Section 444 | Meaning of “strip” in Chapter 8

(1)In this Chapter “strip”, in relation to any stock or bond (“the underlying security”), means a security which—

(a)meets conditions A to C,

(b)if it was acquired after 26th March 2003, was issued by or on behalf of the government of any territory, and

(c)if it was acquired on or before that date, was issued under the National Loans Act 1968 (c. 13) in a case where the underlying security was itself a gilt-edged security.

(2)Condition A is that the security is issued for the purpose of representing the right to or of securing—

(a)a payment corresponding to a payment of interest or principal remaining to be made under the underlying security, or

(b)two or more payments each corresponding to a payment to be so made.

(3)Condition B is that the security is issued in conjunction with the issue of one or more other securities which, together with that security—

(a)represent the right to, or

(b)secure,

payments corresponding to every payment remaining to be made under the underlying security.

(4)Condition C is that the security is not itself a security which—

(a)represents the right to, or

(b)secures,

payments corresponding to a part of every payment remaining to be made under the underlying security.

(5)After the balance has been struck for a dividend on any underlying security, a payment to be made in respect of that dividend is treated for the purposes of conditions A to C as not being a payment remaining to be made under the underlying security.

(6)Nothing in this section affects the meaning of the expression “corporate strip” in this Chapter (see section 452E).