Article 49 - Loans
(1) This Article applies where the actual conditions imposed between two
Associated Persons include the making of a loan, and the matters specified in Article 49(2) are relevant to the determination of the arm's length conditions for the purposes of Article 48.
(2) Article 48(2) shall be construed as requiring account to be taken of all factors including—
(a) the appropriate level or extent of the borrowing person's overall indebtedness;
(b) whether the loan would have been made at all if the
Persons had not been Associated;
(c) the amount which the loan would have been if the
Persons had not been Associated; and
(d) the rate of interest and other terms which would have been agreed if the
Persons had not been Associated,
but is subject to the following provisions of this Article.
Person makes a loan to an Associated Person; and
(b) it is not part of the first
Person's business to make loans generally, the fact that it is not part of the first Person's business to make loans generally shall be disregarded in construing Article 49(2).
(4) Article 48(2) shall be construed as requiring no account to be taken, in the determination of any of the matters mentioned in Article 49(2), of (or any inference capable of being drawn from) any guarantee provided by a
Person with which the borrowing person is Associated.
(5) Any reference to a guarantee includes a reference to a surety and to any other relationship, arrangement, connection or understanding (whether formal or informal) such that the
Person making the loan to the borrowing person has a reasonable expectation that in the event of a default by the borrowing person he will be paid by, or out of the assets of, one or more Persons.
(6) For the purposes of this Article, "the borrowing person" means the
Person which received the loan referred to in Article 49(1).
|Amended (as from 18th June 2014)|