On 22 February 2008, the Banking (Special Provisions) Act 2008 (the Act), and The Northern Rock plc Transfer Order 2008 (SI 2008/432) together with Explanatory Memorandum (the Transfer Order), came into force and were published on the OPSI website.

The Act which received Royal Assent on 21 February 2008, was made in the form of the Banking Special Provisions Bill (see further, Legal Update, Proposed Northern Rock legislation has potentially wider impact).

The Transfer Order, transfers into public ownership all the shares in Northern Rock, including preference shares, and extinguishes all share options and other entitlements to shares. It was made under section 2(2)(b) of the Act, that is, to protect the public interest in circumstances where HM Treasury has provided financial assistance to the Northern Rock and for the purpose of maintaining the stability of the UK financial system.

The Act also provides for an order to set up a compensation scheme under which an independent valuer will assess any compensation which may be payable to holders of shares in Northern Rock at the time of the transfer and certain other affected parties. A draft order to this effect was laid before Parliament on 22 February 2008.