Document ID: chunk:federal_register_of_legislation:C2024C00373:section:14a:p1
Version: federal_register_of_legislation:C2024C00373
Segment Type: section
Provision Reference: s 14A (pt 1/3)
Character Range: 41835–44597

14A  Effectiveness of security given in respect of obligations under close‑out netting contracts
 (1) Paragraphs 14(1)(ca) and 14(2)(fa) apply to the enforcement of security over financial property, in respect of obligations of a party to a close‑out netting contract, only to the extent that:
 (a) the obligations secured by the financial property, and discharged through the enforcement, are:
 (i) eligible obligations in relation to the contract; or
 (ii) obligations under the contract of a party to the contract to pay interest on an eligible obligation; or
 (iii) obligations of a party to the contract to pay costs and expenses incurred in connection with enforcing security given in respect of an eligible obligation; and
 (b) before the enforcement, the financial property is transferred or otherwise dealt with so as to be in the possession or under the control of:
 (i) the secured person; or
 (ii) another person (who is not the grantor) on behalf of the secured person, under the terms of an arrangement evidenced in writing; and
 (c) the enforcement is carried out in a manner that complies with section 420A of the Corporations Act 2001 (if it applies) and any applicable general law duties that are not inconsistent with the terms of the security.
Note: Section 5 defines financial property.
 (2) For the purposes of paragraph (1)(b), financial property is taken not to be in the possession or control of a person mentioned in that paragraph if, under the security, the grantor is free to deal with the financial property in the ordinary course of business until the secured person's interest in the financial property becomes fixed and enforceable.
 (3) Subsection (2) applies even if the secured person's interest in the financial property becomes fixed and enforceable before the enforcement of the security over that property mentioned in subsection (1).
 (4) Without limiting paragraph (1)(b), financial property is taken to be in the possession of a person for the purposes of that paragraph if:
 (a) in a case where there is an issuer of the financial property—the person is registered by, or on behalf of, the issuer as the registered owner of the financial property; or
 (b) in a case where the financial property is intermediated financial property—the person is the person in whose name the intermediary maintains the account.
 (5) Without limiting paragraph (1)(b), financial property is taken to be under the control of a person for the purposes of that paragraph if:
 (a) the financial property is intermediated financial property; and
 (b) the intermediary is not the grantor (but may be the secured person or any other person); and
 (c) there is an agreement in force between the intermediary and one or more other persons, one of