Corporation Tax Act 2009 section 649

Meaning of certain expressions in section 648

Section 649 defines key terms used in section 648, which deals with creditor relationships containing embedded derivatives that are exactly tracking contracts for differences.

• An "exactly tracking contract" is one where the settlement amount equals the percentage change in value of the underlying assets (or an index of those assets) applied to the original cost of the creditor relationship asset.
• The "relevant period" is broadly the life of the creditor relationship asset, from creation to the end of the corresponding debtor relationship, with a minor adjustment allowed for valuation purposes.
• "Qualifying ordinary shares" are shares forming part of a company's issued share capital that carry rights to participate in the company's profits beyond a fixed-rate dividend.
• Shares that only carry a fixed-rate dividend, or that carry no dividend or profit-sharing rights at all, are excluded from the definition of qualifying ordinary shares.