Prudential Regulation Authority Rulebook

2B.1

A UK ISPV must ensure that the contractual arrangements relating to the transfer of risk from an undertaking to the UK ISPV ensure that the UK ISPV is at all times fully funded in accordance with 2.2 to 2.5.

2B.2

A UK ISPV must ensure that the contractual arrangements relating to the transfer of risk from an undertaking to the UK ISPV and from the UK ISPV to the providers of debt or financing shall ensure all of the following:

1. (1) the transfer of risk is effective in all circumstances; and
2. (2) the extent of risk transfer is clearly defined and incontrovertible.

2B.3

The transfer of risk shall not be effective in all circumstances where there are connected transactions which could undermine the effective transfer of risk.

2B.4

A UK ISPV must ensure that the contractual arrangements relating to the transfer of risk from an undertaking to the UK ISPV and from that UK ISPV to the providers of debt or finance shall ensure all of the following:

1. (1) the claims of the providers of debt or financing mechanisms are at all times subordinated to the payment obligations of the UK ISPV to the undertaking;
2. (2) no payments are made to the providers of debt or financing, if following those payments, the UK ISPV would no longer be fully funded;
3. (3) the providers of debt or finance to the UK ISPV have no rights of recourse to the assets of the undertaking; and
4. (4) the providers of debt or finance to the UK ISPV have no rights to apply for the winding-up of the UK ISPV.