137. Recovery Plans

(1)         This section applies to an Authorised Person which:

(a)             is of a class prescribed in the Rules as requiring a Recovery Plan; or

(b)           is not included in a class prescribed under (a), but has been given written notice by the AFSA that it must prepare a Recovery Plan.

(2)         An Authorised Person must prepare and submit to the AFSA for review a plan setting out the measures to be taken to restore the financial position of the Authorised Person (or one or more entities in its Group) in the event of a serious deterioration of the Authorised Person’s financial position (the “Recovery Plan”).

(3)         The Recovery Plan must be in writing and set out such information as may be prescribed in the Rules.

(4)         The AFSA may, by written notice given to the Authorised Person, require it to prepare and submit to the AFSA such information that the AFSA considers reasonably necessary for it to assess the adequacy of the Authorised Person’s Recovery Plan.

(5)      If the AFSA is not satisfied with an Authorised Person’s Recovery Plan it may, by written notice, require the Authorised Person to take measures to rectify any deficiencies in the Recovery Plan and submit the rectified Recovery Plan to the AFSA.

(6)         An Authorised Person must review and update its Recovery Plan and submit the updated Recovery Plan to the AFSA:

(a)             annually;

(b)        where there has been a material change reasonably likely to affect the implementation of the original Recovery Plan; or

(c)             if otherwise directed in writing by the AFSA to do so.

138. Resolution Plans

(1)             The AFSA may prepare a plan for securing an orderly Resolution (the “Resolution Plan”) of an Authorised Person.

(2)             The Resolution Plan must set out the strategies for the Resolution (including consideration of failure scenarios, the options for the exercise of the Resolution Powers, the application of the Resolution Tools) and contain such information as may be prescribed in the Rules.

(3)             If the AFSA decides to prepare a Resolution Plan with respect to an Authorised Person, it must inform the Authorised Person in writing of that decision.

(4)             An Authorised Person that is informed of the AFSA’s decision to prepare a Resolution Plan must, to the extent reasonably necessary for the AFSA to prepare, assess or update the Resolution Plan, do the following:

(a)             maintain in the AIFC up to date information and systems; and

(b)             if required in writing by the AFSA, provide to the AFSA any information and assistance within a specified period.

139. Resolvability Assessment

(1)         The AFSA may conduct an assessment to determine if there are any impediments that may prevent or affect the Resolvability of an Authorised Person (the “Resolvability Assessment”).

(2)         An Authorised Person must provide to the AFSA such information and assistance that the AFSA considers reasonably necessary for the Resolvability Assessment.

140. Requirement to Remove Impediments to Resolvability

(1)         The AFSA may by written notice require an Authorised Person or an entity in its Group to take such measures as the AFSA considers reasonably necessary to remove impediments to, or improve, the Resolvability of an Authorised Person.

(2)         The measures may include changes relating to:

(a)             legal, ownership or governance structure;

(b)             operations, including intra-Group dependencies and relationships with third parties;

(c)             business activities or practices;

(d)             financial matters, (including assets, liabilities, rights and obligations), or funding strategy, (including measures to improve the resilience of Core Business Lines and Critical Functions);

(e)             risk profile, including liquidity risk; or

(f)              terms to be included in contracts.

(3)         The procedures in Schedule 2 apply to a decision of the AFSA under this section.

141. Loss Absorbing Capacity Requirement

(1)         The AFSA may by written notice require an Authorised Person to hold and maintain a minimum amount of financial instruments or resources available during Resolution:

(a)             to absorb losses; and

(b)             to enable the Authorised Person to be recapitalised so that it can continue to perform Critical Functions while Resolution is ongoing (“Loss Absorbing Capacity”).

(2)         The AFSA must specify in the notice the nature of the financial instruments or resources to be held and maintained by the Authorised Person.

(3)         The AFSA may vary or revoke a requirement under this section.

(4)         The procedures in Schedule 2 apply to a decision of the AFSA under this section.