153Effect of decrease in quota shares

1. This section applies where—

2. either—
   1. a transfer of quota shares in any stock to any person holding preferential allocation rights under section 23 necessitates a deduction of quota shares under that section from any quota owner; or
   2. any determination of an appeal under section 51 necessitates a deduction of quota shares under section 52 from any quota owner (other than the quota owner involved in the appeal); and
3. as a result of the deduction, the number of quota shares in that stock held by the owner is less than the total number of quota shares in that stock subject to a mortgage or caveat immediately before the deduction.

4. Where a deduction referred to in subsection (1)(a)(i) is required and there are 1 or more mortgages or caveats registered over the quota shares owned by the quota owner, then the number of shares secured by any 1 or more of those mortgages or caveats must be reduced in the manner prescribed by regulations made under this Act in accordance with the quota share reduction principles set out in subsection (4).

5. If any quota owner, or the chief executive, has appealed under section 51 in relation to any stock, then, when the appeal is finally determined,—

6. all provisional individual transferable quota for the relevant stock owned by that quota owner must, at the chief executive's direction, be transferred to the Crown in accordance with section 52; and
7. if any provisional individual transferable quota shares so transferred were subject to a mortgage or caveat, the mortgage or caveat ceases to apply to the transferred provisional individual transferable quota shares, and instead applies to the same number of individual transferable quota shares transferred to that quota owner under section 52 (if possible); and
8. if, as a result of such transfers, the number of individual transferable quota shares in the relevant stock owned by the quota owner is less than the number of provisional individual transferable quota shares that were subject to the mortgage or caveat and there are 1 or more mortgages or caveats registered over the provisional individual transferable quota shares owned by the quota owner, then the number of shares secured by any 1 or more of those mortgages or caveats must be reduced in the manner prescribed by regulations made under this Act in accordance with the quota share reduction principles set out in subsection (4).

9. The quota share reduction principles referred to in subsections (2) and (3)(c) are as follows:

10. the total number of shares subject to any individual caveat may not exceed the total number of shares owned by the quota owner concerned:
11. the total number of shares subject to all caveats may exceed the total number of shares owned by the quota owner:
12. where quota shares subject to caveats must be reduced, they must be reduced to equal the number of shares owned by the quota owner:
13. the total number of shares subject to all mortgages may not exceed the total number of shares owned by the quota owner concerned:
14. the total number of shares subject to all mortgages and caveats that were registered prior to the last registered mortgage may not exceed the total number of shares owned by the quota owner:
15. where quota shares subject to mortgages must be reduced, the shares subject to the most recently registered mortgage must be reduced first, and the shares subject to any earlier registered mortgage may only be reduced after the first-mentioned mortgage has had its security eliminated completely by the reduction.

16. The chief executive must make on the register any entry necessary to show that the quota has been transferred in accordance with section 23 or section 52, and alter any relevant mortgage or caveat accordingly.