The Gilt Strips (Consequential Amendments) Regulations 1997

Explanatory Note

(This note is not part of the Regulations)

These Regulations modify statutory provisions in consequence of arrangements to issue a new type of Government security called a “strip”. The arrangements will enable holders of Government securities which are declared strippable to exchange such a security for a number of different “strip” securities representing different payments (of interest or principal) remaining to be made under the original security. Such exchanges, and the terms on which strips are issued, will be contractual.

These Regulations secure that statutory provisions (whenever passed) which apply or refer to all or any strippable government securities will, in a like manner, apply or refer to strips (regulation 3). For the purposes of the application and construction of statutory provisions relating to strips, regulation 4 provides for strips to be treated as fixed-interest securities, for payments under strips to be taken to have the character of capital payments (except that the Agricultural Research Institute of Northern Ireland is permitted to treat payments made under strips held in its Endowment Fund as income of the Fund for those purposes, which has the effect of allowing the Institute to use such payments for the upkeep, maintenance and staffing of its Agricultural Research Station), and for distinctions based on maturity periods to be preserved.

None of these provisions apply in relation to certain tax provisions, nor where the context otherwise requires (regulation 5). Relevant statutory provisions are amended to secure that strips are not to be registrable in the National Savings Stock Register (regulation 6) and that credit unions do not invest in strips (regulation 7). Other amendments which draw distinctions between strips and strippable Government securities are provided for by the Government Stock (Amendment) Regulations 1997 (S.I. 1997/1709).