| (1) | If the Reserve Bank determines that it is necessary for the orderly resolution of a designated institution in resolution that the designated institution enter into a particular transaction, the designated institution may enter into the transaction, and may do so despite any law or agreement that would otherwise restrict or prevent it from doing so, including a law or agreement that requires consent or approval by a specified person. |
| (2) | For the purpose of this section, ‘transaction’ includes each of the following: |
| (a) | Transferring, creating an interest in, or dealing in any other way with, assets and liabilities of a designated institution; and |
| (b) | an amalgamation or merger, or a scheme of arrangement of a kind referred to in Chapter 5 of the Companies Act that involves, as one of the parties, a designated institution. |
(3)
| (a) | In making a determination in terms of subsection (1), the Reserve Bank must consult the Prudential Authority. |
| (b) | A determination made in terms of subsection (1), in respect of a transaction referred to in subsection (2)(b), must be made after consultation with the Competition Commission. |
| (4) | When the transaction comes into effect— |
| (a) | the assets and liabilities of the parties that are transferred in terms of the transaction vest in, and become binding upon, the parties in accordance with the terms of the transaction; |
| (b) | a party to the transaction in whom an asset vests, or which is liable under the transaction, has the same rights and is subject to the same obligations as those that the transferor may have had, or to which it may have been bound, immediately before the transfer; and |
| (c) | in the case of an amalgamation or merger— |
| (i) | all agreements, appointments, transactions and documents entered into, made, drawn up or executed with, by or in favour of, any of the amalgamating or merging parties and in force immediately before the transaction came into effect, remain of full force and effect and must be construed, for all purposes, as if they had been entered into, made, drawn up or executed with, by or in favour of the amalgamated or merged entity; and |
| (ii) | any bond, pledge, guarantee or instrument to secure future advances, facilities or services by any of the amalgamating or merging parties, remains of full force and effect and must be construed for all purposes as a bond, pledge, guarantee or instrument given to or in favour of the amalgamated or merged entity as security for future advances, facilities or services by that entity. |
| (5) | Subsection (4)(c)(i) does not apply to agreements, appointments, transactions and documents that, by virtue of the terms and conditions of the transaction, are not to be retained in force after the amalgamation or merger. |
| (6) | Despite any law or agreement, including the designated institution’s memorandum of incorporation, a designated institution in resolution may, if the Reserve Bank determines that it is necessary to do so for the orderly resolution of the designated institution, do either or both of the following: |
| (a) | Cancel a share of the designated institution that is valued, in terms of section 166Q(1), at zero value, in liquidation; or |
| (b) | issue new shares of the designated institution, on terms approved by the Reserve Bank. |
| (7) | If the Reserve Bank determines that it is necessary to do so for the orderly resolution of a designated institution in resolution, the Reserve Bank may, by written order, do any of the following in relation to an agreement to which the designated institution is a party: |
| (a) | By notice to a party to the agreement to which an amount is or may become payable by the designated institution, in terms of the agreement or arrangement, reduce the amount that is or may become payable, subject to sections 166Q and 166V; or |
| (b) | by written notice to all the other parties to the agreement, cancel the agreement. |
| (8) | Subject to subsection (7)(a), cancellation of an agreement in terms of subsection (7)(b) does not affect the rights of the parties to the agreement, which rights accrued before the date the cancellation takes effect. |
| (9) | Subsection (7) does not apply to the following: |
| (a) | An unsettled exchange traded transaction, including a transaction on a licenced exchange; |
| (b) | a derivative instrument as defined in section 1 of the Financial Markets Act; |
| (c) | a deposit where the deposit holder is the Corporation for Public Deposits established by section 2 of the Corporation for Public Deposits Act, 1984 (Act No. 46 of 1984); or |
| (d) | a transaction in the settlement system between two or more settlement system participants as provided for in the National Payment System Act. |
| (10) | An action in terms of this section does not, by itself, give rise to any right by a party to, or a person who holds an interest in, an agreement referred to in subsection (7). |
[Section 166S inserted by section 51 of the Financial Sector Laws Amendment Act, 2021 (Act No. 23 of 2021), Notice No. 789, GG45825, dated 28 January 2022- effective 1 June 2023 per (b)(ii) of Commencement Notice No. 3202, GG48294, dated 24 March 2023]
