Part 7Derivative contracts

Chapter 2Contracts to which this Part applies

Other contracts etc treated as derivative contracts

587Contract relating to holding in OEIC, unit trust or offshore fund

(1)

This section applies in relation to a relevant contract to which a company is a party in an accounting period if—

(a)

it is not a derivative contract for the purposes of this Part but for this section, and

(b)

its underlying subject matter consists wholly or partly of a relevant holding in that period.

(2)

This Part has effect—

(a)

for that accounting period, and

(b)

for any succeeding accounting period in which the relevant contract is a relevant contract of the company,

as if the relevant contract were a derivative contract.

(3)

For the purposes of this section, the underlying subject matter of a contract consists wholly or partly of a relevant holding in an accounting period if—

(a)

at any time in that period it consists wholly or partly of—

(i)

any shares in an open-ended investment company,

(ii)

any rights under a unit trust scheme, or

(iii)

F1an interest in an offshore fund (within the meaning of section 355 of TIOPA 2010), and

(b)

there is a time in the period when that company, scheme or fund fails to meet the qualifying investments test.

(4)

In subsection (3) “meeting the qualifying investments test” has the same meaning as in section 493 (the qualifying investments test).

(5)

See section 18(2)(c)(ii) of F(No.2)A 2005 (section 17(3): specific powers) for the power to modify the meaning of “relevant holding” for the purposes of this section by regulations under section 17(3) of that Act (regulations about authorised unit trusts and OEICs).

(6)

For the way in which credits and debits are to be brought into account where this section applies, see section 601 (application of fair value accounting).

(7)

See also—

(a)

section 602 (contract becoming one relating to holding in OEIC, unit trust or offshore fund), and

(b)

section 660 (company ceasing to be party to contract relating to holding in OEIC, unit trust or offshore fund).