Section 627 | Meaning of “variable rate securities”

(1)For the purposes of this Chapter securities are “variable rate securities” unless their terms of issue provide that throughout the period from issue to redemption (whenever redemption might occur) they are to carry interest at a rate which falls into one, and one only, of the categories specified in subsection (2).

(2)The categories are—

(a)a fixed rate which is the same throughout the period,

(b)a rate which bears the same fixed relationship to a standard published base rate throughout the period, and

(c)a rate which bears the same fixed relationship to a published index of prices throughout the period.

(3)In subsection (2) “published index of prices” means the retail prices index or any similar general index of prices which is published by the government of any territory outside the United Kingdom or by an agent of such a government.

(4)In determining whether new securities (within the meaning of section 649 (new securities issued with extra return)) are variable rate securities, the interest payable on them on the first interest payment day after their issue is treated as payable in respect of the period beginning with the relevant period and ending with that day.

(5)In subsection (4) “the relevant period” has the meaning given by section 649(8).