach joint decision: disagreement by the Bank with joint proposalsU.K.

#### Requesting the assistance of EBAU.K.

## **PART 17**U.K.Modified application of company law to banks etc in resolution

### Interpretation of PartU.K.

F113Section 6B was inserted by S.I. 2014/3329.

F1142006 c. 46.

### Shadow directorshipU.K.

F1151986 c. 45.

F1161986 c. 46.

### Modified application of legislation on cross-border mergersU.K.

F117OJ No. L 310, 25.11.2005, p. 1.

F118S.I. 2007/2974. There are amendments, but none is relevant.

F119S.I. 2009/1804. There are amendments, but none is relevant.

### Modified application of the Companies Act 2006 (disapplication of Article 5.1 of the Takeovers Directive)U.K.

F120OJ No. L 142, 30.4.2004, p. 12.

### Modified application of the Companies Act 2006 (disapplication of other directives)U.K.

F121S.I. 2008/2860. There are amendments, but none is relevant.

F122OJ No. L 184, 14.7.2007, p. 17-24.

F123OJ No. L 110, 29.4.2011, p. 1-11.

F124OJ No. L 315, 14.11.2012, p. 74-97.

## **PART 18**U.K.Treasury support for investment firms

### Investment firms to be treated as financial institutionsU.K.

F125Section 258A was inserted by the Financial Services Act 2012, section 101(1) and (7); and was amended by S.I. 2013/3115. Also, see **S.I**. 2014/1832, which was made under subsection (2)(b).

## **PART 19**U.K.Miscellaneous provisions

### ContinuityU.K.

### Duty to co-operateU.K.

### Non-binding co-operation arrangements in line with EBA framework arrangementsU.K.

F126For the meaning of “third-country parent undertaking”, “Union subsidiary”, “third-country institution” and “significant branch”                              see the recovery and resolution directive, Article 2.1, points (87), (84), (86) and (34).

### Duty to inform EBA of imposition of penaltiesU.K.

F127Section 348 was amended by the Financial Services Act 2010 (c. 28), **section 24(1)** and (2) and Schedule 2, paragraphs 1 and 26; by the Financial Services Act 2012, section 41 and Schedule 12, paragraph 18,                              and by the Financial Services (Banking Reform) Act 2013, section 129 and Schedule 8, paragraph 5.

## **PART 20**U.K.Amendments

### Amendments of primary and secondary legislationU.K.

## **PART 21**U.K.Review

### ReviewU.K.

Mark Lancaster

Gavin Barwell

 Two of the Lords Commissioners of Her Majesty's Treasury

18th December 2014

 Article 37(2)

## SCHEDULE 1U.K.Information to be contained in a resolution plan

### Impediments to the effectiveness of resolution actionU.K.

F128For the meaning of “resolution action” see the recovery and resolution directive, Article 2.1, point (40).

### The context for resolution actionU.K.

F129For the meaning of “extraordinary public financial support” and “emergency liquidity assistance” see the recovery and resolution                              directive, Article 2.1, points (28 and (29).

### Application for the use of the Bank's facilitiesU.K.

### Options for applying the resolution tools and exercising the resolution powersU.K.

 Article 40(3)

## SCHEDULE 2U.K.Information to be contained in a group resolution plan

### The context for resolution actionU.K.

F130For the meaning of “emergency liquidity assistance” see the recovery and resolution directive, Article 2.1, point (29).

### Contents of group resolution planU.K.

F131For the meaning of “resolution” see the recovery and resolution directive, Article 2.1, point (1).

F132For the meaning of “group resolution” see the recovery and resolution directive, Article 2.1, point (42).

3.  The Bank must ensure that the principles set out in accordance with paragraph 2(j) are based on equitable and balanced criteria                     which, in particular, take account of—U.K.

(a)the factors referred to in Article 107.5 of the recovery and resolution directive (mutualisation of national financing arrangements                        in the case of a group resolution); and

(b)the impact of group resolution, and of a failure to take resolution action, on the financial stability of each State concerned.

 Article 226

## SCHEDULE 3U.K.Amendments

### **PART 1**U.K.Amendments of FSMA

#### Amendments of FSMAU.K.

#### Recovery plansU.K.

F133Section 137J was substituted by the Financial Services Act 2012, section 24(1).

F134Section 192B was inserted by the Financial Services Act 2012, section 27. For Condition C (a parent undertaking must be a financial institution                              of a prescribed kind (section 192B(4)) see S.I. 2013/165.

F135OJ No. L 173, 12.6.2014, p. 190.

F136Section 2 was amended by the Financial Services Act 2012, sections 101(1) and (3) and 102(1) and (3) and Schedule 17, paragraph 3,                              and by S.I. 2011/2832.

F1371986 c. 53.

F138Section 258A was inserted by the Financial Services Act 2012, section 101(1) and (7). See S.I. 2014/1832, which was made under subsection (2)(b). No other order has been made under that subsection.

#### Rules about resolution packs: duty to consultU.K.

F139Section 137K was substituted by the Financial Services Act 2012, section 24(1).

#### Special provision relating to adequacy of resolution plansU.K.

F140Section 137M was substituted by the Financial Services Act 2012, section 24(1).

#### Recovery plans and resolution packs: restriction on duty of confidenceU.K.

F141Section 137N was substituted by the Financial Services Act 2012, section 24(1).

F142Subsection (6) of section 137J is amended by paragraph 2(4) of this Schedule.

F143Section 192A was inserted by the Financial Services Act 2012, section 27.

### **PART 2**U.K.Amendments of other primary legislation

#### Amendment of the Financial Services (Banking Reform) Act 2013U.K.

F1442013 c.33.

### **PART 3**U.K.Amendments of secondary legislation

#### Financial Markets and Insolvency (Settlement Finality) Regulations 1999U.K.

F145S.I. 1999/2979. There are amendments, but none is relevant.

F146Section 48Z was inserted by S.I. 2014/3329.

#### Financial Services and Markets Act 2000 (Disclosure of Confidential Information) Regulations 2001U.K.

F147S.I. 2001/2188.

F148Amended by S.I. 2003/693, 2003/2066, 2004/1862, 2004/3379, 2006/3413, 2010/2628, 2012/916, 2012/917, 2012/2554, 2013/472 and 2013/1773.

F149OJ No. L 173, 12.6.2014, p. 190.

F150Section 62B was inserted by S.I. 2014/3329.

F151Regulation 8 was amended by S.I. 2003/504, 2006/3413 and 2012/916.

F152Regulation 9 was amended by S.I. 2003/693, 2004/3379, 2006/3221, 2006/3413, 2010/2628, 2011/1613, 2012/916, 2013/472, 2013/1773 and S.I. 2013/3115.

F153S.I. No. 2011/245.

F154Regulation 11 was amended by S.I. 2003/2066, 2006/3413, 2011/1613, 2012/916 and 2013/504.

F155Schedule 1 was amended by S.I. 2001/3437, 2001/3624, 2003/2174, 2003/2817, 2005/3071, 2006/3413, 2011/1265, 2012/916, 2013/472, 2013/3115, 2014/549, 2014/883 and                              2014/2879.

F156S.I. 2011/245.

F1572009 c. 1. Section 81D was inserted by the Financial Services Act 2012 (c. 21), **s.100**.

F158OJ No. L 157, 9.6.2006, p. 87.

#### Financial Collateral Arrangements (No 2) Regulations 2003U.K.

F159S.I. 2003/3226.

F160Regulation 3 was amended by S.I. 2010/2993.

F161Regulations 12, 16 and 17 were amended by S.I. 2010/2993.

#### Credit Institutions (Reorganisation and Winding up) Regulations 2004U.K.

F162S.I. 2004/1045, as amended by S.I. 2007/108, 2007/126, 2007/830, 2011/1043, 2011/1265, 2013/472 and 2013/3115.

F163Section 6B was inserted by S.I. 2014/3329.

F164Section 12A was inserted by the Financial Services (Banking Reform) Act 2013, Schedule 2, paragraphs 1 and 2; and was amended by S.I. 2014/3329.

F165Section 33 was amended by S.I. 2014/3329.

F166Section 89H was inserted by S.I. 2014/3329.

F167OJ No. L 125, 5.5.2001, p. 15.

F168Section 89L was inserted by S.I. 2014/3329.

F169OJ No. L 173, 12.6.2014, p. 349.

F170Section 48Z is inserted by S.I. 2014/3329.

F171Section 70C is inserted by S.I. 2014/3329.

F172Section 48Z is inserted by S.I. 2014/3329.

F173Section 70C is inserted by S.I. 2014/3329.

F174Section 89L was inserted by S.I. 2014/3329.

F175Section 55A to 55Z4 were inserted by the Financial Services Act 2012, section 11; and was amended by S.I. 2013/1773 and 2013/3115.

#### Financial Services and Markets Act 2000 (Prescribed Financial Institutions) Order 2013U.K.

F176S.I. 2013/165, as amended by S.I. 2013/3115.

F177Section 192JB was inserted by the Financial Services (Banking Reform) Act 2013, section 133; and was amended by S.I. 2014/3329.

F178Sections 12A, 48U, 48V and 48W were inserted of the Financial Services (Banking Reform) Act 2013, Schedule 2, paragraphs 1, 2 and 4; and were amended                              by S.I. 2014/3329.

#### Financial Services and Markets Act 2000 (Qualifying EU Provisions) Order 2013U.K.

F179S.I. 2013/419, as amended by SI 2013/1773.

F180Section 192K(1)(c) was inserted by S.I. 2014/3329.

#### Capital Requirements Regulations 2013U.K.

F181S.I. 2013/3115.

 Article 220(4)

## SCHEDULE 4U.K.Modified application of the Companies Act 2006 to banks etc in resolution

### **PART 1**U.K.Provisions concerning the exercise of certain rights of shareholders in listed companies

1.  In relation to a company under resolution, this Part modifies the application of provisions of the Companies Act 2006 F182 which concern the exercise of certain rights of shareholders in listed companies F183.U.K.

F1822006 c. 46.

F183The modifications have effect in relation to provisions of the Act inserted, substituted or amended by S.I. 2009/1632.

2.  Section 145 (effect of provisions of articles as to enjoyment or exercise of members' rights) has effect as if, in subsection                     (3), paragraphs (ea) and (ga) were omitted.U.K.

3.  Section 153 (exercise of rights where shares held on behalf of others: members' requests) has effect as if, in subsection                     (1), paragraph (ba) were omitted.U.K.

4.  Section 282 (ordinary resolutions) has effect as if, in subsection (4), for “, by proxy or in advance (see section 322A)”                     there were substituted “ or by proxy ”.U.K.

5.  Section 283 (special resolutions) has effect as if, in subsection (5), for “, by proxy or in advance (see section 322A)” there                     were substituted “ or by proxy ”.U.K.

6.  Section 284 (votes: general rules) has effect as if, in subsection (5), the entry for section 322A were omitted.U.K.

7.  Section 303 (members' power to require directors to call general meeting) has effect as if—U.K.

(a)in subsection (2)(a) and (b) for “5%” there were substituted “ the required percentage ”; and

(b)after subsection (2) there were inserted—

“(3A)The required percentage is 10%, except that in the case of a private company it is 5% if more than twelve months have elapsed                        since the end of the last general meeting—                  

(a)which was called in pursuance of a requirement under this section, or                  

(b)in relation to which any members of the company had (by virtue of an enactment, the company's articles or otherwise) rights                           with respect to the circulation of a resolution no less extensive than they would have had if the meeting had been so called                           at their request.”.                  

8.  Section 307 (notice required of general meeting) has effect as if subsections (A1) and (A2) were omitted.U.K.

9.  Part 13 (resolutions and meetings) has effect as if section 307A (notice required of general meeting: certain meetings of                     traded companies) were omitted.U.K.

10.  Section 311 (contents of notices of meetings) has effect as if—U.K.

(a)in subsection (2) the words “In relation to a company other than a traded company,” were omitted; and

(b)subsection (3) were omitted.

11.  Part 13 has effect as if the following sections were omitted—U.K.

(a)section 311A (traded companies: publication of information in advance of general meeting); and

(b)section 319A (traded companies: questions at meetings).

12.  Section 327 (notice required of appointment of proxy etc) has effect as if—U.K.

(a)subsection (A1) were omitted; and

(b)in subsection (1) for “The following provisions apply in the case of traded companies and other companies as regards” there                        were substituted “ This section applies to ”.

13.  Section 330 (notice required of termination of proxy's authority) has effect as if—U.K.

(a)subsection (A1) were omitted; and

(b)in subsection (1) for “The following provisions apply in the case of traded companies and other companies as regards” there                        were substituted “ This section applies to ”.

14.  Part 13 has effect as if section 333A (traded company: duty to provide electronic address for receipt of proxies etc) were                     omitted.U.K.

15.  Section 334 (application to class meetings) has effect as if—U.K.

(a)in subsection (1) for “subsections (2) to (3)” there were substituted “ subsections (2) and (3) ”;

(b)in subsection (2)—

(i)after paragraph (a) there were inserted “and”; and

(ii)after paragraph (b) the word “and” and paragraph (c) were omitted; and

(c)subsection (2A) were omitted.

16.  Section 336 (public companies and traded companies: annual general meeting) has effect as if—U.K.

(a)subsection (1A) were omitted;

(b)in subsections (2) and (3), in each place where they appear, the words “or (1A)” were omitted; and

(c)in the heading the words “and traded companies” were omitted.

17.  Section 337 (public companies and traded companies: notice of AGM) has effect as if—U.K.

(a)in subsection (1) the words “or a private company that is a traded company” were omitted;

(b)in subsection (2) the words “of a public company that is not a traded company” were omitted;

(c)subsection (3) were omitted; and

(d)in the heading the words “and traded companies” were omitted.

18.  Part 13 has effect as if the following sections were omitted—U.K.

(a)section 338 (public companies: members' power to require circulation of resolutions for AGMs); and

(b)section 338A (traded companies: members' power to include other matters in business dealt with at AGM).

19.  Section 341 (results of poll to be made available on website) has effect as if—U.K.

(a)in subsection (1) the words “that is not a traded company” were omitted; and

(b)subsections (1A) and (1B) were omitted.

20.  Section 352 (application of provisions to class meetings) has effect as if for subsections (1) and (1A) there were substituted—U.K.

“(1)The provisions of—                  

(a)section 341 (results of poll to be made available on website), and                  

(b)sections 342 to 351 (independent report on poll),                  

apply (with any necessary modifications) in relation to a meeting of holders of a class of shares of a quoted company in connection                        with the variation of the rights attached to such shares as they apply in relation to a general meeting of the company.”.                  

21.  Section 360 (computation of periods of notice etc: clear day rule) has effect as if, in subsection (1)—U.K.

(a)the entry for section 307A(1), (4), (5) and (7)(b) were omitted

(b)after the entry for section 314(4)(d) there were inserted “and”; and

(c)the entries for sections 337(3), 338(4)(d)(i) and 338A(5) were omitted.

22.  Section 360A (electronic meetings and voting) has effect as if subsections (2) and (3) were omitted.U.K.

23.  Part 13 has effect as if section 360B (traded companies: requirements for participating in and voting at general meetings)                     were omitted.U.K.

### **PART 2**U.K.Provisions concerning mergers and divisions of public limited liability companies

24.  In relation to a company under resolution, Part 27 of the Companies Act 2006 (mergers and divisions of public companies) has                     effect as if, in section 902 (application of this Part), for subsection (3) there were substituted—U.K.

“(3)This Part does not apply where the company in respect of which the compromise or arrangement is proposed—                  

(a)is being wound up; or                  

(b)is a company under resolution for the purposes of Part 17 of the Bank Recovery and Resolution (No. 2) Order 2014 F184.”.                  

F184See article 216(3) of this Order.

### **PART 3**U.K.Provisions concerning the maintenance and alteration of a company's share capital

25.  In relation to a company under resolution, this Part modifies the application of provisions of the Companies Act 2006 made—U.K.

(a)for the co-ordination of safeguards in respect of the formation of public limited liability companies and the maintenance                        and alteration of their capital; or

(b)for equivalent purposes in relation to companies to which the Safeguards Directive does not apply.

26.  Section 550 (power of directors to allot shares etc: private company with only one class of shares) has effect as if—U.K.

(a)the existing provision were subsection (1); and

(b)after that provision there were inserted—

“(2)In relation to a company which is a company under resolution for the purposes of Part 17 of the Bank Recovery and Resolution                        (No. 2) Order 2014, any provision in the company's articles which prohibits the directors from exercising the power referred                        to in subsection (1) is to be disregarded.”.                  

27.  Section 551 (power of directors to allot shares etc: authorisation by company) has effect as if after subsection (9) there                     were inserted—U.K.

“(10)In relation to a company which is a company under resolution for the purposes of Part 17 of the Bank Recovery and Resolution                        (No. 2) Order 2014—                  

(a)the maximum amount of shares that may be allotted under the authorisation may be exceeded where necessary for the use of resolution                           tools, powers and mechanisms (within the meaning given in article 216 of that Order) in relation to the company;                  

(b)if the maximum amount is exceeded, the statement of that amount made in the authorisation is deemed to have been increased                           under subsection (4) by the amount of the excess;                  

(c)the authorisation does not expire until it is renewed or revoked after the company has ceased to be a company under resolution;                           and                  

(d)the authorisation may not be revoked or varied while the company is a company under resolution.”.                  

28.  Part 17 (a company's share capital) has effect as if the following sections were omitted—U.K.

(a)section 561 (existing shareholders' right of pre-emption); and

(b)section 568 (exclusion of pre-emption right: articles conferring corresponding right).

29.  Section 569 (disapplication of pre-emption rights: private company with only one class of shares) has effect as if it provided                     that a determination made under subsection (1)(b) does not have effect.U.K.

30.  Section 570 (disapplication of pre-emption rights: directors acting under general authorisation) has effect as if it provided                     that a determination made under subsection (1)(b) does not have effect.U.K.

31.  Section 571 (disapplication of pre-emption rights by special resolution) has effect as if, in subsection (1)—U.K.

(a)after paragraph (a) “, or” were omitted; and

(b)paragraph (b) were omitted.

32.  Section 586 (public companies: shares must be at least one-quarter paid-up) has effect as if for subsection (2) there were                     substituted—U.K.

“(2)This does not apply to shares allotted—                  

(a)in pursuance of an employers' share scheme; or                  

(b)by the use of resolution tools, powers and mechanisms (within the meaning given in article 216 of the Bank Recovery and Resolution                           (No. 2) Order 2014) in relation to a company which is a company under resolution for the purposes of Part 17 of that Order.”.                  

33.  Section 593 (public company: valuation of non-cash consideration for shares) has effect as if after subsection (2) there were                     inserted—U.K.

“(2A)In relation to a company which is a company under resolution for the purposes of Part 17 of the Bank Recovery and Resolution                        (No. 2) Order 2014, subsection (1) does not prevent the allotment of shares by the use of resolution tools, powers and mechanisms                        (within the meaning given in article 216 of that Order), and for the purposes of the Companies Acts such a share is deemed                        to be fully paid up.”.                  

34.  Section 617 (alteration of share capital of limited company) has effect as if, in subsection (5), at the end there were inserted—U.K.

“(f)the alteration of the share capital of a company, which is a company under resolution for the purposes of Part 17 of the Bank                           Recovery and Resolution (No. 2) Order 2014, by the use of resolution tools, powers and mechanisms (within the meaning given                           in article 216 of that Order)”.                  

35.  Section 618 (sub-division or consolidation of shares) has effect—U.K.

(a)as if subsection (3) were omitted; and

(b)where the articles of a company under resolution would otherwise exclude or restrict the exercise of any power conferred by                        that section, as if that section provided that the exclusion or restriction does not have effect.

36.  Section 656 (public companies: duty of directors to call meeting on serious loss of capital) has effect as if at the end there                     were inserted—U.K.

“(7)This section does not apply to a company which is a company under resolution for the purposes of Part 17 of the Bank Recovery                        and Resolution (No. 2) Order 2014 (“the Order”).                  

(8)Where the net assets of such a company became half or less of its called-up share capital before the date on which the company                        became a company under resolution—                  

(a)the duty of the directors to call a general meeting of the company under subsection (1) ceases to have effect on that date;                  

(b)a general meeting which has been called under subsection (1) but has not yet taken place is deemed to have been cancelled                           on that date; and                  

(c)any resolution passed at such a meeting which has taken place is subject to the use of resolution tools, powers and mechanisms                           (within the meaning given in article 216 of the Order) in relation to the company.”.                  

## Explanatory Note