The ICMSA has noted a tendency for the signatures of parties to agreements to be circulated in soft copy only.
In some circumstances, particularly in the context of litigation, the existence of hard copy, executed documentation can prove crucial and there have been instances of parties being unable to enforce their rights as a result of the absence of original, executed documentation.
This article first appeared in International Financial Law Review.
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In the context of the implementation timeframe of the Prospectus Directive Review (‘PDII’) and the fast approaching end of the granted grandfathering period on 30 June 2013, Issuers, Arrangers and their appointed Legal Counsel need to be aware of, and factor into the update process, the timeframe required by Stock Exchanges and Competent Authorities, Trustees (where applicable) and Issuing & Paying Agents (‘IPAs’) as well as the ICSDs to review the associated programme updates prior to the first drawdown being able to be issued under any amended documentation.
The ICMSA, representing IPAs, the ICSDs and Stock Exchanges strongly recommend that Issuers and their Legal Counsel now formalize their desired approach so that the necessary draft documentation can be submitted well in front of the end of the grandfathering period.
The ICMSA recommends the issuer ensures that only one principal IPA is acting for issues primarily deposited with the ICSDs and if required, only one domestic IPA, per domestic market, should be handling local issuances.
The ICMSA seeks to draw attention to a number of problems arising in relation to the appointment of several IPAs for programme based issuances.
Foreign Account Tax Compliance Act (FATCA), Section 502 – Repeal of certain foreign exceptions to registered bond requirements.
Operational guidelines and Frequently Asked Questions for issuance and processing of international debt global note securities deposited with International Central Securities Depositories (ICSDs), issued by issuers subject to U.S. tax law, as from 19 March 2012.
The association would like to highlight that the conditions specified in such carve-outs are not monitored by the paying agents or International Central Securities Depositories (ICSDs), Clearstream Banking and Euroclear SA/NV, when making payments on securities.
The ICMSA has noted during a review of new Eurobond standalone and programme documentation increasing instances of conditional carve-outs to tax gross-up clauses, that is to say instances where the obligation on an issuer to gross-up payments in respect of an obligation to withhold tax is dependent on certain conditions being fulfilled such as e.g. a connection between the bondholder with the State in which the Issuer is resident.