Overview of the Programme
The rights attached to Industrial Metal Securities are summarised in Part 1 (Description of Industrial Metal Securities), and have the rights set out in Part 4 (Trust Instrument and the Conditions).
Industrial Metal Securities are being made available by the Issuer for subscription only to Authorised Participants. Applications for Industrial Metal Securities will not be accepted unless the Issuer in its discretion determines to do so. Only Authorised Participants may Apply for and/or Redeem Industrial Metal Securities (except in the event that on any given Business Day there are no Authorised Participants, or in certain other circumstances as may be announced by the Issuer, in which case a Security Holder who is not an Authorised Participant may request Redemption of Industrial Metal Securities which it holds in exchange for cash proceeds by lodging a valid Redemption Form and delivery to the Issuer (in CREST or by delivery of certificates) of such Industrial Metal Securities). Industrial Metal Securities are available to be issued in Certificated Form or in Uncertificated Form in the CREST System. Persons who apply for Industrial Metal Securities and wish to hold their Industrial Metal Securities in Uncertificated Form should so signify on the Application Form and complete the relevant sections of that form in accordance with the instructions thereon. See “CREST” below.
Passporting
The Issuer has requested the FSA to provide the competent authority in Austria, the Österreichische Finanzmarktaufsicht (Austrian Financial Market Authority), the competent authority in Denmark, the Finanstilsynet (Financial Supervisory Authority), the competent authority in Finland, Finanssivalvonta (Finnish Financial Supervisory Authority), the competent authority in France, the Autorité des Marchés Financiers (French Authority for the Financial Markets), the competent authority in Germany, the Bundesanstalt für Finanzdienstleistungsaufsicht (the German Federal Financial Supervisory Authority), the competent authority in Ireland, the Central Bank of Ireland, the competent authority in Italy, the Commissione Nazionale per le Società e la Borsa (CONSOB), the competent authority in the Netherlands, the Autoriteit Financiële Markten (Netherlands Authority for the Financial Markets), the competent authority in Portugal, the Comissão do Mercado de Valores Mobiliários (Portuguese Securities Market Commission), the competent authority in Spain, the Comisión Nacional del Mercado de Valores (Spanish Securities Market Commission) and the competent authority in Sweden, Finansinspektionen (Swedish Financial Supervisory Authority) with certificates of approval attesting that this Prospectus has been drawn up in accordance with Directive 2003/71/EC.
The Issuer may request the FSA to provide competent authorities in other EEA Member States with such certificates whether for the purposes of making a public offer in such Member States or for admission to trading of all or any Industrial Metal Securities on a regulated market therein or both. The ETFS Physical Copper Securities have been admitted to listing on the Regulated Market (General Standard) (Regulierter Markt [General Standard]) of the Frankfurt Stock Exchange (Frankfurter Wertpapierbörse) since 12 July 2011.
Procedure for Application Only Authorised Participants may make an Application. An Authorised Participant who wishes to Apply for Industrial Metal Securities should complete the Application Form in accordance with the instructions thereon and the applicable Authorised Participant Agreement and lodge it with the Administrator. For those Applicants who wish to hold their Industrial Metal Securities in Certificated Form, certificates in respect of the Industrial Metal Securities will be dispatched within 10 London Business Days of the Industrial Metal Securities being issued. For those Applicants who desire to hold their Industrial Metal
breakdown of CREST (or any part of CREST), or on the part of the facilities and/or systems operated by the Registrar in connection with CREST. This right may also be exercised if the correct details (such as participant ID and member account details) are not provided as requested on the Application Form. No temporary documents of title will be issued and, pending despatch of security certificates, transfers will be certified against the register.
By completing and lodging an Application Form the Applicant confirms and agrees that:
(a) it is not relying on any information or representation other than such as may be contained in this Prospectus;
(b) no person responsible solely or jointly for this Prospectus or any part of it shall have any liability for any information or representation not contained in this Prospectus;
(c) it is an Authorised Person, an Exempt Person or an Overseas Person; (d) it is not a UCITS Fund; and
(e) it understands that Industrial Metal Securities are direct, limited recourse obligations of the Issuer alone.
Further details on the procedure for Applications are set out under the heading “Applications and Redemptions” in Part 1 (Description of Industrial Metal Securities).
Subscription for Industrial Metal Securities Authorised Participants may subscribe for Industrial Metal Securities by delivering a duly completed Application Form to the Administrator and by depositing Warrants into the Issuer’s LMEsword Account and paying into the Metal Agent Account the Accrued Rent of such Warrants up to and including the Settlement Date (or the date of delivery of the Warrants, if later).
All Warrants to be delivered in settlement of an Application must meet the requirements therefor specified in the applicable Authorised Participant Agreement.
Industrial Metal Securities will not be issued until either the Metal Agent has confirmed to the Issuer that Warrants evidencing not less than the required amount of LME Physical Metal of the appropriate type and meeting the further requirements specified in the Authorised Participant Agreement have been received or the relevant Authorised Participant and the Issuer have agreed on the terms of an appropriate TRS Transaction in accordance with the terms of the Authorised Participant Agreement and AP TRS Master Confirmation. The Issuer intends to limit the aggregate amount in respect of TRS Transactions with any Authorised Participant not yet collateralised in cash to US$75,000,000 for that Authorised Participant and each type of Metal.
Settlement
CREST
The Issuer is a participating issuer in, and the Industrial Metal Securities are participating securities in, CREST, a paperless multi currency electronic settlement procedure enabling securities (including debt securities) to be evidenced otherwise than by written instrument, and transferring such securities electronically with effective delivery versus payment. Accordingly, to the extent that Industrial Metal Securities are issued in Uncertificated Form, settlement of transactions in the Industrial Metal Securities will take place within the CREST system.
Settlement and Delivery on the Frankfurt Stock Exchange
For the purpose of good delivery of the Industrial Metal Securities on the Frankfurt Stock Exchange, Clearstream Banking Aktiengesellschaft (“Clearstream”) will issue, for each type and the relevant number of Industrial Metal Securities, a Global Bearer Certificate (each a “Global Bearer Certificate”) in the German language created under German law (“Collective Safe Custody”). As at the date of this Prospectus, only ETFS Physical Copper Securities are available in certificated form and the Global
A non-binding English language translation of the conditions of the Global Bearer Certificates is set out in Part 7 (Global Bearer Certificates (Germany)) of this Prospectus.
For each Global Bearer Certificate, the relevant number and type of Industrial Metal Securities will be registered in the name of Vidacos Nominees Limited, London, England (the “Nominee”) in the relevant Register of Security Holders and credited as underlying stock to a separate safe custody account of Clearstream with Citibank N.A., London, England (the “Custodian”). The safe custody accounts assigned to the Industrial Metal Securities (the “Safe Custody Account”) will be designated “Clearstream Banking Aktiengesellschaft (Clearstream) - Special Safe Custody Account for Industrial Metal Securities Global Bearer Certificate” followed by the name of the type of Industrial Metal Securities concerned as set out in Annex 2.
In accordance with the conditions governing each Global Bearer Certificate:
• each co-owner thereof will be entitled, at his expense, to demand at any time that Clearstream arrange for the registration of the co-owner or a third party designated by him, in the relevant Register of Security Holders of the number and type of Industrial Metal Securities corresponding to his co-ownership share or any portion thereof in the Global Bearer Certificate of the same class; and
• any registered holder of Industrial Metal Securities will be entitled, at his expense, to have his Industrial Metal Securities delivered to the Custodian for crediting to the Safe Custody Account against a corresponding co-ownership share in the Global Bearer Certificate.
Whenever the number of Industrial Metal Securities represented by the Global Bearer Certificate changes (as a result, for example, of deliveries to the Safe Custody Account, withdrawals from the Safe Custody Account or issues or Redemptions of Industrial Metal Securities), Clearstream will amend the Global Bearer Certificate accordingly.
Unless otherwise agreed, the Issuer will treat the Nominee as one single security holder so far as fractional rights and entitlements are concerned.
Cash Payments and Exercise of Subscription Rights and Other Rights: Cash payments are credited to Clearstream’s cash account with the Custodian and paid by Clearstream to the respective co-owners. Any subscription rights or other rights and any fractional rights relating to the Industrial Metal Securities in the Safe Custody Account will be held by Clearstream at the disposal of HSBC Trinkaus & Burkhardt AG (the “Bank”) Königsallee 21/23, 40212 Düsseldorf, Federal Republic of Germany. Upon the request of the Bank, Clearstream will give instructions to the Custodian for the exercise, purchase or sale of such subscription rights, other rights or fractional rights. In case of any flow of cash amounts resulting out of such transactions, Clearstream will without delay inform the Bank by fax of the net proceeds or the net costs, respectively, and the related value date. The net proceeds or the net costs, respectively, must be credited or debited to the Bank’s cash account with Clearstream or as otherwise agreed between Clearstream and the Bank.
Clearstream Banking AG: Clearstream is a company that was incorporated on 12 July 1949 in Frankfurt under the laws of the Federal Republic of Germany.
Clearstream is a regulated credit institution under the German Banking Act and licensed as the German Central Securities Depository pursuant to the German Securities Deposit Act, i.e. a professional depository that holds securities for its customers and facilitates the clearance and settlement of securities transactions among them through electronic book-entry transfers between their accounts, thereby eliminating the need for physical movement of the securities. Clearstream also provides other services to its customers, including safekeeping, administration, clearance and settlement of internationally-traded securities and securities lending and borrowing. Clearstream’s customers are worldwide financial institutions, including underwriters, securities brokers and dealers, banks, trust companies and clearing corporations.
Supply and Inspection of Documents in Germany
For the duration of the Programme or so long as any Industrial Metal Securities remain outstanding, copies of this Prospectus (or any replacement prospectus), the German translation of the summary hereto and all financial information as well as the contracts required to be disclosed by the Issuer pursuant to the applicable rules will be available for inspection during normal business hours on any weekday (Saturdays, Sundays and public holidays excepted) at the registered office of the Bank, and a copy of the documents referred to above may be requested by contacting the Bank.
Registers
The Registrar will maintain the Registers in Jersey.
UCITS and CIS
United Kingdom
The Issuer has received legal advice that:
(a) the Industrial Metal Securities do not constitute units in a collective investment scheme; (b) the Industrial Metal Securities are capable of constituting transferable securities; and
(c) for the purposes of COLL 5.2.29(R)(2) of the FSA Handbook, all outstanding Industrial Metal Securities and all outstanding Notes will constitute “debt securities”.
Prospective investing UCITS Schemes would need to satisfy themselves that an investment in the Industrial Metal Securities in their own circumstances would be in line with their investment objectives and comply with the relevant parts of the FSA Handbook.
Money Laundering Regulations
The verification of identity requirements of Jersey’s anti-money laundering laws and regulations and/or any subsequent equivalent legislation will apply to the Programme and verification of the identity of the Authorised Participants for Industrial Metal Securities may be required. The anti-money laundering laws and regulations of other jurisdictions may also apply to the Programme and verification of the identity of the Authorised Participants.
By lodging an Application Form, each Authorised Participant confirms that it is subject to the Money Laundering (Jersey) Order 2008 (as amended from time to time) (in relation to Jersey), the Money Laundering Regulations 2007 (in relation to the UK) and/or any other applicable anti-money laundering laws and regulations and/or undertakes to provide such other evidence of identity as is required by the Issuer at the time of lodging the Application Form, or, at the absolute discretion of the Issuer, at such specified time thereafter as may be requested to ensure compliance with the Money Laundering (Jersey) Order 1999, the Money Laundering Regulations 2007 and/or any other applicable legislation. The Registrar and the Administrator are entitled, in their absolute discretion, to determine whether the verification of identity requirements apply to any Authorised Participant and whether such requirements have been satisfied. None of the Issuer, the Administrator or the Registrar shall be responsible or liable to any person for any loss or damage suffered as a result of the exercise of their discretion hereunder. No Application will be accepted by the Issuer unless evidence of such Authorised Participant’s identity satisfactory to the Issuer and its agents is provided.
PART 4
TRUST INSTRUMENT AND THE CONDITIONS