Page:Clearing and Settlement Systems Ordinance (Cap. 584).pdf/23

(a) is entered into at an undervalue to the gain of one of the participants (“first participant”); and

(b) was entered into at any time during the period of 6 months ending with—

(i) the presentation of a petition for the bankruptcy or winding up of the other participant (“second participant”) or his principal;

(ii) the passing of a resolution for voluntary winding up of the second participant or his principal; or

(iii) the making of a directors’ voluntary winding up statement in respect of the second participant or his principal.

(2) A relevant insolvency office-holder acting in respect of the second participant to a transaction to which this section applies or his principal may, unless a court otherwise orders, recover from the first participant to the transaction an amount equivalent to the gain made from the transaction.

(3) For the purposes of this section, a transaction is entered into at an undervalue if it is entered into—

(a) on terms that provide for the second participant or his principal to receive no consideration; or

(b) for a consideration the value of which, in money or money’s worth, is less than the value, in money or money’s worth, of the consideration provided by the second participant or his principal.

(4) At the request of a system operator or settlement institution of a designated system the Monetary Authority may, by notice published in the Gazette, exempt the system operator or settlement institution from the application of this section; and where such an exemption is in effect this section shall not apply in respect of any transaction entered into by the system operator or settlement institution (as the case may be) as first participant in his capacity as such system operator or settlement institution.

(5) For the avoidance of doubt, nothing in this section has the effect of derogating from section 20(2) or 22.

29. Right of relevant insolvency office-holder to recover transfer between 2 participants giving unfair preference

(1) This section applies to any transfer of funds or securities from one participant in a designated system to another, being—

(a) a transfer to which section 19 applies (other than a transfer that forms part of a transaction to which section 28 applies);