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84K. Conditions for Resolution

(1) The DFSA may exercise its Resolution Powers or apply its Resolution Tools in relation to an Authorised Firm only where it is satisfied that the following conditions (the “Resolution Conditions”) are met:
(a) the Authorised Firm is failing or is likely to fail;
(b) having regard to timing and other relevant circumstances, it is not reasonably likely that any action will be taken by or in respect of the Authorised Firm that will prevent the failure or likely failure of the Authorised Firm within a reasonable timeframe; and
(c) the taking of resolution action is in the public interest.
(2) For the purposes of this Article, an Authorised Firm is failing or likely to fail where one or more of the following circumstances exist:
(a) it no longer meets requirements under the Law or Rules or other legislation administered by the DFSA, such as prescribed capital or liquidity levels;
(b) its access to market-based funding sources is seriously impaired;
(c) there is a significant deterioration in the value of its assets;
(d) there are serious governance issues or deficiencies in its risk management and controls that may have a significant impact on the Authorised Firm’s financial condition; or
(e) it is unable to pay its debts or other liabilities as they fall due,
but an Authorised Firm is not failing or likely to fail merely because one or more Early Intervention Powers have been exercised in relation to it.
(3) In determining whether (1)(a) and (2) are met, the DFSA may take into account the likely impact on the Authorised Firm of the failure or likely failure of another entity in the Authorised Firm’s Group.
(4) For the purposes of (1)(c), an action is in the public interest where:
(a) it is necessary and proportionate to achieve one or more of the DFSA’s objectives; and
(b) winding up the Authorised Firm under the Insolvency Law or other applicable insolvency laws would not meet the DFSA’s objectives to the same extent.
(5) An Authorised Firm must immediately notify the DFSA if its senior management reasonably considers or is aware that:
(a) it is failing or likely to fail;
(b) another entity in its Group is failing or likely to fail;
(c) in the case of an Authorised Firm operating as a branch in the DIFC, the Resolution Authority in the jurisdiction of its head office is considering, or has initiated, resolution action in relation to the Authorised Firm;
(d) a Resolution Authority, in a jurisdiction where another entity in its Group is present is considering, or has initiated, resolution action in relation to that entity; or
(e) a Resolution Authority in the jurisdiction of the head office of the legal entity of which the Authorised Firm is a subsidiary is considering, or has initiated, resolution action in relation to the head office.
(6) If the DFSA determines that the Resolution Conditions are met in respect of an Authorised Firm, it:
(a) shall record its decision together with the reasons for that decision and the actions that it intends to take as a result of the decision;
(b) shall give written notice of the decision to:
(i) the Authorised Firm;
(ii) if applicable, the Financial Services Regulator and Resolution Authorities of jurisdictions in which any relevant Group entity or significant branches are located; and
(iii) if applicable, any scheme for the protection of depositors or clients that is relevant to the Authorised Firm; and
(c) may publish information about the decision if it appears to the DFSA to be desirable to do so in the public interest.