124 4 Debt
need for special credit protection, and so ECP does not contain events of default or
a negative pledge provision. It does, however, contain a tax gross-up in the normal
Eurobond form.^209
Under English law, the legal basis of ECP is physical bearer paper containing a
promise to pay. By market convention, ECP takes the form of an immobilised
global certificate lodged with a central securities depository such as Euroclear or
Clearstream. No fully dematerialised system exists in England. The law of the lo-
cation on the securities depository holding the immobilised global certificate gov-
erns the nature of the investor’s rights in ECP.^210
Some particular legal aspects of euro medium-term note programmes. The pur-
pose of particular Euro medium-term note programmes (EMTM programmes) is
to reduce documentation and other costs of each issue by standardising the terms
on which the company issues securities (for standardisation, see Volume II). Ac-
cording to Fuller, “[t]his is done by setting out in the documents constituting the
programme all the provisions which it is envisaged may be applicable to the com-
pany’s issues, with the documentation for a particular issue (usually called a final
terms document or a pricing supplement) needing only to set out the commercial
terms (such as maturity date, interest rate, issue prices, etc) and to apply or disap-
ply provisions of the programme documentation as appropriate. The programme
can be established either with or without a trustee. Issues are made to financial in-
stitutions who have been appointed in advance as dealers under the programme.
Most programmes also allow for issues to be sold by means of a syndicate of fi-
nancial institutions. One important difference from a loan facility is that, whereas
at least some of the banks under a loan facility are usually committed to lend,
EMTM programmes are uncommitted, in that the dealers are not under any prior
obligation to purchase the securities, and it is a matter for agreement between the
company and a dealer at the time of each proposed issue.”^211
Some legal aspects of the US commercial paper market. The US commercial
paper market is influenced by the general requirement under the Securities Act of
1933 to register securities with the Securities and Exchange Commission (SEC).
USCP are securities issued to qualify for an exemption from the registration re-
quirement.^212 Where USCP are issued under an exemption from registration in the
1933 Act, no disclosures are required. However, it is market practice to provide a
simple disclosure document to potential investors. In principle, USCP could be re-
sold under a private placement exemption in the 1933 Act. USCP dealers need not
register with the SEC as broker-dealers but most CP dealers are registered because
they are engaged in other activities that require registration with the SEC.^213
The US commercial paper market also benefits from an exemption under an-
other federal statute. The Tax Equity and Fiscal Responsibility Act of 1982
(TEFRA) was introduced, inter alia, to limit tax evasion by US taxpayers. One of
(^209) Ibid, paragraph 4.3.
(^210) EFMLG, op cit, pp 39–40.
(^211) Fuller G, op cit, paragraph 3.13.
(^212) See in particular Section 3(a)(3) of the 1933 Act.
(^213) EFMLG, op cit, p 43.