Corporation Tax Act 2010 section 1009

Securities reflecting dividends on certain shares etc.: exclusion of section 1008

Section 1009 disapplies the distribution treatment under section 1008 where a security issued by a company is linked to dividends or share values of that company or its associates, subject to an exception for banks and securities houses dealing in index-linked products.

• Where a security significantly reflects dividends, distributions or value fluctuations of shares in the issuing company or its associated companies, the section 1008 rule (treating excess consideration over principal as a distribution) does not apply.
• However, the premium-at-issue rules under section 1007 still apply to such securities.
• The exclusion from section 1008 does not apply where a bank or securities house issues the security in the ordinary course of business and the link to its own or associated companies' shares arises solely because the security tracks a qualifying index that happens to include those shares.
• A "securities house" is a person authorised under FISMA 2000 whose business consists wholly or mainly of dealing as principal in financial instruments.