The European Single Currency (Taxes) Regulations 1998

Renominalisation resulting in new minimum amount in which securities can be held or traded

22.—(1) This regulation applies in a case where—

(a) there is a stock lending arrangement in relation to securities,

(b) there is a euroconversion of those securities prior to their being transferred back to the lender under the arrangement,

(c) the aggregate nominal value (expressed in euros) of the securities transferred to the borrower under the arrangement, or of the securities issued to replace them in the euroconversion, is, as a result of renominalisation, not a whole multiple of the new minimum denomination in which those securities can be traded at the time of the transfer of securities back to the lender under the arrangement,

(d) securities the aggregate nominal value of which is equal to the largest whole multiple of the new minimum denomination which does not exceed the aggregate nominal value referred to in sub-paragraph (c) are transferred back to the lender pursuant to the arrangement, and

(e) the borrower is required under the arrangement to pay to the lender an amount which either—

(i) is equal to the amount of what would, but for the arrangement, have been the proceeds of disposal of the remainder of the securities on the renominalisation received by the lender, or

(ii) is equal to the value, at the time of the transfer of securities back to the lender under the arrangement, of the remainder of the securities if the remainder could still be held at that time though not traded.

(2) Where this regulation applies, the requirement for payment of the amount specified in paragraph (1)(e) is to be regarded for the purposes of section 263B of the 1992 Act as a requirement on the part of the borrower to transfer the remainder of the securities back to the lender.

(3) The value referred to in paragraph (1)(e)(ii) is the appropriate proportion (based on nominal value) of the market value of the minimum amount of the original securities that, at the time of the transfer back of securities to the lender under the arrangement, could be traded.

(4) Where the value, or proceeds of disposal, of the remainder of the securities referred to in sub-paragraph (e) of paragraph (1) does not exceed 500 euros, and the arrangement does not require payment of a sum equal to this amount, this regulation shall have effect as if the amount calculated in accordance with that sub-paragraph were nil and the requirement specified in that sub-paragraph were satisfied.