The Local Authorities (Borrowing) Regulations 1990

Loan instruments transferable by delivery

7.—(1) Subject to paragraphs (4) and (7) below, a local authority may not issue a loan instrument which is transferable by delivery unless the instrument is a bill, sterling commercial paper or a sterling medium term note.

(2) For the purposes of this regulation,—

(a) a loan instrument is a bill if—

(i) all payments by the authority under the instrument fall to be made not later than 187 days after the date of issue of the instrument; and

(ii) it does not fall within sub-paragraph (b) or (c) below;

(b) a loan instrument is sterling commercial paper if—

(i) all payments which fall to be made by the authority under the instrument are to be in sterling and to be made not earlier than seven days and not later than one year after the date of issue of the instrument;

(ii) the aggregate redemption value of the instrument at the date of issue is not less than £100,000;

(iii) it is transferable only if its aggregate redemption value at the date of transfer is not less than £100,000; and

(iv) it contains the statements and bears the rubric required by paragraph (9) below; and

(c) a loan instrument is a sterling medium term note if—

(i) all payments which fall to be made by the authority under the instrument are to be in sterling and all payments other than payments in respect of interest are to be made later than one year but not later than five years after the date of issue of the instrument; and

(ii) it complies with paragraphs (ii) to (iv) of sub-paragraph (b) above.

(3) In paragraph (2) above, “aggregate redemption value” means the aggregate amount in respect of principal which is payable upon redemption of the loan instrument in question.

(4) A local authority shall not issue a bill if to do so would cause the total amount of the payments which fall to be made by the authority under all bills issued by the authority to exceed the relevant amount.

(5) In paragraph (4) above, the relevant amount for each authority, other than the Common Council of the City of London, shall be an amount in pounds equal to the product of the formula—

where—

• “A” is, in the case of the Broads Authority, 60,000, and in the case of a local authority which is—

  (a)

  a charging authority, the relevant population of the area of the authority;

  (b)

  a precepting authority, the aggregate of the relevant population of each charging authority’s area, or (as the case may be) the part, which falls within the precepting authority’s area;

  (c)

  an authority established under section 10 or 28 of the Local Government Act 1985(1) (waste disposal authorities and metropolitan county passenger transport authorities), the aggregate of the relevant population of the area of each charging authority to which they issue a levy;

  (d)

  a joint or special planning board constituted for a National Park by an order under paragraph 1 or 3 of Schedule 17 to the Local Government Act 1972(2), 60,000;

  (e)

  a combined police authority established by an amalgamation scheme under the Police Act 1964(3), 1,000,000;

  and, for this purpose, “charging authority” and “precepting authority” have the meaning given by subsections (1) and (2), respectively, of section 144 of the Local Government Finance Act 1988(4), and “relevant population” of an area or part of an area means the relevant population for the financial year in which the loan instrument is issued calculated, or last calculated before that year begins, under paragraph 4, 5 or 6, as the case may be, of Schedule 12A to that Act(5);

• “B” is, in the case of—

  • county councils and metropolitan district councils, 110, non-metropolitan district councils, 15, London borough councils, 120, the Council of the Isles of Scilly, 125, any other local authority, 5;

• “C” is the non-domestic rating multiplier specified by the Secretary of State under paragraph 3 or 4 of Schedule 7 to the Local Government Finance Act 1988(6) for the financial year in which the loan instrument is issued; and

• “D” is the non-domestic rating multiplier specified by the Secretary of State under paragraph 2(1) of Schedule 7 to the Local Government Finance Act 1988 for the financial year beginning on 1st April 1990.

(6) In paragraph (4) above, the relevant amount for the Common Council of the City of London is an amount equal to the product of the formula—

where

• “C” and “D” have the same meaning as in paragraph (5) above.

(7) A local authority shall not issue sterling commercial paper or a sterling medium term note unless—

(a) the authority have issued debt securities some or all of which are included in the Official List of The Stock Exchange;

(b) the authority have complied with their obligations under the listing rules in respect of their listed debt securities and, since the last publication in compliance with the listing rules of information about the authority, the authority, having made all reasonable enquiries, have not become aware of any change in their circumstances which could reasonably be regarded as significantly and adversely affecting their ability to meet their obligations in respect of sterling commercial paper or sterling medium term notes as the obligations fall due; and

(c) the requirements of paragraph (8) below are complied with.

(8) The requirements of this paragraph are that—

(a) the authority have notified the Bank of England (referred to in this paragraph as “the Bank”) of the amount and maturity period of the paper or note to be issued, and provided the Bank with a detailed description of the purposes for which the proceeds of the issue would be used; or

(b) if the paper or note is part of a programme for the issue of such paper or such notes—

(i) the authority have notified the Bank of the total amount to be raised under the programme and the maturity period of the paper or the notes to be issued under the programme (if known) and provided the Bank with a detailed description of the purposes for which the proceeds of the programme would be used; and if the programme has been subsequently extended, the authority have notified the Bank of details of the increased amount to be raised and any other material changes to the information initially provided; and

(ii) the authority have reported to the Bank, within one week after the end of each calendar month following the month in which a notification was given in accordance with paragraph (i) above, the amount of sterling commercial paper or sterling medium term notes issued by the authority outstanding at the end of that calendar month and, in the case of a second or subsequent report, the amounts of such paper or notes issued and redeemed since the date of the previous report, distinguishing in each case between paper or notes guaranteed by an authorised institution and paper or notes not so guaranteed.

(9) Any sterling commercial paper or sterling medium term note which is issued by a local authority shall—

(a) contain a statement that the authority are in compliance with their obligations under the listing rules in respect of their listed debt securities and that, since the last publication in compliance with the listing rules of information about the authority, the authority, having made all reasonable enquiries, have not become aware of any change in their circumstances which could reasonably be regarded as significantly and adversely affecting their ability to meet their obligations in respect of sterling commercial paper or sterling medium term notes as the obligations fall due;

(b) state that the authority’s liabilities to make payments under the instrument are charged on all the revenues of the authority;

(c) state that it is sterling commercial paper or, as the case may be, a sterling medium term note;

(d) bear the rubric—

• “sterling commercial paper issued in accordance with regulations made under section 43(5) of the Local Government and Housing Act 1989”

• or, as the case may be,

  • “sterling medium term note issued in accordance with regulations made under section 43(5) of the Local Government and Housing Act 1989”; and

(e) contain a statement to the effect that the instrument is issued by a person for the time being specified in Schedule 2 to the Banking Act 1987, and accordingly exempted from the requirement in section 3(1) of that Act to be authorised by the Bank of England for the purposes of accepting a deposit in the course of carrying on a deposit-taking business.

(10) In this regulation—

• “authorised institution” has the same meaning as in the Banking Act 1987;

• “debt security” means bonds, stock, annuities, debentures, debenture stock or loan instruments;

• “maturity period” means the period from the date of issue of the loan instrument to the date of its redemption.

(1)

1985 c. 51.

(2)

1972 c. 70.

(3)

1964 c. 48.

(4)

1988 c. 41.

(5)

Schedule 12A to the 1988 Act was inserted by paragraph 74 of Schedule 5 to the Act.

(6)

Schedule 7 was amended by paragraph 39 of Schedule 5 to the Act.