Common use of Commencement of Resolution Measures Clause in Contracts

Commencement of Resolution Measures. The aim of the implementing laws of the BRRD (in Finland, theFinnish Resolution Laws) is to provide authorities with a broad range of powers and instruments to address failing financial institutions in order to safeguard financial stability and minimise tax payers’ exposure to losses. The 13 According to Finnish legal praxis, amounts representing about ten (10) per cent of the insolvent party's assets have been regarded as considerable. new regime imposes an obligation on the resolution authority (the Financial Stability Board and the SRB, as applicable) and financial institutions to prepare resolution and recovery plans, authorises the resolution authority to assess the resolvability of a financial institution, and to address or remove impediments to resolvability. In the event of a distress of a financial institution, the new regime allows the resolution authority (the Financial Stability Authority together with the Finnish Financial Supervisory Authority, the “FIN-FSA”, as applicable) to intervene and take early intervention measures with respect to the financial institution where the resolution authority consider that it is likely that the institution will not be able to meet the conditions of its authorisation or its other liabilities or infringes its capital adequacy requirements. Such measures include the power to require the financial institution to take measures referred to in its recovery plan and, if necessary, require the institution to convene its general meeting to approve any such measures requested by the competent authorities, require the institution to prepare a plan on the reorganisation of its debts as instructed by the authorities, and to require the institution to change its strategy, or the legal or administrative structure of the institution. In addition, the Finnish Resolution Laws give the Financial Stability Authority a power to temporarily suspend termination rights of any party to a contract with an institution under resolution. The Financial Stability Authority is vested with power to implement resolution measures with respect to a financial institution where the authority considers that the financial institution in question is failing or likely to fail, and where there is no reasonable prospect that any measures could be taken to prevent the failure of the institution and that and the taking of the resolution measures is necessary to protect significant public interest. An institution will be considered as failing or likely to fail when: (i) it is, or is likely in the near future to bebecome, in breach of its requirements for continuing authorisation; (ii) its liabilities exceed its assets are, or are likely to do so in the near future to be, less than its liabilities; (iii) it is, or is likely in the near future to be, unable to pay its debts as they fall due; or (iv) it requires extraordinary public financial support (except in limited circumstances).