Debt on a security: essential characteristics of: structure of permanence
This point was made by Lord Wilberforce, in Ramsay, where he commented (at page 190) that the relevant loan had `a structure of permanence such as fitted it to be dealt in ….’ In fact, the loan in that case was repaid early. But it had been issued on terms which meant that a large penalty would be payable in the event of early repayment. It is not possible to set any precise limits for the `life’ of a debt, which would enable it to be regarded as a debt on a security. The attractiveness of any particular debt will depend upon the other terms of the loan, and on the type of market in which the debt would normally be traded. You can accept that any loan which could not be terminated by the borrower within a year from the date of commencement will have the required `structure of permanence’. But a debt will not have a `structure of permanence’ merely because the borrower is not in a position to repay the debt in the foreseeable future.