The Communiqué on Amendments to the Communiqué on Covered Bonds (III-59.1) was published in Official Gazette number 29508 on 20 October 2015 ("Communiqué"). It was issued by the Capital Markets Board and enters into effect on the same day. The Communiqué enables contracting parties to unilaterally terminate agreements about derivative financial instruments in certain circumstances.
The Communiqué amends principles relating to derivative instruments (Article 11, Communiqué on Covered Bonds (III-59.1), Official Gazette number 28889, 21 January 2014).
The amendments enable contracting parties to include a provision in agreements regarding derivative financial instruments which allows for unilateral termination of the agreement under certain conditions. Accordingly, the Communiqué allows parties to include a clause which allows unilateral termination if:
- The issuer fails to perform its liabilities totally or partially and the total liabilities exceed the assets' total value, including the derivative instrument.
- The agreement becomes impossible and contrary to law within the context of relevant legislation or significant amendments to legislation regarding contracted principles.
- Early redemption of covered bonds occurs.
- The agreement is not registered in the cover register, or is removed from the cover register for violating the agreement's terms and conditions.
The Communiqué also allows parties to agree to add a unilateral termination clause into an agreement which addresses similar circumstances to those outlined above, provided the Board's consent is received.
Please see this link for full text of the Communiqué (only available in Turkish).
Information first published in the MA | Gazette, a fortnightly legal update newsletter produced by Moroğlu Arseven.
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