Accuracy of Specified Information - ISDA Provision
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ISDA Anatomy™
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Note that the 3(d) representation, in the ISDA documents for delivery table in the Schedule, therefore covers only the accuracy, completeness of Specified Information and not (for example) whether it is delivered at all or not. For that, see Section 4(a) - Furnish Specified Information.
Template:Commonnegpoints
Opposing negotiators may try to crowbar in something like this, to satisfy their yen to make a difference and please their clients with their acumen and commercial fortitude:
- “or, in the case of financial information, a fair representation of the financial condition of the relevant party, provided that the other party may rely on any such information when determining whether an Additional termination Event has occurred.”
This is predicated on the following reasoning: “In publishing the audit, the auditor itself is not making any greater representation than that in its view the statements are a fair representation of the financial conditions. I didn't even write the audit. Why should I give any more severe representation than the expert? How do I even know?”
The riposte is this:
[[The Part 3 information you must supply is “Party B’s annual audited financial statements.” So the representation we are after is that what you have handed over is a fair, accurate and complete copy of those audited statements, not that the statements themselves, as prepared by the auditor are fair, accurate and complete. To get that comfort, we have the auditor’s own representation of the company’s financial condition, and we don’t need yours. - ISDA Provision|The Part 3 information you must supply is “Party B’s annual audited financial statements.” So the representation we are after is that what you have handed over is a fair, accurate and complete copy of those audited statements, not that the statements themselves, as prepared by the auditor are fair, accurate and complete. To get that comfort, we have the auditor’s own representation of the company’s financial condition, and we don’t need yours.]]
Not providing documents for delivery is an Event of Default ... eventually
The importance of promptly sending required documents for delivery goes as follows:
- By dint of Section {{{{{1}}}|4(a)}} you agree to furnish each other {{{{{1}}}|Specified Information}} set out in {{{{{1}}}|Part 3}} of the {{{{{1}}}|Schedule}}.
- By dint of Section {{{{{1}}}|5(a)(ii)}} if you don’t then that can be a {{{{{1}}}|Breach of Agreement}} {{{{{1}}}|Event of Default}} (Section {{{{{1}}}|5(a)(ii)}}). Be warned: you must pursue a tortured chain of nested double negatives and carefully parse the interplay between Sections {{{{{1}}}|4(a)}} and {{{{{1}}}|5(a)(ii)}} to grasp this, but it is true.
- But, Section {{{{{1}}}|5(a)(ii)}} imposes a thirty freaking day grace period following notice before a {{{{{1}}}|Breach of Agreement}} counts as an {{{{{1}}}|Event of Default}} allowing termination. (A {{{{{1}}}|Failure to Pay or Deliver}} is excluded from that definition, by the way, because it has its own EOD with a much tighter grace period).
- So if you need a document “furnished” urgently and can’t wait a month for it (you might not, if you are a credit officer and it is a monthly NAV statement, for example) then you must upgrade a simple {{{{{1}}}|5(a)(ii)}} {{{{{1}}}|Breach of Agreement}} to a full-blown {{{{{1}}}|Additional Termination Event}}.