Finance Act 1990

Securities becoming subject to later options U.K.

4 (1) This paragraph applies where—

(a) a security becomes at any time (the time in question) subject to a qualifying provision for redemption (the new provision), and

(b) immediately before that time it was a qualifying convertible security.

(2) If the relevant requirement is not satisfied, the security shall cease to be a qualifying convertible security for the purposes of this Schedule at the time in question.

(3) For the purposes of this paragraph the relevant requirement is satisfied if—

(a) the security becomes subject to the new provision on or after the relevant day but not after the day on which the occasion for redemption under the old provision falls,

(b) the person who issued the security did not indicate, at any time falling before the relevant day, that the security might become subject to a qualifying provision for redemption (in addition to any other such provision or provisions),

(c) the day on which the occasion for redemption under the new provision falls is not less than one year after the day on which the occasion for redemption under the old provision falls,

(d) the amount payable on redemption on exercise of the option for which the new provision provides is not less than the amount payable on redemption on exercise of the option for which the old provision provides,

(e) the yield to redemption for the relevant redemption period represents no more than a reasonable commercial return, and

(f) the obtaining of a tax advantage by any person is not the main benefit, or one of the main benefits, that might be expected to accrue from the new provision.

(4) For the purposes of this paragraph the relevant day is the day falling 30 days before the day on which the occasion for redemption under the old provision falls.

(5) For the purposes of this paragraph the old provision is—

(a) if the security became subject to one other qualifying provision for redemption before the time in question, that provision, or

(b) if the security became subject to more than one qualifying provision for redemption before the time in question, the one to which it last became subject.

(6) For the purposes of this paragraph the relevant redemption period is the redemption period which ends with the day on which the occasion for redemption under the new provision falls.