Amendment of Part 2 of Schedule 26

Amendment of paragraph 4 of Schedule 266

1

Amend paragraph 44 (contracts excluded by virtue of their underlying subject matter) as follows.

2

In sub-paragraph (2)(b) after “(2C)” insert “, (2CA)”.

3

For sub-paragraph (2A) substitute—

2A

The conditions specified in this sub-paragraph are that the relevant contract—

a

is a plain vanilla contract entered into by a company carrying on life assurance business;

b

is an approved derivative for the purposes of Rule 4.3.5 of the Integrated Prudential Sourcebook; and

c

does not fall within paragraph 3(1)(b).

4

In sub-paragraph (2B)—

a

in paragraph (b)(ii) after “of the company” insert “or any liability related to share capital of the company”, and

b

in paragraph (c) for the words from “a deemed relevant contract" to the end substitute “a loan-contract embedded derivative.”

5

After sub-paragraph (2C) insert—

2CA

The conditions specified in this sub-paragraph are—

a

the relevant contract is entered into or acquired—

i

by a company otherwise than in the course of activities forming an integral part of a trade carried on by it, or

ii

by a company which is a mutual trading company;

b

the relevant contract is—

i

an option to acquire shares in a company, or

ii

a future requiring delivery of shares in a company;

c

the relevant contract is not a loan-contract embedded derivative; and

d

the shares to be acquired or delivered constitute, or would (if acquired or delivered) constitute a substantial shareholding within the meaning of paragraph 8 of Schedule 7AC to TCGA 1992.