The Banking Act 1987 (Exempt Transactions) (Amendment) Regulations 1990

Made: 8th January 1990

Laid before Parliament: 11th January 1990

Coming into force: 1st February 1990

The Treasury, in exercise of the powers conferred upon them by section 4(4), (5) and (6) of the Banking Act 1987[^f00001] and of all other powers enabling them in that behalf, hereby make the following Regulations:

Citation and commencement

1

These Regulations may be cited as the Banking Act 1987 (Exempt Transactions) (Amendment) Regulations 1990 and shall come into force on 1st February 1990.

Interpretation

2

In these Regulations “the principal Regulations” means the Banking Act 1987 (Exempt Transactions) Regulations 1988[^f00002].

Amendment of principal Regulations

3

The principal Regulations shall be amended as follows:

• (a) by substituting for regulation 1(2) the following paragraph–

(2) In these Regulations, unless the context otherwise requires– - “the Act” means the Banking Act 1987; - “commercial paper” means a debt security which may not be redeemed in whole or in part until after seven days beginning with the date of issue but which must be redeemed within one year beginning with the date of issue; - “company” means a body corporate, including a body corporate constituted under the law of a country or territory outside the United Kingdom; - “the corresponding Northern Ireland legislation” means, in relation to any of the provisions of the Companies Act 1985[^f00003] specified in these Regulations, the corresponding provisions of the Companies (North ern Ireland) Order 1986[^f00004]; - “the Council” means the Council of The Stock Exchange; - “debt security” includes bonds, notes, debentures and debenture stock; - “deposit”, except in the expressions “pre-contract deposit” and “deposit fund”, shall be construed in accordance with section 5 of the Act; - “exempt transactions” shall be construed in accordance with regulation 2 of these Regulations; - “financial year” has the meaning ascribed to it by section 742 of the Companies Act 1985; - “industrial and provident society” means a society registered or deemed to be registered under the Industrial and Provident Societies Act 1965[^f00005] or under the Industrial and Provident Societies Act (Northern Ireland) 1969[^f00006] but does not include a credit union within the meaning of the Credit Unions Act 1979[^f00007] or the Credit Unions (Northern Ireland) Order 1985[^f00008]; - “the listing rules” means any rules made pursuant to section 142(6) of the Financial Services Act[^f00009]; - “medium term note” means a debt security which may not be redeemed in whole or in part until after one year beginning with the date of issue but which must be redeemed within five years beginning with the date of issue; - “net assets” has the meaning ascribed to it by section 264(2) of the Companies Act 1985; - “the Official List” means the Official List of The Stock Exchange; - “Recognised Overseas Exchange” means an exchange, market place or association for the time being included in the list published by the Council for the purposes of rule 535.4 of the Rules of The Stock Exchange (permitted dealings in foreign securities) or any rule of The Stock Exchange having substantially the same effect[^f00010]; - “redemption value”, in relation to any debt security, means the amount of the principal which is payable upon redemption of that security; - “relevant debt security” means a debt security which is commercial paper or a medium term note; - “The Stock Exchange” means The International Stock Exchange of the United Kingdom and Republic of Ireland Limited; - “subsidiary” and “wholly-owned subsidiary” shall be construed in accordance with section 736 of the Companies Act 1985[^f00011]; - “successor”, in relation to a body, means any company in which property, rights and liabilities of the body shall have become vested by virtue of an Act; - “the Unlisted Securities Market” means the Unlisted Securities Market of The Stock Exchange.

• (b) in regulation 7(3)(a) by inserting after the words “of the other part” the words “(as amended by qualifying resolutions of Participating Societies (as therein defined) dated 29th May 1989)” and by inserting before the word “amended” the word “subsequently”;

• (c) regulation 12 shall be revoked;

• (d) by substituting for regulation 13 the following new regulation–

(13) The acceptance of a deposit by a person (not being a body listed in Schedule 2 to these Regulations) on terms involving the issue of any relevant debt security is an exempt transaction if (a) the person accepting the deposit is– (i) a company whose shares or debt securities have been admitted to the Official List (and are not the subject of a notice issued by the Council cancelling or suspending the listing or suspending dealings) or are dealt in on the Unlisted Securities Market (and are not the subject of a notice issued by the Council cancelling or suspending dealings); or (ii) a company not falling within sub-paragraph (a)(i) above which is incorporated in the United Kingdom or whose shares or debt securities have been admitted to listing on a Recognised Overseas Exchange (and are not the subject of official action taken in accordance with the rules of the Recognised Overseas Exchange cancelling or suspending the listing or suspending dealings), which has complied with the requirements of Schedule 3 to these Regulations; or (iii) the government of any country or territory, or a public authority, outside the United Kingdom the debt securities of which are admitted to trading on the Stock Exchange or on a Recognised Overseas Exchange (and are not the subject of a notice issued by the Council or official action taken in accordance with the rules of the Recognised Overseas Exchange (as the case may be) cancelling or suspending the admission to trading or suspending dealings); or (iv) a person who does not fall within sub-paragraphs (a)(i) to (iii) above, if either a company which falls within sub-paragraph (a)(i) or an authorised institution has guaranteed to the holder of the relevant debt security the repayment of the principal and the payment of any interest or premium in connection therewith; (b) in the case of a company falling within sub-paragraph (a)(i) or (ii) above, its net assets, or, in the case of a person falling within sub-paragraph (a)(iv) above where the guarantor is not an authorised institution, the guarantor’s net assets, were shown in its last audited individual or group accounts (as the case may be) to be not less than £25 million (or an amount of equivalent value denominated wholly or partly otherwise than in sterling); (c) in consideration of the deposit a single debt security is issued, in the form of a relevant debt security, which has a redemption value of not less than £100,000 (or an amount of equivalent value denominated wholly or partly otherwise than in sterling), the whole or part of which may be transferred only if the redemption value of each relevant debt security being transferred is not less than £100,000 (or an amount of equivalent value denominated wholly or partly otherwise than in sterling); and (d) the relevant debt security– (i) if commercial paper, bears the rubric “commercial paper issued in accordance with regulations made under section 4 of the Banking Act 1987”; (ii) if a medium term note, bears the rubric “medium term note issued in accordance with regulations made under section 4 of the Banking Act 1987”; (iii) states the name of the issuer and that the issuer is not an authorised institution and either states that repayment of the principal and the payment of any interest or premium in connection with the relevant debt security have not been guaranteed, or, if they have been guaranteed, states that this is the case, the name of the guarantor and whether or not the guarantor is an authorised institution; and (iv) if it is issued by a company falling within sub-paragraph (a)(i) or (ii) above, or where it is not issued by such a company but is guaranteed by a company falling within sub-paragraph (a)(i) above, and is not offered by a prospectus to which section 56 or 72 of the Companies Act 1985[^f00012] or the corresponding Northern Ireland legislation applies, includes a statement made by the company accepting the deposit or the guarantor (as the case may be) that the relevant company has complied with its obligations under the relevant rules and that, since the last publication in compliance with the relevant rules of information about the relevant company, the relevant company, having made all reasonable enquiries, has not become aware of any change in circumstances which could reasonably be regarded as significantly and adversely affecting its ability to meet its obligations in respect of the relevant debt security as they fall due. In this paragraph “the relevant rules” means– (aa) in the case of a company whose shares or debt securities have been admitted to the Official List, the listing rules, or (bb) in the case of a company whose shares or debt securities are dealt in on the Unlisted Securities Market, the terms and conditions of entry to the Unlisted Securities Market, or (cc) in the case of a company not falling within sub-paragraph (aa) or (bb) above, Schedule 3 to these Regulations.

• (e) Schedule 1 hereto shall be substituted for Schedule 1 to the principal Regulations; and

• (f) Schedule 2 hereto shall be substituted for Schedule 3 to the principal Regulations.

SCHEDULE 1 — SUBSTITUTED SCHEDULE 1 TO THE PRINCIPAL REGULATIONS

SCHEDULE 2 — SUBSTITUTED SCHEDULE 3 TO THE PRINCIPAL REGULATIONS

Signed

Stephen Dorrell — Kenneth Carlisle — Two of the Lords Commissioners of Her Majesty’s Treasury. — 8th January 1990

Explanatory note

(This note is not part of the Regulations)

These Regulations amend the Banking Act 1987 (Exempt Transactions) Regulations 1988 (the 1988 Regulations).

First they extend from one to five years the maximum redemption period of debt securities which may be issued under the 1988 Regulations, consequent on the amendment by section 202 of the Companies Act 1989 (c. 40) of section 195 of the Financial Services Act 1986 (offers of short-dated debentures). Instruments with a maturity of one year or less are referred to in these Regulations as “commercial paper” and instruments with a maturity of between one and five years are referred to as “medium term notes”; the two together are referred to as “relevant debt securities”. These Regulations also remove the requirement that instruments coming within the 1988 Regulations must be denominated in sterling. Regulation 12 of the 1988 Regulations (sterling debt securities) is revoked.

Apart from changes throughout in nomenclature resulting from the extension of the maximum redemption period, the changes are as follows. Regulation 13(c) of the 1988 Regulations is amended to permit the redemption value to be denominated otherwise than in sterling; regulation 13(c) is also amended to make it clear that where a relevant debt security is capable of being split prior to transfer the exemption will be available only if the redemption value of each relevant debt security being transferred is not less than £100,000 (or foreign currency equivalent). Now that foreign currency issues are embraced, the requirement in regulation 13(d)(i) that the relevant debt security be issued and payable in the United Kingdom has been deleted. In paragraph 2(x) of Schedule 3 of the 1988 Regulations (information to have been notified to The Stock Exchange concerning paying and managing agents) there is no longer any reference to the paying agent being in the United Kingdom.

Regulation 13(d)(i) and (ii) now specifies that different rubrics must be used on commercial paper and medium term notes; otherwise the only places where the Regulations distinguish between the two types of instrument (apart from the definitions) are paragraphs 2(w) (information to have been notified to the Stock Exchange concerning the amount to be raised by the issue of relevant debt securities), 8 and 9 (information to have been notified to the Bank of England) of Schedule 3. Paragraphs 8 and 9 of that Schedule are also amended to require information notified to the Bank of England to distinguish between issues of relevant debt securities denominated in sterling and issues denominated in other currencies.

Secondly, these Regulations incorporate changes made to the Co-operative Deposit Protection Scheme at a meeting of Participating Societies on 29th May 1989 and Schedule 1 to the 1988 Regulations (deed establishing the Co-operative Deposit Protection Scheme) is set out in full as amended.

Footnotes

[^f00001]: 1987 c. 22.

[^f00002]: S.I. 1988/646, amended by S.I. 1989/465.

[^f00003]: 1985 c. 6; relevant amendments to which are noted below.

[^f00004]: S.I. 1986/1032 (N.I.6).

[^f00005]: 1965 c. 12.

[^f00006]: 1969 c. 24 (N.I.).

[^f00007]: 1979 c. 34.

[^f00008]: S.I. 1985/1205 (N.I.12).

[^f00009]: 1986 c. 60.

[^f00010]: The list and the Rules may be obtained from the Quotations Department, The Stock Exchange, London EC2N 1HP.

[^f00011]: 1985 c. 6; section 736 is substituted by section 144 of the Companies Act 1989 (c. 40) with effect from a day to be appointed.

[^f00012]: 1985 c. 6; Part III (capital issues) is repealed by Part I of Schedule 2 to the Financial Services Act 1986 (c. 60) with effect from a day to be appointed.

[^f00013]: 1986 c. 53.