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Valid from 01/04/2009

Part 5 U.K.Loan Relationships

Chapter 12U.K.Special rules for particular kinds of securities

DerivativesU.K.

415Loan relationships with embedded derivativesU.K.

(1)This section applies if in accordance with generally accepted accounting practice a company treats the rights and liabilities under a loan relationship to which it is a party as divided between—

(a)rights and liabilities under a loan relationship (“the host contract”), and

(b)rights and liabilities under one or more derivative financial instruments or equity instruments.

(2)The company is treated for the purposes of this Part as a party to a loan relationship whose rights and liabilities consist only of those of the host contract.

(3)For the corresponding treatment of the rights and liabilities within subsection (1)(b), see section 585 (loan relationships with embedded derivatives).