F1PART 4APROPERTY AIFS

Annotations:
Amendments (Textual)

CHAPTER 2ENTRY INTO AND MEMBERSHIP OF THE PROPERTY AIF REGIME

The loan creditor condition

The loan creditor condition69M

1

The loan creditor condition is that the open-ended investment company must meet conditions A to C throughout the accounting period in the case of any loan relationship to which the company is party as debtor.

2

Condition A is that, in the case of a debtor relationship of the company, the person standing in the position of a creditor as respects the debt in question is not entitled to an amount by way of interest which depends to any extent on—

a

the results of all or part of the open-ended investment company’s business, or

b

the value of any of the company’s assets.

3

For the purposes of condition A, a loan shall not be treated as dependent on the results of the company’s business by reason only that the terms of the loan provide—

a

for the interest to be reduced in the event of results improving, or

b

for the interest to be increased in the event of results deteriorating.

4

Condition B is that, in the case of a debtor relationship of the company, the person standing in the position of a creditor as respects the debt in question is not entitled to an amount by way of interest which exceeds a reasonable commercial return on the consideration lent.

5

Condition C is that, in the case of a debtor relationship of the company, the person standing in the position of a creditor as respects the debt in question is entitled on repayment to an amount which—

a

does not exceed the consideration lent, or

b

is reasonably comparable with the amount generally repayable (in respect of an equal amount of consideration) under the terms of issue of securities listed on a recognised stock exchange.

6

In this regulation “loan relationship” and “debtor relationship” shall be construed in accordance with Chapter 2 of Part 4 of FA 1996 (loan relationships).