Definisn’t

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Definisn’t
/ˌdɛfɪˈnɪznt/ (n.)

The opposite of a definition. A lexical means to establishing, for all times and all avoidances, what something is not.

“Security-based swap”

The most famous example is the definisn’t of “security-based swap” from the Rules and Regulations of the Securities Exchange Act of 1934.

“'The term security-based swap ... does not include an agreement, contract, or transaction that is based on or references a qualifying foreign futures contract ... on the debt securities of any one or more of the foreign governments ... provided that such agreement, contract, or transaction satisfies the following conditions: [there follows an interminable list of conditions]”

We are left with the rather unsettling conclusion that anything else in the universe is, or could be, or it is not beyond that question that it could in suitable circumstances be considered as, or deemed to be, a security-based swap. A Cornish pasty; an echidna; a map of Tasmania; a motorised rick-shaw: all are, or at any rate could be, “security-based swaps” for whatever purposes might hove into view should you be a regulator empowered by the Securities Exchange Act.

“Company”

Then there is the definisn’t of “companies” in Clifford Chance’s Luxembourg GMRA netting opinion, which goes beyond the lawyers run-of-the-mill perversities — you know: pegging off the rest of the universe, known and unknown, instead of focusing on the matter at hand — and moves over to a form of cruel and unusual torture of the English language, mischievously aimed at those poor souls consigned forever to read netting opinions.

It concerns the anti-meaning of the word “company”. Here our learned colleagues, having devoted dozens of paragraphs to what Luxembourg companies are, then embarked on pages more musing, in excruciating detail, on what they are not.

It is a form of waterboarding just to read it — it begins so:

“For the purpose of this opinion, the word “companies” shall neither refer to economic interest groups (groupements d’interêts économiques) nor European economic interest groups (groupements d’interêts économiques européens). It shall furthermore not encompass any entities listed hereafter or any entities which are subject to a specific legislative framework or any specific licensing requirements, such as, without limitation, reinsurance undertakings, pension funds, investment companies in risk capital, securitisation vehicles, alternative investment fund managers subject to the Luxembourg law of 12 July 2013 on investment fund managers (as amended) (the “AIFM Law”), alternative investment funds subject to the AIFM law other than UCI or reserved alternative investment funds (fonds d’investissement alternatives reserves (“RAIF”) which are additionally subject to the Luxembourg law of 2016 on RAIF (as amended) (except the extent such entities are specifically covered in Appendix 2 part 1).”

Yet, as the pain and grogginess wear off, we find ourselves feeling curious.

Firstly, if one did want good clear illustrations of things that aren’t companies, the examples picked here seem singularly ill-suited. Many of them, for one thing, are companies; just not the special types of company that the blessèd author of this opinion has in mind.

Now there are lots of things — most things on heav’n and earth, indeed — that are not Luxembourg companies. If the idea is to put clear water between what is, and what is not, a Luxembourg company, wouldn’t it be better to draw comparisons with things that, more plainly, are not?

Giraffes, for example, are certainly not Luxembourg companies. Nor, to bring it a little closer to home, are Moules Frites. Nor tapioca.

None of these things are like companies in any way. We feel their very non-“companyness”, when compared to things that the learned author has in contemplation, helps a novice reader construct the sorts of categories that companies do and do not fall into.

These, we submit, are much better, distinctions; more conducive to a frustration-free working day, whether it is primarily concerned with semolina or credit risk management. They promise helpful, practical advice on how to go about one’s day, should you come across something that might or might not be a legal fiction. Do not make sago-pudding out of a SICAV, for example. Do not try to close-out a dromedary.

But we can imagine someone saying “I know very well zebras are not companies. I do not need a legal opinion for that. It is the very nearness of these company-like things to being companies, whereas in law they are not, that makes this sort of definition necessary and helpful.”

Just so. But still, there is “helpful” and there is “torturing the sinews of logic for no good reason”. Let us draw nearer and have a look.

To do that we must leave pure, tedious, black-letter law and get our hands dirty with set theory. Buried in that dense list of almost-but-for-present-purposes-not-quite companies, is another negative: “alternative investment funds subject to the AIFM law other than UCI”.

The author has already told us that UCIs — even those that are, in fact, companies — for the purpose of this opinion are not “companies”. But around these non-companies, there is a penumbra of similar, but different entities: things that are like UCIs, but are not UCIs. These fringe entities — even though they, too, might actually be companies, are not “companies” either. We are left with a logical structure which stretches the Euclidean idea of space tedium so profoundly I have struggled to render it in plain English:

Investment funds which are not non-companies by dint of being investment funds, and might otherwise be companies, do not count as companies after all, and therefore should be treated as non-companies anyway.

Now, it is all very well to pick holes, but at the Jolly Contrarian we are bigger than that. We can propose solutions. And here our solution would be this:

“Companies” means normal companies in the corporate sector. It does not include:
(a) Regulated insurance or reinsurance undertakings;
(b) Pension or other regulated investment funds;
(c) Flora;
(d) Fauna; or
(e) Puddings.

See also

• Extraordinary rendition
• US Person