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Summary of

Securities Act (Commercial Bill Dealers) Exemption Notice 2002

2002/297

Gazetted on 19 September 2002
Expires on 30 September 2007

This notice replaces the Securities Act (Commercial Bill Dealers) Exemption Notice 1997 (the 1997 notice). It carries forward the provisions of the 1997 notice without any change of substance. Certain drafting changes have been made which reflect current drafting practice.

Context
The exemption applies to registered banks and others who issue the following "specified securities"

• promissory notes endorsed but not made by a registered bank;
• bills of exchange that are drawn accepted or endorsed by a registered bank; and
• other negotiable and transferable debt securities for which a registered bank is liable otherwise than as the original allotter.

Effects of the exemption
Registered banks are exempted, subject to conditions, from

• the trust deed and prospectus requirements of the Act;
• the requirement that before a security is allotted the subscriber has received an investment statement; and
• certain other requirements of the Act and the Regulations, in respect of "specified securities".

Persons, other than registered banks, who issue "specified securities" are exempted from the trust deed, prospectus and investment statement requirements.

Exemption for banks
Registered banks are exempted in respect of "specified securities" from sections 33(2), 37, 51, 52, and 54 of the Act and regulation 13(1) of the Regulations.

Registered banks are exempted from regulation 7A(1) to the extent that it requires an investment statement for "specified securities" which were not originally allotted by the bank to contain information about the original allotter.

Exemption from section 37(A)(1)(a)
Registered banks are exempted, subject to conditions, from section 37(A)(1)(a) in respect of "specified securities" offered to the public.

Condition
The exemption is subject to the condition that the bank must not allot a specified security unless an investment statement has been sent to the subscriber at least 3 working days before the subscriber subscribes. If the investment statement is sent by fax, the fax machine must have recorded the transmission. If it is sent by other electronic means the machine used must not have generated a record that the investment statement has failed to be transmitted.

Exemption for persons other than banks
Persons other than registered banks who issue "specified securities" are exempted from section 33(2), 37, and 37A of the Act in respect of those securities.

Exemption relating to advertisements
Registered banks and others who distribute investment statements or other advertisements for an issue "specified securities" are exempted from the requirement to complete a certificate under regulation 17 in respect of that advertisement.

Condition
The exemption is subject to the condition that the bank completes a certificate relating to the advertisement, in the prescribed form, and signed by two people who are directors or executive officers of the bank. The certificate is to be held by the bank for at least 12 months from the last distribution of the advertisement.

Exemption relating to acceptance and endorsement of "specified securities"
Registered banks and others who issue "specified securities" are exempted from

• regulation 11 and 23A(d) to the extent that they apply to any acceptance or endorsement of the securities; and
• clause 10 of Schedule 3D to the extent that it requires an investment statement to contain information about any acceptance or endorsement of the securities.

Reasons
The Commission reviewed the 1997 notice and received submissions from interested parties. The exemptions in the 1997 notice were found to be relevant and useful and the terms and conditions of exemption are appropriate. The exemption reflects current Commission policy.