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HMRC internal manual

Corporate Finance Manual

Deemed loan relationships: alternative finance: investment bond arrangements: conditions: convertible arrangements

Convertible or exchangeable sukuk

Just as the issue terms of conventional bonds may provide for them to be converted into shares of the issuing company on maturity, or exchanged for shares in some other company, alternative finance investment bonds may be convertible or exchangeable. (Since the issuing company is frequently a special purpose vehicle, ‘exchangeables’ are more common than ‘convertibles’). CTA09/S507(2)(i) specifically provides that entitlement to the redemption payment may be satisfied by the issue or transfer of shares or other securities.