Netting of Financial Agreements Act 2015 · Updated to 6 Mar 2015 · Part II · Netting Provision
3. Enforceability of netting provision in qualified financial agreement
Official textFrom Laws of Malaysia Online, unchanged
Notwithstanding the provisions specified in Part I of the
Schedule, the netting provision in a qualified financial agreement in respect of the qualified financial transactions referred to in section 5 shall be enforceable in accordance with the terms of the qualified financial agreement which may involve the following steps:
netting provision
“netting provision” means— (a) a provision in a qualified financial agreement which provides that upon the occurrence of the events specified by the parties in the agreement, all obligations owed by one party to another party under a qualified financial transaction are reduced to or replaced with a single net amount in accordance with the qualified financial agreement; or (b) any other mechanism which has the effect of determining a single net amount prescribed by the Minister to be a netting provision under paragraph 6(1)(b);
termination of qualified financial transactions entered into under the qualified financial agreement;
qualified financial agreement
“qualified financial agreement” means— (a) a master agreement, with a netting provision, in respect of one or more qualified financial transactions, and where a master agreement is also in respect of one or more transactions that are not qualified financial transactions, the master agreement shall be a qualified financial agreement only with respect to the transactions that are qualified financial transactions; (b) any agreement or arrangement prescribed by the Minister to be a qualified financial agreement under paragraph 6(1)(a); or (c) an agreement relating to financial collateral that secures payment or performance of an obligation, including any agreement under which title to property has been provided for the purpose of such security, with respect to one or more qualified financial transactions under a master agreement referred to in paragraph (a) or an agreement or arrangement referred to in paragraph (b);
calculation of termination values owed by the parties to each other in respect of each of the qualified financial transactions under paragraph (a); and
determination of a single net amount of the termination values under paragraph (b) which becomes payable by one party to the other.
Terms defined in s 2
netting provision
Defined · s 2“netting provision” means— (a) a provision in a qualified financial agreement which provides that upon the occurrence of the events specified by the parties in the agreement, all obligations owed by one party to another party under a qualified financial transaction are reduced to or replaced with a single net amount in accordance with the qualified financial agreement; or (b) any other mechanism which has the effect of determining a single net amount prescribed by the Minister to be a netting provision under paragraph 6(1)(b);
qualified financial agreement
Defined · s 2“qualified financial agreement” means— (a) a master agreement, with a netting provision, in respect of one or more qualified financial transactions, and where a master agreement is also in respect of one or more transactions that are not qualified financial transactions, the master agreement shall be a qualified financial agreement only with respect to the transactions that are qualified financial transactions; (b) any agreement or arrangement prescribed by the Minister to be a qualified financial agreement under paragraph 6(1)(a); or (c) an agreement relating to financial collateral that secures payment or performance of an obligation, including any agreement under which title to property has been provided for the purpose of such security, with respect to one or more qualified financial transactions under a master agreement referred to in paragraph (a) or an agreement or arrangement referred to in paragraph (b);