Commonwealth Consolidated Acts Commonwealth Consolidated Acts(1) The Reserve Bank may, by written notice given to a CS facility licensee holding a licence granted under subsection 824B(1) (domestic clearing and settlement facilities), direct the licensee to:
(a) do, or refrain from doing, anything under either or both of the following instruments (the operating instruments ):
(i) the facility's operating rules;
(ii) the written procedures the facility must have under regulations made for the purposes of subsection 822A(2); or
(b) change one or more of those operating instruments; or
(c) subject to sections 823M and 823P:
(i) increase the licensee's level of share capital to a specified level; or
(ii) issue one or more specified classes of shares, or one or more specified classes of rights to acquire shares, in the licensee; or
(iii) issue one or more specified classes of capital instruments that are prescribed by the regulations; or
(d) refrain from paying a dividend on any shares; or
(e) refrain from repaying any amount paid on shares; or
(f) exercise rights under an agreement (including termination rights);
if subsection (2) of this section applies to the licensee.
Note 1: The direction is a recapitalisation direction to the extent that it deals with a matter in paragraph (c).
Note 2: The procedures referred to in subparagraph (a)(ii) could relate to matters such as:
(a) the licensee's operations; or
(b) the conduct of participants in the facility; or
(c) the structure and operation of electronic communications with those participants; or
(d) default management or recovery.
(2) This subsection applies to the licensee if:
(a) the licensee informs the Reserve Bank that the licensee considers that the licensee is likely to become unable to meet one or more of its obligations under paragraphs 821A(1)(aa), (ab) and (d) (its critical obligations ); or
(b) the Reserve Bank reasonably believes that, in the absence of external support:
(i) the licensee may become unable to meet one or more of its critical obligations; or
(ii) it is likely that the licensee will be unable to operate the facility in Australia consistently with the stability of the Australian financial system; or
(c) the licensee becomes unable to meet one or more of its critical obligations; or
(d) the Reserve Bank reasonably believes that the licensee is conducting, or is likely to conduct its affairs in a way that may cause or promote instability in the Australian financial system.
(3) For the purposes of paragraph (2)(b), the regulations may specify that a particular form of support:
(a) is external support; or
(b) is not external support.
(4) The direction:
(a) must specify a reasonable time by which, or a reasonable period during which, it is to be complied with; and
(b) may deal with one or more of the matters in the paragraphs or subparagraphs of subsection (1).
(5) The licensee must comply with the direction.
Note: Failure to comply with this subsection is an offence: see subsection 1311(1).