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Part 7 U.K.Derivative contracts

Chapter 7U.K.Chargeable gains arising in relation to derivative contracts

Issuers of securities with embedded derivatives: deemed optionsU.K.

654Payment instead of disposal on exercise of deemed optionU.K.

(1)Subsection (2) applies if—

(a)the option mentioned in section 652(3) is exercised at any time in the accounting period,

(b)no shares are issued or transferred in fulfilment of the obligations under the option, and

(c)an amount is paid in fulfilment of those obligations.

(2)If —

(a)CV exceeds X, a chargeable gain equal to the amount of the excess is treated as accruing to the company in the accounting period,

(b)X exceeds CV, an allowable loss equal to the amount of the excess is treated as accruing to the company in the accounting period.

(3)In this section—