Section 431 | Excluded occasions of redemption

(1)An occasion of redemption of a security other than maturity is ignored for the purposes of section 430(1) if the third-party option conditions or the commercial protection conditions are met.

(2)The third-party option conditions are that—

(a)the security may be redeemed on the occasion at the option of a person other than its holder,

(b)the security is issued to a person who is not connected with the issuer, and

(c)the obtaining of a tax advantage by any person is not the main benefit, or one of the main benefits, that might have been expected to accrue from the provision in accordance with which the security may be redeemed on the occasion.

(3)The commercial protection conditions are that—

(a)the security may be redeemed on the occasion as the result of an exercise of an option that is exercisable only on the occurrence of—

(i)an event adversely affecting the holder (see subsection (8)), or

(ii)a default by any person, and

(b)as at the time of the security's issue it appears unlikely that the option will be exercisable on the occasion.

(4)Subsection (1) does not apply to an occasion just because the occasion coincides or may coincide with an occasion meeting the third-party option conditions or the commercial protection conditions.

(5)If—

(a)the only reason that a security is not a deeply discounted security is that an occasion on which it may be redeemed is ignored because the third-party option conditions are met, and

(b)at some time after its issue the security is acquired by, or its holder becomes, a person connected with the issuer,

in relation to that time and later this Chapter applies as if the security were a deeply discounted security.

(6)If a person (“P”) who is not connected with the issuer acquires—

(a)a security which is only a deeply discounted security because it was issued to a person connected with the issuer and so fails to meet the condition specified in subsection (2)(b), or

(b)a security within subsection (5),

this Chapter applies in relation to P as if the security ceased to be a deeply discounted security on the acquisition.

(7)For the purposes of the application of this section to a security, the question whether persons are connected is determined without regard to the security or any other security issued under the same prospectus.

(8)In this section “event adversely affecting the holder”, in relation to a security, means an event the occurrence of which appears, as at the time of the security's issue, likely to have an adverse effect on the interests of its holder at the time of the event if there were no provision for redemption on its occurrence.