§ Mr. Freemanasked the Chancellor of the Exchequer if he has any plans to exercise any of his order-making powers under the Banking Act 1979.
§ Mr. LawsonThe Government have decided to remove the constraints which prevent companies from financing themselves by issuing sterling commercial paper.
The necessary amendment to the Banking Act 1979 (Exempt Transactions) Regulations is being laid today to exempt sterling commercial paper from the definition of deposit taking in the Banking Act. An order is also being laid today amending the Control of Borrowing Order 1958 to exempt sterling commercial paper from the controls contained in part 1 of that order. A copy of the Bank of England's market notice describing the arrangements for the issue of sterling commercial paper is being placed in the Library.
371WAs a transitional measure the Government will introduce an amendment to the Financial Services Bill specifically providing for British companies, in respect of sterling commercial paper, the dispensation from publishing a full prospectus which section 79(2) of the Companies Act already bestows on oversea companies including oversea subsidiaries of British companies. The proposed amendment would take effect when the Financial Services Bill receives Royal Assent. Definitive disclosure provisions will be made subsequently by regulation under the Financial Services Act.
An order is also being laid today to amend schedule 8 to the Finance Act 1984 to reduce the minimum term for qualifying time deposits and qualifying certificates of deposit to be excluded from composite rate tax from 28 to seven days. This is to bring the relevant minimum maturity provisions into line with those for sterling commercial paper. After the Building Societies Bill takes effect, building societies will also be able to issue certificates of deposit with a minimum maturity of seven days.