Regulation 12 Amendments to the principal Regulations

After regulation 8 there shall be added the following regulation—

“Redemption of securities

9

(1)

The cases specified for the purposes of subsection (4B) of the principal section, in relation to which the principal section shall have effect as mentioned in that subsection, are cases where a person (“the borrower”) enters into an arrangement under which—

(a)

another person (“the lender”) is to transfer securities to the borrower or his nominee;

(b)

the arrangement is to terminate on redemption of the securities; and

(c)

on redemption of the securities the borrower is to pay to the lender an amount equivalent to the proceeds of redemption.

(2)

Subsection (3) shall not apply to a payment referred to in paragraph (1) (c) above unless the conditions specified in paragraph (4) below are fulfilled.

(3)

Section 271 (9) shall not apply to any disposal and acquisition made in pursuance of an arrangement mentioned in paragraph (1) above unless the conditions specified in paragraph (4) below are fulfilled.

(4)

The conditions specified are that—

(a)

the arrangement is part of a chain of arrangements;

(b)

the lender is not the last lender in the chain; and

(c)

The borrower is not the first borrower in the chain.

(5)

Where any of the conditions specified in paragraph (4) above are not fulfilled, the operation of the 1992 Act in relation to disposals and acquisitions made pursuant to the arrangement shall be modified in accordance with paragraph (6), (7) or (8) below (as the case may be).

(6)

Where the arrangement is not part of a chain of arrangements—

(a)

the lender shall be regarded as having disposed of the securities transferred by him to the borrower pursuant to the arrangement—

(i)

on the occasion of the redemption of the securities and not at the time of that transfer, and

(ii)

for an amount equivalent to the proceeds of redemption;

(b)

the borrower shall be regarded as having acquired the securities transferred to him by the lender pursuant to the arrangement on the occasion and for the amount specified in sub-paragraph (a) above.

(7)

Where the lender is the last lender in the chain, he shall be regarded as having disposed of the securities transferred by him to the borrower on the occasion and for the amount specified in paragraph (6) (a) above.

(8)

Where the borrower is the first borrower in the chain, he shall be regarded as having acquired the securities transferred to him by the lender pursuant to the arrangement on the occasion and for the amount specified in paragraph (6) (a) above.”.