C1Part 7Derivative contracts
Chapter 2Contracts to which this Part applies
Cases where companies treated as parties to relevant contracts
585Loan relationships with embedded derivatives
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, and
b
rights and liabilities under one or more derivative financial instruments or equity instruments (“embedded derivatives”).
2
The company is treated for the purposes of this Part—
a
as a party to a relevant contract whose rights and liabilities consist only of those of the embedded derivative, or
b
if there is more than one embedded derivative, as a party to relevant contracts each of whose rights and liabilities consist only of those of one of the embedded derivatives.
3
Each relevant contract to which a company is treated as a party under subsection (2) is treated for the purposes of this Part as an option, a future or a contract for differences depending on what the character of a separate contract containing the rights and liabilities of the embedded derivative would be.
4
For the corresponding treatment of the rights and liabilities within subsection (1)(a), see section 415 (loan relationships with embedded derivatives).
5
See also—
a
section 416 (election for section 415 and this section to apply), and
b
section 635 (some creditor relationships treated as ones in relation to which section 415 and this section have effect).
Pt. 7 modified (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), ss. 601, 1184(1) (with Sch. 2)