23.
| (1) In section 23 and 24 "insolvency proceedings" shall mean any collective measures provided for in any applicable law, either to wind-up the participant or to re organize it, whether voluntarily or involuntarily, or to suspend its business, including insolvency proceedings instituted under the Insolvency Ordinance (Chapter 81), where such measure involves the suspending of, or the imposing of limitations on, payment orders and payments. |
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| (2) Payment orders which have been entered into a designated clearing and settlement system and their netting shall be legally enforceable and binding on third parties, notwithstanding the commencement of insolvency proceedings against a participant, provided that payment orders were entered into the system prior to the commencement of such insolvency proceedings. |
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| (3) Where payment orders have been entered into a designated clearing and settlement system after the commencement of insolvency proceedings and are carried out on the day of the commencement of such proceedings, such payment orders shall be legally enforceable and binding on third parties only if, after the time of settlement, the central counter-party or the clearing house can furnish evidence to the satisfaction of the Court of the fact that they were not aware nor could they have been aware of the commencement of such proceedings. |
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| (4) The specific moment of entry of a payment order into a designated clearing and settlement system shall be determined by the rules of that system. |
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| (5) For the purposes of this section, the time of commencement of insolvency proceedings is the moment either when the judgement or order of insolvency, winding- up or suspension is pronounced or the effective resolution for the voluntary winding-up is passed. |
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| (6) A participant against whom a judgement or order is pronounced, or who has passed an effective resolution for voluntary winding-up, as provided for in subsection (5), shall advise the Central Bank and where applicable the central counter-party or the clearing house as the case may be, of the judgement, order or resolution on the day it is pronounced or passed. |
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| (7) Insolvency proceedings shall not have any retroactive effect on the rights and obligations of a participant, arising from the clearing and settlement of payment obligation on a designated clearing and settlement system prior to the time of commencement of such proceedings. |
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Sri Lanka Consolidated Acts