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Copy of Enforceable Undertaking

View Enforceable Undertaking in PDF format.

This undertaking is offered to the Securities Commission for acceptance under section 69J of the Securities Act 1978 by:

Kiwibank Limited ("Kiwibank")
Level 12
Radio New Zealand House
155 The Terrace
WELLINGTON

And on behalf of each director of Kiwibank (collectively "the directors") by:

Richard Westlake
Level 12
Radio New Zealand House
155 The Terrace
WELLINGTON

Background

1.: During February to April 2004 advertisements were published relating to offers of term investments by Kiwibank, a company carrying on business as a registered bank. The advertisements contained offers of debt securities to the public.
2.: The advertisements enabled members of the public to invest in Kiwibank term investments by completing a coupon contained within the body of the advertisement which specified the term and interest rate. Subscribers were asked to send the coupon to Kiwibank along with a cheque.
3.: Under this subscription mechanism, some subscribers for term investments did not receive an investment statement prior to subscription as required under section 37A(1)(a) of the Act. Neither were subscribers sent an investment statement at least three days before subscription under the terms of an applicable Securities Act exemption notice.
4.: Subscribers must receive or be sent an investment statement before subscription as required by the Act (or the terms of an applicable exemption notice). If this does not occur, section 37A(1)(a) of the Act is breached and the securities are voidable at the instance of the subscriber in accordance with section 37A(3) to section 37A(7) of the Act.
5.: Kiwibank has corresponded and met with the Commission about the advertisements and Kiwibank's failure to provide some investors with an investment statement prior to subscription. Kiwibank has acknowledged that it has failed to meet certain obligations under the securities laws. Kiwibank acknowledges the Commission's concerns about the matter.
6.: Kiwibank and the directors wish to address the situation and to ensure that no similar events occur. They have offered the undertakings set out below. The Commission has agreed to accept these undertakings under section 69J of the Act.

Undertakings

7.: Kiwibank will inform affected customers that each of them may, if they wish, withdraw their term investment and any accrued interest before the term investment matures, without incurring any break costs.
8.: Kiwibank and the directors will, in the case of an offer of securities to the public by Kiwibank which requires an investment statement, ensure that Kiwibank employees or agents provide investors with an investment statement relating to the securities before a subscriber subscribes for the securities in accordance with the Act or any applicable exemption.
9.: Kiwibank will ensure that its employees and any agents that take instructions from investors to establish term investments are aware of the law's requirements and Kiwibank's obligations under the securities laws.
10.: Kiwibank will make no further use of the advertisements (as referred to in paragraph 2 above) and will prohibit any Kiwibank employee or agent from making any further use of the advertisements.
11.: Kiwibank will take all steps necessary to ensure that it complies with the securities laws in relation to the offer (including advertising) and allotment of securities to the public, including seeking professional advice as necessary.
12.: The directors of Kiwibank will take all reasonable steps to ensure compliance by Kiwibank, its officers, agents and employees with the applicable undertakings.
13.: Kiwibank and the directors will review Kiwibank's procedures for ensuring that its advertising and banking practices and processes comply with all applicable securities laws. Kiwibank and the directors will ensure that Kiwibank employees are familiar with, and adhere to, those procedures.
14.: Kiwibank will complete that review, and provide a draft written record of its compliance procedures (the "Compliance Plan") to the Commission for its review, within 4 weeks of the date of this undertaking.
15.: Kiwibank will arrange for the Compliance Plan to be reviewed, and if necessary updated, annually and will procure that its auditors report on its compliance with the Plan annually.
16.: Kiwibank will ensure that an appropriately qualified and experienced senior member of staff is responsible for compliance by Kiwibank with these undertakings and with the securities laws generally.

Acknowledgements

17.: Kiwibank and the directors acknowledge that this undertaking does not derogate from the rights and remedies available to the Commission or to any other person or entity arising from the conduct described in the undertaking.
18.: Kiwibank and the directors acknowledge that the Commission's acceptance of an enforceable undertaking under section 69J of the Securities Act 1978 does not affect the Commission's power to investigate future conduct of any person, to take any action or exercise any power under the Act or under any other legislation, or to refer any matter for criminal prosecution or seek any civil penalty.
19.: Kiwibank and the directors acknowledge that the Commission:

Signed for and on behalf of Kiwibank Limited by its duly authorised officer:

[Sam Knowles]

Signed on behalf of the directors of Kiwibank Limited by:

[Richard Westlake, Director; Chair, Finance, Audit + Risk Committee.]

Accepted by the Securities Commission
pursuant to section 69J of the Securities Act 1978
by its authorised delegate:

[Kathryn Rogers, Associate Counsel]

[Dated this 18th day of June 2004]

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