Income Tax (Earnings and Pensions) Act 2003 section 436

Convertible securities

Section 436 defines what counts as "convertible securities" for the purposes of the tax rules in this chapter.

• Securities are convertible if they give the holder a right — whether immediate or deferred, conditional or unconditional — to convert them into a different type of security.
• They are also convertible if a contract, agreement, arrangement or condition allows or requires a conversion right to be granted to the holder in certain circumstances.
• Securities fall within the definition even where a contract or arrangement provides for someone other than the holder to convert them into a different type of security.
• The definition is deliberately broad, capturing not only straightforward conversion rights but also contingent or third-party conversion mechanisms.