3(1)Paragraph 12 is amended as follows.U.K.
(2)In sub-paragraph (2) (determination of credits and debits to be brought into account) in paragraph (a) (disregard of the transaction or series of transactions except for certain purposes) after “except” insert—
“(i)for the purpose of determining the debits or credits to be brought into account in respect of exchange gains or losses and identifying the company which is to bring them into account; or
(ii) ”.
(3)In paragraph (b) of that sub-paragraph (transferor and transferee deemed to be the same person, except for that purpose) for “that purpose” substitute “ those purposes ”.
(4)In sub-paragraph (2A) (amount to be brought into account where transferor company uses authorised mark to market basis of accounting) for paragraph (a) substitute—
“(a)the amount to be brought into account by the transferor company in respect of the transaction, the result of the series of transactions, or the transfer must be—
(i)where an asset is to be brought into account, the fair value of the asset, or of the rights under or interest in the asset, and
(ii)where a liability is to be brought into account, the fair value of the liability,
as at the date on which the transferee company becomes party to the loan relationship;
(aa)the amount to be brought into account by the transferee company in respect of the transaction, the result of the series of transactions, or the transfer must be the same as the amount brought into account by the transferor company in respect of the transaction, or, as the case may be, the result of the series of transactions, or the transfer; and”.
(5)In sub-paragraph (6) (novation: equivalent rights) after “rights” insert “ , or (as the case may be) its obligations, ”.
(6)After sub-paragraph (7) (cases where rights are “equivalent”) insert—
“(7A)For the purposes of sub-paragraph (6) above a person’s obligations under a debtor relationship are equivalent to obligations under another such relationship if they subject the holder of the liability representing the relationship—
(a)to the same obligations to the same persons as to capital, interest and dividends, and
(b)to the same remedies for the enforcement of those obligations,
notwithstanding any difference in the total nominal amounts of the assets representing the corresponding creditor relationships, in the form in which those assets are held or in the manner in which they can be transferred.”.
(7)The amendments made by this paragraph have effect where the date on which the transferee company becomes party to the loan relationship falls on or after 9th April 2003.