The Financial Services and Markets Act 2000 (Financial Promotion) Order 2005

[F1 Alternative finance investment bonds U.K.

15A.— (1) Rights under an alternative finance investment bond, to the extent that they do not fall within paragraph [F2 15 or] 16.

(2) For the purposes of this paragraph, arrangements constitute an alternative finance investment bond if—

(a) the arrangements provide for a person (“the bond-holder”) to pay a sum of money (“the capital”) to another (“the bond-issuer”);

(b) the arrangements identify assets, or a class of assets, which the bond-issuer will acquire for the purpose of generating income or gains directly or indirectly (“the bond assets”);

(c) the arrangements specify a period at the end of which they cease to have effect (“the bond term”);

(d) the bond-issuer undertakes under the arrangements—

(i) to make a repayment in respect of the capital (“the redemption payment”) to the bond-holder during or at the end of the bond term (whether or not in instalments); and

(ii) to pay to the bond-holder other payments on one or more occasions during or at the end of the bond term (“the additional payments”);

(e) the amount of the additional payments does not exceed an amount which would, at the time at which the bond is issued, be a reasonable commercial return on a loan of the capital; and

(f) the arrangements are a security admitted to—

(i) an official list (in accordance with the provisions of Directive 2001/34/EC of the European Parliament and of the Council on the admission of securities to official stock exchange listing and on information to be published on those securities); or

(ii) trading on a regulated market (within the meaning of [F3 Article 4.1.21 of the markets in financial instruments directive]) or on a recognised investment exchange (within the meaning of section 285 of the Act).

(3) For the purposes of sub-paragraph (2)—

(a) the bond-issuer may acquire the bond assets before or after the arrangements take effect;

(b) the bond assets may be property of any kind, including rights in relation to property owned by someone other than the bond-issuer;

(c) the identification of the bond assets mentioned in sub-paragraph (2)(b) and the undertakings mentioned in sub-paragraph (2)(d) may (but need not) be described as, or accompanied by a document described as, a declaration of trust;

(d) the reference to a period in sub-paragraph (2)(c) includes any period specified to end upon the redemption of the bond by the bond-issuer;

(e) the bond-holder may (but need not) be entitled under the arrangements to terminate them, or participate in terminating them, before the end of the bond term;

(f) the amount of the additional payments may be—

(i) fixed at the beginning of the bond term;

(ii) determined wholly or partly by reference to the value of or income generated by the bond assets; or

(iii) determined in some other way;

(g) if the amount of the additional payments is not fixed at the beginning of the bond term, the reference in sub-paragraph (2)(e) to the amount of the additional payments is a reference to the maximum amount of the additional payments;

(h) the amount of the redemption payment may (but need not) be subject to reduction in the event of a fall in the value of the bond assets or in the rate of income generated by them; and

(i) entitlement to the redemption payment may (but need not) be capable of being satisfied (whether or not at the option of the bond-issuer or the bond-holder) by the issue or transfer of shares or other securities.

(4) An instrument excluded from sub-paragraph (1) of paragraph 16 by sub-paragraph (2)(b) of that paragraph is not thereby taken to fall within sub-paragraph (1) of this paragraph. ]

Textual Amendments

F1 Sch. 1 para. 15A inserted (24.2.2010) by The Financial Services and Markets Act 2000 (Regulated Activities) (Amendment) Order 2010 (S.I. 2010/86), art. 1(2), Sch. para. 9(f)(iii)

F2 Words in Sch. 1 para. 15A(1) inserted (16.2.2011) by The Financial Services and Markets Act 2000 (Regulated Activities) (Amendment) Order 2011 (S.I. 2011/133), arts. 1(2), 3(2)(c) (with art. 4)

F3 Words in Sch. 1 para. 15A(2)(f)(ii) substituted (1.4.2017 for specified purposes, 3.1.2018 in so far as not already in force) by The Financial Services and Markets Act 2000 (Regulated Activities) (Amendment) Order 2017 (S.I. 2017/488), art. 1(2), Sch. para. 9(10)(f)