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Clarifying the definition of loan agreements and debentures

Clarifying the definition of loan agreements and debentures
Published on: 03 July 2014
Published by: LexisPSL
  • Clarifying the definition of loan agreements and debentures
  • Original news
  • What was the rationale for the court providing that loan agreements may amount to a ‘debenture’?
  • Consequently these loan agreements could be contracts caught under RAO, art 77. Do you agree with the court’s findings in the
  • case?
  • Given that the FSA’s historical viewpoint was that the loan or loan facility agreement did not constitute a financial instrument under RAO, art 77, have either the FCA or Prudential Regulation Authority (PRA) said anything about the judgment?
  • If loans and loan agreements are to be treated as regulated investments under the RAO, how many currently unauthorised lenders and borrowers are estimated to be caught, and who therefore may require authorisation?
  • How can HM Treasury clarify the position, and what is their role in regard to regulated activities?
  • Do you think the market should accept the implications of the judgment?

Article summary

Banking & Finance analysis: Rosali Pretorius, a partner at Dentons, advises that loan agreements were not intended to fall within the definition of ‘specified investments’ in the Financial Services and Markets Act 2000 (FSMA 2000) (Regulated Activities) Order 2001 (RAO), and doubts that Fons HF (in liquidation) will be the last word on the subject. or take a trial to read the full analysis.

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