Regulation 23 Additional information on derivative contracts

(1)

Every company shall, in respect of the financial year in question, annex to the documents referred to in regulations 6, 7 and 8 above a statement comprising a brief description of—

(a)

any investment guidelines operated by the company for the use of derivative contracts;

(b)

any provision made by such guidelines for the use of contracts under which the company had a right or obligation to acquire or dispose of assets which was not, at the time when the contract was entered into, reasonably likely to be exercised and, if so, the circumstances in which, pursuant to that provision, such contracts would be used;

(c)

the extent to which the company was during the financial year a party to any contracts of the kind described in sub-paragraph (b) above;

(d)

the extent to which any of the amounts recorded in Form 13 would be changed if assets which the company had a right or obligation to acquire or dispose of under derivative contracts outstanding at the end of the financial year (being, in the case of options, only those options which it would have been prudent to assume would be exercised) had been so acquired or disposed of;

(e)

how different the information provided pursuant to sub-paragraph (d) above would have been if such options as were outstanding at the end of the year had been exercised in such a way as to change the amounts referred to in that sub-paragraph to the maximum extent;

(f)

how different the information provided pursuant to sub-paragraphs (d) and (e) above would have been if, instead of applying to contracts outstanding at the end of the financial year, those sub-paragraphs had applied to derivative contracts outstanding at such other time during the financial year as would have changed the amounts referred to in those sub-paragraphs to the maximum extent;

(g)

the maximum loss which would be incurred by the company on the failure by any one other person to fulfil its obligations under derivative contracts outstanding at the end of the financial year, both under existing market conditions and in the event of other foreseeable market conditions, together with an assessment of whether such maximum loss would have been materially different at any other time during the financial year;

(h)

the circumstances surrounding the use of any derivative contract held at any time during the financial year which did not fall within paragraph (2) of regulation 55 of, or (where appropriate) paragraph 15 of Schedule 10 to, the Insurance Companies Regulations^f1; and

(i)

the total value of any fixed consideration received by the company (whether in cash or otherwise) during the financial year in return for granting rights under derivative contracts and a summary of contracts under which such rights have been granted.

(2)

In this regulation, “derivative contract” includes a contract or asset which has the effect of a derivative contract within the meaning of regulation 56 of the Insurance Companies Regulations and, for the purposes of paragraph (1)(h) above, such a contract or asset shall be treated as falling within paragraph (2) of regulation 55 of, or paragraph 15 of Schedule 10 to, the Insurance Companies Regulations, as appropriate, if it has the effect of a derivative contract which would fall within that paragraph.

(3)

For the purposes of this regulation, a company which is a party to—

(a)

a contract for differences; or

(b)

any other contract which is to be, or may be, settled in cash,

shall be taken to have a right or obligation to acquire or dispose of the assets underlying the contract.

Annotations

Footnotes

f1: Regulation 55 and Schedule 10 were substituted by S.I. 1995/3248, reg. 10 and reg. 19.