Page:Clearing and Settlement Systems Ordinance (Cap. 584).pdf/24

(b) a transfer by which the participant who is the recipient of the transfer (“first participant”) is given an unfair preference by the participant making the transfer (“second participant”) or by the principal of the second participant acting through the second participant; and

(c) a transfer that is effected 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 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 transfer to which this section applies or his principal may, unless a court otherwise orders, recover from the first participant to the transfer an amount equivalent to the value of the transfer.

(3) For the purposes of this section, a transfer is a transfer as described in subsection (1)(b) if—

(a) the first participant is a creditor of, or is a surety or guarantor for any debts or liabilities of, the second participant or his principal;

(b) the transfer has the effect of putting the first participant into a position which, in the event of the bankruptcy or winding up of the second participant or his principal, will be a better position than the position he would have been in if the transfer had not been made; and

(c) the second participant in deciding to make the transfer, or the second participant’s principal in deciding to cause him to make the transfer, is influenced by a desire to produce in relation to the first participant, the effect described in paragraph (b).

(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 transfer effected 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.