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Copy of Enforceable Undertaking

View Enforceable Undertaking in PDF format.

07 May 2004

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

TSB Bank Limited ("TSB")
5th Floor TSB Centre
122 Devon Street East
NEW PLYMOUTH

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

Mr K.W.G. Rimmington
5th Floor
TSB Centre
122 Devon Street East
NEW PLYMOUTH

Background

1.: Between 15 September 2003 and 17 February 2004 an advertisement was published relating to an offer of term investments by TSB, a company carrying on business as a registered bank. The advertisement contained an offer of debt securities to the public.
2.: The advertisement was not an authorised advertisement as defined in section 38 of the Securities Act 1978 ("the Act") in that it did not refer to an investment statement.
3.: This advertisement was withdrawn from publication after compliance concerns were raised. Another form of the advertisement was published between 17 February 2004 and 24 February 2004. This version of the advertisement did refer to the availability of an investment statement.
4.: No directors' certificate under regulation 17 of the Regulations was signed in respect of either form of the advertisement.
5.: Both forms of the advertisement enabled members of the public to invest in TSB term investments by completing a coupon contained within the body of the advertisement. Subscribers were asked to specify the term and interest rate, and send the coupon to TSB along with a cheque.
6.: Under this subscription mechanism, 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.
7.: The investment statement for TSB's term investments was printed on the back of the term investment certificate. Subscribers did not receive a term investment certificate until after subscription. As a result, subscribers only received the investment statement after they had subscribed for the term investment.
8.: TSB has acknowledged that other investors that have contacted TSB by telephone to establish term investments also did not receive an investment statement until after they had subscribed for the securities.
9.: 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.
10.: TSB's solicitors have corresponded with the Commission about the advertisement and TSB's failure to provide some investors with an investment statement prior to subscription. TSB has acknowledged that it has failed to meet certain obligations under the securities laws. TSB acknowledges the Commission's concerns about the matter.
11.: TSB 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

12.: TSB and the directors will, in the case of an offer of securities to the public by TSB which requires an investment statement, ensure that TSB 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.
13.: TSB 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 TSB's obligations under the securities laws.
14.: TSB will make no further use of the advertisement (as referred to in paragraph 5 above) and will prohibit any TSB employee or agent from making any further use of the advertisement.
15.: TSB 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.
16.: TSB will ensure that its employees and any agents who prepare advertising for TSB are in the case of employees appropriately trained and in all other cases aware of the law's requirements relating to advertisements for securities and that all external marketing advisers and agents are instructed to obtain approval in writing from TSB prior to placing any advertisements in any media on behalf of TSB.
17.: The directors of TSB will take all reasonable steps to ensure compliance by TSB, its officers, agents and employees with the applicable undertakings.
18.: TSB and the directors will prepare a written compliance plan ("Plan") to ensure that its advertising and banking practices comply with all applicable securities laws. TSB and the directors will ensure that TSB employees are familiar with, and adhere to, that Plan.
19.: TSB will provide a draft of the Plan to the Commission for its review within 4 weeks of the date of this undertaking.
20.: TSB will arrange for the Plan to be updated annually and will procure that its auditors report on its compliance with the Plan' procedures annually.
21.: TSB will ensure that an appropriately qualified and experienced senior member of staff is responsible for compliance by TSB with these undertakings and with the securities laws generally.

Acknowledgements

22.: TSB 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.
23.: TSB 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.
24.: TSB and the directors acknowledge that the Commission:

Signed for an on behalf of TSB Bank Limited
by its duly authorised officer:

[K.W.G. Rimmington, Director]

Signed on behalf of the directors of TSB Bank Limited by:

[K.W.G. Rimmington, Director]

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

[dated this 7th day of May 2004]

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