FA 2019 repealed and replaced the regulatory capital securities regime from 1 January 2019 with a new hybrid capital instrument (HCI) regime. An HCI is a loan relationship under which the debtor (but not the creditor) is allowed to defer or cancel interest payments but which has no other ‘significant equity features’ including that it not be convertible other than into shares in the debtor or its quoted parent in ‘qualifying cases’ only. HMRC has updated its technical note (first published at Budget 2018) about the HCI regime to add a new para 2.4 dealing with takeover and change of control clauses.
A concern had been raised that the standard term in convertible AT1 and RT1 notes to deal with takeovers – essentially providing for the notes to become write-down notes unless the acquiring parent entity enters into arrangements with the issuer providing for...
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FA 2019 repealed and replaced the regulatory capital securities regime from 1 January 2019 with a new hybrid capital instrument (HCI) regime. An HCI is a loan relationship under which the debtor (but not the creditor) is allowed to defer or cancel interest payments but which has no other ‘significant equity features’ including that it not be convertible other than into shares in the debtor or its quoted parent in ‘qualifying cases’ only. HMRC has updated its technical note (first published at Budget 2018) about the HCI regime to add a new para 2.4 dealing with takeover and change of control clauses.
A concern had been raised that the standard term in convertible AT1 and RT1 notes to deal with takeovers – essentially providing for the notes to become write-down notes unless the acquiring parent entity enters into arrangements with the issuer providing for...
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