H-2949.2 _______________________________________________
HOUSE BILL 2245
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State of Washington 53rd Legislature 1994 Regular Session
By Representatives Padden, Zellinsky, Mielke, Horn, Dyer and Long
Read first time 01/12/94. Referred to Committee on Financial Institutions & Insurance.
AN ACT Relating to providing bond call notification; and adding a new chapter to Title 21 RCW.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:
NEW SECTION. Sec. 1. The legislature finds that when interest rates are low, bond issuers may refinance outstanding debt by redeeming the bond earlier than its stated maturity date. In the event the bondholder does not submit the bond for redemption when this early call occurs, the bondholder ceases receiving interest on the bond. The legislature also finds that the usual method of call notification is by regular mail, and the usual practice is not to provide additional notices when the bond is not submitted for redemption in a timely manner. The purpose of this chapter is to require better notification and to require a second notice when the bond is not redeemed timely.
NEW SECTION. Sec. 2. (1)(a) An issuer that intends to redeem a registered bond held by a person whose address of record is in the state of Washington shall send notice of redemption in a timely manner.
(b) Any issuer that provides a notice under (a) of this subsection shall send a second notice by registered mail if the bondholder has not submitted the bond for redemption within thirty days from the date the bond ceases to earn interest based on the call.
(2) For the purposes of this section:
(a) "Bond" means any debt obligation of an issuer with a maturity of more than five years that qualifies as a security within the definition of RCW 62A.8-102(1);
(b) "Issuer" means a person who qualifies as an issuer within the meaning of RCW 62A.8-201 or any trustee, registrar, transfer agent, or other person to the extent the trustee, registrar, transfer agent, or other person undertakes the obligation of paying or redeeming the bond or providing notice of redemption of the bond; and
(c) "Registered bond" means a bond that specifies a person entitled to the security or the rights it represents, and its transfer may be registered on books maintained by or on behalf of the issuer.
(3) If an issuer fails to provide the notices required in subsection (1) of this section, the issuer shall be liable for interest from the date payment of interest ceases under the call until actual notice of the redemption is received by the bondholder or the maturity date of the bond, whichever occurs first.
NEW SECTION. Sec. 3. If any provision of this act or its application to any person or circumstance is held invalid, the remainder of the act or the application of the provision to other persons or circumstances is not affected.
NEW SECTION. Sec. 4. Sections 1 through 3 of this act shall constitute a new chapter in Title 21 RCW.
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