5. rezles by bookkeeping entries: Thanks to the bookkeeping entry system, the delivery of shares deposited WITH STOOVAM is carried out without any physical movement taking place. In this context, article of the legislation of August 4th, 1949, stipulates that 'bender tims, in order to effect mutual deliveries of securities, which are either deposited or designated to be deposited into their current accounts, must so so through $2DOVAM bookkeeping entries". Since it is the only authorized mode of delivery between participants, the siste 2o 2ookkeeping entries is notably used for the settlement of stock exchange transactions. The delivery orier consists of a numbered form in triplicate. The deliverer keeps me copy and sends the original plus the duplicate to the decedulary who, in turn, sends the original to SICOVAM and keeps the suplicice, dvi vay of exception, the centralizing organizations send directly to stava che sellery orders in connection with the distribution of new stocks rewiting from a subscription. In addition, SICOVAM has accepted, in areone: 4127 the Sartered Stockbrokers' Institute (Chambre Syndicale de La Compagnie des Agents de Change), to apply the bookkeeping entry system to the clearing of balances as shown on the Institute's records) in connection with the foresightly making up and the monthly settlement of trades on the settlement marset Marché à terme'. Roxteeng selivery orders cannot be made out to the bearer or be endorsed. Moreover, participants must not make out orders, unless their accounts are suttieteetly supplied. Since bookkeeping deliveries often demand a cash Arvient five the beneficiary, the latter must be sure of their effectiveness. It follows that an order cannot be stopped, except in the case of loss or PIN the form. kiy orvet torm which has not been properly made out or seems doubtful is All errors in the particulars of an order which are detected *ter De Alleering entries have been made are compensated for by XaP4¥ Dang) retibig entries. Insufficient accounts, if not supplied 1 time, are also compensated for by rectifications cancelling the debits wird die dee rated from the account of the deliverer. Lars from facilitating all transmissions by bookkeeping entries, ********* *vocet allows for considerable simplifications in the administration bele a de legislation of August 4th, 1949, provides that SICOVAM, ** * secvades deld in the system, may either issue coupon certificates or voltest duecily, gav probction of certified records and on behalf My the AtelTARAX, Y dividends or interests. The first mode of this 6. Consequently, whenever dividends are due, SICOVAM sends each participant a certificate showing the number of coupons corresponding to his share balance the day before the record day. The participant presents this certificate to the paying organization of his choice which pays the corresponding amount. The participant then distributes this amount amongst his clients. At the same time, SICOVAM sends the company or the central paying organization a list of the certificates issued, giving their respective numbers and the number of coupons represented by each. However, the list does not indicate the name of the beneficiary, thus giving him the alternative of remaining anonymous by detaching the portion of the certificate where his name and code number are shown. b) Subscription and Allotment Rights : Article 6 of the legislation of August 4th, 1949, also provides that "Right" accounts are operated in the same way as securities accounts through bookkeeping entries, and delivery orders are made out on special forms by the participants. These orders are used for the delivery of rights traded on the stock exchange, and for the presentation of subscription records or allotment applications to the SICOVAM member organizations responsible for receiving subscriptions or distributing allotted shares (cooperating central organizations). SICOVAM delivers to these organizations "right certificates" corresponding to the rights thus exercised. These certificates serve as proof with regard to the issuing company. The "right certificates" can also be delivered to the participants, if the latter have to present subscription records or allotment applications to organizations which are not members of SICOVAM. In this case, SICOVAM sends the organizations concerned lists of the issued certificates. c) Bond Redemption : On redemption of a series, a portion or the whole of a bond issue held in the system, SICOVAM delivers to its participants "redemption right certificates" and automatically closes down the corresponding securities accounts. These certificates are collected in the same way as dividend certificates. of on-fungiaflity, stocks deposited g are accertimally charged to the 7. KOOLILSCHACUM af deposited securities, SICOVAM COLLA KOREnts, particularly where French securities are TLsCeres-dearer' account the equivalent in bearer cicaces. Such an account avoids paperwork in the war = 2gistered scares, and vice-versa. In replace the presentation of the shares. es. counts for foreign registered or non erlurs inherent in each type of securities are the participants incur all liabilities resulting transactions, or to the current regulations in France 28 41* barely countries. recalled that SCOOTAM acts as a nominee; this kind of Loates, registered in the name of SICOVAM, are the participants on behalf of the actual owners. days 2088.le to have these shares transferred to the name 21 20 mocher tumitee. ves eeuzug recessary to insure the payment of dividends, kelelertial rights in capital increases, the sale of these hautes De representation of the shares at general meetings, pis de al exercised according to the instructions of the actua1 A. De participants before being transmitted en bloc to Xwe can obviously include both affirmative and negative silicate transfer operations, SICOVAM has sent complete Tists of authorized signatures) to every transfer agent of ye av has established special agents in the foreign places. There has worked well since 1948 and thus facilitates the arbitrage bạ London, Johannesburg, Montreal, New-York, Tokyo, 8. Milan, Copenhagen and Stockholm Stock Exchanges. Non-registered Securities : At present, these are represented by bearer shares issued by certain Dutch companies, grouped by the "Centrum Voor Fondsenadministratie N.V.", abbreviated "CF", since the "traditional" bearer shares issued by these companies are not eligible for SICOVAM operations. Together with the "CF" Organization it has joined, SICOVAM has brought into play, in 1970, a system of bookkeeping entries that eliminates any physical delivery of shares between the Netherlands and France. SICOVAM is also in a position to extend its activities to the bearer shares of the German companies, since the first admissions of such securities are to take place in 1973. 3) Safekeeping and Location of Deposited Shares Not all the securities deposited with SICOVAM are held in its vaults. SICOVAM stores a large part of unit stocks in the vaults that main banks let to it under exclusive rights. A bank -the "Depositary Bank"- has been appointed for the stocks of each issuing company and is generally the one entrusted by that company with administrating its stocks. Such a "Depositary Bank" acts for the account of SICOVAM, according to its instructions and under its control. SICOVAM only keeps in its vaults larger denominations (1.000 or 10.000 stocks) and sufficient reserves of unit stocks to meet withdrawal requirements, along with all foreign securities, whether they are registered or not. Stop notices concerning stocks held by SICOVAM are ineffective, if published after the depositing of the shares. In this eventuality, SICOVAM checks the depositing date and, according to the amended article 16 of the 1949 legislation, delivers a certificate to the issuing body or -in the case of foreign companies- to each paying organization of the securities in question; the latter transmits a copy to the party who had the stop notice published as well as to the Chartered Stockbrokers' Institute which, on the strength of this certificate, automatically cancels the stop notice. Nevertheless, the party which claims to have been dispossessed has the right to be informed of the name of the organization which deposited the said share with SICOVAM. Securities held in the system, which have been pledged by participants, are in no way distinguished or put into a special account by SICOVAM; they remain in the participants' securities accounts. 4) Securities Bookkeeping SICOVAM handles a daily volume of 15 to 20 000 entries concerning some 150 000 accounts. Daily statements of account are issued to participants at the latest two days after the relevant operational instructions were received. THE DEPOSITORY TRUST Co., Mr. VIC REINEMER, Staff Director, Subcommittee on Budgeting, Management, and Expenditures, Committee on Government Operations, U.S. Senate, Washington, D.C. DEAR VIC: This responds to your request for information about the Societe Interprofessionells Pour La Compensation Des Valeurs Mosilieres (SICOVAM). SICOVAM is the French securities depository system, which was organized under a 1949 law as a "societe anonyme ordinaire" and whose predecessor was established in 1941. It is supervised by the Ministry of Finance and is owned by the principal banks of France and the French brokers association. Its eligible security issues consist of approximately 1,250 French and 125 foreign issues. SICŎVAM receives for deposit both bearer securities, which are standard in France, and registered foreign securities which are re-registered in SICOVAM's nominee name. Our understanding is that SICOVAM has over 200 participating members at the present time, most of them banks. SICOVAM is located in Paris. We will supply its current address to you when we have it. I am sorry we do not have more information but the above may be of some help to you. Best wishes. Sincerely, WILLIAM T. Dentzer, Jr., |