Accuracy of Specified Information - ISDA Provision: Difference between revisions

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Accuracy of Specified Information - ISDA Provision (view source)

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{{isdaanat|3(d)}}The fabulous Section {{isdaprov|3(d)}} representation, giving one’s counterparty the right to close out should any so-designated representations turn out not to be true. This is sure to occupy an inordinate amount of your [[negotiation]] time — in that it occupies any time at all — because you are as likely to be hit in the face by a live flying starfish in the driest part of the Gobi Desert as you are to close out an ISDA because your counterparty is late preparing its annual accounts. [[Disclaimer|But that’s a personal view and you may not rely on it.]]
{{manual|MI|2002|3(d)|Sections(d)|long}}
 
{{Section 3(d) capsule}}
 
Note that the {{isdaprov|3(d)}} representation, in the ISDA {{isdaprov|documents for delivery}} table in the {{isdaprov|Schedule}}, therefore covers only the accuracy, completeness of {{isdaprov|Specified Information}} and not (for example) whether it is delivered at all or not. For that, see Section {{isdaprov|4(a)}} - {{isdaprov|Furnish Specified Information}}.
{{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 the statements are a fair representation of the financial conditions. I’m no accountant. I didn’t even write the stupid audit. How am I supposed to know? Why should I give any a stronger representation than the expert?”
 
Fair questions, but they misapprehend what is being asked.The riposte is this:
 
The {{isdaprov|Part 3}} information you must supply is “Party B’s annual [[audited financial statements]].” So the [[Representations - ISDA Provision|representation]] we are after is that  you have handed over ''a fair, accurate and complete copy of those audited statements'', not that the statements ''themselves'', as prepared by the auditor are necessarily 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.}}
 
{{Specified Information and Breach of Agreement}}
 
{{ref}}
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