The Local Authorities (Borrowing) Regulations 1990

Terms of loan instruments

3.—(1) The terms of a loan instrument shall comply with the following provisions of this regulation.

(2) The total of the payments which fall to be made by a local authority under the instrument, other than payments in respect of interest, shall not, on the date on which the instrument is issued, exceed the amount of money borrowed by the authority under the instrument by more than—

(a) fifteen per cent. of the amount borrowed, or

(b) if less, the product of P per cent. of the amount borrowed multiplied by the number of relevant years,

and, for the purposes of this paragraph, the “number of relevant years” means the number of complete periods of twelve months in the period beginning on the date on which the instrument is issued and ending on the last date by which all payments by the authority under the instrument fall to be made.

(3) Where a payment under the instrument in respect of interest is required to be made by a local authority in respect of any period, the payment shall be required to be made on a date (which may be specified in the instrument or not)—

(a) within the period for which the interest is payable, and

(b) if the period is a period of more than twelve months, within twelve months of the beginning of the period.

(4) Where payments under the instrument at any time fall to be made by a local authority to two or more persons in respect of the same liability, they shall be required to be treated as jointly entitled to those payments.

(5) Any payments under the instrument in respect of principal shall be required to be made by the local authority in question—

(a) upon dates specified in the instrument; or

(b) if the holder of the instrument and the authority agree to defer such payments, upon the dates agreed;

provided that where payments fall to be made as mentioned in sub-paragraph (b) above, the payment of interest in respect of the period of deferment shall be required to be made on a date or dates which accord with paragraph (3)(a) and (b) above.

(6) The authority or, as the case may be, the registrar shall not be required to make any payment by way of additional interest—

(a) because payment of any amount in respect of principal is not duly made as a result of the holder of the instrument not complying with any requirement imposed under regulation 8(2); or

(b) in a case where such a request as is mentioned in regulation 8(4) has been made, if a payment has not been duly made but the authority or the registrar have taken all reasonable steps to make that payment on or before the date on which it falls due in accordance with the request.

(7) After redemption of the instrument no payments shall be due under the instrument to the holder of the instrument in respect of any other loan, or the provision of any other funds, to a local authority.

(8) Where the instrument is issued in respect of a loan—

(a) if the right under the instrument to receive payments in respect of the loan is transferred, the person whose particulars were entered in the register before the transfer as the person to whom the payments are due shall continue to be entitled to any such payments until particulars of the transferee are entered in the register; and

(b) if the register is closed or the balance for interest is struck in respect of the loan, the person whose particulars are entered in the register on the date on which the register is closed or the balance is struck as the person to whom payments are due in relation to the loan shall be entitled to any such payments falling to be made in the period during which the register is closed or in respect of the interest the balance for which is being struck.