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Explanatory memoranda4/20/2023 A note is made in the legislation to the effect that the express recognition given to close-out netting in sections 14(1) and 14(2) of the Netting Act is to remove the basis for arguing that close-out netting contracts are void as contrary to public policy embodied in insolvency law. Specific reference is also made to the insolvency provisions of the Corporations Act ( essentially those provisions concerning voidable and void transactions) and certain provisions of the Bankruptcy Act. The laws included in the definition of “specified provisions” include laws providing for the following: ▪ the assets of Australian banks and other authorised deposit- taking institutions being available to meet the obligations to depositors before other creditors (section 13A(3) of the Banking Act 1959) ▪ the assets of foreign authorised deposit-taking institutions in Australia being available to meet Australian liabilities before other liabilities (section 11F of the Banking Act) ▪ the priority of an Australian bank’s debts to the Reserve Bank of Australia over the other debts owed by the bank (other than those owed to depositors) ▪ the allocation of assets of a life insurance company on its insolvency and ▪ the winding up or dissolution of trustees of superannuation trustsentities. The 2016 Explanatory Memorandum explained that the “ specified provisions” definition is an inclusive list of the provisions of other laws over which the Netting Act prevails and is inserted for transparency and ease of reference.
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