Section 718 CAMA 2020

Section 718 Companies and Allied Matters Act is about Definition of applicable concepts. It is under Chapter 28 (Netting) of the Act.

In this Chapter—“financial regulatory authority” means—

(a) the Central Bank of Nigeria ;

(b) the Securities and Exchange Commission ;

(c) the National Insurance Commission ;

(d) the National Pension Commission ; and

“cash” means money credited to an account in any currency or a similar claim for repayment of money, such as a money market deposit ;

“collateral” means any—

(a) cash in any currency ;

(b) securities of any kind, including debt and equity securities ;

(c) guarantees, letters of credit and obligations to reimburse ; and

(d) any asset commonly used as collateral in Nigeria ;

“collateral arrangement” means any margin, collateral, security arrangement or other credit enhancement related to or forming part of a netting agreement or one or more qualified financial contracts entered into thereunder, including—

(a) a pledge, charge or any other form of security interest in collateral,whether possessory or non-possessory ;

(b) a title transfer collateral arrangement ;

(c) a security interest collateral arrangement ; and

(d) any guarantee, letter of credit or reimbursement obligation by orto a party to one or more qualified financial contracts, in respect of those qualified financial contracts ;

“insolvent party” means the party in relation to which an insolvency proceeding under the laws of Nigeria has been instituted ;

“liquidator” means the liquidator, administrator, nominee, supervisor,receiver, trustee, conservator or other individual, person or entity which administers the affairs of an insolvent party during an insolvency proceeding under the laws of Nigeria ;

“netting” means the occurrence of the following—

(a) termination, liquidation or acceleration of any payment or delivery obligation or entitlement under one or more qualified financial contracts entered into under a netting agreement;

(b) calculation or estimation of a close-out value, market value,liquidation value or replacement value in respect of each obligation or entitlement or group of obligations or entitlements terminated, liquidated or accelerated under paragraph (a) ;

(c) conversion of any values calculated or estimated under paragraph (b) into a single currency ; and

(d) determination of the net balance of the values calculated under paragraph (b), as converted under paragraph (c), whether by operation of set-off or otherwise ;

“netting agreement” means any—

(a) agreement between two parties that provides for netting of present or future payment or delivery obligations or entitlements arising under or in connection with one or more qualified financial contracts entered into under the agreement by the parties to the agreement (a “master netting agreement”) ;

(b) master agreement between two parties that provides for netting of the amounts due under two or more master netting agreements (a“master-master netting agreement”) ; and

(c) collateral arrangement related to or forming part of one or more of the foregoing ;

“non-insolvent party” means the party other than the insolvent party;

“party” means a person constituting one of the parties to a netting agreement ;

“person” includes partnerships, companies, regulated entities such as banks, insurance companies and pension fund administrators, or any other body corporate (including statutory corporations or statutory bodies) whether organised under the laws of Nigeria or under the laws of any other jurisdiction,and any international or regional development bank or other international or regional organisation ;

“qualified financial contract” means any financial agreement, contractor transaction, including any terms and conditions incorporated by reference in any financial agreement, contract or transaction, pursuant to which payment or delivery obligations are due to be performed at a certain time or within a certain period of time and whether or not subject to any condition or contingency and includes—

(a) a currency, cross-currency or interest rate swap ;

(b) a basis swap ;

(c) a spot, future, forward or other foreign exchange transaction ;

(d) a cap, collar or floor transaction ;

(e) a commodity swap ;

(f ) a forward rate agreement ;

(g) a currency or interest rate future ;

(h) a currency or interest rate option ;

(i) an equity derivative, such as an equity or equity index swap, equity forward, equity option or equity index option ;

(j) a derivative relating to bonds or other debt securities or to a bond or debt security index, such as a total return swap, index swap, forward, option or index option ;

(k) a credit derivative, such as a credit default swap, credit default basket swap, total return swap or credit default option ;

(l) an energy derivative, such as an electricity derivative, oil derivative,coal derivative or gas derivative ;

(m) a weather derivative, such as a weather swap or weather option ;

(n) a bandwidth derivative ;

(o) a freight derivative ;

(p) an emissions derivative, such as an emissions allowance or emissions reduction transaction ;

(q) an economic statistics derivative, such as an inflation derivative ;

(r) a property index derivative ;

(s) a spot, future, forward or other securities or commodities transaction ;

(t) a securities contract, including a margin loan and an agreement to buy, sell, borrow or lend securities, such as a securities repurchase or reverse repurchase agreement, a securities lending agreement or a securities buy or sell back agreement, including any such contract or agreement relating to mortgage loans, interests in mortgage loans or mortgage-related securities ;

(u) a commodities contract, including an agreement to buy, sell, borrow or lend commodities, such as a commodities repurchase or reverse repurchase agreement, a commodities lending agreement or a commodities buy or sell back agreement ;

(v) a collateral arrangement ;

(w) an agreement to clear or settle securities transactions or to act as a depository for securities ;

(x) any other agreement, contract or transaction similar to any agreement,contract or transaction referred to in paragraphs (a) – (w) with respect to one or more reference items or indices relating to interest rates, currencies,commodities, energy products, electricity, equities, weather, bonds and other debt instruments, precious metals, quantitative measures associated with an occurrence, extent of an occurrence, or contingency associated with a financial, commercial or economic consequence, or economic or financial indices or measures of economic or financial risk or value ;

(y) any swap, forward, option, contract for differences or other derivatives in respect of, or combination of, one or more agreements or contracts referred to in paragraphs (a-x) ; and

(z) any agreement, contract or transaction designated as such by the financial regulatory authority under this Act ;“security interest collateral arrangement” means “security financial collateral arrangement” as defined in Chapter 9 (Debentures) of this Act and includes charges ; and“title transfer collateral arrangement” means a margin, collateral or security arrangement related to a netting agreement based on the transfer of title to collateral, whether by outright sale or by way of security, including a sale and repurchase agreement, securities lending agreement, or securities buy or sell-back agreement.