Guidance on best practice relating to requests for admission to collective safe custody and signature rules ensuring the validity of global certificates

Clearstream Banking¹ wishes to inform participants acting as issuing banks and submitting physical global certificates that evidence securities issues² for direct admission to collective safe custody through the vaults of Clearstream Banking of the following general rules on the content and form of the admission request, and on the signature rules in relation to physical global certificates, effective from

17 November 2014.

The provisions stated below will apply until further notice.

Content and form of the admission request

The admission requests for securities issues evidenced by physical global certificates or individual physical certificates must be presented in written form on a letterhead of the issuing bank together with the other issue-related documents.

Regardless of the type of financial instrument to be admitted, the admission request must contain the following details, that are essential for collective safe custody and settlement:

• ISIN and, where applicable, German securities code (WKN);
• Designation/name of the financial instrument;
• Main characteristics of the financial instrument, for example unit or percentage quotation (for bearer bonds); bearer or registered form (for equities and investment fund units); ‘smallest transferable unit’, denomination;
• Scheduled admission and/or issue date;
• Statement that the function of paying agent will be assumed either by the issuing bank submitting the financial instrument, or by a third-party bank that has an account connection with Clearstream Banking;
• Indication of the tax law applicable to the securities issue, noting whether the standard procedure or the special procedure will be applied;
• Confirmation that the signature(s) of the issuer on the global securities certificate to be admitted to collective safe custody is/are legally valid and meet any formal requirements provided for in the global securities certificate itself or in the relevant accompanying issue conditions, where applicable;
• Declaration that a standard banking compliance check on the issuer (including a ‘know your customer’ (KYC) audit regarding anti-money laundering (AML), terrorism financing and (capital market) fraud has been carried out:
• Declaration that the issuer and/or the securities issue (with related underlyings)
  to be admitted are not subject to any sanctions imposed by any specific country (especially by the European Union or the United States of America).

To avoid queries and delays in the admission check, the issuing bank submitting the securities issue should aim to ensure that formal requirements in relation to the global securities certificate itself and/or (where applicable) the issue terms are as clear and unambiguous as possible with regard to the type and number of signatures required to ensure validity.

Samples of admission requests for securities categories that are eligible for collective safe custody can be found under Securities Admission or requested from New Issues Frankfurt.

Signature(s) on the global certificate and any formal requirements

For securities certificates, there are generally two types of signature. For the securities certificate to be drawn up (effectuated) so that it is legally effective, it is always necessary for it to be signed by one or more board members or representatives of the issuer as the entity issuing the securities certificate (see 1.  below). The issuer may additionally require validation by one or more validation signatories as a further formal requirement for the validity of the global certificate (see 2. below).

1. Signature(s) of the issuer as the entity drawing up the global certificate
   
   The issuer must ensure that the securities certificate has the required number of signatures in line with the rules of representation of the issuer at the time when the global certificate is drawn up and, where applicable, any special formal requirements in the issue terms. Depending on the provisions of the law applicable to the securities issue, this can take the form of one or several hand-written signatures or electronically-produced signatures (digital facsimile signatures) on the global certificate. For bonds issued under German law, for example, this is governed by Section 793, paragraph 2 of the German Civil Code (Bürgerliches Gesetzbuch, BGB).
   
   The issuing bank must confirm to Clearstream Banking in writing in the admission request that the signature(s) is/are legally valid, and that the representation rules and all formal requirements of the issue terms have been complied with.
2. Validation signature(s)
   
   If the issuer, as the entity drawing up (effectuating) the global certificate, also requires (at least) one validation signature on the global securities certificate itself and/or in the issue terms attached to the financial instrument this will be a further essential condition for the legal validity of the global certificate and thus for admission to collective safe custody.
   
   If the issue terms, in contrast to the relevant global certificate itself, do not require any validation signature(s), the issuing bank must remove this inconsistency by submitting a duly modified and/or adequately signed global certificate.

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1. This Announcement is published by Clearstream Banking AG (CBF), registered office at Mergenthaleralle 61, 65760 Eschborn, Germany, registered with the Commercial Register of the District Court in Frankfurt am Main, Germany, under number HRB 7500.

2. For the EDT Service for bonds (debt instruments), certificates (structured products) and warrants, please refer to the separate contractual agreements on admission document requirements.