Section 652 — Corporation Tax Act 2009: Introduction to sections 653 to 655

Introduction to sections 653 to 655 652 1 Sections 653 to 655 apply to a derivative contract of a company for an accounting period if each of conditions A to E is met.

2 Condition A is that the derivative contract is a relevant contract to which the company is treated as a party under section 585(2) (loan relationships with embedded derivatives) because of a debtor relationship of the company.

3 Condition B is that the derivative contract is treated as an option by section 585(3) (contract treated as option, future or contract for differences).

4 Condition C is that the underlying subject matter of the derivative contract is shares.

5 Condition D is that at the time when the company became a party to the debtor relationship—

a it was not carrying on a banking business or a business as a securities house, or b if it was carrying on such a business, it did not become a party to the debtor relationship in the ordinary course of that business.

6 Condition E is that the company is not an excluded body.

7 In this section “ option ” is to be construed as if section 580(2) and (3) (meaning of “option”) were omitted.