Section 554Z20 | Valuation of step within section 554Z19 ^F1

(1)This section applies if, by virtue of section 554Z17, Chapter 2 applies by reason of a step taken by B within section 554Z19.

(2)Section 554Z3 has effect as if subsections (3) and (4) below were substituted for subsections (1) to (6) of that section.

(3)The value of the relevant step is—

(a)the amount to be paid as a contribution under the relevant undertaking determined, as at the time the step is taken, on a just and reasonable basis assuming that any condition to be met before any payment is made will be met, or

(b)if lower, the value of the security.

(4)For the purposes of subsection (3)(b) the value of the security—

(a)consists of—

(i)the total amount of the sums of money included in the subject of the step (see section 554Z19(2)(a)), and

(ii)the total market value, as at the time the step is taken, of the assets included in the subject of the step (see section 554Z19(2)(b)), but

(b)is to be subject to a just and reasonable reduction to take account of any term of the security which limits the total amount which may be made available under the security for the performance of the relevant undertaking to an amount which is lower than the amount determined under paragraph (a).

(5)The following subsections apply if, as at the end of the day of an anniversary of the taking of the step (“the anniversary day”), B continues to provide the security for the performance of the relevant undertaking.

(6)This Part has effect as if B's continuing to provide the security were a new step (“the anniversary step”) within section 554Z19—

(a)which is taken by B at the end of the anniversary day, and

(b)by reason of which Chapter 2 is to apply by virtue of section 554Z17 (subject only to section 554A(4)).

(7)If the total amount of the sums of money which are the subject of the security (“the security sums”) varies from time to time, for the purpose of determining the sums of money included in the subject of the anniversary step, in section 554Z19(2)(a) the reference to the time the step is taken is to be read as a reference to the time during the preceding year at which the total amount of the security sums is at its highest.

(8)For the purposes of subsection (4)(a)(ii) the market value of any asset included in the subject of the anniversary step may be determined as at any time during the preceding year (so long as the asset is the subject of the security, or one of the assets which is the subject of the security, as at that time).

(9)In subsections (7) and (8) “the preceding year” means the year ending with the anniversary day.