New legislation set to address Hammersmith concerns

Ever since the House of Lords decision in Hammersmith was handed down in 1991, financial institutions have been wary of dealing with statutory corporations - particularly in relation to derivative transactions.

Likewise, lawyers giving enforceability opinions for these dealings have had to interpret some ambiguous, and often archaic, legislation and yet reach a "yes" or "no" conclusion.

A new Bill, introduced into Parliament in mid-December 2003, is designed to address these concerns for Crown entities. It contains sections designed to regulate the capacity of Crown entities to borrow, invest, guarantee and enter into derivative transactions.

Bell Gully partner David Craig has prepared a newsletter explaining the background to the Bill and its likely effects.

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