asked the Chancellor of the Exchequer when he intends to introduce the secondary legislation that he announced in his Budget speech to remove the constraint under the Banking Act which at present prevents companies from financing themselves by a series of issues of short-term securities.
The necessary regulations under the Banking Act have today been laid before the House.These regulations will facilitate issues of sterling bonds by companies whose shares are listed on the Stock Exchange or dealt in on the unlisted securities market. In the light of representations made since the Chancellor's announcement, issues by the wholly-owned financing subsidiaries of such companies (provided that the subsidiary in question is not a UK private company) will be treated in the same way, on condition that the parent company gives its guarantee. The regulations will permit such companies and subsidiaries to issue bonds in circumstances where they would at present be prevented by the Banking Act, subject to the bonds being offered by prospectus or having a full listing. Such bonds must be denominated in sterling; they must have a minimum maturity of one year; the minimum deposit accepted in respect of each bond should be £100,000, and the bonds should be transferable only in amounts with an aggregate redemption value of not less than £100,000; and any interest or dividend in respect of any bonds of this kind issued on or before 28 August 1985 must be payable not before 28 August 1985 and not later than six months from the date of issue. Bonds can carry either fixed or floating rates of interest and may be issued in either the domestic capital market or in the eurosterling market.An order has also been laid today, further amending the Control of Borrowing Order 1958. This will require companies wishing to make issues of sterling bonds with a maturity of between one and five years to obtain the prior approval of the Bank of England for the timing of the issue, or the period during which such bonds are to be issued and the aggregate amount of the money to be raised during that period. The bank has indicated in a guidance notice issued to the market on 19 March that, in order to give companies maximum flexibility over timing, consent will normally be given for imediate issue of bonds in this maturity area.The regulations and order will take effect on 24 April 1985. They will be published as statutory instruments Nos. 564 and 565 of 1985.