Legally Enforceable Netting Agreement

Federal Law No. 1 of Water-Decretal 10 of 2018 with respect to netting (Netting Law) was adopted on 20 September 2018, which governs compensation for the first time in the UAE on an autonomous basis and places the UAE between positive clearing courts of demanding legal systems following the guidelines of the International Swaps and Derivatives Association (ISDA) Model Netting Act 2006. Possible conflicts with bankruptcy law and the Civil Code in the United Arab Emirates are mentioned in the text of the Compensation Act. The recognition of clearing is also included in Federal Law No. 14 of 2018 on the Central Bank and the Organization of Financial Institutions and Activities (the new Banking Law). Examples of situations in which trades are considered illiquid for this purpose include, among others, trades that are not marked daily and trades subject to specific accounting treatment for valuation purposes (e.g. repo.B-type transactions that relate to securities whose fair value is determined by input patterns not observed in the market). In the event of an event of default, whether the counterparty is in default or bankrupt, the bank has the right to immediately seize and liquidate the collateral to its advantage. Under the Clearing Act, the concept of set-off includes: (i) the termination, liquidation and/or acceleration of payments, delivery obligations, allowances or obligations, payments or deliveries under an eligible financial contract (as explained below) concluded under a clearing contract (as explained below) or which is the subject of a clearing contract; (ii) the calculation of the net balance (based on an index of an end-of-contract or termination value or other relevant value) in respect of such terminated, liquidated and/or accelerated obligations or claims; and (iii) the conversion of that estimated value into a single currency. .

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