Corporation Tax Act 2009 section 549

Meaning of debtor quasi-repo

Section 549 defines the concept of a "debtor quasi-repo", which covers arrangements that are economically equivalent to standard debtor repos but are structured on non-standard terms.

• A debtor quasi-repo arises where a company (the borrower) receives an advance under an arrangement, does not have a standard debtor repo, and five conditions (A to E) are all satisfied.
• The borrower must record a financial liability for the advance under GAAP, and securities must be sold under the same or a related arrangement, with a right or obligation for the borrower (or another person) to repurchase securities at a later date.
• Where another person has the repurchase right or obligation, the arrangement must also provide for that person to receive money or assets from the borrower, or for a liability to the borrower to be discharged, to fund the repurchase.
• The repurchase of the securities, or the receipt of assets or discharge of liabilities under the arrangement, must extinguish the financial liability recorded in the borrower's accounts under GAAP; references to the borrower include a firm of which the borrower is a member.