CFM31060 - Loan relationships: what are loan relationships: when is a security issued?
Issue of company securities: debt instruments
CFM31050 explains that CTA09/S303(3) extends the normal meaning of 바카라 사이트˜loan relationship바카라 사이트™ to include money debts arising where an instrument is issued representing security for the debt, or the rights of a creditor in respect of the debt.
This extended meaning will for instance apply where a company issues securities or debentures as consideration for acquiring other assets. For instance loan notes are sometimes issued in exchange, wholly or in part, for shares or securities of another company acquired in a buy-out or take-over. Because there has been no 바카라 사이트˜lending of money바카라 사이트™ such securities would not be loan relationships within the mainstream definition. S303(3) recognises that such securities are more akin to loan relationships than simple money debts, and that it is appropriate to extend the meaning of loan relationship to include them.
The following general guidance will help identify when a money debt is turned into a loan relationship by S303(3).
Meaning of 바카라 사이트˜instrument바카라 사이트™
Any legal document is an 바카라 사이트˜instrument바카라 사이트™. However in order to be an 바카라 사이트˜instrument바카라 사이트™ within the narrower meaning of S303(3), it must have been issued for the 바카라 사이트˜purpose바카라 사이트™ described in that subsection. Thus for instance an invoice is not a S302(3) instrument, because its purpose is to record a sale and demand payment, not to represent or secure the creditor바카라 사이트™s rights. Similarly if two companies contract for a supply of services, with a monthly service charge payable in arrears, the series of service charges does not become a loan relationship just because there is documentation.
Meaning of 바카라 사이트˜issued바카라 사이트™
The word 바카라 사이트˜issued바카라 사이트™ is not defined and takes its ordinary meaning, according to its context. The word does, however, require a unilateral act by the issuer, in the sense that he issues the thing in question independently of the person(s) to whom it is issued. It will not therefore apply to a bilateral agreement entered into jointly - while such a document is no doubt an 바카라 사이트˜instrument바카라 사이트™, it is not apt to be described as having been 바카라 사이트˜issued바카라 사이트™ by any person.
Applying these principles to the examples at CFM31050, it is clear that Example 2, but not Example 1, involves the issue of a S303(3) instrument. The £500,000 money debt for the purchase of land is treated as a full loan relationship.