The ISDA Master Agreement is a standardized contract that is widely used in the international financial market. It is an agreement between two parties to govern their derivative transactions, such as swaps or options. The agreement is published by the International Swaps and Derivatives Association, Inc. (ISDA), and updated periodically to reflect changes in market practice and regulatory requirements.
One important aspect of the ISDA Master Agreement is the Change of Control provisions. These provisions govern what happens if one of the parties to the agreement undergoes a change of control, which is defined as a change in the ownership or control of more than 50 percent of the voting equity of a party.
The Change of Control provisions are important because they can have significant implications for the derivative transactions that are governed by the ISDA Master Agreement. For example, if a party undergoes a change of control, the other party may have the right to terminate the agreement or to require certain changes to the agreement.
The specific provisions regarding Change of Control can be found in Section 6(e) of the ISDA Master Agreement. The provisions are designed to address a variety of scenarios, including mergers, acquisitions, and other changes in ownership or control.
One key issue that can arise in the context of Change of Control provisions is the question of what constitutes a change in ownership or control. This can be a complex issue, particularly in the case of companies that have complex ownership structures or that are publicly traded.
In general, however, a Change of Control is likely to be triggered when a party undergoes a significant change in ownership or control. This may include a change in the ownership of a majority of the voting equity, a change in the composition of the board of directors, or a change in the executive management team.
Overall, the Change of Control provisions of the ISDA Master Agreement are an important aspect of the agreement that can have significant implications for the parties involved. It is important for parties to understand these provisions and to ensure that they are properly addressed in any derivative transactions that are governed by the agreement.