[CFM55520] Derivative contracts: issuers of convertible or share-linked securities: equity instruments – example
Example of the tax treatment of a standard convertible security by the issuer applying to periods of account beginning on or after 1 January 2005
On 1 January 2007 X Ltd issues a 3-year security paying 4 per cent interest. The terms are that it will redeem for cash at par £1million or, at the holder's option, convert into 100,000 of X Ltd's ordinary £10 shares. X Ltd's issue costs are £20,000.