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| {{2010 GMSLA Section 6 TOC}} | | {{Manual|MSG|2010|6|Clause|6|medium}} |
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| This section deals with the rights of parties with regard to "their" {{gmslaprov|Securities}} and {{gmslaprov|Collateral}} while it is "out on loan". In a nutshell:
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| *Under {{gmslaprov|6.2}} a {{gmslaprov|Borrower}} of {{gmslaprov|Securities}} must "manufacture" payments equal to {{gmslaprov|Income}} received on those {{gmslaprov|Securities}} and pay it to the {{gmslaprov|Lender}};
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| *Under {{gmslaprov|6.3}} a {{gmslaprov|Lender}} holding {{gmslaprov|Non Cash Collateral}} for a {{gmslaprov|Loan}} must "manufacture" payments equal to {{gmslaprov|Income}} received on that {{gmslaprov|Collateral}} and pay it to the {{gmslaprov|Borrower}};
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| *Under {{gmslaprov|6.4}} the {{gmslaprov|Lender}} indemnifies the {{gmslaprov|Borrower}} for failing to redeliver {{gmslaprov|Equivalent}} {{gmslaprov|Non Cash Collateral}};
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| *Under {{gmslaprov|6.5}} {{gmslaprov|Income}} in the form of {{gmslaprov|Securities}} are rolled up into the {{gmslaprov|Loan}} and not redelivered immediately;
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| *Under {{gmslaprov|6.5}} unless otherwise required, a {{gmslaprov|Borrower}} is NOT obliged to vote shares on behalf of the Lender;
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| *Under {{gmslaprov|6.6}}, however, where a {{gmslaprov|Borrower}} acquires rights as a result of any corporate action or takeover activity, (including those requiring specific elections), upon {{gmslaprov|Lender}}'s request {{gmslaprov|Borrower}} must return {{gmslaprov|Equivalent}} {{gmslaprov|Securities}} or {{gmslaprov|Collateral}} "in such form as would arise is exercised".
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| There is a slight tension between {{gmslaprov|6.5}} and {{gmslaprov|6.6}}: while a Borrower is not obliged to vote in a certain way, if it does so and acquires a certain benefit ''and the Lender requests'', it has to pass over that benefit. Best illustrated by way of example:
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| {{box|Under {{isdaprov|Italian Law}} a [[shareholder]] on the [[Record Date]] who does not vote in favour of a proposed {{tag|merger}} acquires a "''[[withdrawal right|Withdrawal right - Italian Corporate Law]]''" if the {{tag|merger}} is approved. The withdrawal right allows a shareholder who abstained or voted against the merger to be cashed out of the equity at a pre-defined price (the weighted average of the closing price of the stock over the last six months).
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| It is therefore possible that the withdrawal right as a {{tag|call option}} over the stock. It is only exercisable if the shareholder does not vote.}}
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| In this case the {{gmslaprov|Lender}} who has lent out over the [[record date]] could not (without prior agreement) oblige the {{gmslaprov|Borrower}} to vote against the {{tag|merger}}, but if the {{gmslaprov|Borrower}} has done so, the {{gmslaprov|Lender}} can, by request under {{gmslaprov|6.7}}, require the {{gmslaprov|Borrower}} to deliver the proceeds of the withdrawal in lieu of {{gmslaprov|Equivalent}} {{gmslaprov|Securities}}.
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| {{gmslaanatomy}}
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