TNAG-1769-FCO40-2523-Hong-Kong-mergers-involving-banks-and-other-financial-instit-1988 — Page 201

Mr Morris HKD

нис

102/3

FROM:

Paul Fifoot

DATE:

11 March 1988

3

DEUTSCH BANK (MERGER) BILL 1988

1.

The Lloyds Bank Ordinance is hardly a suitable precedent for this Bill. Amongst other things, clause 4 is defective in that it purports to Vest (though solely for Hong Kong law purposes) the whole undertaking of one German bank in that of another, wherever the assets and liabilities

the former are situated. That is

an unacceptable adventure in extraterritoriality.

2.

I have, this afternoon, spoken to Mr John Carver of Clifford Chance and drawn his attention to the following points:-

i) Why is a legislative measure necessary? It is not

the case that every time there is commerical merger of two financial institutions that it is necessary to legislate to facilitate that merger in every jurisdiction in which those institutions do business. Even if it is not necessary, why is it desirable?

ii)

iii)

iv)

v)

This is a private Bill and the Hong Kong legisla- ture should have, as a matter of evidence, suffi- cient facts available to it to justify the state- ments in the preamble. This would include evidence of the merger agreements supported by evidence of its validity and effect provided by Clifford Chance or some German Counsel.

The Lloyds Bank Ordinance is not an appropriate precedent we were able to rely upon the effect of an English Act in that case - and the draftsmen would do better to look at the equivalent clause in the Bank of Scotland Ordinance. (Although we were also able to rely upon an English Act in that case as evidence for the preamble, the solicitors for the Bank of Scotland came up with a different form from that produced by the solicitors for Lloyds Bank and that formula is more appropriate for adaptation in the case of foreign corporations.)

It would be sensible to look at the long title and the preamble again and to draft them on the basis that the Bill was designed to facilitate the merger rather than to effect it.

On the first reading, the substantive clauses sub- sequent to clause 4 looked as though they would be in order once clause 4 was amended, but this should be checked.

3.