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Copy of Enforceable Undertaking

View Enforceable Undertaking in PDF format.

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

Kookmin Bank ("Kookmin")
Level 19, ASB Bank Centre
135 Abert Street
AUCKLAND

And on behalf of each director of Kookmin *collectively "the Directors") by

Jung - Tae Kim
Level 19, ASB Bank Centre
135 Albert Street
AUCKLAND

1.: Kookmin is registered in New Zealand as an overseas company and has a branch office in New Zealand. Kookmin's New Zealand branch is a New Zealand registered bank and is required to comply with the Reserve Bank of New Zealand Act 1989. It is also required to comply with various other disclosure and compliance requirements, including applicable New Zealand securities laws.
2.: On 30 June 2004 the Commission sent a letter to Kookmin (and other New Zealand registered banks) requesting them to undertake a review of their compliance with the requirements of section 37A(1)(a) of the Securities Act 1978 ("Act"), and to report on the results of this review to the Commission. Under section 37A(1)(a) of the Act, and issuer cannot allot securities unless the subscriber has received and investment statement relating to the security prior to subscription.
3.: Kookmin sought legal advice on its compliance with this requirement of the Act. Kookmin subsequently acknowledged to the Commission that it had been offering debt securities to the public in contravention of section 37A(1)(a).The non-compliance related to its term deposit and instalment savings accounts (referred to collectively as "Term Investments").
4.: Kookmin acknowledged to the Commission that subscribers for Term Investments had not received an investment statement prior to subscription as required under section 37A(1)(a) of the Act. No investment statement had been prepared for these debt security products.
5.: Subscribers must receive an investment statement 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. Kookmin advised the Commission that approximately 630 investors were affected by the non-compliance.
6.: Kookmin assured the Commission that it would cease offering Term Investments until Kookmin was able to provide investors with an investment statement in compliance with the Act.
7.: Kookmin's solicitors have corresponded with the Commission about Kookmin's failure to provide investors with an investment statement prior to subscription. Kookmin has acknowledged that it has failed to meet certain obligations under the securities laws. Kookmin acknowledges the Commission's concerns about the matter.
8.: Kookmin 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.
9.: Kookmin will not offer securities to the public for subscription, other than in accordance with the Act, the Securities Regulations 1983, or in accordance with any applicable exemption contained in the Act or granted by the Commission.
10.: Kookmin and the directors will, in the case of an offer of securities to the public by Kookmin which requires an investment statement, ensure that Kookmin 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.
11.: Kookmin will ensure that its employees and any agents that take instructions from investors to establish term investments or bank accounts are aware of the law's requirements and Kookmin's obligations under the securities laws.
12.: Kookmin will take all steps necessary to ensure that it complies with the securities laws in relation to the offer and allotment of securities to the public, including seeking professional advice as necessary.
13.: The directors of Kookmin will take all reasonable steps to ensure compliance by Kookmin, its officers, agents and employees with the applicable undertakings.
14.: Kookmin and the directors will prepare a written compliance plan ("Plan") to ensure that its advertising and banking practices comply with all applicable securities laws. Kookmin and the directors will take all reasonable steps to ensure that Kookmin employees are familiar with, and adhere to, that Plan.
15.: Kookmin will provide a draft of the Plan to the Commission for its review within 4 weeks of the date of this undertaking.
16.: Kookmin will arrange for the Plan to be updated annually and will procure that its auditors report on its compliance with the Plan's procedures annually.
17.: Kookmin will ensure that an appropriately qualified and experienced senior member of staff is responsible for compliance by Kookmin with these undertakings and with the securities laws generally.

Acknowledgments

18.

Kookmin 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.

19.

Kookmin 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.

20.

Kookmin and the directors acknowledge that the Commission:

(a): May issue a media release referring to the undertaking and to the concerns of the Commission which led to the undertaking being executed;
(b): May from time to time publicly refer to the undertaking; and
(c): Will make this undertaking available for public inspection.

Signed for and on behalf of Kookmin Bank
by its duly authorised officer:
[Sang Kyung An]
General Manager

Signed on behalf of the directors of Kookmin Bank by:
[Jung - Tae Kim]
President & Chief Executive Officer

Accepted by the Securities Commission
pursuant to section 69J of the Securities Act 1978
by its authorised delegate:
[Kathryn Ann Rogers]
[Associate Counsel]

[Dated this 16^th day of November 2004.]