Prospectus • Sep 2, 2025
Prospectus
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OFFERING CIRCULAR
(incorporated with limited liability in Japan) as Issuer and Guarantor
and
(incorporated with limited liability in England and Wales) as Issuer
and
(incorporated with limited liability in the State of Delaware) as Issuer
Arranger
Programme Dealers
BNP PARIBAS Daiwa Capital Markets HSBC J.P. Morgan Mizuho MUFG NatWest Nomura
SMBC
29 August 2025
This Offering Circular replaces and supersedes the Offering Circular dated 30 August 2024 describing the Programme (as defined below). Any Notes (as defined below) issued under the Programme on or after the date of this Offering Circular are issued subject to the provisions contained herein. This does not affect any Notes already issued.
Under this U.S.\$12,500,000,000 Euro Note Programme (the "Programme"), each of Mitsubishi HC Capital Inc. ("MHC"), Mitsubishi HC Capital UK PLC ("MHCUK") and Mitsubishi HC Finance America LLC ("MHFA") (each, in its capacity as issuer, an "Issuer" and together the "Issuers") may from time to time issue notes ("Notes") denominated in any currency agreed between the Issuer of such Notes (the "relevant Issuer") and the relevant Dealer (as defined below).
Notes which are denominated in Australian dollars and are issued by MHCUK in the Australian domestic wholesale capital market are referred to as "AMTNs". MHC and MHFA will not issue AMTNs.
Payments under the Notes issued by each of MHCUK and MHFA will be unconditionally and irrevocably guaranteed by MHC (in its capacity as guarantor, the "Guarantor").
References in this Offering Circular to the "Group" are to MHC and its consolidated subsidiaries.
The Notes may be issued on a continuing basis to one or more of the Programme Dealers specified under "Description of the Programme" and any additional Dealer appointed under the Programme from time to time by the Issuers (each a "Dealer" and together the "Dealers"), which appointment may be for a specific issue or on an ongoing basis. References in this Offering Circular to the "relevant Dealer" shall, in the case of an issue of Notes being (or intended to be) subscribed by more than one Dealer, be to all Dealers agreeing to subscribe to such Notes.
An investment in Notes issued under the Programme involves certain risks. For a discussion of these risks see "Risk Factors".
As at the date of this Offering Circular, MHC has been assigned a rating of "A-" by S&P Global Ratings Japan Inc. ("S&P Japan"), a rating of "A3" by Moody's Japan K.K. ("Moody's Japan"), a rating of "AA" by Rating and Investment Information, Inc. ("R&I"), a rating of "AA" by Japan Credit Rating Agency, Ltd. ("JCR"), a short-term rating of "A-2" by S&P Japan, a short-term rating of "a-1+" by R&I and a short-term rating of "J-1+" by JCR, MHCUK has been assigned a rating of "AA" by JCR and a short-term rating of "A-2" by S&P Global Ratings UK Limited. MHFA has not been assigned a public rating by a credit rating agency.
None of S&P Japan, Moody's Japan, R&I and JCR is established in the European Economic Area (the "EEA") or the United Kingdom (the "UK"). JCR is certified under Regulation (EC) No 1060/2009 on credit rating agencies, as amended (the "CRA Regulation") and the CRA Regulation as it forms part of domestic UK law (the "UK CRA Regulation"). Neither S&P Japan nor Moody's Japan is registered under the CRA Regulation or the UK CRA Regulation; however, ratings issued by S&P Japan and Moody's Japan are endorsed, in the EEA, by S&P Global Ratings Europe Limited and Moody's Deutschland GmbH respectively, both of which are established in the EEA and registered under the CRA Regulation, and in the UK, by S&P Global Ratings UK Limited and Moody's Investors Service Ltd, both of which are established in the UK and registered under the UK CRA Regulation. R&I is not registered under the CRA Regulation or the UK CRA Regulation and its ratings are not endorsed by a credit rating agency established in the EEA or in the UK and registered under the CRA Regulation or the UK CRA Regulation.
The European Securities and Markets Authority ("ESMA") is obliged to maintain on its website, https://www.esma.europa.eu/supervision/credit-rating-agencies/risk, a list of credit rating agencies registered and certified in accordance with the CRA Regulation. This list must be updated within five working days of ESMA's adoption of any decision to withdraw the registration of a credit rating agency under the CRA Regulation. The Financial Conduct Authority (the "FCA") is obliged to maintain on its website, https://www.fca.org.uk/firms/credit-rating-agencies, a list of credit rating agencies registered in accordance with the UK CRA Regulation. Any such lists are not conclusive evidence of the status of the relevant rating agency as there may be delays between certain supervisory measures being taken against a relevant rating agency and the publication of the updated ESMA list or FCA list.
In general, European and UK regulated investors are restricted from using a rating for regulatory purposes if such rating is not issued by a credit rating agency established in the EEA or in the UK, respectively, and registered under the CRA Regulation or the UK CRA Regulation (as applicable) unless (1) the rating is provided by a credit rating agency not established in the EEA or in the UK, respectively, but is endorsed by a credit rating agency established in the EEA or in the UK, respectively, and registered under the CRA Regulation or the UK CRA Regulation (as applicable) or (2) the rating is provided by a credit rating agency not established in the EEA or in the UK, respectively, but which is certified under the CRA Regulation or the UK CRA Regulation (as applicable).
A rating reflects only the views of the relevant rating agency, is not a recommendation to buy, sell or hold securities and may be subject to suspension, change or withdrawal at any time by the assigning rating agency.
Application has been made to the FCA for Notes issued by MHC and MHCUK under the Programme (other than Exempted Notes, as defined below) during the period of 12 months from the date of this Offering Circular to be admitted to the official list of the FCA (the "Official List") and to the London Stock Exchange plc (the "London Stock Exchange") for such Notes to be admitted to trading on the main market of the London Stock Exchange, which is a UK regulated market for the purposes of UK MiFIR. References in this Offering Circular to Notes issued by MHC and MHCUK being "listed" (and all related references) shall mean that such Notes have been admitted to trading on the main market of the London Stock Exchange and have been admitted to the Official List. MHFA will not issue listed Notes admitted to the Official List or to trading on the main market of the London Stock Exchange.
This Offering Circular has been approved by the FCA in its capacity as competent authority under Regulation (EU) 2017/1129 as it forms part of domestic UK law (the "UK Prospectus Regulation") and constitutes a base prospectus for the purposes of the UK Prospectus Regulation. The FCA only approves this Offering Circular as meeting the standards of completeness, comprehensibility and consistency imposed by the UK Prospectus Regulation, and such approval should not be considered to be an endorsement of the Issuers, the Guarantor or the quality of the Notes that are the subject of this Offering Circular. Investors should make their own assessment as to the suitability of investing in the Notes.
The requirement to publish a prospectus under the UK Prospectus Regulation only applies to Notes issued by MHC and MHCUK which are to be admitted to trading on a UK regulated market for the purposes of Regulation (EU) No 600/2014 on markets in financial instruments as it forms part of domestic UK law ("UK MiFIR") and/or offered to the public in the UK other than in circumstances where an exemption is available under Article 1(4) and/or 3(2) of the UK Prospectus Regulation or section 86 of the Financial Services and Markets Act 2000 (the "FSMA"). MHC and MHFA may issue exempted Notes ("Exempt Notes") for which no prospectus is required to be published under the UK Prospectus Regulation and the FSMA. The FCA has neither approved nor reviewed information contained in this Offering Circular in connection with Exempt Notes issued by MHC and MHFA. MHCUK will not issue Exempt Notes.
Notice of the aggregate nominal amount of Notes, interest (if any) payable in respect of Notes, the issue price of Notes and the terms of each Tranche of Notes will be set out in a final terms document (the "Final Terms") or (in the case of Exempt Notes issued by MHC or MHFA) a pricing supplement (the "Pricing Supplement") or in a separate prospectus specific to such Tranche (the "Drawdown Prospectus") as described under "Final Terms, Pricing Supplements and Drawdown Prospectuses" below which, with respect to Notes issued by MHC or MHCUK to be listed on the London Stock Exchange, will be delivered to the FCA and the London Stock Exchange and, in the case of a Drawdown Prospectus in respect of such Tranche of Notes, will be approved by the FCA. In the case of a Tranche of Notes which is the subject of a Pricing Supplement or a Drawdown Prospectus, each reference in this Offering Circular to information being specified or identified in the applicable Final Terms shall be read and construed as a reference to such information being specified or identified in the applicable Pricing Supplement or Drawdown Prospectus unless the context requires otherwise.
MHC and MHCUK may issue Notes in bearer form or in registered form. MHFA will only issue Notes in registered form.
Each Tranche of Notes in bearer form will either initially be represented by a Temporary Global Note (as defined in "Form of Notes") or, if agreed between the relevant Issuer and the relevant Dealer, be represented by a Permanent Global Note (as defined in "Form of Notes") which, in either case, will be deposited on the issue date thereof with a common depositary or common safekeeper, as the case may be, on behalf of Euroclear Bank SA/NV ("Euroclear") and/or Clearstream Banking S.A. ("Clearstream, Luxembourg") and/or any other agreed clearance system. A Temporary Global Note so issued will be exchangeable, as specified in the applicable Final Terms, for either a Permanent Global Note or definitive Bearer Notes (as defined in "Form of the Notes"), in each case upon certification as to non-U.S. beneficial ownership as required by U.S. Treasury Regulations and applicable U.S. securities laws. A Permanent Global Note will be exchangeable for definitive Bearer Notes, upon request or upon the occurrence of an Exchange Event, all as further described in "Form of the Notes".
Each Tranche of Notes in registered form (other than AMTNs) will initially be represented by a Global Registered Note (as defined in "Form of the Notes") or, if so specified in the applicable Final Terms, definitive Registered Notes (as defined in "Form of the Notes"). A Global Registered Note will be exchangeable for definitive Registered Notes, upon request or upon the occurrence of an Exchange Event, all as further described in the "Form of Notes". Notes in bearer form may not be exchanged for Notes in registered form and vice versa.
AMTNs will be issued by MHCUK in registered uncertificated form and will take the form of entries on a register established and maintained by a registrar in Australia and may be lodged with the clearing system ("Austraclear System") operated by Austraclear Ltd ("Austraclear"). AMTNs lodged with the Austraclear System will be registered in the name of Austraclear.
Each of the Issuers and the Guarantor accepts responsibility for the information contained in this Offering Circular and the Final Terms for each Tranche of Notes issued under the Programme. To the best of the knowledge of each of the Issuers and of the Guarantor, the information contained in this Offering Circular is in accordance with the facts and the Offering Circular makes no omission likely to affect its import.
Copies of Final Terms will be available for viewing and copies may be obtained from the registered office of the relevant Issuer and the specified office of the Principal Paying Agent (as defined herein) save that, if a Note is neither admitted to trading on a UK regulated market nor offered in the UK in circumstances where a prospectus is required to be published under the UK Prospectus Regulation (including Exempt Notes issued by MHC or MHFA), the applicable Final Terms will only be available to a Noteholder holding one or more such Notes upon such Noteholder producing evidence as to identity satisfactory to the Principal Paying Agent. Copies of each Final Terms relating to Notes offered to the public in the UK (other than pursuant to one or more of the exemptions set out in Article 3(2) of the UK Prospectus Regulation) or admitted to trading on a UK regulated market will be published on the website of the Regulatory News Service operated by the London Stock Exchange at www.londonstockexchange.com/exchange/news/market-news/market-news-home.html. Such Final Terms will also be available for viewing on the UK National Storage Mechanism (https://data.fca.org.uk/#/nsm/nationalstoragemechanism).
This Offering Circular is to be read in conjunction with all documents which are deemed to be incorporated herein by reference (see "Documents Incorporated by Reference"). This Offering Circular shall be read and construed on the basis that such documents are so incorporated and form part of this Offering Circular.
The relevant Issuer and, in the case of Notes issued by MHC and MHFA, the Guarantor may agree with any Dealer that Notes may be issued in a form not contemplated in "Terms and Conditions of the Notes" (except that MHFA shall not issue Notes in bearer form), in which event a Drawdown Prospectus will be made available which will describe the effect of the agreement reached in relation to such Notes. In the case of Exempt Notes, the relevant provisions relating to such Exempt Notes will be included in the applicable Pricing Supplement.
The Dealers have not independently verified all of the information contained herein. Accordingly, no representation, warranty or undertaking, express or implied, is made and no responsibility or liability is accepted by any Dealer as to the accuracy or completeness of the information contained or incorporated by reference in this Offering Circular or any other information provided by the Issuers or the Guarantor. The Dealers do not accept any liability in relation to the information contained or incorporated by reference in this Offering Circular or any other information provided by the Issuers or the Guarantor in connection with the Programme.
No person is or has been authorised by the Issuers or the Guarantor to give any information or to make any representation not contained in or inconsistent with this Offering Circular or any other information supplied in connection with the Programme or the Notes and, if given or made, such information or representation must not be relied upon as having been authorised by the Issuers, the Guarantor or any of the Dealers.
Neither this Offering Circular nor any other information supplied in connection with the Programme (1) is intended to provide the basis of any credit or other evaluation or (2) should be considered as a recommendation by the Issuers, the Guarantor or any of the Dealers that any recipient of this Offering Circular or any other information supplied in connection with the Programme should purchase any Notes. Each investor contemplating purchasing any Notes should make its own independent investigation of the financial condition and affairs, and its own appraisal of the creditworthiness, of the relevant Issuer and, in the case of Notes issued by MHC and MHFA, the Guarantor and must determine the suitability of that investment in light of its own circumstances. In particular, each potential investor should:
Some Notes are complex financial instruments. Sophisticated institutional investors generally do not purchase complex financial instruments as standalone investments. They purchase complex financial instruments as a way to reduce risk or enhance yield with an understood, measured, appropriate addition of risk to their overall portfolios. A potential investor should not invest in Notes which are complex financial instruments unless it has the expertise (either alone or with a financial adviser) to evaluate how the Notes will perform under changing conditions, the resulting effects on the value of the Notes and the impact this investment will have on the potential investor's overall investment portfolio.
The investment activities of certain investors are subject to legal investment laws and regulations, or review or regulation by certain authorities. Each potential investor should consult its legal advisers to determine whether and to what extent (1) the Notes are legal investments for it, (2) the Notes can be used as collateral for various types of borrowing and (3) other restrictions apply to its purchase or pledge of any Notes. Financial institutions should consult their legal advisers or the appropriate regulators to determine the appropriate treatment of Notes under any applicable risk based capital or similar rules.
Neither the delivery of this Offering Circular nor the offering, sale or delivery of any Notes shall in any circumstances imply that the information contained herein concerning the Issuers or the Guarantor is correct at any time subsequent to the date hereof or that any other information supplied in connection with the Programme is correct as of any time subsequent to the date indicated in the document containing the same. The Programme Dealers expressly do not undertake to review the financial condition or affairs of the Issuers or the Guarantor during the life of the Programme or to advise any investor in the Notes of any information coming to their attention.
Neither this Offering Circular nor any other information supplied in connection with the Programme constitutes an offer or invitation by or on behalf of the Issuers, the Guarantor or any Dealer to any person to subscribe for or to purchase any Notes. This Offering Circular does not constitute an offer to sell or the solicitation of an offer to buy any Notes in any jurisdiction to any person to whom it is unlawful to make the offer or solicitation in such jurisdiction. The distribution of this Offering Circular and the offer or sale of Notes may be restricted by law in certain jurisdictions. If a jurisdiction requires that the offering be made by a licensed broker or dealer and any relevant Dealer or any parent company or affiliate of such Dealer is a licensed broker or dealer in that jurisdiction, the offering shall be deemed to be made by the relevant Dealer or the relevant parent company or affiliate of such Dealer on behalf of the relevant Issuer in such jurisdiction. The Issuers, the Guarantor and the Dealers do not represent that this Offering Circular may be lawfully distributed, or that the Notes may be lawfully offered, in compliance with any applicable registration or other requirements in any such jurisdiction, or pursuant to an exemption available thereunder, or assume any responsibility for facilitating any such distribution or offering. In particular, no action has been taken by the Issuers, the Guarantor or the Dealers which is intended to permit a public offering of the Notes or distribution of this document in any jurisdiction where action for that purpose is required.
Accordingly, the Notes may not be offered or sold, directly or indirectly, and neither this Offering Circular nor any advertisement or other offering material relating to the Programme or Notes issued thereunder may be distributed or published in any jurisdiction except in circumstances that will result in compliance with any applicable laws and regulations. Each Dealer has represented or, as the case may be, will be required to represent that all offers and sales by it will be made on the same terms. Persons into whose possession this Offering Circular or any Notes come must inform themselves about, and observe, any such restriction. In particular, there are restrictions on the distribution of this Offering Circular and the offer or sale of the Notes in the United States, the EEA, the UK, the People's Republic of China, Hong Kong, Singapore, Japan and Taiwan (see "Subscription and Sale").
The Notes and the Guarantees (as defined in the Conditions) have not been and will not be registered under the United States Securities Act of 1933, as amended (the "Securities Act"). The Notes are subject to U.S. tax law requirements. Subject to certain exceptions, the Notes and the Guarantees may not be offered, sold or delivered within the United States or its possessions or to, or for the account or benefit of, U.S. persons (as defined in Regulation S under the Securities Act and Section 7701(a)(30) of the United States Internal Revenue Code of 1986, as amended) (see "Subscription and Sale").
This Offering Circular has been prepared on the basis that any offer of Notes in any member state of the EEA or in the UK will only be made pursuant to an exemption under Regulation 2017/1129 (as amended or superseded, the "Prospectus Regulation"), or the UK Prospectus Regulation from the requirement to publish a prospectus for offers of Notes.
The Notes have not been and will not be registered under the Financial Instruments and Exchange Act of Japan (Act No. 25 of 1948, as amended, the "Financial Instruments and Exchange Act") and the Notes (if issued by MHCUK or MHFA, only in circumstances where any interest on the Notes is attributable to a business in Japan conducted by MHCUK or MHFA, as the case may be, through its permanent establishment in Japan as provided for in the Act on Special Measures Concerning Taxation of Japan (Act No. 26 of 1957, as amended, the "Act on Special Taxation Measures")) are subject to the Act on Special Taxation Measures. The Notes may not be offered or sold in Japan or to, or for the benefit of, any person resident in Japan, or to others for reoffering or resale, directly or indirectly, in Japan or to, or for the benefit of, a person resident in Japan, for Japanese securities law purposes (including any corporation or other entity organised under the laws of Japan) except pursuant to an exemption from the registration requirements of, and otherwise in compliance with, the Financial Instruments and Exchange Act and any other applicable laws, regulations and governmental guidelines of Japan. In addition, the Notes (if issued by MHCUK or MHFA, only in circumstances where any interest on the Notes is attributable to a business in Japan conducted by MHCUK or MHFA, as the case may be, through its permanent establishment in Japan as provided for in the Act on Special Taxation Measures) may not, as part of the distribution by the Dealers under the programme agreement or applicable subscription agreement relating to the Notes, at any time be directly or indirectly offered or sold to, or for the benefit of, any person other than a beneficial owner that is, (i) for Japanese tax purposes, neither (a) an individual resident of Japan or a Japanese corporation, nor (b) an individual non-resident of Japan or a non-Japanese corporation that in either case is a person having a special relationship with the Issuer as described in Article 6, Paragraph (4) of the Act on Special Taxation Measures (a "specially-related person of the issuer") (excluding an underwriter designated in Article 6, Paragraph (12), item 1 of the Act on Special Taxation Measures which purchases unsubscribed portions of the Notes (if issued by MHCUK or MHFA, only in circumstances where any interest on the Notes is attributable to a business in Japan conducted by MHCUK or MHFA, as the case may be, through its permanent establishment in Japan as provided for in the Act on Special Taxation Measures) from the other underwriters) or (ii) a Japanese financial institution, designated in Article 3-2-2, Paragraph (29) of the Cabinet Order (Cabinet Order No. 43 of 1957, as amended, the "Cabinet Order"), relating to the Act on Special Taxation Measures.
BY SUBSCRIBING FOR THE NOTES (IF ISSUED BY MHCUK OR MHFA, ONLY IN CIRCUMSTANCES WHERE ANY INTEREST ON THE NOTES IS ATTRIBUTABLE TO A BUSINESS IN JAPAN CONDUCTED BY MHCUK OR MHFA THROUGH ITS PERMANENT ESTABLISHMENT IN JAPAN AS PROVIDED FOR IN THE ACT ON SPECIAL TAXATION MEASURES), AN INVESTOR WILL BE DEEMED TO HAVE REPRESENTED THAT IT IS A PERSON WHO FALLS INTO THE CATEGORY OF (i) OR (ii) ABOVE.
Interest payments on the Notes (if issued by MHCUK or MHFA, only in circumstances where any interest on the Notes is attributable to a business in Japan conducted by MHCUK or MHFA, as the case may be, through its permanent establishment in Japan as provided for in the Act on Special Taxation Measures) will be subject to Japanese withholding tax unless it is established that the Notes are held by or for the account of a beneficial owner that is (i) for Japanese tax purposes, neither an individual resident of Japan or a Japanese corporation, nor an individual non-resident of Japan or a non-Japanese corporation that in either case is a specially-related person of the issuer, or (ii) a Japanese financial institution, designated in Article 3-2-2, Paragraph (29) of the Cabinet Order which complies with the requirement for tax exemption under Article 6, Paragraph (11) of the Act on Special Taxation Measures or (iii) a Japanese public corporation, a Japanese financial institution or a Japanese financial instruments business operator, etc. which has received such payments through a payment handling agent in Japan, as provided in Article 3-3, Paragraph (6) of the Act on Special Taxation Measures, in compliance with the requirement for tax exemption under that paragraph.
Interest payments on the Notes (if issued by MHCUK or MHFA, only in circumstances where any interest on the Notes is attributable to a business in Japan conducted by MHCUK or MHFA, as the case may be, through its permanent establishment in Japan as provided for in the Act on Special Taxation Measures) to an individual resident of Japan, to a Japanese corporation not described in the preceding paragraph, or to an individual nonresident of Japan or a non-Japanese corporation that in either case is a specially-related person of the issuer will be subject to deduction in respect of Japanese income tax.
All references in this document to (i) "USD", "U.S. dollars" and "U.S.\$" are to the currency of the United States of America, (ii) "EUR", "euro" and "€" are to the currency introduced at the start of the third stage of European economic and monetary union, and as defined in Article 2 of Council Regulation (EC) No 974/98 of 3 May 1998 on the introduction of the euro, as amended, (iii) "JPY", "Yen" and "¥" are to the currency of Japan, (iv) "GBP", "Sterling" and "£" are to the currency of the United Kingdom, (v) "Renminbi", "RMB" and "CNH" are to the currency of the People's Republic of China (excluding Hong Kong, Macau and Taiwan) (the "PRC"), (vi) "Singapore dollars", "S\$" and "SGD" are to the currency of the Republic of Singapore, (vii) "Canadian dollars" and "CAD" are to the currency of Canada, (viii) "NZD" and "New Zealand dollars" are to the currency of New Zealand, (ix) "AUD" and "Australian dollars" are to the currency of the Commonwealth of Australia, (x) "SEK" and "Swedish krona" are to the currency of the Kingdom of Sweden, (xi) "NOK" and "Norwegian krone" are to the currency of the Kingdom of Norway and (xii) "HKD" and "Hong Kong dollar" are to the currency of Hong Kong Special Administrative Region of the PRC.
In connection with the issue of any Tranche of Notes (other than AMTNs issued by MHCUK and/or in circumstances where such action could reasonably be expected to affect the price of Notes traded in Australia or on a financial market (as defined in the Corporations Act 2001 of Australia) operated in Australia), the Dealer or Dealers (if any) acting as stabilising manager (the "Stabilisation Manager(s)") (or persons acting on behalf of any Stabilisation Manager(s)) may over-allot Notes or effect transactions with a view to supporting the market price of the Notes at a level higher than that which might otherwise prevail. However, stabilisation may not necessarily occur. Any stabilisation action may begin on or after the date on which adequate public disclosure of the terms of the offer of the relevant Tranche of Notes is made and, if begun, may cease at any time, but it must end no later than the earlier of 30 days after the issue date of the relevant Tranche of Notes and 60 days after the date of the allotment of the relevant Tranche of Notes. Any stabilisation action or overallotment must be conducted by the relevant Stabilisation Manager(s) (or person(s) acting on behalf of any Stabilisation Manager(s)) in accordance with all applicable laws and rules. Any such stabilisation action may only be conducted outside Australia and on a market operated outside Australia.
PRIIPs / IMPORTANT – EEA RETAIL INVESTORS: If the Pricing Supplement and/or the Final Terms in respect of any Notes includes a legend entitled "Prohibition of Sales to EEA Retail Investors", the Notes are not intended to be offered, sold or otherwise made available to and should not be offered, sold or otherwise made available to any retail investor in the EEA. For these purposes, a retail investor means a person who is one (or more) of: (i) a retail client as defined in point (11) of Article 4(1) of Directive 2014/65/EU (as amended, "MiFID II"); (ii) a customer within the meaning of Directive 2016/97/EU (the "Insurance Distribution Directive"), where that customer would not qualify as a professional client as defined in point (10) of Article 4(1) of MiFID II; or (iii) not a qualified investor as defined in the Prospectus Regulation. Consequently, no key information document required by Regulation (EU) No 1286/2014, as amended (the "PRIIPs Regulation") for offering or selling the Notes or otherwise making them available to retail investors in the EEA has been prepared and therefore offering or selling the Notes or otherwise making them available to any retail investor in the EEA may be unlawful under the PRIIPs Regulation.
UK PRIIPs / IMPORTANT – UK RETAIL INVESTORS: If the Pricing Supplement and/or the Final Terms in respect of any Notes includes a legend entitled "Prohibition of Sales to UK Retail Investors", the Notes are not intended to be offered, sold or otherwise made available to and should not be offered, sold or otherwise made available to any retail investor in the UK. For these purposes, a retail investor means a person who is one (or more) of: (i) a retail client, as defined in point (8) of Article 2 of Regulation (EU) No 2017/565 as it forms part of domestic UK law; (ii) a customer within the meaning of the provisions of the FSMA and any rules or regulations made under the FSMA to implement the Insurance Distribution Directive, where that customer would not qualify as a professional client, as defined in point (8) of Article 2(1) of Regulation (EU) No 600/2014 as it forms part of domestic UK law; or (iii) not a qualified investor as defined in Article 2 of the UK Prospectus Regulation. Consequently, no key information document required by the PRIIPs Regulation as it forms part of domestic UK law (the "UK PRIIPs Regulation") for offering or selling the Notes or otherwise making them available to retail investors in the UK has been prepared and therefore offering or selling the Notes or otherwise making them available to any retail investor in the UK may be unlawful under the UK PRIIPs Regulation.
MiFID II PRODUCT GOVERNANCE / TARGET MARKET: The Pricing Supplement and/or the Final Terms in respect of any Notes may include a legend entitled "MiFID II Product Governance/Target Market" which will outline the target market assessment in respect of the Notes and which channels for distribution of the Notes are appropriate. Any person subsequently offering, selling or recommending the Notes (a "distributor") should take into consideration the target market assessment; however, a distributor subject to MiFID II is responsible for undertaking its own target market assessment in respect of the Notes (by either adopting or refining the target market assessment) and determining appropriate distribution channels. A determination will be made in relation to each issue about whether, for the purpose of the MiFID Product Governance rules under EU Delegated Directive 2017/593 (the "MiFID Product Governance Rules"), any Dealer subscribing for any Notes is a manufacturer in respect of such Notes, but otherwise neither the Arranger nor the Dealers nor any of their respective affiliates will be a manufacturer for the purpose of the MiFID Product Governance Rules.
UK MIFIR PRODUCT GOVERNANCE / TARGET MARKET: The Pricing Supplement and/or the Final Terms in respect of any Notes may include a legend entitled "UK MiFIR Product Governance/Target Market" which will outline the target market assessment in respect of the Notes and which channels for distribution of the Notes are appropriate. Any distributor should take into consideration the target market assessment; however, a distributor subject to the FCA Handbook Product Intervention and Product Governance Sourcebook (the "UK MiFIR Product Governance Rules") is responsible for undertaking its own target market assessment in respect of the Notes (by either adopting or refining the target market assessment) and determining appropriate distribution channels. A determination will be made in relation to each issue about whether, for the purpose of the UK MiFIR Product Governance Rules, any Dealer subscribing for any Notes is a manufacturer in respect of such Notes, but otherwise neither the Arranger nor the Dealers nor any of their respective affiliates will be a manufacturer for the purpose of the UK MIFIR Product Governance Rules.
BENCHMARK REGULATION: Interest and/or other amounts payable under the Notes may be calculated by reference to certain reference rates. Any such reference rate may constitute a benchmark for the purposes of Regulation (EU) 2016/1011 as it forms part of domestic UK law (the "UK Benchmark Regulation"). If any such reference rate does constitute such a benchmark, the Pricing Supplement and/or the Final Terms will indicate whether or not the benchmark is provided by an administrator included in the UK Benchmarks Register established and maintained by the FCA pursuant to Article 36 of the UK Benchmark Regulation (the "UK Benchmarks Register"). Transitional provisions in the UK Benchmark Regulation may have the result that the administrator of a particular benchmark is not required to appear in the UK Benchmarks Register at the date of the Pricing Supplement and/or the Final Terms. The registration status of any administrator under the UK Benchmark Regulation is a matter of public record and, save where required by applicable law, the relevant Issuer will not update the Pricing Supplement and/or the Final Terms to reflect any change in the registration status of the administrator.
| DESCRIPTION OF THE PROGRAMME 1 | |
|---|---|
| RISK FACTORS 9 | |
| DOCUMENTS INCORPORATED BY REFERENCE 25 | |
| FINAL TERMS, PRICING SUPPLEMENTS AND DRAWDOWN PROSPECTUSES 27 | |
| FORM OF THE NOTES 28 | |
| FORM OF THE AMTNs 34 | |
| FORM OF THE FINAL TERMS 36 | |
| FORM OF THE PRICING SUPPLEMENT 52 | |
| TERMS AND CONDITIONS OF THE NOTES 67 | |
| USE OF PROCEEDS 169 | |
| GUARANTEES 171 | |
| DESCRIPTION OF MITSUBISHI HC CAPITAL INC. 179 | |
| DESCRIPTION OF MITSUBISHI HC CAPITAL UK PLC 200 | |
| DESCRIPTION OF MITSUBISHI HC FINANCE AMERICA LLC 203 | |
| TAXATION 206 | |
| SUBSCRIPTION AND SALE 215 | |
| GENERAL INFORMATION 222 | |
| INDEX TO THE AUDITED FINANCIAL STATEMENTS OF MITSUBISHI HC FINANCE AMERICA LLC F-1 |
The following description of the Programme does not purport to be complete and is taken from, and is qualified in its entirety by, the remainder of this Offering Circular and, in relation to the terms of any particular Tranche of Notes, the applicable Final Terms. The relevant Issuer and, in the case of Notes issued by MHCUK and MHFA, the Guarantor may agree with the relevant Dealer that Notes shall be issued in a form other than that contemplated in "Terms and Conditions of the Notes", in which event a Drawdown Prospectus or new offering circular will be published or, in the case of Exempt Notes issued by MHC and MHFA, the relevant provisions relating to such Exempt Notes will be included in the applicable Pricing Supplement. Words and expressions defined in "Form of the Notes", specified in capitalised terms in "Form of the Final Terms" and "Form of the Pricing Supplement" and defined in "Terms and Conditions of the Notes" have the same meaning when used herein.
| Issuers: | Mitsubishi HC Capital Inc. (LEI: 353800MZ3QX9RLMH7B09) |
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| Mitsubishi HC Capital UK PLC (LEI: 549300P4PHVCL0EZU771) |
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| Mitsubishi HC Finance America LLC (LEI: 3538008O2MCHLB9FAL82) |
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| Guarantor of Notes issued by MHCUK and MHFA: |
Mitsubishi HC Capital Inc. (LEI: 353800MZ3QX9RLMH7B09) |
| Description: | Euro Note Programme |
| Arranger: | MUFG Securities EMEA plc |
| Programme Dealers: Principal Paying Agent, Registrar, |
BNP PARIBAS Daiwa Capital Markets America Inc. Daiwa Capital Markets Europe Limited HSBC Bank plc J.P. Morgan Securities plc Mizuho International plc MUFG Securities EMEA plc NatWest Markets Plc Nomura International plc SMBC Bank International plc HSBC Bank plc |
| Paying Agent and Transfer Agent (in respect of Notes other than AMTNs): |
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| Paying Agent and Registrar (in respect of AMTNs): |
EQT Australia Pty Ltd (ABN 88 111 042 132) |
| Programme Size: | Up to U.S.\$12,500,000,000 (or its equivalent in other currencies calculated as described in the Dealer Agreement) outstanding at any one time. The Issuers and the Guarantor may increase or decrease the amount of the Programme in accordance with the terms of the Dealer Agreement. |
| Legal and Regulatory Requirements: | Each issue of Notes denominated in a currency in respect of which particular laws, guidelines, regulations, restrictions or |
reporting requirements apply will only be issued in circumstances which comply with such laws, guidelines, regulations, restrictions or reporting requirements from time to time (see "Subscription and Sale") including the following restrictions applicable at the date of this Offering Circular.
Notes having a maturity of less than one year will, if the proceeds of the issue are accepted in the United Kingdom, constitute deposits for the purposes of the prohibition on accepting deposits contained in section 19 of the FSMA unless they are issued to a limited class of professional investors and have a denomination of at least £100,000 (or its equivalent in other Specified Currencies) (see "Subscription and Sale").
Distribution: Notes may be distributed by way of private or public placement and in each case on a syndicated or non-syndicated basis.
Currencies: Euro, Sterling, U.S. dollars, Yen, Renminbi, Canadian dollars, New Zealand dollars, Australian dollars, Singapore dollars, Hong Kong dollars, Swedish krona, Norwegian krone and, subject to any applicable legal or regulatory restrictions, any other currency agreed between the relevant Issuer, the Guarantor and the relevant Dealer.
Condition 5(f) (Payments - Payment of U.S. Dollar Equivalent) applies to Renminbi Notes. Although the relevant Issuer's and the Guarantor's primary obligation is to make all payments in respect of such Notes in Renminbi, in the event that, by reason of Inconvertibility, Non-transferability or Illiquidity, the relevant Issuer or the Guarantor is not able to satisfy in full payments of principal or interest in respect of Renminbi Notes when due in Renminbi, the relevant Issuer or the Guarantor may settle any such payment (in whole or in part) in U.S. dollars on the due date at the U.S. Dollar Equivalent of any such Renminbi amount, all as provided for in more detail in Condition 5(f) (Payments - Payment of U.S. Dollar Equivalent).
Maturities: Such maturities as may be agreed between the relevant Issuer, the Guarantor and the relevant Dealer and as indicated in the applicable Final Terms, subject to such minimum or maximum maturities as may be allowed or required from time to time by the relevant central bank (or equivalent body) or any laws or regulations applicable to the relevant Issuer, the Guarantor or the relevant Specified Currency.
Issue Price: Notes may be issued at an issue price which is at par or at a discount to, or premium over, par.
Form of Notes: MHC and MHCUK may issue Notes in bearer form or in registered form.
MHFA will only issue Notes in registered form.
Notes issued in bearer form will on issue be represented by either a Temporary Global Note or a Permanent Global Note as specified in the applicable Final Terms. Each Temporary Global Note will be exchangeable either for (i) interests in a Permanent Global Note or (ii) for definitive Bearer Notes as indicated in the applicable Final Terms, in each case upon certification of non-U.S. beneficial ownership as required by U.S. Treasury Regulations and applicable U.S. securities laws. Each Permanent Global Note will be exchangeable (free of charge) for definitive Bearer Notes either upon (i) not less than 60 days' written notice from Euroclear and/or Clearstream, Luxembourg (acting on the instructions of any holder of an interest in such Permanent Global Note) to the Principal Paying Agent as described therein or (ii) the occurrence of an Exchange Event as described under "Form of the Notes – Bearer Notes".
Notes issued in registered form will on issue be represented by either a Global Registered Note or definitive Registered Notes, in each case as specified in the applicable Final Terms. Each Global Registered Note will be deposited on or around the relevant issue date with, and registered in the name of, a depositary or a common depositary (or its nominee) for Euroclear and/or Clearstream, Luxembourg and/or any other relevant clearing system and registered in the name of a nominee for such depositary and will be exchangeable (free of charge) for definitive Registered Notes either upon (i) not less than 60 days' written notice from Euroclear and/or Clearstream, Luxembourg (acting on the instructions of any holder of an interest in such Global Registered Note) to the Registrar as described therein or (ii) the occurrence of an Exchange Event as described under "Form of the Notes – Registered Notes".
Notes in bearer form may not be exchanged for Notes in registered form and vice versa.
| AMTNs will only be issued by MHCUK in registered | |
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| uncertificated form. and will take the form of entries on a register | |
| established and maintained by a registrar in Australia and may | |
| be lodged with the Austraclear System. AMTNs lodged with the | |
| Austraclear System will be registered in the name of Austraclear. | |
| Fixed Rate Notes: | Fixed interest will be payable on such date or dates as may be |
| agreed between the relevant Issuer and the relevant Dealer and | |
| on redemption, and will be calculated on the basis of such Day | |
| Count Fraction as may be agreed between the relevant Issuer and | |
| the relevant Dealer and indicated in the applicable Final Terms. | |
| Floating Rate Notes: | Floating Rate Notes will bear interest at a rate determined: |
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| (i) on the same basis as the floating rate under a notional interest rate swap transaction in the relevant Specified Currency governed by an agreement incorporating either the 2006 ISDA Definitions or the 2021 ISDA Interest Rate Derivatives Definitions (in each case, as published by the International Swaps and Derivatives Association, Inc., and as amended and updated as at the Issue Date of the first Tranche of the Notes of the relevant Series); or |
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| (ii) on the basis of a reference rate appearing on the agreed screen page of a commercial quotation service; or |
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| (iii) on such other basis as may be agreed between the relevant Issuer and the relevant Dealer. |
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| The margin (if any) relating to such floating rate will be agreed between the relevant Issuer and the relevant Dealer for each Series of Floating Rate Notes and indicated in the applicable Final Terms. |
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| Benchmark Discontinuation: | In the event that a Benchmark Event occurs, such that any Rate of Interest (or any component part thereof) cannot be determined by reference to the Original Reference Rate specified in the applicable Final Terms, then the relevant Issuer shall use its reasonable endeavours to appoint an Independent Adviser to determine a Successor Rate or an Alternative Rate, together with any Adjustment Spread (which could be positive, negative or zero) and consequent Benchmark Amendments to the terms of such Series of Notes. See Condition 4(b)(iv) (Benchmark Discontinuation) for further information. |
| Other Provisions in Relation to Floating Rate Notes and Index Linked Notes: |
Floating Rate Notes may also have a maximum interest rate, a minimum interest rate or both. |
| Interest on Floating Rate Notes and Index Linked Interest Notes in respect of each Interest Period, as agreed prior to issue by the relevant Issuer and the relevant Dealer, will be payable on such Interest Payment Dates, and will be calculated on the basis of such Day Count Fraction, as may be agreed between the relevant Issuer and the relevant Dealer and indicated in the applicable Final Terms. |
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| Index Linked Notes: | Notes may be Index Linked Notes, where the interest rate, early redemption and/or Index Linked Redemption Amount shall be determined depending on the level of an underlying index or indices. The return (if any) on Index Linked Notes is linked to the performance of the underlying index or indices and the investor in such Notes will be exposed to the performance of, and the market in, such underlying index or indices. |
| Changes of Interest Basis: | Notes may be converted from one Interest Basis to another and any change of interest basis in respect of any Notes will be |
indicated in the applicable Final Terms, as will any Step Up Event or Step Down Event in relation to the Notes.
Dual Currency Notes: Payments (whether in respect of principal or interest and whether at maturity or otherwise) in respect of Dual Currency Notes will be made in such currencies, and based on such rates of exchange, as the relevant Issuer and the relevant Dealer may agree and will be indicated in the applicable Final Terms.
Zero Coupon Notes: Zero Coupon Notes will be offered and sold at a discount, or at a premium, to their nominal amount and will not bear interest.
Redemption: The Final Terms relating to each Tranche of Notes will indicate either that the Notes cannot be redeemed prior to their stated maturity (other than in specified denominations, if applicable, or for taxation reasons or following an Event of Default) or that such Notes will be redeemable at the option of the relevant Issuer and/or the Noteholders upon giving not less than 30 nor more than 60 days' irrevocable notice (or such other notice period (if any) as is indicated in the applicable Final Terms) to the Noteholders or, as the case may be, the relevant Issuer on a date or dates specified prior to such stated maturity and at a price or prices as are indicated in the applicable Final Terms.
The applicable Final Terms may provide that Notes may be repayable in two or more instalments of such amounts and on such dates as indicated therein ("Instalment Notes").
Notes having a maturity of less than one year are subject to restrictions on their denomination and distribution, see "Legal and Regulatory Requirements – Notes having a maturity of less than one year" above.
Denomination of Notes: Notes will be issued in such denominations as may be agreed between the relevant Issuer and the relevant Dealer and as indicated in the applicable Final Terms save that the minimum denomination of each Note will be such as may be allowed or required from time to time by the relevant central bank (or other equivalent regulatory body) or any laws or regulations applicable to the relevant Specified Currency, see "Legal and regulatory requirements – Notes having a maturity of less than one year" above, and save that:
exchangeable for definitive Registered Notes on not less than 60 days' notice given at any time, Notes will be issued only in denominations which are a multiple of the minimum Specified Denomination.
AMTNs will be issued by MHCUK in a single denomination as specified in the Final Terms. Notes issued in, or into, Australia may be issued in such denominations as may be agreed save that: (i) the aggregate consideration payable to MHCUK by each offeree is at least AUD500,000 (or the equivalent in other currencies, but disregarding any monies lent by MHCUK or its associates to the purchaser) or the issuance results from an offer or invitation of those Notes which otherwise does not require disclosure to investors under Part 6D.2 or Chapter 7 of the Corporations Act 2001 of Australia (the "Australian Corporations Act"); (ii) the issuance is not made to a "retail client" for the purposes of section 761G of the Australian Corporations Act; (iii) the issuance complies with all other applicable laws; and (iv) the issuance does not require any document to be lodged with the Australian Securities and Investments Commission or ASX Limited.
Taxation: All payments in respect of the Notes and the Guarantees will be made without withholding or deduction for or on account of any withholding taxes imposed by any Tax Jurisdiction (as defined in Condition 7), unless such withholding or deduction is required by law. In such event, the relevant Issuer or the Guarantor will, as the case may be, save in certain circumstances, be required to pay additional amounts to cover the amounts so withheld or deducted.
Negative Pledge: The Notes will contain a negative pledge provision given by the relevant Issuer and, in the case of Notes issued by MHCUK and MHFA, the Guarantor as described in Condition 3.
Cross Default: The Notes will contain a cross-default provision relating to indebtedness for money borrowed of the relevant Issuer or, in the case of Notes issued by MHCUK and MHFA, the Guarantor as defined and further described in Condition 9.
Status of the Notes: The Notes will constitute (subject to Condition 3) direct, unconditional and unsecured obligations of the relevant Issuer and shall at all times rank pari passu and without preference among themselves and (with the exception of obligations in respect of applicable statutory exceptions and subject as aforesaid) equally with all of its other unsecured obligations (other than subordinated obligations, if any) from time to time outstanding.
Status of the Guarantees: Payments in respect of the Notes issued by MHCUK and MHFA will be unconditionally and irrevocably guaranteed by the Guarantor under the Guarantees. The obligations of the Guarantor under the Guarantees will constitute (subject to Condition 3) direct, unconditional and unsecured obligations of the Guarantor and shall at all times rank pari passu and without any preference among themselves and (with the exception of obligations in respect of national and local taxes and certain other statutory exceptions and subject as aforesaid) equally with all of its other unsecured obligations (other than subordinated obligations, if any) from time to time outstanding.
Rating: Tranches of Notes to be issued under the Programme may be rated or unrated. As at the date of this Offering Circular, Notes issued under the Programme are expected to be assigned a rating of "A-/A-2" by S&P Japan and AA by JCR, neither of which is established in the EEA or in the UK. S&P Japan is not registered under the CRA Regulation or the UK CRA Regulation; however, ratings issued by S&P Japan are endorsed by S&P Global Ratings Europe Limited, which is established in the EEA and registered under the CRA Regulation, and by S&P Global Ratings UK Limited, which is established in the UK and registered under the UK CRA Regulation. JCR is certified under the CRA Regulation and the UK CRA Regulation. The Issuers and the Guarantor cannot assure investors that such rating will not change in the future. Where a Tranche of Notes is rated, the applicable rating(s), which will not necessarily be the same as the rating(s) applicable to the Programme or any Notes already issued, will be specified in the applicable Final Terms.
A rating reflects only the views of the relevant rating agency, is not a recommendation to buy, sell or hold securities and may be subject to suspension, change or withdrawal at any time by the assigning rating agency.
Notes issued under the Programme may be issued either:
The terms of any particular Tranche of Notes will be the Terms and Conditions of the Notes as completed by the applicable Final Terms or the applicable Pricing Supplement, or as supplemented, amended and/or replaced to the extent described in the applicable Drawdown Prospectus.
Listing and Admission to Trading: Application has been made to the FCA for Notes issued by each of MHC and MHCUK under the Programme (other than Exempt Notes) to be admitted to the Official List and to the London Stock
Final Terms, Pricing Supplement or Drawdown Prospectus:
Exchange for such Notes to be admitted to trading on the main market of the London Stock Exchange.
Exempt Notes issued by MHC and MHFA may be unlisted and/or may be admitted to trading on a market or stock exchange in circumstances where the provisions of the UK Prospectus Regulation do not apply.
Governing Law: Notes other than AMTNs: The Notes and any non-contractual obligations arising out of or in connection with them will be governed by, and shall be construed in accordance with, English law. AMTNs: AMTNs will be governed by the laws of New South Wales, Australia. Guarantees: The Guarantees and any non-contractual obligations arising out of or in connection with them will be governed by, and shall be construed in accordance with, English law. Selling Restrictions: There are specific selling restrictions in relation to the United States, the EEA, the UK, the People's Republic of China, Hong Kong, Singapore, Japan, Taiwan and Australia. See
"Subscription and Sale".
Each of the Issuers and the Guarantor believes that the following factors may affect its ability to fulfil its obligations under Notes issued under the Programme and, in the case of the Guarantor, its ability to fulfil its obligations under the Guarantees. All of these factors are contingencies which may or may not occur and individually or together could affect the relevant Issuer's or Guarantor's ability to fulfil its obligations under Notes issued under the Programme or the Guarantees, as the case may be.
In addition, factors which are material for the purpose of assessing the market risks associated with Notes issued under the Programme are also described below.
Each of the Issuers and the Guarantor believes that the factors described below represent the principal risks inherent in investing in Notes issued under the Programme, but the inability of the Issuers or the Guarantor to pay interest, principal or other amounts on or in connection with any Notes or the Guarantees, as the case may be, may occur for other reasons which may not be considered significant risks by the Issuers or the Guarantor based on information currently available to them or which they may not currently be able to anticipate. Investors may lose the value of their entire investment in Notes or part of it. Prospective investors should also read the detailed information set out elsewhere in this Offering Circular (including any documents incorporated by reference) and reach their own views prior to making any investment decision.
Words and expressions defined in the "Terms and Conditions of the Notes" on pages 67 to 168 of this Offering Circular, "Description of Mitsubishi HC Capital Inc." on pages 179 to 199 of this Offering Circular, "Description of Mitsubishi HC Capital UK PLC" on pages 200 to 202 of this Offering Circular and "Description of Mitsubishi HC Finance America LLC" on pages 203 to 205 of this Offering Circular have the same meanings when used herein.
The Group conducts business that extends credit over the medium to long term through leases, instalment sales, monetary loans, and other financial services of various forms. Depending on future business trends and the financial landscape, additional provisions of allowance for doubtful receivables could be necessary with increasing non-performing loans due to deterioration in a company's credit status, which could impact the Group's business results and financial position.
While MHCUK has in place a number of controls and practices to manage customer default risk, there is a risk that the customers (and their sureties) of MHCUK and its subsidiaries (the "MHCUK Group") default on their payment obligations to the MHCUK Group, resulting in the loss of the capital amount outstanding on the agreements at the time the customers default. If the level of defaults was severe enough, resulting credit losses could exceed the MHCUK Group's equity capital and endanger the repayment of principal and interest of Notes issued under the Programme.
The MHCUK Group is exposed to foreign currency exchange rate risk due to the use of foreign currency denominated borrowings taken out to fund the MHCUK Group's Sterling denominated assets. If the borrowings were not hedged, then there is a risk that, were Sterling to weaken significantly, the MHCUK Group could suffer a significant loss and require significantly more Sterling to repay the borrowings than was derived from them when taken out. The combination of a significant weakening of Sterling with un-hedged currency borrowings could cause the MHCUK Group to run out of cash to repay maturing borrowings. However, the MHCUK Group's policy is to eliminate 100 per cent. of all foreign exchange rate risk, mainly by entering into cross currency swaps at the time of issuance of the debt. Currency risk will therefore only arise if a crosscurrency swap counterparty defaults. A system of credit exposure monitoring based on counterparty credit ratings and mark to market valuations is in place to manage the exposure to swap counterparties, as described in the following paragraph "Risk from Counterparties to MHCUK's Financial Derivative Transactions".
There is a risk that a counterparty to one or more of MHCUK's financial derivative transactions defaults on its payment obligations to the MHCUK Group. The size of the MHCUK Group's exposure to each counterparty, its credit rating and credit default swap spread are all monitored, with the credit quality monitored at least quarterly and the individual counterparty and overall limits reviewed annually. While the MHCUK Group only deals with counterparties approved by its Treasury Committee and Board of Directors and which have a credit rating assigned by an international credit rating agency that meets a minimum standard, any default could, when combined with a significant adverse market rate movement (such as a severe weakening of Sterling in foreign exchange markets), potentially cause a significant loss to the MHCUK Group. If large enough, such a loss could endanger the MHCUK Group's future operations.
In addition to general movable property, the Group holds such global assets including aircraft and real estate and conducts business leasing of these assets in and outside Japan in the form of operating leases and others. In this business the Group is exposed to asset risk, in addition to credit risk discussed above under "— Credit Risk of the Group", so fluctuation in revenue from asset management and disposals could impact the profitability of the leases. For this reason, when engaging in operating leases, the Group carefully assesses the future value according to asset type in addition to the customer's credit standing prior to working on each deal. Even after entering into transactions, the Group continues monitoring the status of the leasing and secondary markets for the assets along with the status of asset use by the lessee, striving to prevent risks from emerging or to mitigate their impact if they occur.
The Group holds global assets such as aircraft and aircraft engines, containers and railcars and conducts business leasing of these assets in and outside Japan in the form of operating leases and others. In the business related to global assets, the Group is exposed to price fluctuation risk pertaining to the assets in addition to the credit risk discussed above under "— Credit Risk of the Group". With operating leases, in addition to lease fee revenue received from the customer, the Group recovers funds by selling the asset at the end of the lease period. Additionally, in the event of a customer default, the Group takes the asset back and collects funds by leasing it to another customer or selling it. As for selling assets, in addition to business trends and the financial landscape, major incidents arising from technical problems, obsolescence due to technological change, revisions to laws and regulations, increased concern over global pandemics or terrorism, natural disasters, war, or geopolitical risk may render the asset irrecoverable or cause its selling price to fluctuate. Furthermore, the recording of impairment loss or increased costs associated with property management could also impact the Group's business results and financial position.
The Group makes investment in and provides financing of commercial real estate such as offices, residences, commercial facilities, logistics facilities, and hotels in and outside Japan, and in leasing and other business operations based on its owned properties. These assets are subject to revenue fluctuation risk and price fluctuation risk. In the real estate-related business, in addition to rent revenue from tenants, the Group recovers funds by selling those assets that are not long-term holding policy. Rent revenue and revenue from sale of assets may fluctuate depending on the market environment, such as business trends, the financial landscape, and the rent market in the specific location of the asset, and this could impact the Group's business results and financial position.
There is a risk that the sale of a physical asset at the end of or termination of a lease yields an amount that is less than the value that was assumed would be recovered in the relevant finance agreement. For the MHCUK Group, residual value risk occurs primarily within the Vehicle Solutions business unit (as described in "Description of Mitsubishi HC Capital UK PLC"). The residual value portfolio of the MHCUK Group is relatively small compared to the overall size of the MHCUK Group's assets (around 17 per cent. from time to time), and future residual value positions are determined after being assessed individually. Residual value positions are frequently monitored with reference to various industry wide sources so that maturities can be managed effectively. Residual values are then updated and prospective depreciation is applied to reflect the updated valuation. However, a large fall in second-hand market price of the MHCUK Group's assets that are assumed to have a residual value in rental agreements (such as agreements for the rental of cars and other vehicles) would cause the MHCUK Group to realise losses. Residual value risk is influenced by changes in the market dynamic for new and second-hand vehicles brought about by the transition from internal combustion engine vehicles to electric vehicles and related governmental policies.
The Group makes investment in projects including solar power, wind power, and other renewable energy businesses in Japan and overseas as well as various businesses and funds. These investing activities are subject to such risks as risk of changes in the business environment including declining demand, risk of revenue falling below the plan and diminished recoverability of the investment amount due to sluggish performance of investees or partners, risk of investees' stock value falling below a certain level, and risk of investees' stock value staying below a certain level for a considerable period of time due to unexpected changes in the economic or financial situation or a major disruption of the financial markets regardless of the investee's performance. These risks could result in a total or partial loss of the investment, including through valuation loss, or create the necessity of additional funding. In addition, there is the risk that the Group may be unable to exit or restructure the business at the desired time or using the desired method due to differences with the partner's management policy or low liquidity of the investment asset and the risk that the Group's position may be adversely affected by not being able to obtain relevant information from the investee, and these risks could impact the Group's business results and financial position.
The fees for leases and instalment sales conducted by the Group are set based on the purchase price for the transacted property and the market interest rates at the time of contract. Most of these basically do not fluctuate during the contract term. The cost of funds for acquiring the leased property, on the other hand, is affected by fluctuations in the market interest rate as the funds are procured at both fixed and variable interest rates for fundraising diversification and reduction of funding costs. As such, a sharp rise in the market interest rate resulting from sudden changes in the financial situation could impact the Group's business results and financial position.
The assets of the MHCUK Group are virtually all written at a fixed rate of interest and consequently there is a risk of reduced future profitability if the cost of the MHCUK Group's borrowings taken out to fund its assets were to rise above that which had been assumed at the time when the assets were written. This could potentially create losses over a period of time but would only threaten payment of principal and interest of Notes when the size of the losses exceeds the size of the MHCUK Group's share capital and reserves.
The Group actively conducts business outside Japan, and as foreign currency-denominated assets increase, so does their percentage of consolidated operating assets. The financial statements of the Group's consolidated subsidiaries outside Japan are expressed in the local currency while the Guarantor's consolidated financial statements are expressed in Japanese yen. As such, although fundraising is, in principle, conducted in the same currency as the asset, should a large fluctuation occur in exchange rates, it could impact the Group's business results and financial position in Japanese yen terms.
When engaging in acquisition of lease properties for leases, instalment sales, and monetary lending, the Group raises a large amount of funds in Japanese yen and other currencies. The Group attempts to balance the period of leases and other credit transactions and investments with the period of fundraising, but should it experience difficulty securing enough funds because of heightened risk aversion on the part of financial institutions and investors due to a free fall in economic and financial conditions and major confusion in the financial markets or a decline in the Group's creditworthiness, it could impact the Group's business results and financial position.
The MHCUK Group funds itself from the following variety of sources (in order of size): notes issued under the Programme to both the private and public debt markets to investors in both Europe and the Asia Pacific regions, and, bilateral bank term loans from multiple long term relationship banks, two on-balance sheet securitisation programmes, commercial paper and short-term uncommitted money market facilities from banks. The MHCUK Group's borrowing strategy is to firstly ensure continuity of funding but also at the same time to minimise cost and risk whilst preserving flexibility through the use of borrowings with a range of different maturities. The availability of the above and other types of funding depends on the willingness of investors to purchase debt and lenders to extend loans to MHCUK. Any severe adverse change to the credit rating of MHC or significant and severe market instability could impact upon MHCUK's ability to issue certain types of debt and hence lead to either increased cost due to increased credit spreads or the use of sub-optimal sources to fund new borrowings and refinance existing borrowings. This would adversely impact the cost of borrowing and potentially reduce the profitability of the MHCUK Group when the economic situation is such that these increases could not be passed on to the MHCUK Group's customers. Significant global financial market disruptions could potentially prevent the roll-over of maturing funding and compromise the ability of the MHCUK Group's banking partners to provide short-term financing. This could potentially force the MHCUK Group to temporarily cease writing new business in order to conserve cash to meet liabilities as they become due, and as a result would also reduce the future profitability of the MHCUK Group, which would in turn erode the amount of insulation from default that is provided by the size of the MHCUK Group's share capital and reserves.
The Group's business operates globally, and it is subject to risk in which losses may arise depending on political and economic situations in the countries and regions where its customers and investees are located. In addition to changes in economic conditions such as rapid declines in currency or stock prices or sovereign defaults in a given country, various factors such as conflict, civil unrest, or political instability could result in additional provisions for credit losses or the recognition of impairment losses related to credit transactions or investments in that country or entities. These could impact the Group's business results and financial position.
The Group uses facilities, including sites and systems, in and outside Japan to conduct its operations. Earthquakes, wind and flood damage, or other natural disasters as well as pandemics, war, terrorism, or other unpredictable circumstances could cause a reduction of activities or prevent operations at those sites by damaging the sites themselves or the systems or by injuring employees or preventing them from coming to work, thereby disrupting business operations. Moreover, depending on the extent of the damages or how long the event lasts, significant costs may be required to restore the systems or other facilities, or it may take a long time for business operations to recover. Such a situation could impact the Group's business results and financial position.
The Group utilises email as well as a variety of information systems to conduct account processing, management of various contracts, customer management, asset management of leased properties, and other operations. An outage or failure of these information systems arising from poor maintenance, poor development, or other such problems could cause an interruption of contract and collection operations or services provided to customers, which in turn could cause a suspension of operating activities and economic loss, thereby impacting the Group's business results and financial position.
The Group utilises e-mail as well as a variety of information systems to conduct account processing, management of various contracts, customer management, asset management of leased properties, and other operations. These information systems are subject to risk of business e-mail scams, malware infections, unauthorised access by outside parties, and other cyberattacks. Unauthorised access by outside parties, malware infections, human error, fraud, scams, and other problems could result in system outages or failures, monetary damages, leaks or unauthorised use of confidential information or customer information, or other incidents. These could cause an interruption of contract and collection operations or services provided to customers, which in turn could cause a suspension of operating activities, economic loss, or loss of social confidence from leakage of important information, thereby impacting the Group's business results and financial position.
In relation to operations of MHCUK and the MHCUK Group, there is a risk that a security breach could lead to a loss or theft of customer, employee, supplier or the Group's confidential data. A major data security breach could lead to significant reputational damage and business disruption and result in regulatory intervention and/or fines, especially considering the implementation of the General Data Protection Regulation (Regulation (EU) 2016/679) regarding the protection of natural persons with respect to the processing of personal data and on the free movement of such data. However, this risk is mostly mitigated by MHCUK's real-time system monitoring that detects system compromises, perimeter firewalls and security controls together with its strict identity validation checks, device identification software and frauds, and by employing dedicated and suitably skilled information security and financial crime prevention support teams.
The Group's operations are subject to a range of relevant legislation in and outside Japan. As the primary examples, in Japan its operations must comply with the Companies Act of Japan (Act No. 86 of 2005, as amended) (the "Companies Act"), tax laws, the Financial Instruments and Exchange Act, the Anti-Monopoly Act of Japan (Act No. 54 of 1947, as amended), anti-bribery laws, the Personal Information Protection Act of Japan (Act No. 57 of 2003, as amended) (the "Personal Information Protection Act"), the Money Lending Business Act of Japan (Act No. 32 of 1983, as amended), the Instalment Sales Act of Japan (Act No. 159 of 1961, as amended) (the "Instalment Sales Act"), the Act on Prevention of Transfer of Criminal Proceeds of Japan (Act No. 22 of 2007, as amended) (the "Act on Prevention of Transfer of Criminal Proceeds"), and environmental laws and regulations. Outside Japan, the Group's operations are subject to the legislation of each country and region as well as to oversight by regulatory authorities. Should there be a failure of compliance with legislation, social norms or company rules, it could impact the Group's business results and financial position by causing restriction on or interruption of operations, a claim for damages from customers or others, and a fall in social confidence.
MHCUK is authorised and regulated by the FCA to provide consumer credit products and services and insurance mediation services to consumers and small businesses. There is a risk that if the MHCUK Group fails to comply with registration or regulations it could eventually lead to penalties or other enforcement action, and such losses could potentially reduce MHCUK's ability to repay Notes. In this regard, MHCUK's Board ensures that appropriate mechanisms, committees, subject-matter experts and responsibilities are in place or assigned to identify, evaluate and manage the legal and regulatory risks and furthermore maintains an adequate level of share capital and reserves to absorb some or all of such losses.
MHCUK is required to follow the final decisions of the UK Financial Ombudsman Service ("FOS") in respect of complaints escalated by eligible customers to the FOS and to take account of those final decisions in the handling of other complaints it receives. Despite steps taken by MHCUK to minimise related exposure by seeking to provide good outcomes to customers in the handling of such complaints, in the event that MHCUK is held liable for compensation to eligible customers, MHCUK may incur significant liabilities which could have a negative impact on MHCUK's financial position. In addition, as part of its regulatory powers the FCA may implement industry wide consumer redress schemes if it considers firms to have failed in their regulatory obligations to consumers. The FCA is currently considering whether to effect such a scheme in respect of historic commission offered to introducers of motor vehicle finance. Were either the FCA to implement a consumer redress scheme or, if the FCA chooses not to and the FOS issues further final decisions in respect of motor finance commission complaints, MHCUK may incur significant liabilities in respect of its historic motor finance lending.
The Group's operations are subject to a range of relevant legislation, accounting and tax regulations, and other systems in and outside Japan. Should there be substantial changes or revisions to any of the various systems closely related to the Group's operations that the Group was unable to properly address, there could be penalties for non-conformance, suspension of product offering, restrictions on business activities, sales losses, or other negative consequences that could impact the Group's business results and financial position.
The Group conducts transactions in various forms and various administrative work arises with each transaction. Improper administrative work, including human error, fraud, and other irregularities, could cause an interruption of contract and collection operations or services provided to customers, which in turn could cause a suspension of operating activities or loss of customer trust, thereby impacting the Group's business results and financial position.
The Group seeks to ensure that all officers and employees act with high ethical standards, complying not only with laws and regulations but also with social norms. However, in the unlikely event that any actions in violation of such laws, regulations and social norms occur, it could impact the Group's credibility, business results, and financial position.
The Group is implementing various measures based on the theme of "transformation" to achieve its 10-year Vision of "Together we innovate, challenge and explore the frontiers of the future." During this process, any actions by its officers and employees that compromise customer protection, fair competition, market integrity, public interest, or social norms and cause harm to our stakeholders could impact the Group's credibility, business results, and financial position.
The Group must stably secure adequate human resources, to maintain and strengthen its competitiveness in the various businesses it operates in and outside Japan. The Group strives to continuously recruit and train capable personnel, but should it not be able to adequately secure and train the needed personnel this could impact the Group's business results and financial position.
The Group employs a large number of staff in its business operations. This involves the risk of long working hours having a negative effect on the mental or physical health of employees or other negative impacts, making them unable to fulfil the expected duties, and the risk of legal infringement due to failure to appropriately monitor legal requirements relating to employment and related areas. Additionally, there is the possibility of these risks resulting in damage to public trust. If the Group were to face difficulties retaining and recruiting staff it could impact the Group's ability to conduct business operations and, in turn, the Group's business results and financial position.
In pursuit of continued growth through expansion of its operating base, the Group engages, in and outside Japan, in strategic partnerships with outside entities aimed at the enhancement of various services and tries to diversify and expand the Group's business portfolio through mergers and acquisitions ("M&As") in addition to expanding business on its own. The Group endeavours to diversify its business and enhance its services through this kind of approach. However, changes in domestic or international economic and financial conditions, intensification of competition, changes in the business environment or strategy of partners, revision of relevant legislation, and other factors could cause a failure to achieve expected results or result in the need to record additional expenses, such as impairment of goodwill recorded at the time of an M&A. Such a situation could impact the Group's business results and financial position.
The Group is expanding the scope of its operations on a global basis, including new business domains, within the scope permissible under laws, regulations, and various other conditions. Should the expanded business not develop as envisioned within the expanded scope of operations, or if risks emerge within that process that exceed the Group's initial assumptions, it could impact the Group's business results and financial position.
Competition in the leasing and other businesses of the Group conducted in and outside Japan could intensify not only from companies in the same business but also from financial institutions and others. In addition, the competitive landscape could change due to a shift in business models of other industries, technological innovation, or other factors. If competition intensifies further, it could impact the Group's business results and financial position due to a decline in market share or reduced profitability.
MHCUK's main competitors are UK banks. In periods of rising interest rates, MHCUK is exposed to margin compression on rates offered to customers as competitors have customer deposit funding and are therefore not as dependent on wholesale market pricing.
Regulatory changes, technological innovation, shifts in business models in line with the transition to a decarbonised society or extreme weather stemming from global warming may affect the Group's operating results and financial position in the form of business failure of business partners due to earnings deterioration and other factors, decline in value of assets owned by the Group, and others. Moreover, if the Group's response to climate change risk or its information disclosure are, or are assumed to be inadequate, the Group's corporate value may be adversely affected.
With corporate responsibility extending throughout the supply chain and the emphasis on sustainability initiatives, the prevailing view is that companies should recognise stakeholders as broadly encompassing ordinary individuals and local residents. Under these circumstances, if the Group were to neglect these stakeholders, and human rights violations were to occur within the Group or be committed by customers of the Group, it could be perceived as the Group itself causing, encouraging, or directly participating in those human rights violations. In turn, this could lead to damage to the Group's corporate value.
MHCUK is jointly and severally liable under the Consumer Credit Act 1974 to consumer finance customers who have claims against suppliers for misrepresentation or breach of contract in respect of certain types of consumer credit contracts. If the level of supplier failure was severe enough MHCUK may become solely liable for significant levels of compensation which could impact the Group's business results and financial position and endanger the repayment of principal and interest of Notes issued under the Programme. The credit risk to MHCUK in the case of a supplier failing and MHCUK becoming solely liable for compensation to the consumer customer is minimised by taking third party indemnities, security deposits and carrying out regular monitoring of suppliers through which the consumer finance products are sold. MHCUK will also cease to accept credit applications from customers of any supplier in situations where there is higher potential risk of misrepresentation, breach of contract or risk of insolvency by the supplier or the supplier's sureties.
Interest rate benchmarks play an important role in financial markets, it is therefore critical that extensively used benchmarks are robust and are based on active, liquid underlying markets. As a consequence, interest rates and indices or other figures which are deemed to be "benchmarks" (including but not limited to various interbank offered rates ("IBORS"), have been the subject of international and national regulatory reform.
Regulation (EU) 2016/1011 on indices used as benchmarks in financial instruments and financial contracts or to measure the performance of investment funds (the "EU Benchmarks Regulation") and the EU Benchmarks Regulation as it forms part of UK domestic law (the "UK Benchmarks Regulation") could have a material impact on any Notes linked to or referencing a "benchmark". For example:
Any of the international or national reforms, or the general increased regulatory scrutiny of "benchmarks", could increase the costs and risks of administering or otherwise participating in the setting of a "benchmark" and complying with any such regulations or requirements. Such factors may have the following effects on certain "benchmarks": (i) discourage market participants from continuing to administer or contribute to the "benchmark"; (ii) trigger changes in the rules or methodologies used in the "benchmark" and/or (iii) lead to the disappearance of the "benchmark". Any of the above changes or any other consequential changes as a result of international or national reforms or other initiatives or investigations, could have a material adverse effect on the value of and return on any Notes linked to or referencing a "benchmark" resulting in corresponding adjustments to the conditions of the Notes.
Risk-free rates may differ from IBORs in a number of material respects, including (without limitation) by being backwards-looking in most cases and being calculated on a compounded or weighted average basis, whereas such interbank offered rates are generally expressed on the basis of a forward-looking term and include a riskelement based on interbank lending. As such, potential investors should be aware that IBORs and any risk-free rates may behave materially differently as interest reference rates for the Notes.
Interest on Notes which reference a backwards-looking risk-free rate is not determined until the end of the relevant interest calculation period. Therefore, Noteholders may be unable to reliably estimate in advance the amount of interest which will be payable on such Notes. Also, some investors may be unable or unwilling to trade such Notes without changes to their information technology or other operational systems, which could adversely impact the liquidity of such Notes. Further, if such Notes become due and payable following an Event of Default, or are otherwise redeemed early on a date which is not an Interest Payment Date, the final Interest Rate payable in respect of such Notes shall be determined by reference to a shortened period ending immediately prior to the date on which the Notes become due and payable or are scheduled for redemption.
The market continues to develop in relation to adoption of risk-free reference rates (including those which are relevant to this Programme), and their adoption as alternatives to the relevant interbank offered rates. In addition, market participants and relevant working groups are exploring alternative reference rates based on risk-free rates which seek to measure the market's forward expectation of these rates over a designated term.
The market or a significant part thereof may adopt an application of risk-free rates that differs significantly from that set out in the Conditions and used in relation to Notes that reference such risk-free rates issued under this Offering Circular. The development of new risk-free rates could result in reduced liquidity or increased volatility or could otherwise affect the market price of any Notes that reference a risk-free rate issued under this Offering Circular from time to time.
New risk-free rates may have no established trading market, and an established trading market may never develop or may not be very liquid. Market terms for Notes indexed to new risk-free rates may evolve over time, and may lead to impacts on trading prices and values, and such Notes may not be able to be sold or may not be able to be sold at prices that will provide a yield comparable to similar investments that have a developed secondary market, and may consequently suffer from increased pricing volatility and market risk.
Similarly, the manner of adoption or application of risk-free rates in the Eurobond markets may differ materially compared with the application and adoption of risk-free rates in other markets, such as the derivatives and loan markets. Potential investors should carefully consider how any mismatch between the adoption of such reference rates in the bond, loan and derivatives markets may impact any hedging or other financial arrangements which may be put in place in connection with any acquisition, holding or disposal of Notes referencing such risk-free rates.
Investors should be aware that, if an applicable benchmark is discontinued or otherwise was to become unavailable, the rate of interest on any Notes which reference such benchmark will be determined for the relevant period by the fallback provisions applicable to such Notes. There is a risk that the determination of the relevant interest rate in accordance with any of these fallback provisions may result in lower amounts payable to holders under the Notes and a reduction in their market value.
Such determination of a fallback rate may a material adverse effect on the value and liquidity of and return on any such Notes. Moreover, any significant change to the setting or existence of any relevant benchmark could affect the ability of the relevant Issuer to meet its obligations under the Notes or could have a material adverse effect on the value or liquidity of, and the amount payable under, the Notes. Investors should note that if the fallbacks specified in Condition 4(b)(iv) apply following a Benchmark Event, the relevant Issuer, in consultation with the Independent Adviser, will have discretion to adjust the reference rate in the circumstances provided under the Terms and Conditions of the Notes. Other risk free rate benchmarks may have bespoke fallback provisions (as described herein) pursuant to which adjustments may be made to the applicable reference rate. Any such adjustment could have unexpected commercial consequences and there can be no assurance that, due to the particular circumstances of each Noteholder, any such adjustment will be favourable to each Noteholder. Investors should consider all of these matters when making their investment decision with respect to the relevant Notes.
In the case of Notes issued by MHCUK, the applicable Final Terms relating to any specific issue of Notes may, provided that MHCUK's intention is to apply an amount equal to the proceeds from such offer of Notes to finance or refinance a portfolio of qualifying projects (the "Eligible Project Portfolio"), which is selected based on categories and criteria under the Green Finance Framework of MHCUK, as updated from time to time (the "Green Finance Framework"). Prospective investors should have regard to the information in the applicable Final Terms and the Green Finance Framework regarding such use of proceeds (or an amount equal thereto) and consult with their legal and other advisers before making an investment in any such Notes and must determine for themselves the relevance of such information for the purpose of any investment in such Notes together with any other investigation such investor deems necessary.
Pursuant to the recommendations under the 2018 edition of the Green Bond Principles published by the International Capital Market Association ("ICMA"), prior to the issuance of any such Notes, MHCUK will engage a second party opinion provider to provide a second party opinion regarding its Green Finance Framework (the "second party opinion"). The Green Finance Framework, any second party opinions and associated reporting are available on MHCUK's website at https://www.mitsubishihccapital.co.uk/investors/. The Green Finance Framework and any second party opinions published are not incorporated in, and do not form part of, this Offering Circular. The second party opinions may not reflect the potential impact of all risks related to the issuance, market, additional risk factors and other factors that may affect the value of any specific issue of Notes. The second party opinions are not a recommendation to buy, sell or hold securities and is only current as of the date on which such opinion was initially issued.
There is no guarantee that the use of such proceeds (or an amount equal thereto) will satisfy, whether in whole or in part, any present or future investor expectations or requirements as regards to any investment criteria or guidelines with which such investor or its investments are required to comply, whether by any present or future applicable law or regulations or by its own by-laws or other governing rules or investment portfolio mandates (in particular with regard to any direct or indirect environmental, sustainable or social impact of any projects or uses, the subject of or related to, the relevant projects in the Eligible Project Portfolio).
No assurance can be given that Eligible Projects will meet investor expectations or requirements regarding such "green", "sustainable", "social" or similar labels (including Regulation (EU) 2020/852 on the establishment of a framework to facilitate sustainable investment (the so called "EU Taxonomy") or Regulation (EU) 2020/852 as it forms part of domestic UK law) or that adverse environmental, social and/or other impacts may not occur during the implementation of any projects within the Eligible Project Portfolio. In addition, there is a risk that the Notes may not comply with any future standards or requirements regarding any "green", "social", "sustainable" or other equivalently-labelled performance objectives and, accordingly, the status of any Notes as being "green", "social" or "sustainable" (or equivalent) could be withdrawn at any time.
No assurance or representation is given by MHCUK, the Guarantor, the Dealers, the Paying Agents or any other person as to the suitability or reliability for any purpose whatsoever of any opinion or certification of any third party (whether or not solicited by MHCUK) which may or may not be made available in connection with the issue of any Notes and in particular with the Eligible Project Portfolio to fulfil any environmental, sustainability, social and/or other criteria. For the avoidance of doubt, any such opinion or certification is not, nor shall it be deemed to be, incorporated in and/or form part of this Offering Circular. Any such opinion or certification is only current as of the date that it was initially issued. Prospective investors must determine for themselves the relevance of any such opinion or certification (if issued) and/or the information contained therein and/or the provider of such opinion or certification for the purpose of any investment in any such Notes. Currently, the providers of such opinions and certifications are not subject to any specific regulatory regime or oversight.
In the event that any such Notes are listed or admitted to trading on any dedicated "green", "social", "sustainable" or other equivalently-labelled segment of any stock exchange or securities market (whether or not regulated), no representation or assurance is given by MHCUK, the Guarantor, the Dealers, the Paying Agents or any other person that such listing or admission satisfies, whether in whole or in part, any present or future investor expectations or requirements as regards to any investment criteria or guidelines with which such investor or its investments are required to comply (including with regard to environmental impact and sustainability performance, the characteristics of the projects, including their environmental and sustainability criteria), whether by any present or future applicable law or regulations or by its own by-laws or other governing rules or investment portfolio mandates, in particular with regard to any direct or indirect environmental, sustainability or social impact of any projects or uses, the subject of or related to, the Eligible Project Portfolio. Furthermore, it should be noted that the criteria for any such listings or admission to trading may vary from one stock exchange or securities market to another. No representation or assurance is given or made by MHCUK, the Guarantor, the Dealers, the Paying Agents or any other person that any such listing or admission to trading obtained in respect of any such Notes will be maintained during the life of the relevant Notes.
While an amount equal to the proceeds of any Notes may be applied to the Eligible Project Portfolio in the manner described in the applicable Final Terms, no representation or assurance is given by MHCUK, the Guarantor, the Dealers, the Paying Agents or any other person that the relevant project(s) or use(s) the subject of, or related to, the Eligible Project Portfolio will be capable of being implemented in or substantially in such manner and/or in accordance with any timing schedule and that accordingly such proceeds (or an amount equal thereto) will be totally or partially disbursed for such projects in the Eligible Project Portfolio. Nor can there be any assurance that such projects in the Eligible Project Portfolio will be completed within any specified period or at all or with the results or outcome as originally expected or anticipated.
Any such event or failure by MHCUK will not constitute an Event of Default under the relevant Notes. Any such event or failure to apply the proceeds of any issue of Notes (or an amount equal thereto) as aforesaid and/or withdrawal of any opinion or certification or any such opinion or certification attesting that MHCUK is not complying in whole or in part with any matters for which such opinion or certification is opining or certifying on and/or any such Notes no longer being listed or admitted to trading on any stock exchange or securities market as aforesaid may have a material adverse effect on the value of such Notes and also potentially the value of any other Notes which may finance or refinance the Eligible Project Portfolio and/or result in adverse consequences for certain investors with portfolio mandates to invest in securities to be used for a particular purpose.
Investors should refer to MHCUK's website and the Eligible Project Portfolio for further information.
The Terms and Conditions of the Notes and the Agency Agreement contain provisions for calling meetings of Noteholders to consider matters affecting their interests generally. These provisions permit defined majorities to bind all Noteholders, including Noteholders who did not attend and vote at the relevant meeting and Noteholders who voted in a manner contrary to the majority.
In relation to any issue of Notes which have denominations consisting of a minimum Specified Denomination plus one or more higher integral multiples of another smaller amount, it is possible that such Notes may be traded in amounts that are not integral multiples of such minimum Specified Denomination. In such a case a holder who, as a result of trading such amounts, holds an amount which is less than the minimum Specified Denomination in his account with the relevant clearing system at the relevant time may not receive a definitive Note in respect of such holding (should definitive Notes be printed) and would need to purchase a principal amount of Notes such that its holding amounts to a Specified Denomination.
If definitive Notes are issued, holders should be aware that definitive Notes which have a denomination that is not an integral multiple of the minimum Specified Denomination may be illiquid and difficult to trade.
A wide range of Notes may be issued under the Programme. A number of these Notes may have features which contain particular risks for potential investors. Set out below is a description of the most common such features:
Each Issuer may issue Notes with principal or interest payable in one or more currencies which may be different from the currency in which the Notes are denominated. Potential investors should be aware that the market price of such Notes may be volatile, they may receive no interest, payment of principal or interest may occur at a different time or in a different currency than expected and they may lose all or a substantial portion of their principal.
Notes may be issued in one or more currencies that are not freely convertible into other currencies, or are subject to restrictions on remittance and transfer or availability, which in turn may affect the liquidity of such Notes and the relevant Issuer's ability to source such currencies to service the Notes. In addition, unanticipated changes in government regulations could, and may, further impact the availability and convertibility of certain currencies, which will impact the suitability of such Notes as well as the relevant Issuer's ability to source such currencies to service the Notes.
Fixed/Floating Rate Notes may bear interest at a rate that converts from a fixed rate to a floating rate, or from a floating rate to a fixed rate. Where the relevant Issuer has the right to effect such a conversion, this will affect the secondary market and the market value of the Notes since the relevant Issuer may be expected to convert the rate when it is likely to produce a lower overall cost of borrowing. If the relevant Issuer converts from a fixed rate to a floating rate in such circumstances, the spread on the Fixed/Floating Rate Notes may be less favourable than then prevailing spreads on comparable Floating Rate Notes tied to the same reference rate. In addition, the new floating rate at any time may be lower than the rates on other Notes. If the relevant Issuer converts from a floating rate to a fixed rate in such circumstances, the fixed rate may be lower than then prevailing rates on its Notes.
Each Issuer may issue Index Notes where the Index Linked Redemption Amount, automatic early redemption or interest payable is dependent upon the level of an index or indices. The index or indices may comprise of reference equities, bonds, other securities, commodities, property, currency exchange rate or other assets or bases of reference, and may be a well-known and widely published index or indices or an index or indices established by an entity which may not be widely published or available. An investment in Index Linked Notes will entail significant risks not associated with a conventional fixed rate or floating rate debt security.
Potential investors in Index Linked Notes should be aware that, depending on the terms of the Index Linked Notes, (i) they may receive no or a limited amount of interest, (ii) payments may occur at a different time than expected and (iii) except in the case of principally protected Notes, they may lose all or a substantial portion of their investment if the value of the index/indices do not move in the anticipated direction.
In addition, the movements in the level of the index or indices may be subject to significant fluctuations that may not correlate with changes in interest rates, currencies or other indices and the timing of changes in the relevant level of the index or indices may affect the actual yield to investors, even if the average level is consistent with their expectations. In general, the earlier the change in the level of an index or result of a formula, the greater the effect on yield.
If the Index Linked Redemption Amount or interest payable is determined in conjunction with a multiplier greater than one or by reference to some other leverage factor, the effect of changes in the level of the index or the indices on the Index Linked Redemption Amount or interest payable will be magnified.
If the Calculation Agent determines that an event giving rise to a Disrupted Day has occurred at any relevant time, such determination may have an effect on the timing of valuation and consequently the value of the Notes and/or may delay settlement in respect of the Notes.
Prospective purchasers should review the Additional Conditions relating to Index Linked Notes and the applicable Final Terms to ascertain whether and how such provisions apply to the Notes.
The market price of Index Linked Notes may be volatile and may depend on, among other things, the time remaining to the redemption date and the volatility of the level of the index or indices. The level of the index or indices may be affected by, among other things, the economic, financial and political events in one or more jurisdictions, including the stock exchange(s) or quotation system(s) on which any securities comprising the index or indices may be traded.
Investment in Fixed Rate Notes involves the risk that subsequent changes in market interest rates may adversely affect the value of the Fixed Rate Notes.
If specified in the applicable Final Terms in relation to a Series of Index Linked Notes, and if the Calculation Agent determines that an event giving rise to an Additional Disruption Event has occurred at any relevant time, the relevant Issuer may either (i) require the Calculation Agent to, at its sole discretion, make such adjustments to the Terms and Conditions to account for the Additional Disruption Event or (ii) redeem the Notes by giving notice to the holders of Notes in accordance with Condition 13 (Notices).
Prospective purchasers should review the Terms and Conditions relating to such Notes and the applicable Final Terms to ascertain whether and how such provisions apply to the Notes.
The market values of securities issued at a substantial discount or premium from their principal amount tend to fluctuate more in relation to general changes in interest rates than do prices for conventional interest-bearing securities. Generally, the longer the remaining term of the securities, the greater the price volatility as compared to conventional interest-bearing securities with comparable maturities.
Notes denominated in Renminbi ("Renminbi Notes") may be issued under the Programme. Renminbi Notes contain particular risks for potential investors, including:
In the event that access to Renminbi becomes restricted to the extent that, by reason of Inconvertibility, Nontransferability or Illiquidity (as defined in Condition 5(f) (Payments – Payment of U.S. Dollar Equivalent)), the relevant Issuer or the Guarantor is unable, or it is impractical for it, to pay interest or principal in Renminbi, the Terms and Conditions of the Notes allow the relevant Issuer or the Guarantor to make payment in U.S. dollars at the prevailing spot rate of exchange, all as provided in more detail in Condition 5(f) (Payments – Payment of U.S. Dollar Equivalent). As a result, the value of these Renminbi payments may vary with the prevailing exchange rates in the marketplace. If the value of Renminbi depreciates against the U.S. dollar or other foreign currencies, the value of a Noteholder's investment in U.S. dollar or other foreign currency terms will decline.
Set out below is a brief description of the principal market risks, including liquidity risk, exchange rate risk, interest rate risk and credit risk:
Notes may have no established trading market when issued, and one may never develop. If a market does develop, it may not be very liquid. Therefore, investors may not be able to sell their Notes easily or at prices that will provide them with a yield comparable to similar investments that have a developed secondary market. This is particularly the case for Notes that are especially sensitive to interest rate, currency or market risks, are designed for specific investment objectives or strategies or have been structured to meet the investment requirements of limited categories of investors. These types of Notes generally would have a more limited secondary market and more price volatility than conventional debt securities. Illiquidity may have a severely adverse effect on the market value of Notes.
The relevant Issuer will pay principal and interest on the Notes and, in the case of Notes issued by MHCUK and MHFA, the Guarantor will make any payments under the relevant Guarantee in the Specified Currency. This presents certain risks relating to currency conversions if an investor's financial activities are denominated principally in a currency or currency unit (the "Investor's Currency") other than the Specified Currency. These include the risk that exchange rates may significantly change (including changes due to devaluation of the Specified Currency or revaluation of the Investor's Currency) and the risk that authorities with jurisdiction over the Investor's Currency may impose or modify exchange controls. An appreciation in the value of the Investor's Currency relative to the Specified Currency would decrease (i) the Investor's Currency equivalent yield on the Notes, (ii) the Investor's Currency-equivalent value of the principal payable on the Notes and (iii) the Investor's Currency-equivalent market value of the Notes.
Government and monetary authorities may impose (as some have done in the past) exchange controls that could adversely affect an applicable exchange rate. As a result, investors may receive less interest or principal than expected, or no interest or principal.
Notes issued under the Programme may be rated or unrated. Where an issue of Notes is rated, the applicable rating(s) will be specified in the applicable Final Terms. Such rating(s) will not necessarily be the same as the ratings assigned to the relevant Issuer, to the Programme described in this Offering Circular or to Notes already issued.
The rating(s) assigned to any Notes may not reflect the potential impact of all risks related to the structure of the issue, market, additional factors discussed above, and other factors that may affect the value of the Notes. Accordingly, a credit rating is not a recommendation to buy, sell or hold securities and may be revised or withdrawn by the rating agency at any time.
There are no guarantees that any rating assigned to an issue of Notes will be assigned or maintained. Any credit rating agency may lower its rating or withdraw its rating if, in the sole judgement of the credit rating agency, the credit quality of the Notes has declined or is in question. In addition, at any time a credit rating agency may revise its relevant rating methodology with the result that, among other things, any rating assigned to the Notes may be lowered. If any of the rating(s) assigned to the Notes is lowered or withdrawn, the market value of the Notes may be reduced.
The following documents which have previously been published and have been filed with the FCA shall be incorporated in, and form part of, this Offering Circular:
MHC's interim consolidated financial statements have been prepared in accordance with the Article 4-1 of the Tokyo Stock Exchange's standard for preparation of quarterly financial statements and in accordance with accounting principles for interim financial statements generally accepted in Japan, omitting certain disclosures under the Article 4-2 of the Tokyo Stock Exchange's standard for preparation of quarterly financial statements. A part of the disclosures required under accounting principles generally accepted in Japan is omitted under the Article 4-2 of the Tokyo Stock Exchange's standard for preparation of quarterly financial statements.
in each case, excluding all information incorporated therein by reference (such information is not relevant for prospective investors or is covered elsewhere in this Offering Circular) which shall not form part of this Offering Circular; provided that any statement contained in a document all or the relative portion of which is incorporated by reference will be deemed to be modified or superseded for the purpose of this Offering Circular to the extent that a statement contained herein or in any supplement hereto, including any document incorporated therein by reference, modifies or supersedes such earlier statement (whether expressly, by implication or otherwise).
Where only certain parts of a document are incorporated by reference, the non-incorporated parts of the document are either not relevant for investors or are covered elsewhere in this Offering Circular.
Following the publication of this Offering Circular a supplement may be prepared and approved by the FCA in accordance with Article 23 of the UK Prospectus Regulation. Statements contained in any such supplement (or contained in any document incorporated by reference therein) shall, to the extent applicable (whether expressly, by implication or otherwise), be deemed to modify or supersede statements contained in this Offering Circular or in a document which is incorporated by reference in this Offering Circular. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Offering Circular.
Copies of documents incorporated by reference in this Offering Circular can be obtained from the registered office of MHC and MHCUK and from the specified office of the Principal Paying Agent in London. In addition, copies of such documents will be published on the website of the Regulatory News Service ("RNS") operated by the London Stock Exchange at www.londonstockexchange.com/exchange/news/market-news/market-newshome.html and available for viewing on the UK National Storage Mechanism (https://data.fca.org.uk/#/nsm/nationalstoragemechanism), or will be available on the websites of MHC (https://www.mitsubishi-hc-capital.com/english/investors) and MHCUK (https://www.mitsubishihccapital.co.uk/investors).
Any content of the websites referred to herein do not form part of this Offering Circular and have not been scrutinised or approved by the FCA, nor are they incorporated by reference in this Offering Circular.
The Issuers will, in the event of any significant new factor, material mistake or material inaccuracy relating to information included in this Offering Circular which is capable of affecting the assessment of any Notes, prepare a supplement to this Offering Circular or publish a new offering circular for use in connection with any subsequent issue of Notes.
In this section "Final Terms, Pricing Supplements and Drawdown Prospectuses", the expression "necessary information" means, in relation to any Tranche of Notes, the information necessary to enable investors to make an informed assessment of the assets and liabilities, financial position, profits and losses and prospects of the relevant Issuer and, in the case of Notes issued by MHCUK and MHFA, the Guarantor, and of the rights attaching to the Notes. In relation to the different types of Notes which may be issued under the Programme, the Issuers and the Guarantor have endeavoured to include in this Offering Circular all of the necessary information except for information relating to the Notes which is not known at the date of this Offering Circular and which can only be determined at the time of an individual issue of a Tranche of Notes.
Any information relating to the Notes which is not included in this Offering Circular and which is required in order to complete the necessary information in relation to a Tranche of Notes will be contained either in the applicable Final Terms, Pricing Supplements or in a Drawdown Prospectus. Such information will be contained in the applicable Final Terms, Pricing Supplements unless any of such information constitutes a significant new factor relating to the information contained in this Offering Circular in which case such information, together with all of the other necessary information in relation to the relevant series of Notes, may be contained in a Drawdown Prospectus or a new offering circular.
For a Tranche of Notes which is the subject of Final Terms or Pricing Supplement, the Final Terms or Pricing Supplement will, for the purposes of that Tranche only, supplement this Offering Circular and must be read in conjunction with this Offering Circular. The terms and conditions applicable to any particular Tranche of Notes which is the subject of Final Terms are the Terms and Conditions of the Notes as completed by the applicable Final Terms and the terms and conditions applicable to any particular Tranche of Notes which is the subject of a Pricing Supplement are the Terms and Conditions of the Notes as completed, amended, modified or superseded by the applicable Pricing Supplement.
Each Drawdown Prospectus will be constituted by a single document containing the necessary information relating to the relevant Issuer and, in the case of Notes issued by MHCUK and MHFA, the Guarantor, and the relevant Notes. The terms and conditions applicable to any particular Tranche of Notes which is the subject of a Drawdown Prospectus will be the Terms and Conditions of the Notes as supplemented, amended and/or replaced to the extent described in the applicable Drawdown Prospectus.
In the case of a Tranche of Notes which is the subject of a Drawdown Prospectus, each reference in this Offering Circular to information being specified or identified in the applicable Final Terms shall be read and construed as a reference to such information being specified or identified in the applicable Drawdown Prospectus unless the context requires otherwise.
The following section applies to Notes, other than AMTNs.
The issue, exchange and transfer of Notes as described in this section "Form of the Notes" shall be effected pursuant to, and in accordance with, the provisions of the Agency Agreement (as defined under "Terms and Conditions of the Notes") and without charge to any holder of Notes (but against such indemnity as the Principal Paying Agent or Registrar may require in respect of any tax or other duty of whatsoever nature which may be levied or imposed in connection with such issue, exchange or transfer).
Notes which are represented by a global Note will only be transferable in accordance with the rules and procedures for the time being of Euroclear or Clearstream, Luxembourg, as the case may be.
Each Issuer may issue additional Tranches of Notes from time to time, which will be consolidated, form a single series and be interchangeable for trading purposes with the existing Tranche(s) of the Series on either (i) the issue date of the additional Tranche of Notes or (ii) on exchange of the Temporary Global Note representing the additional Tranche of Notes for interests in the Permanent Global Note. Upon issuance of additional Tranches of Bearer Notes (if any) prior to the Exchange Date for a particular Tranche of Bearer Notes (as it may be extended), such Exchange Date will be extended (or further extended), without the consent of the Noteholders, until the fortieth day after the completion of the distribution of such additional Tranche of Bearer Notes. Upon issuance of additional Tranches of Registered Notes (if any) prior to the date that is the fortieth day after the completion of the distribution of a particular Tranche of Registered Notes (as it may be extended), such fortieth day will be extended (or further extended), without the consent of the Noteholders, until the fortieth day after the completion of the distribution of such additional Tranche of Registered Notes.
Pursuant to the Agency Agreement, the Principal Paying Agent or the Registrar, as the case may be, shall arrange that, where an additional Tranche of Notes is issued which is intended to form a single series and be consolidated with an existing Tranche of Notes and such Notes will be represented on issue by a Temporary Global Note, the Notes of such additional Tranche shall be assigned a temporary common code and temporary ISIN by Euroclear and Clearstream, Luxembourg which are different from the common code and ISIN assigned to existing Notes of any other Tranche of the same Series until at least 40 days after the completion of the distribution of the Notes of such additional Tranche.
A Note may be declared due and payable by a Noteholder upon the occurrence of an Event of Default, as described in Condition 9 of the Notes. In such circumstances, where any Note is still represented by a global Note and a holder of such Note so represented and credited to his securities account with Euroclear or Clearstream, Luxembourg gives notice that he wishes to accelerate such Note, unless within a period of 15 days from the giving of such notice payment has been made in full of the amount due in accordance with the terms of such global Note, such global Note will become void together with, in the case of a Global Registered Note, the corresponding entry in the Register (as defined under "Terms and Conditions of the Notes"). At the same time, holders of interests in such global Note credited to their account with Euroclear or Clearstream, Luxembourg will become entitled to proceed directly against the relevant Issuer on the basis of statements of account provided by Euroclear and Clearstream, Luxembourg, on and subject to the terms of a deed of covenant (the "Deed of Covenant") dated 29 August 2025, executed by the relevant Issuer.
Only MHC and MHCUK may issue Notes in bearer form ("Bearer Notes").
The applicable Final Terms in relation to Bearer Notes will specify whether such Notes are issued in compliance with United States Treasury Regulation §1.163-5(c)(2)(i)(C) or any successor rules in substantially the same form for purposes of Section 4701 of the Internal Revenue Code of 1986, as amended ("TEFRA C") or United States Treasury Regulation §1.163-5(c)(2)(i)(D) or any successor rules in substantially the same form for purposes of Section 4701 of the Internal Revenue Code of 1986, as amended ("TEFRA D"). Bearer Notes must be issued in compliance with TEFRA C or TEFRA D unless they have a term of one year or less (taking into account any unilateral right to extend or rollover).
Each Tranche of Bearer Notes will either be initially represented by a temporary global Note (without Receipts, Coupons or Talons) (a "Temporary Global Note") or, if agreed between the relevant Issuer and the relevant Dealer, be represented by a permanent global Note (a "Permanent Global Note") which, in either case, unless otherwise agreed between the relevant Issuer and the relevant Dealer, will (i) if the Global Notes are intended to be issued in new global note ("NGN") form, as stated in the applicable Final Terms, be delivered on or prior to the original issue date of the Tranche to a common safekeeper (the "Common Safekeeper") for Euroclear and Clearstream, Luxembourg; and (ii) if the Global Notes are not intended to be issued in NGN form, be delivered on or prior to the original issue date of the Tranche to a common depositary (the "Common Depositary") for Euroclear and Clearstream, Luxembourg. If the Notes are issued in compliance with TEFRA D, the Notes must be initially represented by a Temporary Global Note.
If a Temporary Global Note and/or Permanent Global Note is issued in NGN form, Euroclear and Clearstream, Luxembourg will be informed whether or not the Notes are intended to be held as eligible collateral for Eurosystem monetary policy and intra-day credit operations by the Eurosystem ("Eurosystem eligible collateral"). The designation that Notes are intended to be held as Eurosystem eligible collateral means that the Notes are intended upon issue to be deposited with Euroclear or Clearstream, Luxembourg as common safekeeper and does not necessarily mean that the Notes will be recognised as eligible collateral for Eurosystem monetary policy and intra-day credit operations by the Eurosystem either upon issue or at any or all times during their life. In the case of Notes which are not intended to be held as Eurosystem eligible collateral as of their issue date, should the Eurosystem eligibility criteria be amended in the future such that the Notes are capable of meeting them, the Notes may then be deposited with Euroclear or Clearstream, Luxembourg as common safekeeper. This does not necessarily mean that the Notes will then be recognised as eligible collateral for Eurosystem monetary policy and intra-day credit operations by the Eurosystem at any time during their life. In either case, such recognition will depend upon the European Central Bank being satisfied that Eurosystem eligibility criteria have been met.
Prior to the expiry of the distribution compliance period (as defined in Regulation S under the Securities Act) applicable to each Tranche of Notes, beneficial interests in a Temporary Global Note, a Permanent Global Note or definitive Bearer Notes may not be offered or sold to, or for the account or benefit of, a U.S. person (as defined in Regulation S under the Securities Act).
Whilst any Bearer Note issued under TEFRA D is represented by a Temporary Global Note, payments of principal and interest (if any) and any other amount payable in respect of the Temporary Global Note due prior to the Exchange Date (as defined below) will be made outside the United States and its possessions (against presentation of the Temporary Global Note if the Temporary Global Note is not intended to be issued in NGN form) only to the extent that certification (in a form to be provided) to the effect that the beneficial owner of such Bearer Note is not a U.S. person or a person who has purchased for resale, directly or indirectly, to any U.S. person, as required by TEFRA D and applicable U.S. securities laws, has been received by Euroclear and/or Clearstream, Luxembourg, and Euroclear and/or Clearstream, Luxembourg, as applicable, has given a like certification (based on the certifications it/they has/have received) to the Principal Paying Agent.
On and after the date (the "Exchange Date") which is the later of (i) 40 days after the date on which any Temporary Global Note is issued and (ii) 40 days after the completion of the distribution of the relevant Tranche, as certified by the relevant Dealer(s) (in the case of a non-syndicated issue) or the relevant lead manager (in the case of a syndicated issue), interests in such Temporary Global Note will be exchangeable (free of charge) upon a request as described therein either (i) for interests in a Permanent Global Note of the same Series or (ii) for definitive Bearer Notes of the same Series with, where applicable, Receipts, Coupons and (if, at the time of exchange into definitive form, more than 27 coupon payments are left) Talons attached (as indicated in the applicable Final Terms), in each case if the Bearer Notes were issued under TEFRA D against certification of non-U.S. beneficial ownership as described above unless such certification has already been given. The holder of a Temporary Global Note will not be entitled to collect any payment of interest, principal or other amount due on or after the Exchange Date unless, upon due certification, exchange of the Temporary Global Note for an interest in a Permanent Global Note or definitive Bearer Notes is improperly withheld or refused. The exchange upon notice or at any time options should not be expressed to be applicable if the Specified Denomination of the Notes includes language substantially to the following effect: "€100,000 and integral multiples of €1,000 in excess thereof up to and including €199,000". Furthermore, such Specified Denomination construction is not permitted in relation to any issuance of Notes which is to be represented on issue by a Permanent Global Note exchangeable for Definitive Notes.
Payments of principal, interest (if any) or any other amounts on a Permanent Global Note will be made through Euroclear and/or Clearstream, Luxembourg (against presentation or surrender (as the case may be) outside the United States and its possessions of the Permanent Global Note if the Permanent Global Note is not intended to be issued in NGN form) without any requirement for certification.
The applicable Final Terms will specify that a Permanent Global Note will be exchangeable (free of charge) in whole, but not in part, for definitive Bearer Notes with, where applicable, Receipts, Coupons and Talons attached upon either (i) not less than 60 days' written notice from Euroclear and/or Clearstream, Luxembourg (acting on the instructions of any holder of an interest in such Permanent Global Note) to the Principal Paying Agent as described therein or (ii) only upon the occurrence of an Exchange Event. For these purposes, and in respect of Bearer Notes only, "Exchange Event" means that (i) an Event of Default (as defined in Condition 9) has occurred and is continuing, (ii) the relevant Issuer has been notified that both Euroclear and Clearstream, Luxembourg have been closed for business for a continuous period of 14 days (other than by reason of holiday, statutory or otherwise) or have announced an intention permanently to cease business or have in fact done so and no successor clearing system is available or (iii) the relevant Issuer has or will become subject to adverse tax consequences which would not be suffered were the Notes represented by the Permanent Global Note issued in definitive Bearer Note form. The relevant Issuer will promptly give notice to Noteholders in accordance with Condition 13 if an Exchange Event occurs. In the event of the occurrence of an Exchange Event, Euroclear and/or Clearstream, Luxembourg (acting on the instructions of any holder of an interest in such Permanent Global Note) may give notice to the Principal Paying Agent requesting exchange and, in the event of the occurrence of an Exchange Event as described in (iii) above, the relevant Issuer may also give notice to the Principal Paying Agent requesting exchange. Any such exchange shall occur not later than 45 days after the date of receipt of the first relevant notice by the Principal Paying Agent.
No definitive Bearer Note delivered in exchange for a Temporary Global Note or a Permanent Global Note will be mailed or otherwise delivered to any location in the United States or its possessions in connection with any such exchange.
Each of MHC, MHCUK and MHFA may issue Notes in registered form ("Registered Notes").
Each Tranche of Registered Notes will be in the form of either a global Registered Note (a "Global Registered Note") or definitive Registered Notes, without Receipts, Coupons or Talons attached, in each case as specified in the applicable Final Terms.
Prior to the expiry of the distribution compliance period (as defined in Regulation S under the Securities Act) applicable to each Tranche of Notes, beneficial interests in a Global Registered Note or definitive Registered Notes may not be offered or sold to, or for the account or benefit of, a U.S. person (as defined in Regulation S under the Securities Act).
Each Global Registered Note will be deposited on or around the relevant issue date with a depositary or a common depositary for Euroclear and/or Clearstream, Luxembourg and/or any other relevant clearing system and registered in the name of a nominee for such depositary and will be exchangeable for definitive Registered Notes in accordance with its terms.
Payments of principal, interest (if any) and any other amount in respect of a Global Registered Note will, in the absence of provision to the contrary, be made to the person shown on the Register as the registered holder of the relevant Global Registered Note. None of the Issuers, the Guarantor, the Principal Paying Agent, any Paying Agent or the Registrar will have any responsibility or liability for any aspect of the records relating to or payments or deliveries made on account of beneficial ownership interests in a Global Registered Note or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests. Payments of principal, interest (if any) or any other amount in respect of the Registered Notes in definitive form will be made to the persons shown on the Register on the relevant Record Date (as defined under "Terms and Conditions of the Notes") immediately preceding the due date for payment in the manner provided in the Terms and Conditions of the Notes.
If the applicable Final Terms specifies the form of Notes as being "Global Registered Note exchangeable for definitive Registered Notes", then the Notes will initially be in the form of a Global Registered Note which will be exchangeable (free of charge) in whole, but not in part, for definitive Registered Notes, without Receipts, Coupons or Talons attached, upon either (i) not less than 60 days' written notice from Euroclear and/or Clearstream, Luxembourg (acting on the instructions of any holder of an interest in such Global Registered Note) to the Registrar as described therein or (ii) only upon the occurrence of an Exchange Event. For these purposes, and in respect of Global Registered Notes only, "Exchange Event" means that (i) an Event of Default (as defined in Condition 9) has occurred and is continuing, (ii) the relevant Issuer has been notified that both Euroclear and Clearstream, Luxembourg have been closed for business for a continuous period of 14 days (other than by reason of holiday, statutory or otherwise) or have announced an intention permanently to cease business or have in fact done so and no successor clearing system is available or (iii) the relevant Issuer has or will become subject to adverse tax consequences which would not be suffered were the Notes represented by the Global Registered Note issued in definitive Registered Note form. The relevant Issuer will promptly give notice to Noteholders in accordance with Condition 13 if an Exchange Event occurs. In the event of the occurrence of an Exchange Event, Euroclear and/or Clearstream, Luxembourg (acting on the instructions of any holder of an interest in such Global Registered Note) may give notice to the Registrar requesting exchange and, in the event of the occurrence of an Exchange Event as described in (iii) above, the relevant Issuer may also give notice to the Registrar requesting exchange. Any such exchange shall occur not later than 45 days after the date of receipt of the first relevant notice by the Registrar.
If the applicable Final Terms specifies the form of Notes as being "definitive Registered Notes", then the Notes will at all times be in the form of definitive Registered Notes issued to each Noteholder in respect of their respective holdings.
The following summary of certain settlement and trading procedures is generally based on current law and practice and assumes that the Notes will be issued, offered, sold or re-sold, directly or indirectly, to professional investors as defined under Paragraph 1 of Article 2-1 of the Taipei Exchange Rules Governing Management of Foreign Currency Denominated International Bonds of Taiwan ("TPEx Rules") only and pursuant to such TPEx Rules and other relevant rules and regulations of Taiwan.
Initial subscription of the Notes by investors will be settled directly through Euroclear or Clearstream, Luxembourg. In order to purchase the Notes, an investor must have an account with Euroclear or Clearstream, Luxembourg and settle the Notes through such account with Euroclear or Clearstream, Luxembourg. For any Taiwanese investor having its own account with Euroclear or Clearstream, Luxembourg, the distributions of principal and/or interest for the Notes to such holders will be made to its own account with Euroclear or Clearstream, Luxembourg.
As of the date of this Offering Circular, the Issuers have not entered into any settlement agreement with the Taiwan Depository & Clearing Corporation ("TDCC") and have no intention to do so. In the future, if an Issuer enters into a settlement agreement with TDCC, an investor, if it has a securities book-entry account with a Taiwan securities broker and a foreign currency deposit account with a Taiwan bank, may settle the Notes issued by such Issuer through the account of TDCC with Euroclear or Clearstream, Luxembourg if it applies to TDCC (by filing in a prescribed form) to transfer the Notes issued by such Issuer in its own account with Euroclear or Clearstream, Luxembourg to such TDCC account with Euroclear or Clearstream, Luxembourg for trading in the domestic market or vice versa for trading in overseas markets. For settlement through TDCC, TDCC will allocate the respective Notes position to the securities book-entry account designated by such investor in Taiwan. The Notes will be traded and settled pursuant to the applicable rules and operating procedures of TDCC and the Taipei Exchange ("TPEx") as domestic bonds. For such investors who hold their interest in the Notes through an account opened and held by TDCC with Euroclear or Clearstream, Luxembourg, distributions of principal and/or interest for the Notes to such holders may be made by payment services banks whose systems are connected to TDCC to the foreign currency deposit accounts of the holders. Such payment is expected to be made on the second Taiwanese business day following TDCC's receipt of such payment (due to time difference, the payment is expected to be received by TDCC one Taiwanese business day after the distribution date). However, when the holders will actually receive such distributions may vary depending upon the daily operations of the Taiwan banks with which the holder has the foreign currency deposit account.
The following legend will appear on all Notes and (if applicable) Receipts, Coupons and Talons:
"THE NOTES HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") AND MAY NOT BE OFFERED, SOLD OR DELIVERED WITHIN THE UNITED STATES OR ITS POSSESSIONS OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS UNLESS AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT IS AVAILABLE."
The following legend will appear on all global Bearer Notes, definitive Bearer Notes, Receipts, Coupons and Talons issued by MHC and MHCUK with an initial maturity of more than 1 year (taking into account any unilateral right to extend or rollover):
"Any United States person who holds this obligation will be subject to limitations under the United States income tax laws, including the limitations provided in sections 165(j) and 1287(a) of the Internal Revenue Code."
The sections of the Internal Revenue Code referred to provide that United States persons, with certain exceptions, will not be entitled to deduct any loss on Notes, Receipts or Coupons and will not be entitled to capital gains treatment of any gain on any sale, disposition, redemption or payment of principal in respect of Notes, Receipts or Coupons.
AMTNs will be issued only as Registered Notes. AMTNs will be issued by MHCUK in registered uncertificated form, constituted by the Note (AMTN) Deed Poll (as defined under "Terms and Conditions of the Notes") and will take the form of entries on a register established and maintained by a registrar in Australia and may be lodged with the Austraclear System.
On issue of any AMTNs, MHCUK may, as specified in the applicable Final Terms, procure that the AMTNs are lodged in the Austraclear System. On lodgement, Austraclear will become the sole registered holder and legal owner of the AMTNs. Subject to the rules and regulations known as the "Austraclear System Regulations" established by Austraclear (as amended or replaced from time to time) to govern the use of the Austraclear System, participants of the Austraclear System ("Accountholders") may acquire rights against Austraclear in relation to those AMTNs as beneficial owners and Austraclear is required to deal with the AMTNs in accordance with the directions and instructions of the Accountholders. Any prospective investors who are not Accountholders would need to hold their interest in the relevant AMTNs through a nominee who is an Accountholders. All payments by or on behalf of MHCUK in respect of AMTNs entered in the Austraclear System will be made directly to an account agreed with Austraclear or as it directs in accordance with the Austraclear System Regulations.
Once lodged with the Austraclear System, interests in the AMTNs may be held through Euroclear or Clearstream, Luxembourg. In these circumstances, entitlements in respect of holdings of interests in the AMTNs in Euroclear would be held in the Austraclear System by HSBC Custody Nominees (Australia) Limited as nominee of Euroclear, while entitlements in respect of holdings of interests in the AMTNs in Clearstream, Luxembourg would be held in the Austraclear System by BNP PARIBAS, Australia Branch as nominee of Clearstream, Luxembourg.
The rights of a holder of interests in AMTNs held through Euroclear or Clearstream, Luxembourg are subject to the respective rules and regulations of Euroclear and Clearstream, Luxembourg, the arrangements between Euroclear and Clearstream, Luxembourg and their respective nominees and the Austraclear System Regulations.
Any transfer of AMTNs will be subject to the Corporations Act 2001 of Australia and the other requirements set out in the Conditions and, where the AMTNs are entered in the Austraclear System, the Austraclear System Regulations.
Secondary market sales of AMTNs settled in the Austraclear System will be settled in accordance with the Austraclear System Regulations.
Accountholders who acquire an interest in AMTNs entered in the Austraclear System must look solely to Austraclear for their rights in relation to such AMTNs and will have no claim directly against MHCUK in respect of such AMTNs although under the Austraclear System Regulations, Austraclear may direct MHCUK to make payments direct to the relevant Accountholders.
Where Austraclear is registered as the holder of any AMTNs that are lodged in the Austraclear System, Austraclear may, where specified in the Austraclear System Regulations, transfer the AMTNs to the person in whose Security Record (as defined in the Austraclear System Regulations) those AMTNs are recorded and, as a consequence, remove those AMTNs from the Austraclear System.
Potential investors should inform themselves of, and satisfy themselves with, the Austraclear System Regulations and (where applicable) the rules of Euroclear and Clearstream, Luxembourg and the arrangements between their nominees in the Austraclear System.
AMTNs lodged with the Austraclear System will be transferable only in accordance with the rules and regulations (in force from time to time) of the Austraclear System. The transferor of an AMTN is deemed to remain the Noteholder of such AMTN until the name of the transferee is entered in the Register in respect of such AMTN.
Set out below is the form of Final Terms which will be completed for each Tranche of Notes issued under the Programme with a denomination of at least €100,000 (or its equivalent in another Specified Currency).
Final Terms dated [Date]
[MITSUBISHI HC CAPITAL UK PLC Legal Entity Identifier (LEI): 549300P4PHVCL0EZU771] Issue of [Aggregate Nominal Amount of Tranche] [Title of Notes] [Guaranteed by Mitsubishi HC Capital Inc.]
under the U.S.\$12,500,000,000 EURO NOTE PROGRAMME
[PROHIBITION OF SALES TO EEA RETAIL INVESTORS: THE NOTES ARE NOT INTENDED TO BE OFFERED, SOLD OR OTHERWISE MADE AVAILABLE TO AND SHOULD NOT BE OFFERED, SOLD OR OTHERWISE MADE AVAILABLE TO ANY RETAIL INVESTOR IN THE EUROPEAN ECONOMIC AREA ("EEA"). FOR THESE PURPOSES, A RETAIL INVESTOR MEANS A PERSON WHO IS ONE (OR MORE) OF:
CONSEQUENTLY, NO KEY INFORMATION DOCUMENT REQUIRED BY REGULATION (EU) NO 1286/2014, AS AMENDED (THE "PRIIPS REGULATION") FOR OFFERING OR SELLING THE NOTES OR OTHERWISE MAKING THEM AVAILABLE TO RETAIL INVESTORS IN THE EEA HAS BEEN PREPARED AND THEREFORE OFFERING OR SELLING THE NOTES OR OTHERWISE MAKING THEM AVAILABLE TO ANY RETAIL INVESTOR IN THE EEA MAY BE UNLAWFUL UNDER THE PRIIPS REGULATION.]1
[PROHIBITION OF SALES TO UK RETAIL INVESTORS: THE NOTES ARE NOT INTENDED TO BE OFFERED, SOLD OR OTHERWISE MADE AVAILABLE TO AND SHOULD NOT BE OFFERED, SOLD OR OTHERWISE MADE AVAILABLE TO ANY RETAIL INVESTOR
1 Legend to be included on the front of the Final Terms if "Prohibition of Sales to EEA Retail Investors" (see Part B, paragraph 10(i)) is specified as "Applicable".
IN THE UNITED KINGDOM ("UK"). FOR THESE PURPOSES, A RETAIL INVESTOR MEANS A PERSON WHO IS ONE (OR MORE) OF:
CONSEQUENTLY, NO KEY INFORMATION DOCUMENT REQUIRED BY [REGULATION (EU) NO 1286/2014]/[THE PRIIPS REGULATION] AS IT FORMS PART OF DOMESTIC UK LAW (THE "UK PRIIPS REGULATION") FOR OFFERING OR SELLING THE NOTES OR OTHERWISE MAKING THEM AVAILABLE TO RETAIL INVESTORS IN THE UK HAS BEEN PREPARED AND THEREFORE OFFERING OR SELLING THE NOTES OR OTHERWISE MAKING THEM AVAILABLE TO ANY RETAIL INVESTOR IN THE UK MAY BE UNLAWFUL UNDER THE UK PRIIPS REGULATION.]2
[MIFID II PRODUCT GOVERNANCE / TARGET MARKET: SOLELY FOR THE PURPOSES OF [THE/EACH] MANUFACTURER['S/S'] PRODUCT APPROVAL PROCESS, THE TARGET MARKET ASSESSMENT IN RESPECT OF THE NOTES HAS LED TO THE CONCLUSION THAT:
ANY PERSON SUBSEQUENTLY OFFERING, SELLING OR RECOMMENDING THE NOTES (A "DISTRIBUTOR") SHOULD TAKE INTO CONSIDERATION THE MANUFACTURER['S/S'] TARGET MARKET ASSESSMENT; HOWEVER, A DISTRIBUTOR SUBJECT TO MIFID II IS RESPONSIBLE FOR UNDERTAKING ITS OWN TARGET MARKET ASSESSMENT IN RESPECT OF THE NOTES (BY EITHER ADOPTING OR REFINING THE MANUFACTURER['S/S'] TARGET MARKET ASSESSMENT) AND DETERMINING APPROPRIATE DISTRIBUTION CHANNELS.]
[UK MIFIR PRODUCT GOVERNANCE / TARGET MARKET: SOLELY FOR THE PURPOSES OF [THE/EACH] MANUFACTURER['S/S'] PRODUCT APPROVAL PROCESS, THE TARGET MARKET ASSESSMENT IN RESPECT OF THE NOTES HAS LED TO THE CONCLUSION THAT:
(A) THE TARGET MARKET FOR THE NOTES IS ONLY ELIGIBLE COUNTERPARTIES, AS DEFINED IN THE FCA HANDBOOK CONDUCT OF BUSINESS SOURCEBOOK ("COBS"), AND
2 Legend to be included on the front of the Final Terms if "Prohibition of Sales to UK Retail Investors" (see Part B, paragraph 10(ii)) is specified as "Applicable".
PROFESSIONAL CLIENTS, AS DEFINED IN REGULATION (EU) NO 600/2014 AS IT FORMS PART OF DOMESTIC UK LAW ("UK MIFIR"); AND
(B) ALL CHANNELS FOR DISTRIBUTION OF THE NOTES TO ELIGIBLE COUNTERPARTIES AND PROFESSIONAL CLIENTS ARE APPROPRIATE.
ANY PERSON SUBSEQUENTLY OFFERING, SELLING OR RECOMMENDING THE NOTES (A "DISTRIBUTOR") SHOULD TAKE INTO CONSIDERATION THE MANUFACTURER['S/S'] TARGET MARKET ASSESSMENT; HOWEVER, A DISTRIBUTOR SUBJECT TO THE FCA HANDBOOK PRODUCT INTERVENTION AND PRODUCT GOVERNANCE SOURCEBOOK (THE "UK MIFIR PRODUCT GOVERNANCE RULES") IS RESPONSIBLE FOR UNDERTAKING ITS OWN TARGET MARKET ASSESSMENT IN RESPECT OF THE NOTES (BY EITHER ADOPTING OR REFINING THE MANUFACTURER['S/S'] TARGET MARKET ASSESSMENT) AND DETERMINING APPROPRIATE DISTRIBUTION CHANNELS.]
[Terms used herein shall be deemed to be defined as such for the purposes of the Terms and Conditions (the "Conditions") set forth in the Offering Circular dated [●] which constitutes a base prospectus for the purposes of the UK Prospectus Regulation. This document constitutes the Final Terms of the Notes described herein for the purposes of Article 8 of the UK Prospectus Regulation and must be read in conjunction with the Offering Circular [and the supplement[s] thereto dated [●]] which constitute[s] a base prospectus for the purposes of the UK Prospectus Regulation. Full information on the Issuer[, the Guarantor] and the offer of the Notes is only available on the basis of the combination of these Final Terms and the Offering Circular [as so supplemented]. Copies of the Offering Circular [and the supplements thereto] may be obtained during normal business hours from the registered office of the Issuer and from the specified office of the Principal Paying Agent in London. In addition, copies of the Offering Circular [and the supplements thereto] will be published on the website of the Regulatory News Service operated by the London Stock Exchange, and will also be available for viewing on the UK National Storage Mechanism (https://data.fca.org.uk/#/nsm/nationalstoragemechanism).]/[Terms used herein shall be deemed to be defined as such for the purposes of the Terms and Conditions (the "Conditions") set forth in the Offering Circular dated [original date], which are incorporated by reference in the Offering Circular dated [●]. This document constitutes the Final Terms of the Notes described herein for the purposes of Article 8 of the UK Prospectus Regulation and must be read in conjunction with the Offering Circular dated [●] [and the supplement[s] thereto dated [●]] which constitute[s] a base prospectus for the purposes of the UK Prospectus Regulation. Full information on the Issuer[, the Guarantor] and the offer of the Notes is only available on the basis of the combination of these Final Terms and the Offering Circular dated [●] [as so supplemented]. Copies of such Offering Circular [and the supplement[s] thereto] may be obtained during normal business hours from the registered office of the Issuer and from the specified office of the Principal Paying Agent in London. In addition, copies of the Offering Circular [and the supplements thereto] will be published on the website of the Regulatory News Service operated by the London Stock Exchange, and will also be available for viewing on the UK National Storage Mechanism (https://data.fca.org.uk/#/nsm/nationalstoragemechanism).] The expression "UK Prospectus Regulation" means Regulation (EU) 2017/1129 as it forms part of domestic UK law.
[Insert the following language for an issue by MHCUK of AMTNs: The Notes will be constituted by a deed poll ("Note (AMTN) Deed Poll") dated 27 September 2023 executed by the Issuer and will be issued in registered uncertificated form by inscription on a register. The Notes are "AMTNs" for the purposes of the Offering Circular dated [●] and the relevant Conditions.
Notes will be offered in Australia only in the wholesale capital markets and on the basis that no disclosure to investors is required under Part 6D.2 or Chapter 7 of the Corporations Act 2001 of Australia.]
| 1. | (i) | Issuer: | [Mitsubishi HC Capital Inc./Mitsubishi HC Capital UK PLC] |
|---|---|---|---|
| (ii) | [Guarantor:] | [Mitsubishi HC Capital Inc.] | |
| 2. | (i) | Series Number: | [●] |
| (ii) | Tranche Number: | [●] | |
| [(iii) | Date on which the Notes become fungible: |
[Not Applicable/[●]] | |
| 3. | Specified Currency [or Currencies]: | [●] | |
| 4. | Aggregate Nominal Amount: | ||
| (i) | Series | [●] | |
| (ii) | Tranche: | [●] | |
| 5. | Issue Price: | [●] | |
| 6. | (i) | Specified Denomination(s): | 3 [●] [If Notes issued by MHCUK are AMTNs insert the following: |
| Subject to the requirement that the amount payable by each person who subscribed for the Notes in Australia must be at least AUD500,000 (disregarding monies lent by the Issuer or its associates).] |
|||
| (ii) | Calculation Amount: | [●] | |
| 7. | (i) | Issue Date: | [●] |
| (ii) | Interest Commencement Date: | [●] | |
| 8. | Maturity Date: | [●] | |
| 9. | Interest Basis: | [[●] per cent. Fixed Rate] | |
| [[●] +/- [●] per cent. Floating Rate] | |||
| [Zero Coupon] | |||
| [Dual Currency Interest] | |||
| [Index Linked Interest] | |||
| 10. | Redemption/Payment Basis: | [Redemption at par] | |
| [Dual Currency Redemption] | |||
| [Instalment] | |||
| [Index Linked Redemption] | |||
| 11. | Change of Interest Basis or Redemption/Payment Basis: |
[Applicable/Not Applicable] | |
| 12. | Put/Call Options: | [Not Applicable] | |
| [Investor Put] | |||
| [Issuer Call] | |||
| 13. | Date of Board Resolutions: | [●] [and [●] respectively] |
3 If the Notes are AMTNs to be admitted to trading on the main market of the London Stock Exchange, the Specified Denomination must be more than €100,000 (or its equivalent in another currency).
| 14. | Fixed Rate Note Provisions | [Applicable/Not Applicable] | |
|---|---|---|---|
| (i) | Rate(s) of Interest: | [●] per cent. per annum payable on each Interest Payment Date [adjusted in accordance with the Interest Ratchet] |
|
| (ii) | Step Up Event/Step Down Event: | [Yes/No] | |
| (iii) | Step Up Margin: | [Not Applicable/[●] per cent. per annum] | |
| (iv) | Interest Payment Date(s): | [●] [adjusted in accordance with the Business Day Convention specified below/(not adjusted)] |
|
| (Interest Payment Dates for Fixed Rate Notes are normally not subject to adjustment by any Business Day Convention) |
|||
| (v) | Business Day Convention: | [Following Business Day Convention/Modified Following Business Day Convention/Preceding Business Day Convention] |
|
| (vi) | Additional Business Centre(s): | [●] | |
| (vii) | Fixed Coupon Amount(s): | [●] per Calculation Amount | |
| (viii) | Broken Amount(s): | [●] per Calculation Amount, payable on the Interest Payment Date falling [in/on] [●] |
|
| (ix) | Fixed Day Count Fraction: | [Actual/Actual (ICMA) / 30/360 / Actual/365 (Fixed) / RBA Bond Basis] |
|
| (x) | [Determination Dates: | [●] in each year] | |
| 15. | Floating Rate Note Provisions | [Applicable/Not Applicable] | |
| (i) | Specified Period(s)/Specified Interest Payment Dates: |
[[●] in each year, subject to adjustment in accordance with the Business Day Convention set out in (iii) below] |
|
| (ii) | First Interest Payment Date: | [●] | |
| (iii) | Business Day Convention: | [Floating Rate Convention/Following Business Day Convention/Modified Following Business Day Convention/Preceding Business Day Convention] |
|
| (iv) | Additional Business Centre(s): | [●] | |
| (v) | Manner in which the Rate(s) of Interest and Interest Amount(s) is/are to be determined: |
[Screen Rate Determination/ISDA Determination] | |
| (vi) | Party responsible for calculating the Rate(s) of Interest and Interest Amount(s) (if not the Principal Paying Agent): |
[●] | |
| (vii) | Screen Rate Determination: | [Applicable/Not Applicable] | |
(a) Reference Rate: [EURIBOR/ BBSW Rate/ AONIA Rate/ BKBM/ CMS/ CNH HIBOR/ Compounded Daily SONIA/ HIBOR/ NDBB/ NIBOR/ SOFR/ Compounded Daily
| SOFR/ Compounded SOFR Index/ SONIA/ SORF/ STIBOR/ TIBOR/ TONA/ Compounded Daily CORRA/ CORRA Compounded Index/ SARON/ WIBOR] |
|
|---|---|
| (b) Interest Determination Date(s): | [[●]/[as per the Conditions]] |
| (c) Relevant Screen Page: | [●] |
| (d) Relevant Time: | [●] in the Relevant Financial Centre |
| (e) Relevant Financial Centre: | [London/ Brussels/ Sydney/ Auckland/ Toronto/ Hong Kong/ Oslo/ New York/ Singapore/ Stockholm/ Tokyo/ Wellington/ Warsaw/ [●]] |
| (f) Designated Maturity: | [●] |
| (g) Compounded Daily SOFR: | [Not Applicable/ SOFR Lag/ SOFR Observation Shift/ SOFR Payment Delay/ SOFR Lockout] (Only applicable in the case of Compounded Daily SOFR) |
| (h) Lookback Days: | [Not Applicable/[●] U.S. Government Securities Business Day(s)] (Only applicable in the case of SOFR Lag) |
| (i) SOFR Observation Shift Days: | [Not Applicable/[●] U.S. Government Securities Business Day(s)] (Only applicable in the case of SOFR Observation Shift or Compounded SOFR Index) |
| (j) Interest Payment Delay Days: | [Not Applicable/[●] U.S. Government Securities Business Day(s) (Only applicable in the case of SOFR Payment Delay) |
| (k) SOFR Rate Cut-Off Date: | [Not Applicable/The day that is the [●] U.S. Government Securities Business Day(s) prior to the end of each Interest Period] (Only applicable in the case of Compounded Daily SOFR: SOFR Payment Delay or Compounded Daily SOFR: SOFR Lockout) |
| (l) SOFR IndexStart: | [Not Applicable/[●] U.S. Government Securities Business Day(s)] (Only applicable in the case of Compounded SOFR Index) |
| (m)SOFR IndexEnd: | [Not Applicable/[●] U.S. Government Securities Business Day(s)] (Only applicable in the case of Compounded SOFR Index) |
| (n) Benchmark Discontinuation (SOFR) | [Applicable/Not Applicable] |
| (o) Observation Look-Back Period: | [●]/[Not Applicable] |
| (p) TONA Rate of Interest Determination method: |
[TONA Lookback Compound][TONA Shift Compound] |
| (q) Observation Shift Days: | [●] [Tokyo Banking Days][Bank of Canada Business Days][Zurich Banking Days] |
|
|---|---|---|
| (only applicable in the case of TONA Shift Compound, Compounded Daily CORRA and SARON) |
||
| (viii) | ISDA Determination: | [2006 ISDA Determination/2021 ISDA Determination] |
| (a) Floating Rate Option: | [●] | |
| (b) Designated Maturity: | [●] | |
| (c) Reset Date: | [●] | |
| (d) Compounding: | [Applicable/Not Applicable] | |
| (e) Compounding Method: | [Compounding with Lookback Lookback: [●] Applicable Business Days] |
|
| [Compounding with Observation Period Shift Observation Period Shift: [●] Observation Period Shift Business Days |
||
| Observation Period Shift Additional Business Days: [●]/[Not Applicable]] |
||
| [Compounding with Lockout Lockout: [●] Lockout Period Business Days Lockout Period Business Days: [●]/[Applicable Business Days]] |
||
| (to be at least five Applicable Business Days/Observation Period Shift Business Days/Lockout Period Business Days unless otherwise agreed with the Calculation Agent) |
||
| (f) Index Provisions: | [Applicable/Not Applicable] | |
| (g) Index Method: | [Compounded Index Method with Observation Period Shift |
|
| Observation Period Shift: [●] Observation Period Shift Business Days |
||
| Observation Period Shift Additional Business Days: [●]/[Not Applicable]] |
||
| (To be at least five Observation Period Shift Business Days unless otherwise agreed with the Calculation Agent) |
||
| (ix) | Linear Interpolation: | [Not Applicable]/[Applicable. The Rate of Interest for the [long/short] [first/last] Interest Period shall be calculated using Linear Interpolation.] |
| (x) | Margin(s): | [+/-] [●] per cent. per annum |
| (xi) | Minimum Interest Rate: | [●] per cent. per annum |
| (xii) | Maximum Interest Rate: | [●] per cent. per annum |
| (xiii) | Day Count Fraction: | [Actual/Actual (ISDA) / Actual/365 (Fixed) / Actual/365 (Sterling) / Actual/360 / 30/360 / 30E/360 / 30E/360 (ISDA)] |
|
|---|---|---|---|
| 16. | Zero Coupon Note Provisions | [Applicable/Not Applicable] | |
| (i) | Accrual Yield: | [●] per cent. per annum | |
| (ii) | Reference Price: | [●] | |
| (iii) | Day Count Fraction in relation to Early Redemption Amounts and late payment: |
[Conditions 6(e)(iii) and 6(j) apply] | |
| 17. | Dual Currency Interest Note Provisions | [Applicable/Not Applicable] | |
| (i) | Rate of Exchange: | [●] | |
| (ii) | Party, if any, responsible for calculating the principal and/or interest due: |
[Principal Paying Agent/[●]] | |
| (iii) | Person at whose option Specified Currency(ies) is/are payable: |
[●] | |
| 18. | Index Linked Interest Note Provisions | [Applicable/Not Applicable] | |
| (i) | Index/Basket of Indices/Index | [The "Index" means [●]] | |
| Sponsor/Reference Source: | [The Index is a Unitary Index/Multi-Exchange Index] | ||
| [The Index Sponsor for the Index is [●]] | |||
| [The Index Currency for the Index is [●]] | |||
| [The Reference Source for the Index is [●]] | |||
| (ii) | Index Linked Interest Formula: | Additional Condition 1.3 [(A)/(B)][(I)/(II)] shall apply | |
| [For the purpose of each item of the Index Linked Interest Formula, [(x)/(y)] shall apply] [the applicable Interest Amount shall be [●]] |
|||
| (iii) | Specified Period(s)/Specified Interest Period End Date(s): |
[[●] in each year from and including [●] to and including the Maturity Date [subject to adjustment in accordance with the Business Day Convention/subject to no adjustment]/[●]/[same as Specified Interest Payment Date(s)]] |
|
| (iv) | Specified Interest Payment Dates: | [[●] in each year from and including [●] to and including the Maturity Date [subject to adjustment in accordance with the Business Day Convention/[●]]] |
|
| (v) | Business Day Convention: | [Floating Rate Convention/Following Business Day Convention/Modified Following Business Day Convention/Preceding Business Day Convention] |
|
| (vi) | Additional Financial Centre(s) relating to Business Days: |
[[●]/Not Applicable] | |
| (vii) | Minimum Rate/Amount of Interest: | [[●] per cent. per annum/Not Applicable] | |
| (viii) | Medium Rate/Amount of Interest: | [[●] per cent. per annum/Not Applicable] | |
| (ix) | Maximum Rate/Amount of Interest: | [[●] per cent. per annum/Not Applicable] |
| (x) | Day Count Fraction: | [Actual/Actual (ISDA) / Actual/Actual (ICMA) / Actual/365 (Fixed) / Actual/360 / 30/360 / 30E/360 / 30E/360 (ISDA)] |
|
|---|---|---|---|
| (xi) | Exchange(s): | [●] | |
| (xii) | Related Exchange: | [[●]/All Exchanges] | |
| [(Paragraph [(I)/(II)] of the definition of "Related Exchange" in Additional Condition 1.2 shall apply)] |
|||
| (xiii) | Valuation Date(s): | [●] [(Paragraph [(b)(i)/(b)(ii)] of the definition of "Valuation Date" in Additional Condition 1.2 shall apply)] |
|
| (xiv) | Valuation Cut-Off Date(s): | [●]/[Paragraph (ii) of the definition of "Valuation Cut Off Date" in Additional Condition 1.2 shall apply] |
|
| (xv) | Barrier Level: | [[●]/Barrier Level 1: [●]; Barrier Level 2: [●] /Not Applicable] |
|
| (xvi) | Base Price | [As defined in Additional Condition 1.2/Not Applicable] |
|
| (xvii) Base Price Fixing Date: | [[●]/Not Applicable] | ||
| [(Paragraph [(I)/(II)/(III)] of the definition of "Base Price Fixing Date" in Additional Condition 1.2 shall apply)] |
|||
| (xviii) Base Price Valuation Cut-Off Date: | [●]/[Paragraph (ii) of the definition of "Base Price Valuation Cut-Off Date" in Additional Condition 1.2 shall apply] |
||
| (xix) | Correction Publication Cut-Off Date: | [Applicable/Not Applicable] | |
| [The immediately following business day of the original date of publication/[●]] |
|||
| (xx) | Additional Disruption Events: | Change in Law is [Applicable/Not Applicable] | |
| Hedging Disruption is [Applicable/Not Applicable] Increased Cost of Hedging is [Applicable/Not Applicable] |
|||
| PROVISIONS RELATING TO REDEMPTION | |||
| 19. | Notice periods for Condition 6(b) (Redemption and Purchase - Redemption for Tax Reasons): |
[As set out in Condition 6(b)/Minimum period: [●] days; Maximum period: [●] days] |
|
| 20. | Issuer Call: | [Applicable/Not Applicable] | |
| (i) | Optional Redemption Date(s): | [●] | |
| - Par Redemption Date: |
[●] | ||
| (ii) | Optional Redemption Amount and | [[●] per Calculation Amount]/[Make-Whole |
(iii) Reference Bond: [●]
amount(s):
method, if any, of calculation of such
Redemption Amount (Sterling)]/[Make-Whole Redemption Amount (Non-Sterling)]/[Par Redemption Amount]
| (iv) | Redemption Margin: | [●] | |
|---|---|---|---|
| (v) | Quotation Time: | [●] | |
| (vi) | If redeemable in part: | ||
| (a) Minimum Redemption Amount: | [●] per Calculation Amount | ||
| (b) Maximum Redemption Amount: | [●] per Calculation Amount | ||
| (vii) | Notice period: | [Minimum period: [●] days; Maximum period: [●] days] |
|
| 21. | Investor Put: | [Applicable/Not Applicable] | |
| (i) | Optional Redemption Date(s): | [●] | |
| (ii) | Optional Redemption Amount: | [●] | |
| (iii) | Notice period: | [Minimum period: [●] days; Maximum period: [●] days] |
|
| 22. | Final Redemption Amount: | [●] per Calculation Amount | |
| 23. | Index Linked Redemption Notes: | [Applicable/Not Applicable] | |
| (i) | Index Linked Automatic Early | [Applicable/Not Applicable] | |
| Redemption: | [For the purpose of the Automatic Early Redemption Event, Additional Condition 1.4(a)[(i)(x)/(i)(y)/ (ii)(x)/(ii)(y)] shall apply] |
||
| (ii) | Index Linked Final Redemption: | ||
| (a) Index/Basket of Indices/Index | [The "Index" means [●]] | ||
| Sponsor(s)/Reference Source: | [The Index is a Unitary Index/Multi-Exchange Index] | ||
| [The Index Sponsor for the Index is [●]] | |||
| [The Index Currency for the Index is [●]] | |||
| [The Reference Source for the Index is [●]] | |||
| [As specified in item 18(i) in "Index Linked Interest Note Provisions" above] |
|||
| (b) Index Linked Redemption Formula: | Additional Condition 1.4(b)[(I)/(II)/(III)/(IV)] shall apply |
||
| [For the purpose of each item in the Index Linked Redemption Formula, [(x)/(y)] shall apply] |
|||
| (c) Automatic Early Redemption Amount: |
[●] per Calculation Amount | ||
| (d) Automatic Early Redemption Date(s): |
[●] | ||
| (e) Automatic Early Redemption Valuation Date(s): |
[●] | ||
| (f) Rounding (Index Performance): | [[Rounded down/Rounded up/Rounded to the [nearest [whole number [(with 0.5 being rounded up)]]]/[nearest [●] decimal places [(with [half of such number of decimal places] being rounded up)]]]] |
[Rounding Not Applicable]
| (g) Exchange(s): | [[●]/As specified in item 18(xi) of "Index Linked Interest Note Provisions" above] |
|---|---|
| (h) Related Exchange: | [[●]/All Exchanges/As specified in item 18(xii) of "Index Linked Interest Note Provisions" above] |
| (i) Valuation Date(s): | [[●]/As specified in item 18(xiii) of "Index Linked Interest Note Provisions" above] |
| (j) Valuation Cut-Off Date: | [●]/[Paragraph (ii) of the definition of "Valuation Cut Off Date" in Additional Condition 1.2 shall apply]/[As specified in item 18(xiv) of "Index Linked Interest Note Provisions" above] |
| (k) Observation Period: | [Applicable/Not Applicable] |
| (i) Observation Period Start Date: |
[[Including/Excluding] [●]/Not Applicable] |
| (ii) Observation Period End Date: |
[[Including/Excluding] [●]/Not Applicable] |
| (l) Barrier Event: | [Not Applicable/Barrier Event (intraday), Early Closure [applicable/not applicable]/Barrier Event (closing)] |
| [For the purpose of the definition of the Barrier Event Determination Day, [(a)(i)/(a)(ii)/(b)] shall apply] [For the purpose of definition of the Barrier Event (closing), [(a)(x)/(a)(y)/(b)(x)/(b)(y)] shall apply] [For the purpose of definition of the Barrier Event |
|
| (intraday), [(a)(x)/(a)(y)/(b)(x)/(b)(y)] shall apply] | |
| (m)Barrier Level: | [[●]/Not Applicable] |
| (n) Knock-out Price: | [[●]/Not Applicable] |
| (o) Strike Price: | [[●]/Not Applicable] |
| (p) Base Price: | [[●]/Not Applicable/As specified in item 18(xvi) of "Index Linked Interest Note Provisions" above] |
| (q) Base Price Fixing Date: | [[●]/Not Applicable] |
| [(Paragraph [(I)/(II)/(III)] of the definition of "Base Price Fixing Date" in Additional Condition 1.2 shall apply] |
|
| [As specified in item 18(xvii) of "Index Linked Interest Note Provisions" above] |
|
| (r) Base Price Valuation Cut-Off Date: | [●]/[Paragraph (ii) of the definition of "Base Price Valuation Cut-Off Date" in Additional Condition 1.2 shall apply]/[As specified in item 18(xviii) of "Index Linked Interest Note Provisions" above] |
| (s) Correction Publication Cut-Off Date: | [Applicable/Not Applicable] |
| [The immediately following business day of the original date of publication/[●]] |
|
| (t) Additional Disruption Events: | Change in Law is [Applicable/Not Applicable] |
Hedging Disruption is [Applicable/Not Applicable] Increased Cost of Hedging is [Applicable/Not Applicable]
[[●] per Calculation Amount]/[Early Redemption (Market Value) is applicable/not applicable]
Early Redemption Amount payable on redemption for taxation reasons or on event of default:
GENERAL PROVISIONS APPLICABLE TO THE NOTES
(i) Form: [Bearer Notes4 : [Temporary Global Note exchangeable for [a Permanent Global Note which is exchangeable for Definitive Notes [on [●] days' notice given at any time/only upon an Exchange Event]]/Definitive Notes on and after the Exchange Date]/[Permanent Global Note exchangeable for Definitive Notes [on [●] days' notice given at any time/only upon an Exchange Event]].] [Global Registered Note exchangeable for definitive Registered Notes [on [●] days' notice given at any time/only upon the occurrence of an Exchange Event]/[Definitive Registered Notes].] [If Notes issued by MHCUK are AMTNs use the following alternative text: The Notes are AMTNs as referred to in the Offering Circular and will be issued in registered uncertificated form, constituted by the Note (AMTN) Deed Poll and take the form of entries on a register to be maintained by the Australian Agent (as defined below). Copies of the Note (AMTN) Deed Poll are available from the Australian Agent at its principal office in Sydney.] (ii) New Global Note (NGN) / New Safekeeping Structure (NSS): [Yes/No/Not Applicable] [NGN/NSS] 26. Additional Financial Centre(s): [Not Applicable/[●]] 27. Talons for future Coupons or Receipts to be attached to Definitive Notes (and dates on which such Talons mature): [Yes. The Talons mature on [●]/No] 28. Details relating to Instalment Notes: [Applicable/Not Applicable] (i) Instalment Amount(s): [Not Applicable/[●]]
[Not Applicable/[●]]
4 If TEFRA D is applicable under "U.S. Selling Restrictions", the Notes must be initially represented by a Temporary Global Note.
| 30. | Calculation Agent: | [Principal Paying Agent/Australian Agent/[●]/Not Applicable] |
|---|---|---|
| 31. | Governing Law: | [English law]/[if Notes issued by MHCUK are AMTNs |
| insert the following: Laws of New South Wales, | ||
| Australia] |
Signed on behalf of [Mitsubishi HC Capital Inc./Mitsubishi HC Capital UK PLC]:
By: ............................................................... [By: ...............................................................
Duly authorised Duly authorised]
[Signed on behalf of Mitsubishi HC Capital Inc.:
By: ...............................................................
Duly authorised]
| (i) | Listing and admission to trading: | Application [will be/has been] made by the Issuer (or on its behalf) for the Notes to be admitted to trading on the London Stock Exchange's regulated market and to the official list of the FCA with effect from [the Issue Date/[●]] |
|---|---|---|
| (ii) | Estimate of total expenses related to admission to trading: |
[●] |
[The Notes to be issued have not been rated.]/[The Notes to be issued have been rated:
S&P Global Ratings Japan Inc. ("S&P Japan"): [●]. S&P Japan is not established in the EEA or the UK and is neither certified nor registered under Regulation (EC) No 1060/2009 on credit rating agencies, as amended (the "CRA Regulation") or the CRA Regulation as it forms part of domestic UK law (the "UK CRA Regulation"). However, ratings issued by S&P Japan are endorsed by S&P Global Ratings Europe Limited, which is established in the EEA and registered under the CRA Regulation, and by S&P Global Ratings UK Limited, which is
established in the UK and registered under the UK CRA Regulation.]
Japan Credit Rating Agency, Ltd. ("JCR"): [●]. JCR is not established in the EEA or the UK. JCR is certified under [Regulation (EC) No 1060/2009 on credit rating agencies, as amended] / [the CRA Regulation] and [the CRA Regulation as it forms part of domestic UK law] / [the UK CRA Regulation].
[The net proceeds from the issue of the Notes will be applied by the Issuer for [the general corporate purposes of the Issuer which include making a profit.]/[[financing or refinancing, in whole or in part, the Eligible Project Portfolio, which comprises a portfolio of projects meeting the eligibility criteria set out in the Green Finance Framework, as published on the Issuer's website and updated from time to time.][applicable to issuances by MHCUK only]]/[●]]
[Save for any fees payable to the [Manager[s]/Dealer[s]], so far as the Issuer is aware, no person involved in the issue of the Notes has an interest material to the offer.]
[●] has been extracted from [●]. The Issuer [and the Guarantor] confirm[s] that such information has been accurately reproduced and that, so far as [the Issuer/each of them] is aware and is able to ascertain from information published by [●], no facts have been omitted which would render the reproduced information inaccurate or misleading.]
Indication of yield: [●]
[Details of the past and future performance and volatility of the [Index/Basket of Indices] are set out below: [●] [and can be obtained free of charge]/Not Applicable]
| (i) | ISIN Code: | [●] |
|---|---|---|
| (ii) | Common Code: | [●] |
| (iii) | Any clearing system(s) other than Euroclear Bank SA/NV, Clearstream Banking S.A. and the Austraclear System and the relevant identification number(s): |
[Not Applicable/[●]] |
(iv) Names and addresses of additional Paying Agent(s) (if any):
(v) Intended to be held in a manner which would allow eligibility for collateral purposes in credit operations of the central banking system for the Euro (the "Eurosystem"):
[If Notes issued by MHCUK are AMTNs insert the following: EQT Australia Pty Ltd (ABN 88 111 042 132) has been appointed under the Registry and Agency Services Agreement dated 27 September 2023 as issuing and paying agent and registrar (the "Australian Agent") in respect of the Notes. The Australian Agent's address is Level 4, 7 Macquarie Place, Sydney NSW 2000, Australia.]
[Yes. Note that the designation "yes" means that the Notes are intended upon issue to be deposited with Euroclear or Clearstream, Luxembourg as common safekeeper [insert for Registered Notes which are to be held under the NSS:, and registered in the name of a nominee of Euroclear or Clearstream, Luxembourg acting as common safekeeper] and does not necessarily mean that the Notes will be recognised as eligible collateral for Eurosystem monetary policy and intra-day credit operations by the Eurosystem either upon issue or at any or all times during their life. Such recognition will depend upon the European Central Bank being satisfied that Eurosystem eligibility criteria have been met.]
[No. Whilst the designation is specified as "no" at the date of this Final Terms, should the Eurosystem eligibility criteria be amended in the future such that the Notes are capable of meeting them the Notes may then be deposited with Euroclear or Clearstream, Luxembourg as common safekeeper [insert for Registered Notes which are to be held under the NSS:, and registered in the name of a nominee of Euroclear or Clearstream, Luxembourg acting as common safekeeper]. Note that this does not necessarily mean that the Notes will then be recognised as eligible collateral for Eurosystem monetary policy and intra-day credit operations by the Eurosystem at any time during their life. Such recognition will depend upon the European Central Bank being satisfied that Eurosystem eligibility criteria have been met.]
[Applicable]/[Not Applicable]
[Applicable]/[Not Applicable]
| (iii) | U.S. selling restrictions: | [Regulation S Compliance Category 2; TEFRA D/TEFRA C/TEFRA not applicable]5 |
|---|---|---|
| (iv) | Prohibition of Sales to Belgian Consumers: |
[Applicable]/[Not Applicable] |
| (v) | If syndicated, names of Managers: | [Not Applicable/[●]] |
| (vi) | If non-syndicated, name of relevant Dealer: |
[Not Applicable/[●]] |
| (vii) | Additional selling restrictions: | [Not Applicable/[●]] |
[The Issuer [intends to provide post-issuance information/does not intend to provide post-issuance information].]
legal name]. As at the date hereof, [administrator legal name] [appears]/[does not appear] in the register of administrators and benchmarks established and maintained by the FCA pursuant to Article 36 of Regulation (EU) 2016/1011 as it forms part of domestic UK law (the "UK Benchmark Regulation"). [As far as the Issuer is aware, the transitional provisions in Article 51 of the UK Benchmark Regulation apply, such that [administrator legal name] is not currently required to obtain authorisation/registration (or, if located outside the United Kingdom, recognition, endorsement or equivalence).]]/[Not Applicable]
5 TEFRA not applicable may be used only for offerings of Registered Notes, or Bearer Notes with a term of one year or less (taking into account any unilateral right to extend or rollover).
Set out below is the form of Pricing Supplement for use in connection with Exempt Notes issued by MHC or MHFA under the Programme. This pro forma is subject to completion and amendment to set out the terms upon which each Tranche of Exempt Notes is to be issued.
Pricing Supplement dated [Date]
No prospectus is required in accordance with Regulation (EU) 2017/1129 as it forms part of domestic UK law, as amended, varied, superseded or substituted from time to time (the "UK Prospectus Regulation") for this issue of Notes. The Financial Conduct Authority, in its capacity as competent authority under the UK Prospectus Regulation, has neither approved nor reviewed the information contained in this Pricing Supplement.
Issue of [Aggregate Nominal Amount of Tranche] [Title of Notes] [Guaranteed by Mitsubishi HC Capital Inc.]
under the U.S.\$12,500,000,000 EURO NOTE PROGRAMME
[PROHIBITION OF SALES TO EEA RETAIL INVESTORS: THE NOTES ARE NOT INTENDED TO BE OFFERED, SOLD OR OTHERWISE MADE AVAILABLE TO AND SHOULD NOT BE OFFERED, SOLD OR OTHERWISE MADE AVAILABLE TO ANY RETAIL INVESTOR IN THE EUROPEAN ECONOMIC AREA ("EEA"). FOR THESE PURPOSES, A RETAIL INVESTOR MEANS A PERSON WHO IS ONE (OR MORE) OF:
CONSEQUENTLY, NO KEY INFORMATION DOCUMENT REQUIRED BY REGULATION (EU) NO 1286/2014, AS AMENDED (THE "PRIIPS REGULATION") FOR OFFERING OR SELLING THE NOTES OR OTHERWISE MAKING THEM AVAILABLE TO RETAIL INVESTORS IN THE EEA HAS BEEN PREPARED AND THEREFORE OFFERING OR SELLING THE NOTES OR OTHERWISE MAKING THEM AVAILABLE TO ANY RETAIL INVESTOR IN THE EEA MAY BE UNLAWFUL UNDER THE PRIIPS REGULATION.]6
[PROHIBITION OF SALES TO UK RETAIL INVESTORS: THE NOTES ARE NOT INTENDED TO BE OFFERED, SOLD OR OTHERWISE MADE AVAILABLE TO AND SHOULD NOT BE OFFERED, SOLD OR OTHERWISE MADE AVAILABLE TO ANY RETAIL INVESTOR IN THE UNITED KINGDOM ("UK"). FOR THESE PURPOSES, A RETAIL INVESTOR MEANS A PERSON WHO IS ONE (OR MORE) OF:
CONSEQUENTLY, NO KEY INFORMATION DOCUMENT REQUIRED BY [REGULATION (EU) NO 1286/2014]/[THE PRIIPS REGULATION] AS IT FORMS PART OF DOMESTIC UK LAW (THE "UK PRIIPS REGULATION") FOR OFFERING OR SELLING THE NOTES OR OTHERWISE MAKING THEM AVAILABLE TO RETAIL INVESTORS IN THE UK HAS BEEN PREPARED AND THEREFORE OFFERING OR SELLING THE NOTES OR OTHERWISE MAKING THEM AVAILABLE TO ANY RETAIL INVESTOR IN THE UK MAY BE UNLAWFUL UNDER THE UK PRIIPS REGULATION.]7
[MIFID II PRODUCT GOVERNANCE / TARGET MARKET: SOLELY FOR THE PURPOSES OF [THE/EACH] MANUFACTURER['S/S'] PRODUCT APPROVAL PROCESS, THE TARGET MARKET ASSESSMENT IN RESPECT OF THE NOTES HAS LED TO THE CONCLUSION THAT:
ANY PERSON SUBSEQUENTLY OFFERING, SELLING OR RECOMMENDING THE NOTES (A "DISTRIBUTOR") SHOULD TAKE INTO CONSIDERATION THE MANUFACTURER['S/S'] TARGET MARKET ASSESSMENT; HOWEVER, A DISTRIBUTOR SUBJECT TO MIFID II IS RESPONSIBLE FOR UNDERTAKING ITS OWN TARGET MARKET ASSESSMENT IN RESPECT OF THE NOTES (BY
6 Legend to be included on the front of the Pricing Supplement if "Prohibition of Sales to EEA Retail Investors" (see Part B, paragraph 9(i)) is specified as "Applicable".
7 Legend to be included on the front of the Pricing Supplement if "Prohibition of Sales to UK Retail Investors" (see Part B, paragraph 9(ii)) is specified as "Applicable".
EITHER ADOPTING OR REFINING THE MANUFACTURER['S/S'] TARGET MARKET ASSESSMENT) AND DETERMINING APPROPRIATE DISTRIBUTION CHANNELS.]
[UK MIFIR PRODUCT GOVERNANCE / TARGET MARKET: SOLELY FOR THE PURPOSES OF [THE/EACH] MANUFACTURER['S/S'] PRODUCT APPROVAL PROCESS, THE TARGET MARKET ASSESSMENT IN RESPECT OF THE NOTES HAS LED TO THE CONCLUSION THAT:
ANY PERSON SUBSEQUENTLY OFFERING, SELLING OR RECOMMENDING THE NOTES (A "DISTRIBUTOR") SHOULD TAKE INTO CONSIDERATION THE MANUFACTURER['S/S'] TARGET MARKET ASSESSMENT; HOWEVER, A DISTRIBUTOR SUBJECT TO THE FCA HANDBOOK PRODUCT INTERVENTION AND PRODUCT GOVERNANCE SOURCEBOOK (THE "UK MIFIR PRODUCT GOVERNANCE RULES") IS RESPONSIBLE FOR UNDERTAKING ITS OWN TARGET MARKET ASSESSMENT IN RESPECT OF THE NOTES (BY EITHER ADOPTING OR REFINING THE MANUFACTURER['S/S'] TARGET MARKET ASSESSMENT) AND DETERMINING APPROPRIATE DISTRIBUTION CHANNELS.]
[Terms used herein shall be deemed to be defined as such for the purposes of the Terms and Conditions (the "Conditions") set forth in the Offering Circular dated [●]. This document constitutes the final terms of the Notes described herein and must be read in conjunction with the Offering Circular [and the supplement[s] thereto dated [●]]. Full information on the Issuer, the Guarantor and the offer of the Notes is only available on the basis of the combination of this Pricing Supplement and the Offering Circular [as so supplemented]. Copies of the Offering Circular [and the supplements thereto] may be obtained during normal business hours from the registered office of the Issuer and from the specified office of the Principal Paying Agent in London. In addition, copies of the Offering Circular [and the supplements thereto] will be published on the website of the Regulatory News Service operated by the London Stock Exchange, and will also be available for viewing on the UK National Storage Mechanism (https://data.fca.org.uk/#/nsm/nationalstoragemechanism).]/[Terms used herein shall be deemed to be defined as such for the purposes of the Terms and Conditions (the "Conditions") set forth in the Offering Circular dated [original date], which are incorporated by reference in the Offering Circular dated [●]. This document constitutes the final terms of the Notes described herein and must be read in conjunction with the Offering Circular dated [●] [and the supplement[s] thereto dated [●]]. Full information on the Issuer, the Guarantor and the offer of the Notes is only available on the basis of the combination of this Pricing Supplement and the Offering Circular dated [●] [as so supplemented]. Copies of such Offering Circular [and the supplement[s] thereto] may be obtained during normal business hours from the registered office of the Issuer and from the specified office of the Principal Paying Agent in London. In addition, copies of the Offering Circular [and the supplements thereto] will be published on the website of the Regulatory News Service operated by the London Stock Exchange, and will also be available for viewing on the UK National Storage Mechanism (https://data.fca.org.uk/#/nsm/nationalstoragemechanism).]
| (ii) | [Guarantor:] | [Mitsubishi HC Capital Inc.] | |
|---|---|---|---|
| 2. | (i) | Series Number: | [●] |
| (ii) | Tranche Number: | [●] | |
| [(iii) | Date on which the Notes become fungible: |
[Not Applicable/[●]] | |
| 3. | Specified Currency [or Currencies]: | [●] | |
| 4. | Aggregate Nominal Amount: | ||
| (i) | Series | [●] | |
| (ii) | Tranche: | [●] | |
| 5. | Issue Price: | [●] | |
| 6. | (i) | Specified Denomination(s): | [●] |
| (i) | Calculation Amount: | [●] | |
| 7. | (ii) | Issue Date: | [●] |
| (iii) | Interest Commencement Date: | [●] | |
| 8. | Maturity Date: | [●] | |
| 9. | Interest Basis: | [[●] per cent. Fixed Rate] | |
| [[●] +/- [●] per cent. Floating Rate] | |||
| [Zero Coupon] | |||
| [Dual Currency Interest] [Index Linked Interest] |
|||
| 10. | Redemption/Payment Basis: | [Redemption at par] | |
| [Dual Currency Redemption] | |||
| [Instalment] | |||
| [Index Linked Redemption] | |||
| 11. | Change of Interest Basis or Redemption/Payment Basis: |
[Applicable/Not Applicable] | |
| 12. | Put/Call Options: | [Not Applicable] | |
| [Investor Put] | |||
| [Issuer Call] | |||
| 13. | Date of Board Resolutions: | [●] [and [●] respectively] | |
| PROVISIONS RELATING TO INTEREST (IF ANY) PAYABLE | |||
| 14. | Fixed Rate Note Provisions | [Applicable/Not Applicable] | |
| (i) | Rate(s) of Interest: | [●] per cent. per annum payable on each Interest Payment Date [adjusted in accordance with the Interest Ratchet] |
|
| (ii) | Step Up Event/Step Down Event: | [Yes/No] | |
| (iii) | Step Up Margin: | [Not Applicable/[●] per cent. per annum] |
(iv) Interest Payment Date(s): [●] [adjusted in accordance with the Business Day Convention specified below/(not adjusted)]
| Business Day Convention] | |||
|---|---|---|---|
| (vi) | Additional Business Centre(s): | [●] | |
| (vii) | Fixed Coupon Amount(s): | [●] per Calculation Amount | |
| (viii) | Broken Amount(s): | [●] per Calculation Amount, payable on the Interest Payment Date falling [in/on] [●] |
|
| (ix) | Fixed Day Count Fraction: | [Actual/Actual (ICMA) / 30/360 / Actual/365 (Fixed) / RBA Bond Basis] |
|
| (x) | [Determination Dates: | [●] in each year] | |
| 15. | Floating Rate Note Provisions | [Applicable/Not Applicable] | |
| (i) | Specified Period(s)/Specified Interest Payment Dates: |
[[●] in each year, subject to adjustment in accordance with the Business Day Convention set out in (iii) below] |
|
| (ii) | First Interest Payment Date: | [●] | |
| (iii) | Business Day Convention: | [Floating Rate Convention/Following Business Day Convention/Modified Following Business Day Convention/Preceding Business Day Convention] |
|
| (iv) | Additional Business Centre(s): | [●] | |
| (v) | Manner in which the Rate(s) of Interest and Interest Amount(s) is/are to be determined: |
[Screen Rate Determination/ISDA Determination] | |
| (vi) | Party responsible for calculating the Rate(s) of Interest and Interest Amount(s) (if not the Principal Paying Agent): |
[●] | |
| (vii) | Screen Rate Determination: | [Applicable/Not Applicable] | |
| (a) Reference Rate: |
[EURIBOR/ BBSW Rate/ AONIA Rate/ BKBM/ CMS/ CNH HIBOR/ Compounded Daily SONIA/ HIBOR/ NDBB/ NIBOR/ SOFR/ Compounded Daily SOFR/ Compounded SOFR Index/ SONIA/ SORF/ STIBOR/ TIBOR/ TONA/ Compounded Daily CORRA/ CORRA Compounded Index/ SARON/ WIBOR] |
||
| (b) Interest Determination Date(s): |
[[●]/[as per the Conditions]] | ||
| (c) Relevant Screen Page: |
[●] | ||
| (d) Relevant Time: |
[●] in the Relevant Financial Centre | ||
| (e) Relevant Financial Centre: |
[London/ Brussels/ Sydney/ Auckland/ Toronto/ Hong Kong/ Oslo/ New York/ Singapore/ Stockholm/ Tokyo/ |
(Interest Payment Dates for Fixed Rate Notes are normally not subject to adjustment by any Business Day
Following Business Day Convention/Preceding
Convention)
(v) Business Day Convention: [Following Business Day Convention/Modified
(f) Designated Maturity: [●]
56
Wellington/ Warsaw/ [●]]
| (g) | Compounded Daily SOFR: | [Not Applicable/ SOFR Lag/ SOFR Observation Shift/ SOFR Payment Delay/ SOFR Lockout] (Only applicable in the case of Compounded Daily SOFR) |
|
|---|---|---|---|
| (h) | Lookback Days: | [Not Applicable/[●] U.S. Government Securities Business Day(s)] (Only applicable in the case of SOFR Lag) |
|
| (i) | SOFR Observation Shift Days: | [Not Applicable/[●] U.S. Government Securities Business Day(s)] (Only applicable in the case of SOFR Observation Shift or Compounded SOFR Index) |
|
| (j) | Interest Payment Delay Days: | [Not Applicable/[●] U.S. Government Securities Business Day(s) (Only applicable in the case of SOFR Payment Delay) |
|
| (k) | SOFR Rate Cut-Off Date: | [Not Applicable/The day that is the [●] U.S. Government Securities Business Day(s) prior to the end of each Interest Period] (Only applicable in the case of Compounded Daily SOFR: SOFR Payment Delay or Compounded Daily SOFR: SOFR Lockout) |
|
| (l) | SOFR IndexStart: | [Not Applicable/[●] U.S. Government Securities Business Day(s)] (Only applicable in the case of Compounded SOFR Index) |
|
| (m) | SOFR IndexEnd: | [Not Applicable/[●] U.S. Government Securities Business Day(s)] (Only applicable in the case of Compounded SOFR Index) |
|
| (n) | Benchmark Discontinuation (SOFR) |
[Applicable/Not Applicable] | |
| (o) | Observation Look-Back Period: | [●]/[Not Applicable] | |
| (p) | TONA Rate of Interest Determination method: |
[TONA Lookback Compound][TONA Shift Compound] |
|
| (q) | Observation Shift Days: | [●] [Tokyo Banking Days][Bank of Canada Business Days][Zurich Banking Days] |
|
| (only applicable in the case of TONA Shift Compound, Compounded Daily CORRA and SARON) |
|||
| (viii) | ISDA Determination: | [2006 ISDA Determination/2021 ISDA Determination] | |
| (a) | Floating Rate Option: | [●] | |
| (a) | Designated Maturity: | [●] | |
| (b) | Reset Date: | [●] | |
| (c) | Compounding: | [Applicable/Not Applicable] | |
| (d) | Compounding Method: | [Compounding with Lookback | |
| Lookback: [●] Applicable Business Days] | |||
|---|---|---|---|
| [Compounding with Observation Period Shift | |||
| Observation Period Shift: [●] Observation Period Shift Business Days |
|||
| Observation Period Shift Additional Business Days: [●]/[Not Applicable]] |
|||
| [Compounding with Lockout | |||
| Lockout: [●] Lockout Period Business Days | |||
| Lockout Period Business Days: [●]/[Applicable Business Days]] |
|||
| (to be at least five Applicable Business Days/Observation Period Shift Business Days/Lockout Period Business Days unless otherwise agreed with the Calculation Agent) |
|||
| (e) Index Provisions: |
[Applicable/Not Applicable] | ||
| (f) Index Method: |
[Compounded Index Method with Observation Period Shift |
||
| Observation Period Shift: [●] Observation Period Shift Business Days |
|||
| Observation Period Shift Additional Business Days: [●]/[Not Applicable]] |
|||
| (To be at least five Observation Period Shift Business Days unless otherwise agreed with the Calculation Agent) |
|||
| (ix) | Linear Interpolation: | [Not Applicable]/[Applicable. The Rate of Interest for the [long/short] [first/last] Interest Period shall be calculated using Linear Interpolation.] |
|
| (x) | Margin(s): | [+/-] [●] per cent. per annum | |
| (xi) | Minimum Interest Rate: | [●] per cent. per annum | |
| (xii) | Maximum Interest Rate: | [●] per cent. per annum | |
| (xiii) | Day Count Fraction: | [Actual/Actual (ISDA) / Actual/365 (Fixed) / Actual/365 (Sterling) / Actual/360 / 30/360 / 30E/360 / 30E/360 (ISDA)] |
|
| 16. | Zero Coupon Note Provisions | [Applicable/Not Applicable] | |
| (i) | Accrual Yield: | [●] per cent. per annum | |
| (ii) | Reference Price: | [●] | |
| (iii) | Day Count Fraction in relation to Early Redemption Amounts and late payment: |
[Conditions 6(e)(iii) and 6(j) apply] | |
| 17. | Dual Currency Interest Note Provisions | [Applicable/Not Applicable] | |
| (i) | Rate of Exchange: | [●] | |
| (ii) | Party, if any, responsible for calculating the principal and/or interest due: |
[Principal Paying Agent/[●]] |
| (iii) | Person at whose option Specified Currency(ies) is/are payable: |
[●] | |
|---|---|---|---|
| 18. | Index Linked Interest Note Provisions | [Applicable/Not Applicable] | |
| (i) | Index/Basket of Indices/Index | [The "Index" means [●]] | |
| Sponsor/Reference Source: | [The Index is a Unitary Index/Multi-Exchange Index] | ||
| [The Index Sponsor for the Index is [●]] | |||
| [The Index Currency for the Index is [●]] | |||
| [The Reference Source for the Index is [●]] | |||
| (ii) | Index Linked Interest Formula: | Additional Condition 1.3 [(A)/(B)][(I)/(II)] shall apply | |
| [For the purpose of each item of the Index Linked Interest Formula, [(x)/(y)] shall apply] [the applicable Interest Amount shall be [●]] |
|||
| (iii) | Specified Period(s)/Specified Interest Period End Date(s): |
[[●] in each year from and including [●] to and including the Maturity Date [subject to adjustment in accordance with the Business Day Convention/subject to no adjustment]/[●]/[same as Specified Interest Payment Date(s)]] |
|
| (iv) | Specified Interest Payment Dates: | [[●] in each year from and including [●] to and including the Maturity Date [subject to adjustment in accordance with the Business Day Convention/[●]]] |
|
| (v) | Business Day Convention: | [Floating Rate Convention/Following Business Day Convention/Modified Following Business Day Convention/Preceding Business Day Convention] |
|
| (vi) | Additional Financial Centre(s) relating to Business Days: |
[[●]/Not Applicable] | |
| (vii) | Minimum Rate/Amount of Interest: | [[●] per cent. per annum/Not Applicable] | |
| (viii) | Medium Rate/Amount of Interest: | [[●] per cent. per annum/Not Applicable] | |
| (ix) | Maximum Rate/Amount of Interest: | [[●] per cent. per annum/Not Applicable] | |
| (x) | Day Count Fraction: | [Actual/Actual (ISDA) / Actual/Actual (ICMA) / Actual/365 (Fixed) / Actual/360 / 30/360 / 30E/360 / 30E/360 (ISDA)] |
|
| (xi) | Exchange(s): | [●] | |
| (xii) | Related Exchange: | [[●]/All Exchanges] | |
| [(Paragraph [(I)/(II)] of the definition of "Related Exchange" in Additional Condition 1.2 shall apply)] |
|||
| (xiii) | Valuation Date(s): | [●] | |
| [(Paragraph [(b)(i)/(b)(ii)] of the definition of "Valuation Date" in Additional Condition 1.2 shall apply)] |
|||
| (xiv) | Valuation Cut-Off Date(s): | [●]/[Paragraph (ii) of the definition of "Valuation Cut-Off Date" in Additional Condition 1.2 shall apply] |
|
| (xv) | Barrier Level: | [[●]/Barrier Level 1: [●]; Barrier Level 2: [●] /Not Applicable] |
| (xvi) | Base Price | [As defined in Additional Condition 1.2/Not Applicable] | |
|---|---|---|---|
| (xvii) | Base Price Fixing Date: | [[●]/Not Applicable] | |
| [(Paragraph [(I)/(II)/(III)] of the definition of "Base Price Fixing Date" in Additional Condition 1.2 shall apply)] |
|||
| (xviii) Base Price Valuation Cut-Off Date: | [●]/[Paragraph (ii) of the definition of "Base Price Valuation Cut-Off Date" in Additional Condition 1.2 shall apply] |
||
| (xix) | Correction Publication Cut-Off Date: | [Applicable/Not Applicable] | |
| [The immediately following business day of the original date of publication/[●]] |
|||
| (xx) | Additional Disruption Events: | Change in Law is [Applicable/Not Applicable] | |
| Hedging Disruption is [Applicable/Not Applicable] | |||
| Increased Cost of Hedging is [Applicable/Not Applicable] | |||
| PROVISIONS RELATING TO REDEMPTION | |||
| 19. | Notice periods for Condition 6(b) (Redemption and Purchase - Redemption for Tax Reasons): |
[As set out in Condition 6(b)/Minimum period: [●] days; Maximum period: [●] days] |
|
| 20. | Issuer Call: | [Applicable/Not Applicable] | |
| (i) | Optional Redemption Date(s): | [●] | |
| - Par Redemption Date: |
[●] | ||
| (ii) | Optional Redemption Amount and method, if any, of calculation of such amount(s): |
[[●] per Calculation Amount]/[Make-Whole Redemption Amount (Sterling)]/[Make-Whole Redemption Amount (Non-Sterling)]/[Par Redemption Amount] |
|
| (iii) | Reference Bond: | [●] | |
| (iv) | Redemption Margin: | [●] | |
| (v) | Quotation Time: | [●] | |
| (vi) | If redeemable in part: | ||
| (g) Minimum Redemption Amount: | [●] per Calculation Amount | ||
| (h) Maximum Redemption Amount: | [●] per Calculation Amount | ||
| (vi) | Notice period: | [Minimum period: [●] days; Maximum period: [●] days] |
|
| 21. | Investor Put: | [Applicable/Not Applicable] | |
| (i) | Optional Redemption Date(s): | [●] | |
| (ii) | Optional Redemption Amount: | [●] | |
| (iii) | Notice period: | [Minimum period: [●] days; Maximum period: [●] days] |
|
| 22. | Final Redemption Amount: | [●] per Calculation Amount | |
| 23. | Index Linked Redemption Notes: | [Applicable/Not Applicable] |
| (i) | Index Linked Automatic Early | [Applicable/Not Applicable] | |||
|---|---|---|---|---|---|
| Redemption: | [For the purpose of the Automatic Early Redemption Event, Additional Condition 1.4(a)[(i)(x)/(i)(y)/ (ii)(x)/(ii)(y)] shall apply] |
||||
| (ii) | Index Linked Final Redemption: | ||||
| (a) | Index/Basket of Indices/Index Sponsor(s)/Reference Source: |
[The "Index" means [●]] [The Index is a Unitary Index/Multi-Exchange Index] [The Index Sponsor for the Index is [●]] [The Index Currency for the Index is [●]] [The Reference Source for the Index is [●]] [As specified in item 18(i) in "Index Linked Interest Note Provisions" above] |
|||
| (b) | Formula: | Index Linked Redemption | Additional Condition 1.4(b)[(I)/(II)/(III)/(IV)] shall apply [For the purpose of each item in the Index Linked Redemption Formula, [(x)/(y)] shall apply] |
||
| (c) | Amount: | Automatic Early Redemption | [●] per Calculation Amount | ||
| (d) | Date(s): | Automatic Early Redemption | [●] | ||
| (e) | Automatic Early Redemption Valuation Date(s): |
[●] | |||
| (f) | Rounding (Index Performance): | [[Rounded down/Rounded up/Rounded to the [nearest [whole number [(with 0.5 being rounded up)]]]/[nearest [●] decimal places [(with [half of such number of decimal places] being rounded up)]]]] [Rounding Not Applicable] |
|||
| (g) | Exchange(s): | [[●]/As specified in item 18(xi) of "Index Linked Interest Note Provisions" above] |
|||
| (h) | Related Exchange: | [[●]/All Exchanges/As specified in item 18(xii) of "Index Linked Interest Note Provisions" above] |
|||
| (i) | Valuation Date(s): | [[●]/As specified in item 18(xiii) of "Index Linked Interest Note Provisions" above] |
|||
| (j) | Valuation Cut-Off Date: | [●]/[Paragraph (ii) of the definition of "Valuation Cut Off Date" in Additional Condition 1.2 shall apply]/[As specified in item 18(xiv) of "Index Linked Interest Note Provisions" above] |
|||
| (k) | Observation Period: | [Applicable/Not Applicable] | |||
| (i) | Observation Period Start Date: |
[[Including/Excluding] [●]/Not Applicable] | |||
| (ii) | Observation Period End Date: |
[[Including/Excluding] [●]/Not Applicable] |
| (l) | Barrier Event: | [Not Applicable/Barrier Event (intraday), Early Closure [applicable/not applicable]/Barrier Event (closing)] [For the purpose of the definition of the Barrier Event Determination Day, [(a)(i)/(a)(ii)/(b)] shall apply] [For the purpose of definition of the Barrier Event (closing), [(a)(x)/(a)(y)/(b)(x)/(b)(y)] shall apply] [For the purpose of definition of the Barrier Event (intraday), [(a)(x)/(a)(y)/(b)(x)/(b)(y)] shall apply] |
|
|---|---|---|---|
| (m) | Barrier Level: | [[●]/Not Applicable] | |
| (n) | Knock-out Price: | [[●]/Not Applicable] | |
| (o) | Strike Price: | [[●]/Not Applicable] | |
| (p) | Base Price: | [[●]/Not Applicable/As specified in item 18(xvi) of "Index Linked Interest Note Provisions" above] |
|
| (q) | Base Price Fixing Date: | [[●]/Not Applicable] [(Paragraph [(I)/(II)/(III)] of the definition of "Base Price Fixing Date" in Additional Condition 1.2 shall apply] [As specified in item 18(xvii) of "Index Linked Interest Note Provisions" above] |
|
| (r) | Base Price Valuation Cut-Off Date: | [●]/[Paragraph (ii) of the definition of "Base Price Valuation Cut-Off Date" in Additional Condition 1.2 shall apply]/[As specified in item 18(xviii) of "Index Linked Interest Note Provisions" above] |
|
| (s) | Correction Publication Cut-Off Date: |
[Applicable/Not Applicable] [The immediately following business day of the original date of publication/[●]] |
|
| (t) | Additional Disruption Events: | Change in Law is [Applicable/Not Applicable] Hedging Disruption is [Applicable/Not Applicable] Increased Cost of Hedging is [Applicable/Not Applicable] |
|
| 24. | Early Redemption Amount | ||
| default: | Early Redemption Amount payable on redemption for taxation reasons or on event of |
[[●] per Calculation Amount]/[Early Redemption (Market Value) is applicable/not applicable] |
|
| GENERAL PROVISIONS APPLICABLE TO THE NOTES | |||
| 25. | Form of Notes: | ||
| (i) | Form: | [Bearer Notes8 : [Temporary Global Note exchangeable for [a Permanent Global Note which is exchangeable for |
Definitive Notes [on [●] days' notice given at any time/only upon an Exchange Event]]/Definitive Notes
8 If TEFRA D is applicable under "U.S. Selling Restrictions", the Notes must be initially represented by a Temporary Global Note. Bearer Notes may not be issued by MHFA.
| on and after the Exchange Date]/[Permanent Global Note exchangeable for Definitive Notes [on [●] days' notice given at any time/only upon an Exchange Event]].] |
|||
|---|---|---|---|
| [Global Registered Note exchangeable for definitive Registered Notes [on [●] days' notice given at any time/only upon the occurrence of an Exchange Event]/[Definitive Registered Notes].] |
|||
| (ii) | New Global Note (NGN) / New Safekeeping Structure (NSS): |
[Yes/No/Not Applicable] [NGN/NSS] |
|
| 26. | Additional Financial Centre(s): | [Not Applicable/[●]] | |
| 27. | Talons for future Coupons or Receipts to be attached to Definitive Notes (and dates on which such Talons mature): |
[Yes. The Talons mature on [●]/No] | |
| 28. | Details relating to Instalment Notes: | [Applicable/Not Applicable] | |
| (i) | Instalment Amount(s): | [Not Applicable/[●]] | |
| (ii) | Instalment Date(s): | [Not Applicable/[●]] | |
| 29. | Additional Renminbi Clearing Financial Centre(s): |
[Not Applicable/[●]] | |
| 30. | Calculation Agent: | [Principal Paying Agent/Australian Agent/[●]/Not Applicable] |
|
| 31. | Governing Law: | English law | |
Signed on behalf of [Mitsubishi HC Capital Inc./Mitsubishi HC Finance America LLC]:
| By: | [By: |
||
|---|---|---|---|
| Duly authorised | Duly authorised] |
[Signed on behalf of Mitsubishi HC Capital Inc.:
By: ...............................................................
Duly authorised]
[The Notes to be issued are unlisted.]
(i) [Listing and admission to trading:] [[●]]
| admission to trading:] | ||||
|---|---|---|---|---|
| 2. | RATINGS | |||
| [The Notes to be issued have not been rated.]/[The Notes to be issued have been rated: | ||||
| S&P Global Ratings Japan Inc. ("S&P Japan"): | [●]. S&P Japan is not established in the EEA or the UK and is neither certified nor registered under Regulation (EC) No 1060/2009 on credit rating agencies, as amended (the "CRA Regulation") or the CRA Regulation as it forms part of domestic UK law (the "UK CRA Regulation"). However, ratings issued by S&P Japan are endorsed by S&P Global Ratings Europe Limited, which is established in the EEA and registered under the CRA Regulation, and by S&P Global Ratings UK Limited, which is established in the UK and registered under the UK CRA Regulation.] |
|||
| Japan Credit Rating Agency, Ltd. ("JCR"): | [●]. JCR is not established in the EEA or the UK. JCR is certified under [Regulation (EC) No 1060/2009 on credit rating agencies, as amended] / [the CRA Regulation] and [the CRA Regulation as it forms part of domestic UK law] / [the UK CRA Regulation]. |
[[●]]
(ii) [Estimate of total expenses related to
[The net proceeds from the issue of the Notes will be applied by the Issuer for the general corporate purposes of the Issuer which include making a profit.]
[Save for any fees payable to the [Manager[s]/Dealer[s]], so far as the Issuer is aware, no person involved in the issue of the Notes has an interest material to the offer.]
[●] has been extracted from [●]. The Issuer [and the Guarantor] confirm[s] that such information has been accurately reproduced and that, so far as [the Issuer/each of them] is aware and is able to ascertain from information published by [●], no facts have been omitted which would render the reproduced information inaccurate or misleading.]
Indication of yield: [●]
[Details of the past and future performance and volatility of the [Index/Basket of Indices] are set out below: [●] [and can be obtained free of charge]/Not Applicable]
| ISIN Code: | [●] |
|---|---|
| Common Code: | [●] |
| Any clearing system(s) other than Euroclear Bank SA/NV, Clearstream Banking S.A. and the Austraclear System and the relevant identification number(s): |
[Not Applicable/[●]] |
| Names and addresses of additional Paying Agent(s) (if any): |
[Not Applicable/[●]] |
| Intended to be held in a manner which would allow eligibility for collateral purposes in credit operations of the central banking system for the Euro (the "Eurosystem"): |
[Not Applicable] |
[Yes. Note that the designation "yes" means that the Notes are intended upon issue to be deposited with Euroclear or Clearstream, Luxembourg as common safekeeper [insert for Registered Notes which are to be held under the NSS:, and registered in the name of a nominee of Euroclear or Clearstream, Luxembourg acting as common safekeeper] and does not necessarily mean that the Notes will be recognised as eligible collateral for Eurosystem monetary policy and intra-day credit operations by the Eurosystem either upon issue or at any or all times during their life. Such recognition will depend upon the European Central Bank being satisfied that Eurosystem eligibility criteria have been met.]
[No. Whilst the designation is specified as "no" at the date of this Pricing Supplement, should the Eurosystem eligibility criteria be amended in the future such that the Notes are capable of meeting them the Notes may then be deposited with Euroclear or Clearstream, Luxembourg as common safekeeper [insert for Registered Notes which are to be held under the NSS:, and registered in the name of a nominee of Euroclear or Clearstream, Luxembourg acting as common safekeeper]. Note that this does not necessarily mean that the Notes will then be recognised as eligible collateral for Eurosystem monetary policy and intra-day credit operations by the Eurosystem at any time during their life. Such recognition will depend upon the European Central Bank being satisfied that Eurosystem eligibility criteria have been met.]
| (i) | Prohibition of Sales to EEA Retail Investors: |
[Applicable]/[Not Applicable] | |
|---|---|---|---|
| (ii) | Prohibition of Sales to UK Retail Investors: |
[Applicable]/[Not Applicable] | |
| (iii) | U.S. selling restrictions: | [Regulation S Compliance Category 2; TEFRA D/TEFRA C/TEFRA not applicable]9 |
|
| (iv) | Prohibition of Sales to Belgian Consumers: |
[Applicable]/[Not Applicable] | |
| (v) | If syndicated, names of Managers: | [Not Applicable/[●]] | |
| (vi) | If non-syndicated, name of relevant Dealer: |
[Not Applicable/[●]] | |
| (vii) | Additional selling restrictions: | [Not Applicable/[●]] | |
[The Issuer [intends to provide post-issuance information/does not intend to provide post-issuance information].]
legal name]. As at the date hereof, [administrator legal name] [appears]/[does not appear] in the register of administrators and benchmarks established and maintained by the FCA pursuant to Article 36 of Regulation (EU) 2016/1011 as it forms part of domestic UK law (the "UK Benchmark Regulation"). [As far as the Issuer is aware, the transitional provisions in Article 51 of the UK Benchmark Regulation apply, such that [administrator legal name] is not currently required to obtain authorisation/registration (or, if located outside the United Kingdom, recognition, endorsement or equivalence).]]/[Not Applicable]
9 TEFRA not applicable may be used only for offerings of Registered Notes, or Bearer Notes with a term of one year or less (taking into account any unilateral right to extend or rollover).
The following are the Terms and Conditions of the Notes which, save for paragraphs in italics, will be incorporated by reference into each Global Note and which will be endorsed on or attached to (or, if permitted by the relevant stock exchange or other relevant authority (if any) and agreed between the relevant Issuer and the relevant Dealer, incorporated by reference into) each definitive Note or applicable to AMTNs (as defined below). The applicable Final Terms or Pricing Supplement in relation to any Tranche of Notes will (in the case of Final Terms) complete or (in the case of a Pricing Supplement) complete, amend and/or replace the following Terms and Conditions for the purpose of such Notes.
The relevant sections of the applicable Final Terms or Pricing Supplement will be incorporated into, or attached to, each global Note and definitive Note. Reference should be made to "Form of the Final Terms" or "Form of Pricing Supplement" above for the form of the Final Terms and Pricing Supplement which will include the definitions of certain terms used in the following Terms and Conditions or specify which of such terms are to apply in relation to the relevant Notes.
This Note (other than a Note issued by Mitsubishi HC Capital UK PLC and which is specified in the applicable Final Terms as being denominated in Australian dollars and issued in the Australian domestic wholesale capital market (an "AMTN")) is one of a series of Notes issued by the issuer named in the applicable Final Terms (the "Issuer") pursuant to, and with the benefit of, an amended and restated agency agreement dated 29 August 2025 (such agency agreement as amended and/or supplemented and/or restated from time to time, the "Agency Agreement") and made among Mitsubishi HC Capital Inc. ("MHC"), Mitsubishi HC Capital UK PLC ("MHCUK"), Mitsubishi HC Finance America LLC ("MHFA"), HSBC Bank plc as principal paying agent and agent bank (in such capacity, the "Principal Paying Agent", which expression shall include any other successor principal paying agent) and as registrar (in such capacity, the "Registrar", which expression shall include any other successor registrar) and the other paying agents (together with the Principal Paying Agent, the "Paying Agents", which expression shall include any additional or successor paying agents) and transfer agents (together with the Registrar, the "Transfer Agents", which expression shall include any additional or successor transfer agents) named therein.
MHCUK and EQT Australia Pty Ltd as registrar and issuing and paying agent in Australia (the "Australian Agent") have entered into a registry and agency services agreement dated 27 September 2023 (such agency agreement as amended and/or supplemented and/or restated from time to time, the "Australian Agency Agreement") in relation to the issuance of AMTNs by MHCUK.
The final terms applicable to this Note (or the relevant provisions thereof) are set out in Part A of the Final Terms endorsed on, attached to or, as the case may be, incorporated in this Note which supplement these Terms and Conditions and may specify other terms and conditions which shall, to the extent so specified or, to the extent inconsistent with these Terms and Conditions, replace or modify these Terms and Conditions for the purposes of this Note.
The Noteholders, the Receiptholders and the Couponholders of Notes (other than AMTNs) are entitled to the benefit of the deed of covenant (the "Deed of Covenant") dated 29 August 2025 and executed by the Issuer. The Noteholders of AMTNs issued by MHCUK are entitled to the benefit of the deed poll ("Note (AMTN) Deed Poll") dated 27 September 2023 and executed by MHCUK.
In the case of Notes issued by MHCUK and MHFA, Noteholders (including the Noteholders of the AMTNs), the Receiptholders and the Couponholders are entitled to the benefit of the deed of guarantee (the "Guarantee") dated 29 August 2025 and executed by MHC as guarantor (MHC in such capacity, the "Guarantor").
Registered Notes (as defined below) (other than AMTNs) are constituted by the Deed of Covenant. The original of the Deed of Covenant is held by a common depositary on behalf of Euroclear (as defined below) and Clearstream, Luxembourg (as defined below) and the originals of the Guarantee are held by the Principal Paying Agent at its specified office for the time being. AMTNs will be constituted by the Note (AMTN) Deed Poll. The original Note (AMTN) Deed Poll is held by the Australian Agent. The provisions of these Conditions (as defined below) relating to Bearer Notes, Certificates, Receipts, Coupons and Talons do not apply to Notes specified in the Final Terms as being AMTNs.
The Noteholders, the Receiptholders and the Couponholders are deemed to have notice of, and are entitled to the benefit of (in respect of the holders of Notes (other than AMTNs)) all the provisions of the Deed of Covenant, (in respect of the AMTN holders only) the Note (AMTN) Deed Poll, the Agency Agreement, the Australian Agency Agreement, the Guarantee, in the case of Notes issued by MHCUK and MHFA, and the applicable Final Terms which are binding on them.
Copies of the Agency Agreement, the Deed of Covenant and in the case of Notes issued by MHCUK and MHFA, the Guarantee are available at the specified office of the Principal Paying Agent. Copies of the Australian Agency Agreement and the Note (AMTN) Deed Poll are available at the specified office of the Australian Agent. Copies of the applicable Final Terms are available for viewing and copies may be obtained from the registered office of the Issuer and the specified office of the Principal Paying Agent save that, if this Note is neither admitted to trading on a regulated market in the United Kingdom ("UK") nor offered in the UK in circumstances where a prospectus is required to be published under the UK Prospectus Regulation (including Exempt Notes), the applicable Final Terms will only be available to a Noteholder holding one or more such Notes upon such Noteholder producing evidence as to identity satisfactory to the Principal Paying Agent. Copies of each Final Terms relating to Notes offered to the public in the UK (other than pursuant to one or more of the exemptions set out in Article 3(2) of the UK Prospectus Regulation) or admitted to trading on a regulated market in the UK will be published on the website of the Regulatory News Service operated by the London Stock Exchange. Such Final Terms will also be available for viewing on the UK National Storage Mechanism (https://data.fca.org.uk/#/nsm/nationalstoragemechanism).
alternative clearing system approved by the Issuer and (in respect of Note other than AMTNs) the Principal Paying Agent or Registrar, as the case may be, (in respect of AMTNs) the Australian Agent and specified in the applicable Final Terms;
Words and expressions defined in the Agency Agreement or used or specified in capitalised terms in the applicable Final Terms shall have the same meanings where used in these Terms and Conditions unless the context otherwise requires or unless otherwise stated and provided that, in the event of any inconsistency between the Agency Agreement and the applicable Final Terms, the applicable Final Terms will prevail.
The Notes may be issued in bearer form ("Bearer Notes") or in registered form ("Registered Notes"), as specified in the applicable Final Terms, and, in the case of definitive Notes, serially numbered, in the Specified Currency and the Specified Denomination(s). Notes of one Specified Denomination may not be exchanged for Notes of another Specified Denomination and Bearer Notes may not be exchanged for Registered Notes and vice versa. AMTNs will be issued only as Registered Notes in registered uncertificated form.
This Note may be a Fixed Rate Note, a Floating Rate Note, a Zero Coupon Note, a Dual Currency Interest Note, an Index Linked Interest Note or a combination of any of the foregoing, depending upon the Interest Basis specified in the applicable Final Terms.
This Note may be an Index Linked Redemption Note, an Instalment Note, a Dual Currency Redemption Note or a combination of any of the foregoing, depending on the Redemption/Payment Basis specified in the applicable Final Terms.
Interest bearing definitive Bearer Notes (unless otherwise indicated in the applicable Final Terms) have interest coupons ("Coupons") and, if indicated in the applicable Final Terms, talons for further Coupons ("Talons") attached on issue, unless they are Zero Coupon Notes in which case references to Coupons and Couponholders in these Terms and Conditions are not applicable. Bearer Notes in definitive form which are Instalment Notes have receipts ("Receipts") for the payment of the instalments of principal (other than the final instalment) attached on issue. Registered Notes and global Notes do not have Receipts, Coupons or Talons attached on issue.
The holder of each Coupon, whether or not such Coupon is attached to a Bearer Note, in his capacity as such, shall be subject to, and bound by, all the provisions contained in the relevant Note.
Subject as set out below, title to Bearer Notes, Receipts and Coupons will pass by delivery and title to Registered Notes will pass upon registration of transfers in accordance with the provisions of the Agency Agreement. The Issuer, the Guarantor and the Agents will (except as otherwise required by law) deem and treat the bearer of any Bearer Note, Receipt or Coupon or the registered holder of any Registered Note as the absolute owner thereof (whether or not overdue and notwithstanding any notice of ownership for writing thereon or notice of any previous loss or theft thereof) for all purposes but, in the case of any global Note, without prejudice to the provisions set out in the next paragraph.
For so long as any of the Notes is represented by a global Note held on behalf of Euroclear and/or Clearstream, Luxembourg each person who is for the time being shown in the records of Euroclear or of Clearstream, Luxembourg as the holder of a particular nominal amount of such Notes (in which regard any certificate or other document issued by Euroclear or Clearstream, Luxembourg as to the nominal amount of Notes standing to the account of any person shall be conclusive and binding for all purposes save in the case of manifest error) shall be treated by the Issuer, the Guarantor and the Agents as the holder of such nominal amount of such Notes for all purposes other than with respect to the payment of principal or interest on such Notes, for which purpose the bearer of the relevant global Bearer Note or the registered holder of the relevant global Registered Note shall be treated by the Issuer, the Guarantor and the Agents as the holder of such nominal amount of such Notes in accordance with and subject to the terms of the relevant global Note (and the expressions "Noteholder" and "holder of Notes" and related expressions shall be construed accordingly). Notes which are represented by a global Note will be transferable only in accordance with the rules and procedures for the time being of Euroclear or of Clearstream, Luxembourg, as the case may be.
In respect of Registered Notes other than AMTNs:
systems acting on behalf of transferors and transferees of such interests. A beneficial interest in a global Registered Note will, subject to compliance with all applicable legal and regulatory restrictions, be transferable for definitive Registered Notes or for a beneficial interest in another global Registered Note only in the authorised denominations set out in the applicable Final Terms and only in accordance with the rules and operating procedures for the time being of Euroclear or Clearstream, Luxembourg, as the case may be, and in accordance with the terms and conditions specified in the Agency Agreement.
than at the specified office of a Transfer Agent or by uninsured mail and except that the Issuer may require the payment of a sum sufficient to cover any stamp duty, tax or other governmental charge that may be imposed in relation to the registration.
In the case of AMTNs, the following provisions shall apply in lieu of the foregoing provisions of this Condition 1 in the event of any inconsistency.
AMTNs will be the debt obligations of the Issuer owing under the Note (AMTN) Deed Poll. AMTNs will take the form of entries in a Register to be established and maintained by the Australian Agent in Sydney unless otherwise agreed with the Australian Agent (pursuant to the Australian Agency Agreement). The Agency Agreement is not applicable to the AMTNs.
AMTNs will not be serially numbered. Each entry in the Register constitutes a separate and individual acknowledgement to the relevant Noteholder of the indebtedness of the Issuer to the relevant Noteholder. The obligations of the Issuer in respect of each AMTN constitute separate and independent obligations which the Noteholder is entitled to enforce in accordance with these Terms and Conditions and the Note (AMTN) Deed Poll. No certificate or other evidence of title will be issued by or on behalf of the Issuer unless the Issuer determines that certificates should be made available or it is required to do so pursuant to any applicable law or regulation.
No AMTN will be registered in the name of more than four persons. AMTNs registered in the name of more than one person are held by those persons as joint tenants. AMTNs will be registered by name only, without reference to any trusteeship and an entry in the Register in relation to an AMTN constitutes conclusive evidence that the person so entered is the registered owner of such AMTN, subject to rectification for fraud or error.
Upon a person acquiring title to any AMTNs by virtue of becoming registered as the owner of that AMTN, all rights and entitlements arising by virtue of the Note (AMTN) Deed Poll in respect of that AMTN vest absolutely in the registered owner of the AMTN, such that no person who has previously been registered as the owner of the AMTN has or is entitled to assert against the Issuer or the Australian Agent or the registered owner of the AMTN for the time being and from time to time any rights, benefits or entitlements in respect of the AMTN.
AMTNs may be transferred in whole but not part. Unless lodged in the clearing system operated by Austraclear Ltd, the AMTNs will be transferable by duly completed and (if applicable) stamped transfer and acceptance forms in the form specified by, and obtainable from, the Australian Agent or by any other manner approved by the Issuer and the Australian Agent. Each transfer and acceptance form must be accompanied by such evidence (if any) as the Australian Agent may require to prove the title of the transferor or the transferor's right to transfer the AMTNs and be signed by both the transferor and the transferee. The Australian Agent may refuse to register a transfer and acceptance form if it contravenes or fails to comply with these Terms and Conditions or the transfer of AMTNs pursuant to that transfer and acceptance form would result in a contravention of any applicable law.
AMTNs may only be transferred within, to or from Australia if:
A person becoming entitled to an AMTN as a consequence of the death or bankruptcy of a Noteholder or of a vesting order or a person administering the estate of a Noteholder may, upon producing such evidence as to that entitlement or status as the Australian Agent considers sufficient, transfer such AMTN or, if so entitled, become registered as the holder of the AMTN.
Where the transferor executes a transfer of less than all of the AMTNs registered in its name, and the specific AMTNs to be transferred are not identified, the Australian Agent may register the transfer in respect of such of the AMTNs registered in the name of the transferor as the Australian Agent thinks fit, provided the aggregate nominal amount of the AMTNs registered as having been transferred equals the aggregate nominal amount of the AMTNs expressed to be transferred in the transfer.
The Notes and the Coupons and Receipts, if any, relating to them constitute (subject to Condition 3) direct, unconditional and unsecured obligations of the Issuer and shall at all times rank pari passu and without preference among themselves and (with the exception of obligations in respect of applicable statutory exceptions and subject as aforesaid) equally with all of its other unsecured obligations (other than subordinated obligations, if any) from time to time outstanding.
In the case of Notes issued by MHCUK and MHFA, the obligations of the Guarantor under the Guarantee constitute (subject to Condition 3) direct, unconditional and unsecured obligations of the Guarantor and shall at all times rank pari passu and without any preference among themselves and (with the exception of obligations in respect of national and local taxes and certain other statutory exceptions and subject as aforesaid) equally with all of its other unsecured obligations (other than subordinated obligations, if any) from time to time outstanding.
MHC will not, so long as any of the Notes remain outstanding (as defined in the Agency Agreement), create or permit to be outstanding any pledge, lien, mortgage or other charge upon the whole or any part of the property or assets, present or future, of MHC to secure for the benefit of the holders of any Securities (i) payment of any sum due in respect of Securities or (ii) any payment under any guarantee of Securities or (iii) any payment under any indemnity or other like obligation relating to Securities, in any such case in which either such Securities are by their terms payable, or confer a right to receive payment, in any currency other than Yen, or such Securities are denominated in Yen and more than 50 per cent. of the aggregate principal amount thereof is initially distributed outside Japan by or with the authorisation of MHC, without in any such case at the same time according to the Notes the same security as is granted to or is existing in respect of such Securities or such other security or guarantee as shall be approved by an Extraordinary Resolution of the holders of the Notes (as defined in the Agency Agreement).
In the case of Notes issued by MHCUK, so long as any of the Notes remain outstanding (as defined in the Agency Agreement), MHCUK will not create or permit to be outstanding any pledge, lien, mortgage or other charge upon the whole or any part of the property or assets, present or future, of MHCUK to secure for the benefit of the holders of any Securities (i) payment of any sum due in respect of Securities or (ii) any payment under any guarantee of Securities or (iii) any payment under any indemnity or other like obligation relating to Securities, in any such case in which either such Securities are by their terms payable, or confer a right to receive payment, in any currency other than Sterling, or such Securities are denominated in Sterling and more than 50 per cent. of the aggregate principal amount thereof is initially distributed outside the United Kingdom by or with the authorisation of MHCUK, without in any such case at the same time according to the Notes the same security as is granted to or is existing in respect of such Securities or such other security or guarantee as shall be approved by an Extraordinary Resolution of the holders of the Notes (as defined in the Agency Agreement).
In the case of Notes issued by MHFA, so long as any of the Notes remain outstanding (as defined in the Agency Agreement), MHFA will not create or permit to be outstanding any pledge, lien, mortgage or other charge upon the whole or any part of the property or assets, present or future, of MHFA to secure for the benefit of the holders of any Securities (i) payment of any sum due in respect of Securities or (ii) any payment under any guarantee of Securities or (iii) any payment under any indemnity or other like obligation relating to Securities, in any such case in which either such Securities are by their terms payable, or confer a right to receive payment, in any currency other than Yen, or such Securities are denominated in Yen and more than 50 per cent. of the aggregate principal amount thereof is initially distributed outside Japan by or with the authorisation of MHFA, without in any such case at the same time according to the Notes the same security as is granted to or is existing in respect of such Securities or such other security or guarantee as shall be approved by an Extraordinary Resolution of the holders of the Notes (as defined in the Agency Agreement)
"Securities" means bonds, debentures, notes or other similar investment securities of MHC, MHCUK and/or MHFA, as the case may be, or any other person which are capable of being listed on any stock exchange.
(i) General
Each Fixed Rate Note bears interest from (and including) the Interest Commencement Date at the rate(s) per annum equal to the Rate(s) of Interest. Interest will be payable in arrear on the Interest Payment Date(s) in each year up to (and including) the Maturity Date.
If the Notes are in definitive form, except as provided in the applicable Final Terms, the amount of interest payable on each Interest Payment Date in respect of the Fixed Interest Period ending on (but excluding) such date will amount to the Fixed Coupon Amount. Payments of interest on any Interest Payment Date will, if so specified in the applicable Final Terms, amount to the Broken Amount so specified.
As used in these Terms and Conditions, "Fixed Interest Period" means the period from (and including) an Interest Payment Date (or the Interest Commencement Date) to (but excluding) the next (or first) Interest Payment Date.
If a Business Day Convention is specified in the applicable Final Terms and (x) if there is no numerically corresponding day on the calendar month in which an Interest Payment Date should occur or (y) if any Interest Payment Date would otherwise fall on a day which is not a Business Day (as defined in Condition 4(b)), then, if the Business Day Convention if specified is:
Except in the case of Bearer Notes in definitive form where an applicable Fixed Coupon Amount or Broken Amount, is specified in the applicable Final Terms, interest shall be calculated in respect of any period by applying the Rate of Interest to:
and, in each case, multiplying such sum by the applicable Day Count Fraction, and rounding the resultant figure to the nearest sub-unit of the relevant Specified Currency, half of any such subunit being rounded upwards or otherwise in accordance with applicable market convention. Where the Specified Denomination of a Fixed Rate Note in definitive form comprises more than one Calculation Amount, the amount of interest payable in respect of such Fixed Rate Note shall be the product of the amount (determined in the manner provided above) for the Calculation Amount and the amount by which the Calculation Amount is multiplied to reach the Specified Denomination without any further rounding.
For Renminbi Notes (as defined in Condition 5(f)) which are Fixed Rate Notes, where the Interest Payment Dates specified in the applicable Final Terms are subject to modification, each Fixed Coupon Amount shall be calculated by multiplying the product of the relevant Rate of Interest and the relevant Calculation Amount by the relevant Day Count Fraction and rounding the resultant figure to the nearest CNH0.01, CNH0.005 for the case of Renminbi denominated Fixed Rate Notes being rounded upwards.
In these Terms and Conditions:
"Day Count Fraction" means, in respect of the calculation of an amount of interest in accordance with this Condition 4:
"Determination Period" means each period from (and including) a Determination Date to (but excluding) the next Determination Date (including, where either the Interest Commencement Date or the final Interest Payment Date is not a Determination Date, the period commencing on the first Determination Date prior to, and ending on the first Determination Date falling after, such date);
"Interest Ratchet" means the following rates of interest:
"Minimum Rating Requirement" means that there shall be in existence Ratings equal to or higher than the Specified Threshold from at least two Rating Agencies at any particular time;
"Rating" means a rating of the Notes as specified in the applicable Final Terms;
"Rating Agency" means S&P Japan or any other rating agency generally recognised as such by banks, securities houses and investors operating in the international capital markets and appointed by or on behalf of the Issuer to maintain a Rating but excluding any rating agency providing a Rating on an unsolicited basis;
"S&P Japan" means S&P Global Ratings Japan Inc., or its Successor;
"Specified Threshold" means BBB- in the case of S&P Japan, or the equivalent rating level of any other Rating Agency;
"Step Down Event" means the reinstatement of the Minimum Rating Requirement following the occurrence of a Step Up Event;
"Step Up Event" means a failure to meet the Minimum Rating Requirement at any time, unless:
(i) the Minimum Rating Requirement has been reinstated by the earlier of (a) 120 days after the date on which the Minimum Rating Requirement was not met or (b) the Interest Payment Date immediately following the relevant failure to meet the Minimum Rating Requirement; or
(ii) the relevant failure to meet the Minimum Rating Requirement is due to a reason other than a reason related to the Issuer or, with respect to Notes issued by MHCUK and MHFA, the Guarantor;
"Step Up Margin" has the meaning given in the applicable Final Terms;
"sub-unit" means, with respect to any currency other than euro and Yen, the lowest amount of such currency that is available as legal tender in the country of such currency and, with respect to euro, means one cent and with respect to Yen means one Yen; and
"Successor" means the legal successor to any of the Rating Agencies continuing such Rating Agency's respective business activity.
(i) Interest Payment Dates
Each Floating Rate Note bears interest from (and including) the Interest Commencement Date and such interest will be payable in arrear on either:
Such interest will be payable in respect of each Interest Period (which expression shall, in these Terms and Conditions, mean the period from (and including) an Interest Payment Date (or the Interest Commencement Date) to (but excluding) the next (or first) Interest Payment Date).
If a Business Day Convention is specified in the applicable Final Terms and (x) if there is no numerically corresponding day on the calendar month in which an Interest Payment Date should occur or (y) if any Interest Payment Date would otherwise fall on a day which is not a Business Day, then, if the Business Day Convention if specified is:
In these Terms and Conditions, "Business Day" means a day which is both:
The Rate of Interest payable from time to time in respect of the Floating Rate Notes will be determined in the manner specified in the applicable Final Terms.
(A) ISDA Determination for Floating Rate Notes
Where ISDA Determination is specified in the applicable Final Terms as the manner in which the Rate of Interest is to be determined, the Rate of Interest for each Interest Period will be the relevant ISDA Rate plus or minus (as indicated in the applicable Final Terms) the Margin (if any). For the purposes of this sub-paragraph (ii), "ISDA Rate" for an Interest Period means a rate equal to the Floating Rate that would be determined by the Principal Paying Agent or other party specified in the applicable Final Terms under an interest rate swap transaction if the Principal Paying Agent or that other party were acting as Calculation Agent for that swap transaction under the terms of an agreement incorporating the relevant ISDA Definitions (as defined below) and under which:
For the purposes of this sub-paragraph (A), "Floating Rate" and "Calculation Agent" have the meanings given to those terms in the ISDA Definitions.
In these Conditions, "ISDA Definitions" means (i) if "2006 ISDA Definitions" is specified in the applicable Final Terms, the 2006 ISDA Definitions, as published by the International Swaps and Derivatives Association, Inc. ("ISDA"), as amended and updated as at the Issue Date of the first Tranche of the Notes; or (ii) if "2021 ISDA Definitions" is specified in the applicable Final Terms, the latest version of the 2021 ISDA Interest Rate Derivatives Definitions, including any Matrices referred to therein, as published by ISDA as at the Issue Date of the first Tranche of the Notes.
Unless otherwise stated in the applicable Final Terms the Minimum Rate of Interest shall be deemed to be zero.
(B) Screen Rate Determination for Floating Rate Notes – where the Reference Rate is not Compounded Daily SONIA, CMS, Compounded Daily SOFR, Compounded SOFR Index, TONA, Compounded Daily CORRA, CORRA Compounded Index or SARON.
Where Screen Rate Determination is specified in the applicable Final Terms as the manner in which the Rate of Interest is to be determined and the Reference Rate in respect of the Floating Rate Notes is not specified as being Compounded Daily SONIA, CMS, Compounded Daily SOFR, Compounded SOFR Index, TONA, Compounded Daily CORRA, CORRA Compounded Index or SARON, the Rate of Interest for each Interest Period will, subject as provided below, be either:
(expressed as a percentage rate per annum) for the Reference Rate which appears or appear, as the case may be, on the Relevant Screen Page as of the Relevant Time on the Interest Determination Date in question plus or minus (as indicated in the applicable Final Terms) the Margin (if any), all as determined by the Principal Paying Agent or other party as
specified in the applicable Final Terms. If five or more such offered quotations are available on the Relevant Screen Page, the highest (or, if there is more than one such highest quotation, one only of such quotations) and the lowest (or, if there is more than one such lowest quotation, one only of such quotations) shall be disregarded by the Principal Paying Agent or that other party for the purpose of determining the arithmetic mean (rounded as provided above) of such offered quotations.
If the Relevant Screen Page is not available or if, in the case of (A) above, no such offered quotation appears or, in the case of (B) above, fewer than three such offered quotations appear, in each case as at the Relevant Time, the Principal Paying Agent and the Issuer shall request each of the Reference Banks to provide the Principal Paying Agent and the Issuer with its offered quotation (expressed as a percentage rate per annum) for the Reference Rate at approximately the Relevant Time on the relevant Interest Determination Date in question. If two or more of the Reference Banks provide the Principal Paying Agent and the Issuer with such offered quotations, the Rate of Interest for such Interest Period shall be the arithmetic mean (rounded if necessary to the fifth decimal place, with 0.000005 being rounded upwards) of such offered quotations plus or minus (as appropriate) the Margin (if any), all as determined by the Principal Paying Agent.
If on any Interest Determination Date one only or none of the Reference Banks provides the Principal Paying Agent and the Issuer with such offered quotations as provided in the preceding paragraph, the Rate of Interest for the relevant Interest Period shall be the rate per annum which the Principal Paying Agent determines as being the arithmetic mean (rounded if necessary to the fifth decimal place, with 0.000005 being rounded upwards) of the rates, as communicated to (and at the request of) the Principal Paying Agent and the Issuer by the Reference Banks or any two or more of them, at which such banks were offered, at approximately the Relevant Time on the relevant Interest Determination Date, deposits in the Specified Currency for a period equal to that which would have been used for the Reference Rate by leading banks in the Relevant Financial Centre plus or minus (as appropriate) the Margin (if any); or, if fewer than two of the Reference Banks provide the Principal Paying Agent and the Issuer with such offered rates, the offered rate for deposits in the Specified Currency for a period equal to that which would have been used for the Reference Rate, or the arithmetic mean (rounded as provided above) of the offered rates for deposits in the Specified Currency for a period equal to that which would have been used for the Reference Rate, at which, at approximately the Relevant Time on the relevant Interest Determination Date, any one or more banks (which bank or banks is or are in the opinion of the Issuer suitable for such purpose) informs the Principal Paying Agent and the Issuer it is quoting to leading banks in the Relevant Financial Centre plus or minus (as appropriate) the Margin (if any), provided that, if the Rate of Interest cannot be determined in accordance with the foregoing provisions of this paragraph, the Rate of Interest shall be determined as at the last preceding Interest Determination Date (though substituting, where a different Margin is to be applied to the relevant Interest Period from that which applied to the last preceding Interest Period, the Margin relating to the relevant Interest Period, in place of the Margin relating to that last preceding Interest Period).
The Principal Paying Agent shall not be responsible to the Issuer or to any third party (except in the event of negligence, default, misconduct or bad faith of the Principal Paying Agent) as a result of the Principal Paying Agent having acted in good faith on any quotation given by any Reference Bank which subsequently may be found to be incorrect.
Where Screen Rate Determination is specified in the applicable Final Terms as the manner in which the Rate of Interest is to be determined, and if the Reference Rate is specified in the applicable Final Terms as being Compounded Daily SONIA, then the Rate of Interest applicable to the Notes for each Interest Period will, subject as provided below, be Compounded Daily SONIA plus or minus (as indicated in the applicable Final Terms) the applicable Margin, all as determined by the Principal Paying Agent or other party as specified in the applicable Final Terms on the Interest Determination Date for such Interest Period.
If, in respect of any London Banking Day in the relevant Observation Period, the applicable SONIA reference rate is not made available on the Relevant Screen Page or has not otherwise been published by the relevant authorised distributors, then (unless the Principal Paying Agent or other party as specified in the applicable Final Terms has been notified of any Successor Rate or Alternative Rate (and any related Adjustment Spread and/or Benchmark Amendments) pursuant to Condition 4(c), if applicable) such SONIA reference rate shall be the sum of: (i) the Bank of England's Bank Rate (the "Bank Rate") prevailing at 5:00p.m. (or, if earlier, close of business) on such London Banking Day; plus (ii) the mean of the spread of the SONIA reference rate to the Bank Rate over the previous five London Banking Days on which a SONIA reference rate has been published, excluding the highest spread (or, if there is more than one highest spread, one only of those highest spreads) and lowest spread (or, if there is more than one lowest spread, one only of those lowest spreads).
In the event that the Rate of Interest cannot be determined in accordance with the foregoing provisions, the Rate of Interest shall be (i) that determined as at the last preceding Interest Determination Date (though substituting, where a different Margin, Maximum Rate of Interest and/or Minimum Rate of Interest is to be applied to the relevant Interest Period from that which applied to the last preceding Interest Period, the Margin or Maximum Rate of Interest and/or Minimum Rate of Interest (as the case may be) relating to the relevant Interest Period, in place of the Margin or Maximum Rate of Interest and/or Minimum Rate of Interest (as applicable) relating to that last preceding Interest Period) or (ii) if there is no such preceding Interest Determination Date, the initial Rate of Interest which would have been applicable to the Notes for the first Interest Period had the Notes been in issue for a period equal in duration to the scheduled first Interest Period but ending on (and excluding) the Interest Commencement Date (but applying the Margin and any Maximum Rate of Interest or Minimum Rate of Interest applicable to the first Interest Period).
If the Notes become due and payable as a result of an Event of Default (as defined under Condition 9), or are otherwise redeemed early on a date other than an Interest Payment Date in accordance with Condition 4, the final Interest Determination Date shall, notwithstanding any Interest Determination Date specified in the applicable Final Terms, be deemed to be the date on which such Notes became due and payable or are to be redeemed, as applicable, and the Rate of Interest applicable to such Notes shall, for so long as any such Note remains outstanding, be that determined on such date.
(D) Screen Rate Determination for Floating Rate Notes – where the Reference Rate is CMS
Where Screen Rate Determination is specified in the applicable Final Terms as the manner in which the Rate of Interest is to be determined and the Reference Rate in respect of the Floating Rate Notes is specified as being CMS, the Rate of Interest for each Interest Period will, subject as provided below, be determined by the Principal Paying Agent or other party as specified in the applicable Final Terms by reference to the following formula:
If the Relevant Screen Page is not available, the Principal Paying Agent and the Issuer shall request each of the CMS Reference Banks to provide the Principal Paying Agent and the Issuer with its quotation for the Reference Swap Rate at approximately the Relevant Time on the relevant Interest Determination Date in question. If at least three of the CMS Reference Banks provide the Principal Paying Agent and the Issuer with such quotations, the CMS Rate for such Interest Period shall be the arithmetic mean of such quotations, eliminating the highest quotation (or, in the event of equality, one of the highest and the lowest quotation (or, in the event of equality, one of the lowest)).
If on any Interest Determination Date less than three or none of the CMS Reference Banks provides the Principal Paying Agent and the Issuer with such quotations, as provided in the preceding paragraph, the CMS Rate shall be determined by the Principal Paying Agent on such commercial basis as considered appropriate by the Principal Paying Agent in its absolute discretion, in accordance with standard market practice.
(E) Screen Rate Determination for Floating Rate Notes – where the Reference Rate is Compounded Daily SOFR
Where Screen Rate Determination is specified in the applicable Final Terms as the manner in which the Rate of Interest is to be determined, and if the Reference Rate is specified in the applicable Final Terms as being Compounded Daily SOFR, then the Rate of Interest applicable to the Notes for each Interest Period will, subject as provided below, be Compounded Daily SOFR (as defined below) plus or minus (as indicated in the applicable Final Terms) the applicable Margin, all as determined by the Principal Paying Agent (or other party as specified in the applicable Final Terms) on the Interest Determination Date for such Interest Period.
"Compounded Daily SOFR" shall be equal to the compounded average of daily SOFR reference rates for each day during the relevant Interest Period (where SOFR Lag, SOFR Payment Delay or SOFR Lockout is specified as applicable in the applicable Final Terms to determine Compounded Daily SOFR) or the SOFR Observation Period (where SOFR Observation Shift is specified as applicable in the applicable Final Terms to determine Compounded Daily SOFR).
Compounded Daily SOFR shall be calculated by the Principal Paying Agent (or such other party responsible for the calculation of the Rate of Interest, as specified in the applicable Final Terms) in accordance with one of the formulas referenced below depending upon which is specified as applicable in the applicable Final Terms:
(a) SOFR Lag:
$$\left(\prod_{l=1}^{d_0} \left(1 + \frac{\mathcal{S}OFR_{l \ - \times USDD} \times n_l}{360} - 1\right) \times \frac{360}{d}\right)$$
with the resulting percentage being rounded, if necessary, to the nearest one hundredthousandth of a percentage point, with 0.000005 per cent. being rounded upwards (e.g., 9.876541 per cent. (or 0.09876541) being rounded down to 9.87654 per cent. (or 0.0987654) and 9.876545 per cent. (or 0.09876545) being rounded up to 9.87655 per cent. (or 0.0987655)) and where:
"SOFRi-xUSBD" for any U.S. Government Securities Business Day(i) in the relevant Interest Period, is equal to the SOFR reference rate for the U.S. Government Securities Business Day falling the number of Lookback Days prior to that U.S. Government Securities Business Day(i);
"Lookback Days" means such number of U.S. Government Securities Business Days as specified in the applicable Final Terms; provided that such number cannot be less than 5;
"d" means the number of calendar days in the relevant Interest Period;
"do" means the number of U.S. Government Securities Business Days in the relevant Interest Period;
"i" means a series of whole numbers ascending from one to do, representing each relevant U.S. Government Securities Business Day from (and including) the first U.S. Government Securities Business Day in the relevant Interest Period (each a "U.S. Government Securities Business Day(i)"); and
"ni", for any U.S. Government Securities Business Day(i), means the number of calendar days from (and including) such U.S. Government Securities Business Day(i) up to (but excluding) the following U.S. Government Securities Business Day.
$$\left(\prod_{l=1}^{d_0} \left(1 + \frac{SOFR_l \times n_l}{360} \right) - 1\right) \times \frac{360}{d}$$
with the resulting percentage being rounded, if necessary, to the nearest one hundredthousandth of a percentage point, with 0.000005 per cent. being rounded upwards (e.g., 9.876541 per cent. (or 0.09876541) being rounded down to 9.87654 per cent. (or 0.0987654) and 9.876545 per cent. (or 0.09876545) being rounded up to 9.87655 per cent. (or 0.0987655)) and where:
"SOFRi" for any U.S. Government Securities Business Day(i) in the relevant SOFR Observation Period, is equal to the SOFR reference rate for that U.S. Government Securities Business Day(i);
"SOFR Observation Period" means, in respect of an Interest Period, the period from (and including) the date falling the number of SOFR Observation Shift Days prior to the first day of such Interest Period to (but excluding) the date falling the number of SOFR Observation Shift Days prior to the Interest Payment Date for such Interest Period;
"SOFR Observation Shift Days" means the number of U.S. Government Securities Business Days as specified in the applicable Final Terms; provided that such number cannot be less than 5;
"d" means the number of calendar days in the relevant SOFR Observation Period;
"do" means the number of U.S. Government Securities Business Days in the relevant SOFR Observation Period;
"i" means a series of whole numbers ascending from one to do, representing each U.S. Government Securities Business Day from (and including) the first U.S. Government Securities Business Day in the relevant SOFR Observation Period (each a "U.S. Government Securities Business Day(i)"); and
"ni", for any U.S. Government Securities Business Day(i), means the number of calendar days from (and including) such U.S. Government Securities Business Day(i) up to (but excluding) the following U.S. Government Securities Business Day.
(c) SOFR Payment Delay:
$$\left(\prod_{l=1}^{d_0} \left(1 + \frac{SOFR_l \times n_l}{360} \right) - 1\right) \times \frac{360}{d}$$
with the resulting percentage being rounded, if necessary, to the nearest one hundredthousandth of a percentage point, with 0.000005 per cent. being rounded upwards (e.g., 9.876541 per cent. (or 0.09876541) being rounded down to 9.87654 per cent. (or 0.0987654) and 9.876545 per cent. (or 0.09876545) being rounded up to 9.87655 per cent. (or 0.0987655)) and where:
"SOFRi" for any U.S. Government Securities Business Day(i) in the relevant Interest Period, is equal to the SOFR reference rate for that U.S. Government Securities Business Day(i);
"Interest Payment Date" for the purpose of this Condition 4(b)(ii)(E)(c) shall be the number of Interest Payment Delay Days following each Interest Payment Date; provided that the Interest Payment Date with respect to the final Interest Period will be the Maturity Date or, if the Issuer elects to redeem the Notes prior to the Maturity Date, the relevant Optional Redemption Date;
"Interest Payment Delay Days" means the number of U.S. Government Securities Business Days as specified in the applicable Final Terms; provided that such number cannot be less than 5;
"d" means the number of calendar days in the relevant Interest Period;
"do" means the number of U.S. Government Securities Business Days in the relevant Interest Period;
"i" means a series of whole numbers ascending from one to do, representing each relevant U.S. Government Securities Business Day from (and including) the first U.S. Government Securities Business Day in the relevant Interest Period (each a "U.S. Government Securities Business Day(i)"); and
"ni", for any U.S. Government Securities Business Day(i), means the number of calendar days from (and including) such U.S. Government Securities Business Day(i) up to (but excluding) the following U.S. Government Securities Business Day.
For the purposes of calculating Compounded Daily SOFR with respect to the final Interest Period where SOFR Payment Delay is specified in the applicable Final Terms, the SOFR reference rate for each U.S. Government Securities Business Day in the period from (and including) the SOFR Rate Cut-Off Date to (but excluding) the Maturity Date or the relevant Optional Redemption Date, as applicable, shall be the SOFR reference rate in respect of such SOFR Rate Cut-Off Date.
(d) SOFR Lockout:
$$\left(\prod_{l=1}^{d_0} \left(1 + \frac{SOFR_l \times n_l}{360} \right) - 1\right) \times \frac{360}{d}.$$
with the resulting percentage being rounded, if necessary, to the nearest one hundredthousandth of a percentage point, with 0.000005 per cent. being rounded upwards (e.g., 9.876541 per cent. (or 0.09876541) being rounded down to 9.87654 per cent. (or 0.0987654) and 9.876545 per cent. (or 0.09876545) being rounded up to 9.87655 per cent. (or 0.0987655)) and where:
"SOFRi" for any U.S. Government Securities Business Day(i) in the relevant Interest Period, is equal to the SOFR reference rate for that U.S. Government Securities Business Day(i), except that the SOFR for any U.S. Government Securities Business Day(i) in respect of the period from (and including) the SOFR Rate Cut-Off Date to (but excluding) the Interest Payment Date for such Interest Period shall be the SOFR reference rate in respect of such SOFR Rate Cut-Off Date;
"d" means the number of calendar days in the relevant Interest Period;
"do" means the number of U.S. Government Securities Business Days in the relevant Interest Period;
"i" means a series of whole numbers ascending from one to do, representing each relevant U.S. Government Securities Business Day from (and including) the first U.S. Government Securities Business Day in the relevant Interest Period (each a "U.S. Government Securities Business Day(i)"); and
"ni", for any U.S. Government Securities Business Day(i), means the number of calendar days from (and including) such U.S. Government Securities Business Day(i) up to (but excluding) the following U.S. Government Securities Business Day.
The following defined terms shall have the meanings set out below for purpose of Condition 4(b)(ii)(E):
"Bloomberg Screen SOFRRATE Page" means the Bloomberg screen designated "SOFRRATE" or any successor page or service;
"Reuters Page USDSOFR=" means the Reuters page designated "USDSOFR=" or any successor page or service;
"SOFR" means, in respect of a U.S. Government Securities Business Day, the reference rate determined by the Principal Paying Agent (or such other party responsible for the calculation of the Rate of Interest, as specified in the applicable Final Terms) in accordance with the following provision:
"SOFR Rate Cut-Off Date" means the date that is a number of U.S. Government Securities Business Days prior to the Interest Payment Date relating to the relevant Interest Period, the Maturity Date or the relevant Optional Redemption Date, as applicable, as specified in the applicable Final Terms; provided that such number cannot be less than 5; and
"SOFR Determination Time" means approximately 3:00 p.m. (New York City time) on the immediately following U.S. Government Securities Business Day.
(F) Screen Rate Determination for Floating Rate Notes – where the Reference Rate is Compounded SOFR Index
Where Screen Rate Determination is specified in the applicable Final Terms as the manner in which the Rate of Interest is to be determined, and if the Reference Rate is specified in the applicable Final Terms as being Compounded SOFR Index, then the Rate of Interest applicable to the Notes for each Interest Period will, subject as provided below, be Compounded SOFR Index (as defined below) plus or minus (as indicated in the applicable Final Terms) the applicable Margin, all as determined by the Principal Paying Agent (or other party as specified in the applicable Final Terms) on the Interest Determination Date for such Interest Period.
"Compounded SOFR Index" shall be equal to the compounded average of daily SOFR reference rates for each day during the relevant SOFR Observation Period as calculated by the Principal Paying Agent (or such other party responsible for the calculation of the Rate of Interest, as specified in the applicable Final Terms) as follows:
$$
\left(\frac{SOFR\ Index_{End}}{SOFR\ Index_{Start}} - 1\right) \times \left(\frac{360}{d_c}\right)^2
$$
with the resulting percentage being rounded, if necessary, to the nearest one hundredthousandth of a percentage point, with 0.000005 per cent. being rounded upwards (e.g., 9.876541 per cent. (or 0.09876541) being rounded down to 9.87654 per cent. (or 0.0987654) and 9.876545 per cent. (or 0.09876545) being rounded up to 9.87655 per cent. (or 0.0987655)) and where:
"SOFR Index" means, in respect of a U.S. Government Securities Business Day, the SOFR Index value as published on the SOFR Administrator's Website at the SOFR Index Determination Time on such U.S. Government Securities Business Day, provided that:
"SOFR IndexEnd" means, in respect of an Interest Period, the SOFR Index value on the date that is the number of U.S. Government Securities Business Days specified in the applicable Final Terms prior to the Interest Payment Date for such Interest Period (or in the final Interest Period, the Maturity Date);
"SOFR IndexStart" means, in respect of an Interest Period, the SOFR Index value on the date that is the number of U.S. Government Securities Business Days specified in the applicable Final Terms prior to the first day of such Interest Period;
"SOFR Index Determination Time" means, in respect of a U.S. Government Securities Business Day, approximately 3:00 p.m. (New York City time) on such U.S. Government Securities Business Day;
"SOFR Observation Period" means, in respect of an Interest Period, the period from (and including) the date falling the number of SOFR Observation Shift Days prior to the first day of such Interest Period to (but excluding) the date falling the number of SOFR Observation Shift Days prior to the Interest Payment Date for such Interest Period;
"SOFR Observation Shift Days" means the number of U.S. Government Securities Business Days as specified in the applicable Final Terms; provided that such number cannot be less than 5; and
"dc" means the number of calendar days in the applicable SOFR Observation Period.
The following defined terms shall have the meanings set out below for purpose of Condition 4(b)(ii)(E) and Condition 4(b)(ii)(F):
"SOFR Administrator's Website" means the website of the Federal Reserve Bank of New York (currently, being https://www.newyorkfed.org/markets/reference-rates/sofr-averages-and-index), or any successor source;
"SOFR Benchmark Replacement Date" means the Benchmark Replacement Date with respect to the then-current Benchmark;
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"SOFR Benchmark Transition Event" means the occurrence of a SOFR Benchmark Event with respect to the then-current Benchmark; and
"U.S. Government Securities Business Day" means any day except for a Saturday, a Sunday or a day on which the Securities Industry and Financial Markets Association recommends that the fixed income departments of its members be closed for the entire day for purposes of trading in U.S. government securities.
(G) Screen Rate Determination for Floating Rate Notes – where the Reference Rate is TONA
Where Screen Rate Determination is specified in the applicable Final Terms as the manner in which the Rate of Interest is to be determined, and if the Reference Rate is specified in the applicable Final Terms as being TONA, then the TONA rate of interest determination method, as specified in the applicable Final Terms (the "TONA Rate of Interest Determination"), in which the Rate of Interest is to be determined shall be either TONA Lookback Compound or TONA Shift Compound, as follows:
For the purpose of Condition 4(b)(ii)(G):
"TONA Lookback Compound" means the rate of return of a daily compound interest investment (with TONA as the reference rate for the calculation of interest) which will be calculated by the Principal Paying Agent or other party as specified in the applicable Final Terms on the relevant Interest Determination Date, as follows:
$$\left[\prod_{l=1}^{d_0} \left(1 + \frac{\text{TONA}_{l-pTBD} \times n_l}{365} \right) - 1\right] \times \frac{365}{d}$$
with the resulting percentage will be rounded, if necessary, to the nearest fifth decimal place, with 0.000005 being rounded upwards and where:
"d" is the number of calendar days in the relevant Interest Period;
"d0" is the number of Tokyo Banking Days in the relevant Interest Period;
"i" is a series of whole numbers from one to do, each representing the relevant Tokyo Banking Day in chronological order from, and including, the first Tokyo Banking Day in the relevant Interest Period to, and including, the last Tokyo Banking Day in such Interest Period;
"ni" means, for any Tokyo Banking Day "i", the number of calendar days from, and including, such Tokyo Banking Day "i" up to, but excluding, the earlier of (a) the following Tokyo Banking Day ("i+1"); and (b) the last day of the relevant Interest Period;
"Observation Look-Back Period" means the period specified in the applicable Final Terms, such number representing a number of Tokyo Banking Days;
"p" means, in relation to any Interest Period, the number of Tokyo Banking Days included in the Observation Look-Back Period or if none is specified, five Tokyo Banking Days; and
"TONAi-pTBD", means for any Tokyo Banking Day "i" falling in the relevant Interest Period, the TONA in respect of the Tokyo Banking Day falling "p" Tokyo Banking Days prior to the relevant Tokyo Banking Day "i".
"TONA Shift Compound" means the rate of return of a daily compound interest investment (with TONA as the reference rate for the calculation of interest) which will be calculated by the Principal Paying Agent or other party as specified in the applicable Final Terms on the Interest Determination Date, as follows:
$$\left(\prod_{l=1}^{d_0} \left(1 + \frac{TONA_l \times n_l}{365} \right) - 1\right) \times \frac{365}{d}.$$
with the resulting percentage will be rounded, if necessary, to the nearest fifth decimal place, with 0.000005 being rounded upwards and where:
"d" is the number of calendar days in the relevant Observation Period;
"d0" for any Observation Period, means the number of Tokyo Banking Days in the relevant Observation Period;
"TONAi" means, in respect of any Tokyo Banking Day falling in the relevant Observation Period, the TONA in respect of that Tokyo Banking Day "i";
"i" is a series of whole numbers from one to d0, each representing the relevant Tokyo Banking Day in chronological order from, and including, the first Tokyo Banking Day in the relevant Observation Period to, and including, the last Tokyo Banking Day in such Interest Period;
"ni" for any Tokyo Banking Day "i" in the relevant Observation Period, means the number of calendar days from, and including, such day "i" up to, but excluding, the following Tokyo Banking Day ("i+1");
"Observation Period" means, in respect of each Interest Period, the period from, and including, the date falling a number of Tokyo Banking Days equal to the Observation Shift Days preceding the first day of such Interest Period to, but excluding, the date falling a number of Tokyo Banking Days equal to the Observation Shift Days preceding the last day of such Interest Period;
"Observation Shift Days" means the number of Tokyo Banking Days specified in the applicable Final Terms or if none is specified, five Tokyo Banking Days.
If, in respect of a relevant Tokyo Banking Day, the Principal Paying Agent or other party as specified in the applicable Final Terms determines that the TONA is not available on the Relevant Screen Page or has not otherwise been published by the relevant authorised distributors and a TONA Index Cessation Event has not occurred, such TONA shall be the TONA in respect of the first preceding Tokyo Banking Day for which the TONA was published by the Bank of Japan or such authorised distributors.
If a TONA Index Cessation Effective Date occurs with respect to TONA, the rate for a relevant Tokyo Banking Day which occurs on or after such TONA Index Cessation Effective Date will be the JPY Recommended Rate.
If there is a JPY Recommended Rate before the end of the first Tokyo Banking Day following the TONA Index Cessation Effective Date with respect to TONA, but neither the TONA Reference Rate Administrator nor authorised distributors provide or publish the JPY Recommended Rate and a TONA Index Cessation Effective Date with respect to the JPY Recommended Rate has not occurred, then, in respect of any day for which the JPY Recommended Rate is required, references to the JPY Recommended Rate will be deemed to be references to the last provided or published JPY Recommended Rate. However, if there is no last provided or published JPY Recommended Rate, then in respect of any day for which the JPY Recommended Rate is required, references to the JPY Recommended Rate will be deemed to be references to the last provided or published TONA.
If (i) there is no JPY Recommended Rate before the end of the first Tokyo Banking Day following the TONA Index Cessation Effective Date with respect to TONA, or (ii) there is a JPY Recommended Rate and a TONA Index Cessation Effective Date subsequently occurs with respect to the JPY Recommended Rate, the rate for a relevant Tokyo Banking Day which occurs on or after such applicable TONA Index Cessation Effective Date will be the rate determined by the Principal Paying Agent (or other party as specified in the applicable Final Terms) as a commercially reasonable alternative for TONA or the JPY Recommended Rate (as applicable), taking into account all available information that in good faith it considers relevant including a rate implemented by central counterparties and/or futures exchanges (if any), in each case with trading volumes in derivatives or futures referencing TONA or the JPY Recommended Rate (as applicable) that the Principal Paying Agent (or other party as specified in the applicable Final Terms) considers sufficient for that rate to be a representative alternative rate.
Any determination, decision or election pursuant to the terms and provisions set forth in the preceding paragraphs not made by the Principal Paying Agent (or other party as specified in the applicable Final Terms) or the Issuer's designee will be made by the Issuer in its sole discretion and will be conclusive and binding on the Principal Paying Agent (or other party as specified in the applicable Final Terms), the holders of the Notes and the beneficial owners of interests in the Notes, absent manifest error. In addition, the Issuer may designate an entity (which may be its affiliate) to make any determination or decision that the Issuer has the right to make in connection with such terms and provisions.
For the purpose of Condition 4(b)(ii)(G):
"JPY Recommended Rate" means, in respect of any relevant Tokyo Banking Day, the rate (inclusive of any spreads or adjustments) recommended as the replacement for TONA by a committee officially endorsed or convened by the Bank of Japan for the purpose of recommending a replacement for TONA (which rate may be produced by the Bank of Japan or another administrator) and as provided by the administrator of that rate or, if that rate is not provided by the administrator thereof, published by an authorized distributor, in respect of that day.
"Tokyo Banking Day" or "TBD" means any day on which commercial banks are open for general business (including dealing in foreign exchange and foreign currency deposits) in Tokyo; and
"TONA" means, in respect of any Tokyo Banking Day, is a reference rate equal to the daily Tokyo Over Night Average rate in respect of such Tokyo Banking Day as published by the Bank of Japan on the Relevant Screen Page or, if the Relevant Screen Page is unavailable, as otherwise published by such authorised distributors, on the Tokyo Banking Day immediately following such Tokyo Banking Day.
"TONA Applicable Rate" means, as applicable TONA or the JPY Recommended Rate.
where "TONA Non-Representative" means that the regulatory supervisor for the administrator of the TONA Applicable Rate:
provided that the TONA Applicable Rate will be "TONA Non-Representative" by reference to the date indicated in the most recent statement or publication contemplated in paragraph (iii) of the definition of TONA Index Cessation Event.
"TONA Index Cessation Event" means, with respect to a TONA Applicable Rate:
administrator for the TONA Applicable Rate, a resolution authority with jurisdiction over the administrator for the TONA Applicable Rate or a court or an entity with similar insolvency or resolution authority over the administrator for the TONA Applicable Rate, which states that the administrator of the TONA Applicable Rate has ceased or will cease to provide the TONA Applicable Rate permanently or indefinitely, provided that, at the time of the statement or publication, there is no successor administrator or provider that will continue to provide the TONA Applicable Rate (provided that, in each case, as used in this paragraph (ii), the definition of the TONA Applicable Rate shall exclude termadjusted TONA for a designated maturity);
(iii) if TONA Non-Representative applies, a public statement or publication of information by the regulatory supervisor for the administrator of the TONA Applicable Rate announcing that (I) the regulatory supervisor has determined that the TONA Applicable Rate is no longer, or as of a specified future date will no longer be, representative of the underlying market and economic reality that the TONA Applicable Rate is intended to measure and that representativeness will not be restored and (II) it is being made in the awareness that the statement or publication will engage certain contractual triggers for fallbacks activated by precessation announcements by such supervisor (howsoever described) in contracts.
"TONA Reference Rate Administrator" means the Bank of Japan or any successor administrator for TONA, as applicable.
(H) Screen Rate Determination for Floating Rate Notes – where the Reference Rate is Compounded Daily CORRA
Where Screen Rate Determination is specified in the applicable Final Terms as the manner in which the Rate of Interest is to be determined, and if the Reference Rate is specified in the applicable Final Terms as being Compounded Daily CORRA, then the Rate of Interest applicable to the Notes for each Interest Period will, subject as provided below, be Compounded Daily CORRA (as defined below) plus or minus (as indicated in the applicable Final Terms) the applicable Margin, all as determined by the Principal Paying Agent (or other party as specified in the applicable Final Terms) on the Interest Determination Date for such Interest Period.
"Compounded Daily CORRA" means, with respect to an Interest Period, the rate of return of a daily compound interest investment during the Observation Period corresponding to such Interest Period (with CORRA as the reference rate for the calculation of interest) and will be calculated by the Principal Paying Agent or other party as specified in the applicable Final Terms on the Interest Determination Date, as follows:
$$\left[\prod_{l=1}^{d_0} \left(1 + \frac{CORRAi \times n_l}{365} \right) - 1\right] \times \frac{365}{d}$$
with the resulting percentage will be rounded if necessary to the fifth decimal place, with 0.000005 being rounded upwards and where:
"d" means the number of calendar days in the relevant Observation Period;
"do" means the number of Bank of Canada Business Days in the relevant Observation Period;
"CORRAi" means, in respect of any Bank of Canada Business Day "i" in the relevant Observation Period, a reference rate equal to the daily CORRA rate for that day as published or displayed by the CORRA Reference Rate Administrator or an authorised distributor at 11:00 a.m. Toronto time (or an amended publication time, if any, as specified in the CORRA Reference Rate Administrator's methodology for calculating CORRA) on the immediately following Bank of Canada Business Day, which is Bank of Canada Business Day "i" +1;
"i" is a series of whole numbers from one to "do", each representing the relevant Bank of Canada Business Day in chronological order from, and including, the first Bank of Canada Business Day in the relevant Observation Period to, and including, the last Bank of Canada Business Day in the relevant Observation Period;
"ni" means, in respect of any Bank of Canada Business Day "i" in the relevant Observation Period, the number of calendar days from (and including) such Bank of Canada Business Day "i" to (but excluding) the first following Bank of Canada Business Day (which is Bank of Canada Business Day "i" +1);
If neither the CORRA Reference Rate Administrator nor authorised distributors provide or publish CORRA and a CORRA Index Cessation Effective Date with respect to CORRA has not occurred, then, in respect of any day for which CORRA is required, references to CORRA will be deemed to be references to the last provided or published CORRA.
If a CORRA Index Cessation Effective Date occurs with respect to CORRA, the Reference Rate for an Interest Determination Date which occurs on or after such CORRA Index Cessation Effective Date will be the CAD Recommended Rate, to which the most recently published spread will be applied and the Issuer or its designee shall make such adjustments as are necessary to account for any difference in the term, structure or tenor of the CAD Recommended Rate in comparison to CORRA.
If there is a CAD Recommended Rate before the end of the first Bank of Canada Business Day following the CORRA Index Cessation Effective Date with respect to CORRA, but neither the CORRA Reference Rate Administrator nor authorised distributors provide or publish the CAD Recommended Rate and a CORRA Index Cessation Effective Date with respect to the CAD Recommended Rate has not occurred, then, in respect of any day for which the CAD Recommended Rate is required, references to the CAD Recommended Rate will be deemed to be references to the last provided or published CAD Recommended Rate. However, if there is no last provided or published CAD Recommended Rate, then in respect of any day for which the CAD Recommended Rate is required, references to the CAD Recommended Rate will be deemed to be references to the last provided or published CORRA.
If (i) there is no CAD Recommended Rate before the end of the first Bank of Canada Business Day following the CORRA Index Cessation Effective Date with respect to CORRA, or (ii) there is a CAD Recommended Rate and a CORRA Index Cessation Effective Date subsequently occurs with respect to the CAD Recommended Rate, the Reference Rate for an Interest Determination Date which occurs on or after such applicable CORRA Index Cessation Effective Date will be the BOC Target Rate, to which the most recently published spread will be applied and the Issuer or its designee shall make such adjustments as are necessary to account for any difference in the term, structure or tenor of the BOC Target Rate in comparison to CORRA.
In respect of any day for which the BOC Target Rate is required, references to the BOC Target Rate will be deemed to be references to the last provided or published BOC Target Rate as of the close of business in Toronto on that day.
In connection with the implementation of a CORRA Applicable Rate, the Issuer or its designee may make such adjustments to the CORRA Applicable Rate or the spread thereon, if any, as well as the business day convention, the calendar day count convention, Interest Determination Dates, and related provisions and definitions (including observation dates for reference rates), in each case as are consistent with accepted market practice for the use of the CORRA Applicable Rate for debt obligations such as the Notes in such circumstances.
Any determination, decision or election pursuant to the terms and provisions set forth in the preceding paragraphs not made by the Principal Paying Agent (or other party as specified in the applicable Final Terms) or the Issuer's designee will be made by the Issuer in its sole discretion and will be conclusive and binding on the Principal Paying Agent (or other party as specified in the applicable Final Terms), the holders of the Notes and the beneficial owners of interests in the Notes, absent manifest error. In addition, the Issuer may designate an entity (which may be its affiliate) to make any determination or decision that the Issuer has the right to make in connection with such terms and provisions.
For the purpose of Conditions 4(b)(ii)(H) and 4(b)(ii)(I):
"Bank of Canada Business Day" means a day that Schedule I banks under the Bank Act (Canada) are open for business in Toronto, Ontario, Canada, other than a Saturday or a Sunday or a public holiday in Toronto (or such revised regular publication calendar for a CORRA Applicable Rate as may be adopted by the CORRA Reference Rate Administrator from time to time);
"BOC Target Rate" means the Bank of Canada's target for the overnight rate as set by the Bank of Canada and published on the Bank of Canada's website;
"CAD Recommended Rate" means the rate (inclusive of any spreads or adjustments) recommended as the replacement for CORRA by a committee officially endorsed or convened by the Bank of Canada for the purpose of recommending a replacement for CORRA (which rate may be produced by the Bank of Canada or another administrator) and as provided by the administrator of that rate or, if that rate is not provided by the administrator thereof (or a successor administrator ), published by an authorised distributor;
"CORRA Applicable Rate" or "CORRA Reference Rate" means one of CORRA Compounded Index, CORRA, the CAD Recommended Rate or the BOC Target Rate, as applicable;
"CORRA Index Cessation Effective Date" means, in respect of a CORRA Index Cessation Event, the first date on which the CORRA Applicable Rate is no longer provided. If the CORRA Applicable Rate ceases to be provided on the same day that it is required to determine the rate for an Interest Determination Date, but it was provided at the time at which it is to be observed (or, if no such time is specified, at the time at which it is ordinarily published), then the CORRA Index Cessation Effective Date will be the next day on which the rate would ordinarily have been published;
"CORRA Index Cessation Event" means:
"CORRA Reference Rate Administrator" means the Bank of Canada or any successor administrator for CORRA and/or the CORRA Compounded Index or the administrator (or its successor) of another CORRA Applicable Rate, as applicable;
"Observation Period" means, in respect of each Interest Period, the period from, and including, the date falling a number of Bank of Canada Business Days equal to the Observation Shift Days preceding the first day of such Interest Period to, but excluding, the date falling a number of Bank of Canada Business Days equal to the Observation Shift Days preceding the last day of such Interest Period;
"Observation Shift Days" means the number of Bank of Canada Business Days specified in the applicable Final Terms or if none is specified, five Bank of Canada Business Days.
(I) Screen Rate Determination for Floating Rate Notes – where the Reference Rate is CORRA Compounded Index
Where Screen Rate Determination is specified in the applicable Final Terms as the manner in which the Rate of Interest is to be determined, and if the Reference Rate is specified in the applicable Final Terms as being CORRA Compounded Index, then the Rate of Interest applicable to the Notes for each Interest Period will, subject as provided below, be CORRA Compounded Index (as defined below) plus or minus (as indicated in the applicable Final Terms) the applicable Margin, all as determined by the Principal Paying Agent (or other party as specified in the applicable Final Terms) on the Interest Determination Date for such Interest Period.
"CORRA Compounded Index" shall be equal to the compounded daily reference rate for an Interest Period as calculated by the Principal Paying Agent (or such other party responsible for the calculation of the Rate of Interest, as specified in the applicable Final Terms) as follows:
$$\left(\frac{CORRA\ Index \varepsilon_{End}}{CORRA\ Index \text{Start}} - 1\right) \times \left(\frac{365}{d_c}\right)$$
with the resulting percentage being rounded, if necessary, to the nearest one hundredthousandth of a percentage point, with 0.000005 per cent. being rounded upwards (e.g., 9.876541 per cent. (or 0.09876541) being rounded down to 9.87654 per cent. (or 0.0987654) and 9.876545 per cent. (or 0.09876545) being rounded up to 9.87655 per cent. (or 0.0987655)) and where:
"CORRA Index" means the measure of the cumulative impact of CORRA compounding over time as administered and a published by the Bank of Canada (or any successor CORRA Reference Rate Administrator) at 11:30 a.m. (Toronto time);
"CORRA IndexEnd" means, in respect of an Interest Period, the CORRA Index value on the date that is two Bank of Canada Business Days prior to the Interest Payment Date for such Interest Period (or in the final Interest Period, the Maturity Date);
"CORRA IndexStart" means, in respect of an Interest Period, the CORRA Index value on the date that is two Bank of Canada Business Days prior to the first day of such Interest Period; and
"dc" means the number of calendar days from (and including) the day on which the relevant CORRA IndexStart is determined to (but excluding) the day on which the relevant CORRA IndexEnd is determined.
If with respect to any Interest Period, the CORRA IndexStart value and/or CORRA IndexEnd value is not published or displayed by the CORRA Reference Rate Administrator or an authorised distributor by 11:30 a.m. Toronto time (or an amended publication time, if any, as specified in the CORRA Reference Rate Administrator's methodology for calculating the CORRA Compounded Index) on the Interest Determination Date for such Interest Period and (i) a CORRA Index Cessation Effective Date with respect to the CORRA Compounded Index has not occurred, the CORRA Compound Index in respect of such Interest Period shall be calculated in accordance with the Compounded Daily CORRA formula as if the Observation Shift Days were specified as two Bank of Canada Business Days, or (ii) a CORRA Index Cessation Effective Date with respect to the CORRA Compounded Index has occurred, then the Reference Rate for the applicable Interest Period for which the CORRA Compounded Index is not available shall be "Compounded Daily CORRA" as if Compounded Daily CORRA had been specified in the applicable Final Terms in place of CORRA Compounded Index and as if the Observation Shift Days were specified as two Bank of Canada Business Days.
(J) Screen Rate Determination for Floating Rate Notes – where the Reference Rate is SARON
Where Screen Rate Determination is specified in the applicable Final Terms as the manner in which the Rate of Interest is to be determined, and if the Reference Rate is specified in the applicable Final Terms as being SARON, then the Rate of Interest applicable to the Notes for each Interest Period will, subject as provided below, be the rate of return of a daily compound interest investment (with the overnight interest rate of the secured funding market for Swiss franc as the reference rate for the calculation of interest) plus or minus (as indicated in the applicable Final Terms) the Margin (if any) and which will be calculated by the Principal Paying Agent or other party as specified in the applicable Final Terms on the relevant Interest Determination Date, as follows:
$$\left(\prod_{l=1}^{d_0} \left(1 + \frac{\text{SARON}_l \times n_l}{360} \right) - 1\right) \times \frac{360}{d}$$
with the resulting percentage will be rounded, if necessary, to the nearest fifth decimal place, with 0.000005 being rounded upwards and where:
"d" means the number of calendar days in the relevant Observation Period;
"d0" for any Observation Period, means the number of Zurich Banking Days in the relevant Observation Period;
"i" is a series of whole numbers from one to d0, each representing the relevant Zurich Banking Day in chronological order from, and including, the first Zurich Banking Day in the relevant Observation Period to, and including, the last Zurich Banking Day in such Interest Period;
"ni" for any Zurich Banking Day "i" in the relevant Observation Period, means the number of calendar days from, and including, such day "i" up to, but excluding, the following Zurich Banking Day ("i+1");
"Observation Period" means, in respect of each Interest Period, the period from, and including, the date falling a number of Zurich Banking Days equal to the Observation Shift Days preceding the first day of such Interest Period to, but excluding, the date falling a number of Zurich Banking Days equal to the Observation Shift Days preceding the Interest Payment Date for such Interest Period;
"Observation Shift Days" means the number of Zurich Banking Days specified in the applicable Final Terms;
"Relevant Time for SARON" means, in respect of any Zurich Banking Day, close of trading on SIX Swiss Exchange on such Zurich Banking Day, which is expected to be on or around 6 p.m. (Zurich time);
"SARON" means, in respect of any Zurich Banking Day, the Swiss Average Rate Overnight for such Zurich Banking Day published by the SARON Administrator on the SARON Screen Page (as defined below) as at the Relevant Time for SARON on such Zurich Banking Day; and
"SARONi" for any Zurich Banking Day "i" in the relevant Observation Period, is equal to SARON in respect of that day "i".
If (1) SARON is not published on the relevant screen page (the "SARON Screen Page") as at the Relevant Time for SARON on the relevant Zurich Banking Day and (2) the Principal Paying Agent or other party as specified in the applicable Final Terms determines that no SARON Index Cessation Event and no SARON Index Cessation Effective Date have occurred on or prior to the Relevant Time for SARON on the relevant Zurich Banking Day, SARON for such Zurich Banking Day shall be the rate equal to the Swiss Average Rate Overnight published by the SARON Administrator on the SARON Administrator Website for the last preceding Zurich Banking Day on which the Swiss Average Rate Overnight was published by the SARON Administrator on the SARON Administrator Website.
If (1) SARON is not published on the SARON Screen Page at the Relevant Time for SARON on the relevant Zurich Banking Day and (2) the Principal Paying Agent or other party as specified in the applicable Final Terms determines that both a SARON Index Cessation Event and a SARON Index Cessation Effective Date have occurred on or prior to the Relevant Time for SARON on the relevant Zurich Banking Day:
Any substitution of SARON by the SARON Recommended Replacement Rate or the SNB Policy Rate as specified above (the "SARON Replacement Rate") will remain effective for the remaining term to maturity of the Notes and shall be notified by the Issuer to the Noteholders in accordance with Condition 13.
If the Notes become due and payable in accordance with the Conditions, the final Interest Determination Date shall, notwithstanding any Interest Determination Date specified in the applicable Final Terms, be deemed to be the date on which the Notes became due and payable and the Rate of Interest on the Notes shall, for so long as the Notes remain outstanding, be that determined on such date.
Any determination, decision or election that may be made by the Principal Paying Agent or other party as specified in the applicable Final Terms pursuant to Condition 4(b)(ii)(J), including any determination with respect to a rate or adjustment or of the occurrence or non-occurrence of an event, circumstance or date and any decision to take or refrain from taking any action or any selection (i) will be conclusive and binding absent manifest error; (ii) will be made in the sole discretion of the Principal Paying Agent or other party as specified in the applicable Final Terms, acting in good faith and in a commercial and reasonable manner; and (iii) notwithstanding anything to the contrary in the documentation relating to the Notes, shall become effective without consent from the Noteholders or any other party.
Notwithstanding any other provision of Condition 4(b)(ii)(J), if the Rate of Interest cannot be determined in accordance with the foregoing provisions by the Principal Paying Agent or other party as specified in the applicable Final Terms, no SARON Replacement Rate will be adopted by the Principal Paying Agent or other party as specified in the applicable Final Terms, and the SARON Replacement Rate for the relevant Interest Period will be equal to the last SARON available on the SARON Screen Page as determined by the Principal Paying Agent or other party as specified in the applicable Final Terms.
For the purposes of Condition 4(b)(ii)(J):
"SARON Administrator" means SIX Swiss Exchange or any successor administrator of the Swiss Average Rate Overnight;
"SARON Administrator Website" means the website of the SARON Administrator;
"SARON Index Cessation Effective Date" means the earliest of:
in each case, as determined by the Principal Paying Agent or other party as specified in the applicable Final Terms and notified by the Principal Paying Agent or other party as specified in the applicable Final Terms to the Issuer;
"SARON Index Cessation Event" means the occurrence of one or more of the following events, as determined by the Principal Paying Agent or other party as specified in the applicable Final Terms and notified by it to the Issuer:
provided that in the case of sub-paragraphs (2), (3) and (4), the SARON Index Cessation Event shall occur on the date of the cessation of publication of SARON, the discontinuation of SARON, or the prohibition of use of SARON, as the case may be, and not the date of the relevant public statement;
"SARON Recommended Adjustment Spread" means, with respect to any SARON Recommended Replacement Rate, the spread (which may be positive, negative or zero), or formula or methodology for calculating such a spread,
"SARON Recommended Replacement Rate" means the rate that has been recommended as the replacement for SARON by any working group or committee in Switzerland organised in the same or a similar manner as the National Working Group on Swiss Franc Reference Rates that was founded in 2013 for purposes of, among other things, considering proposals to reform reference interest rates in Switzerland (any such working group or committee, the "SARON Recommending Body");
"SIX Swiss Exchange" means SIX Swiss Exchange AG and any successor thereto;
"SNB Adjustment Spread" means, with respect to the SNB Policy Rate, the spread to be applied to the SNB Policy Rate in order to reduce or eliminate, to the extent reasonably practicable under the circumstances, any economic prejudice or benefit (as applicable) to Noteholders as a result of the replacement of the Swiss Average Rate Overnight with the SNB Policy Rate for purposes of determining SARON, which spread will be determined by the Principal Paying Agent or other party as specified in the applicable Final Terms, acting in good faith and a commercially reasonable manner, taking into account the historical median between SARON and the SNB Policy Rate during the two year period ending on the date on which the SARON Index Cessation Event occurred (or, if more than one SARON Index Cessation Event has occurred, the date on which the first of such events occurred); and
"Zurich Banking Day" means a day on which banks are open in the City of Zurich for the settlement of payments and of foreign exchange transactions.
(K) Screen Rate Determination for Floating Rate Notes – where the Reference Rate is BBSW Rate or AONIA Rate
Where Screen Rate Determination is specified in the applicable Final Terms as the manner in which the Rate of Interest is to be determined, and if the Reference Rate is specified in the applicable Final Terms as being BBSW Rate or AONIA Rate, then the Rate of Interest applicable to the Notes for each Interest Period will, subject as provided below, be BBSW Rate (as defined below) or AONIA Rate (as defined below), as the case may be, plus or minus (as indicated in the applicable Final Terms) the applicable Margin, all as determined by the Australian Agent (or other party as specified in the applicable Final Terms) on the Interest Determination Date for such Interest Period.
Each Noteholder shall be deemed to acknowledge, accept and agree to be bound by, and consents to, the determination of, substitution for and any adjustments made to the BBSW Rate or the AONIA Rate, as applicable, in each case as described in this Condition 4(b)(ii)(K) (in all cases without the need for any Noteholder consent). Any determination, decision or election (including a decision to take or refrain from taking any action or as to the occurrence or non-occurrence of any event or circumstance), and any substitution for and adjustments made to, the BBSW Rate or the AONIA Rate, as applicable, and in each case made in accordance with this Condition 4(b)(ii)(K), will, in the absence of manifest or proven error, be conclusive and binding on the Issuer, the Noteholder and each Agent and, notwithstanding anything to the contrary in these Conditions or other documentation relating to the Notes, shall become effective without the consent of any person.
If the Calculation Agent is unwilling or unable to determine a necessary rate, adjustment, quantum, formula, methodology or other variable in order to calculate the applicable Interest Rate, such rate, adjustment, quantum, formula, methodology or other variable will be determined by the Issuer (acting in good faith and in a commercially reasonable manner) or, an alternate financial institution (acting in good faith and in a commercially reasonable manner) appointed by the Issuer (in its sole discretion) to so determine.
All rates determined pursuant to this Condition 4(b)(ii)(K) shall be expressed as a percentage rate per annum and the resulting percentage will be rounded if necessary to the fourth decimal place (i.e., to the nearest one ten-thousandth of a percentage point) with 0.00005 being rounded upwards.
However, if:
then the "Benchmark Rate" for an Interest Period, whilst such Temporary Disruption Trigger is continuing or after a Permanent Discontinuation Trigger has occurred, means (in the following order of application and precedence):
Disruption Trigger has occurred with respect to AONIA, the rate for any day for which AONIA is required will be the last provided or published level of AONIA;
When calculating an amount of interest in circumstances where a Fallback Rate other than the Final Fallback Rate applies, that interest will be calculated as if references to the BBSW Rate or AONIA Rate (as applicable) were references to that Fallback Rate. When calculating interest in circumstances where the Final Fallback Rate applies, the amount of interest will be calculated on the same basis as if the Applicable Benchmark Rate in effect immediately prior to the application of that Final Fallback Rate remained in effect but with necessary adjustments to substitute all references to that Applicable Benchmark Rate with corresponding references to the Final Fallback Rate.
For the purposes of this Condition 4(b)(ii)(K):
"Adjustment Spread" means the adjustment spread as at the Adjustment Spread Fixing Date (which may be a positive or negative value or zero and determined pursuant to a formula or methodology) that is:
"Adjustment Spread Fixing Date" means the first date on which a Permanent Discontinuation Trigger occurs with respect to the BBSW Rate;
"Administrator" means:
and, in each case, any successor administrator or, as applicable, any successor administrator or provider;
"Administrator Recommended Rate" means the rate formally recommended for use as the temporary replacement for the BBSW Rate by the Administrator of the BBSW Rate;
"AONIA" means the Australian dollar interbank overnight cash rate (known as AONIA);
"AONIA Rate" means, for an Interest Period and in respect of an Interest Determination Date, the rate determined by the Calculation Agent to be Compounded Daily AONIA for that Interest Period and Interest Determination Date plus, if determining the AONIA Rate for the purposes of a fallback from the BBSW Rate, the Adjustment Spread;
"Applicable Benchmark Rate" means the Benchmark Rate specified in the relevant Final Terms and, if a Permanent Fallback Effective Date has occurred with respect to the BBSW Rate, AONIA or the RBA Recommended Rate, then the rate determined in accordance with this Condition 4(b)(ii)(K);
"BBSW Rate" means, for an Interest Period, the rate for prime bank eligible securities having a tenor closest to the Interest Period which is designated as the "AVG MID" on the "Refinitiv Screen ASX29 Page" or the "MID" rate on the "Bloomberg Screen BBSW Page" (or any designation which replaces that designation on the applicable page, or any replacement page) at the Publication Time on the first day of that Interest Period;
"Benchmark Rate" means, for an Interest Period, either the BBSW Rate or the AONIA Rate as specified in the relevant Final Terms;
"Bloomberg Adjustment Spread" means the term adjusted AONIA spread relating to the BBSW Rate provided by Bloomberg Index Services Limited (or a successor provider as approved and/or appointed by ISDA from time to time as the provider of term adjusted AONIA and the spread) ("BISL") on the Fallback Rate (AONIA) Screen (or by other means), or provided to, and published by, authorised distributors where Fallback Rate (AONIA) Screen means the Bloomberg Screen corresponding to the Bloomberg ticker for the fallback for the BBSW Rate accessed via the Bloomberg Screen
"Compounded Daily AONIA" means, with respect to an Interest Period, the rate of return of a daily compound interest investment as calculated by the Calculation Agent on the Interest Determination Date, as follows:
$$\left[\prod_{l=1}^{d_0} \left(1 + \frac{AONIA_{l-5\ SBD} \times n_l}{365} \right) - 1\right] \times \frac{365}{d}.$$
where:
−, means the per annum rate expressed as a decimal which is the level of AONIA provided by the Administrator and published as of the Publication Time for the Sydney Business Day falling five Sydney Business Days prior to such Sydney Business Day "i";
is the number of calendar days in the relevant Interest Period;
is the number of Sydney Business Days in the relevant Interest Period;
" " is a series of whole numbers from 1 to d0 , each representing the relevant Sydney Business Day in chronological order from (and including) the first Sydney Business Day in the relevant Interest Period to (and including) the last Sydney Business Day in such Interest Period;
"", for any Sydney Business Day "i", means the number of calendar days from (and including) such Sydney Business Day "i" up to (but excluding) the following Sydney Business Day; and
"Sydney Business Day" or "SBD" means any day on which commercial banks are open for general business in Sydney.
If, for any reason, Compounded Daily AONIA needs to be determined for a period other than an Interest Period, Compounded Daily AONIA is to be determined as if that period were an Interest Period starting on (and including) the first day of that period and ending on (but excluding) the last day of that period;
"Fallback Rate" means, where a Permanent Discontinuation Trigger for an Applicable Benchmark Rate has occurred, the rate that applies to replace that Applicable Benchmark Rate in accordance with this Condition 4(b)(ii)(K);
"Final Fallback Rate" means, in respect of an Applicable Benchmark Rate, the rate:
"Interest Determination Date" means, in respect of an Interest Period:
"Non-Representative" means, in respect of an Applicable Benchmark Rate, that the Supervisor of that Applicable Benchmark Rate if the Applicable Benchmark Rate is the BBSW Rate, or the Administrator of the Applicable Benchmark Rate if the Applicable Benchmark Rate is the AONIA Rate or the RBA Recommended Rate:
"Permanent Discontinuation Trigger" means, in respect of an Applicable Benchmark Rate:
"Permanent Fallback Effective Date" means, in respect of a Permanent Discontinuation Trigger for an Applicable Benchmark Rate:
"RBA Recommended Fallback Rate" means, for an Interest Period and in respect of an Interest Determination Date, the rate determined by the Calculation Agent to be the RBA Recommended Rate for that Interest Period and Interest Determination Date;
"RBA Recommended Rate" means, in respect of any relevant day (including any day "i"), the rate (inclusive of any spreads or adjustments) recommended as the replacement for AONIA by the Reserve Bank of Australia (which rate may be produced by the Reserve Bank of Australia or another administrator) and as provided by the Administrator of that rate or, if that rate is not provided by the Administrator thereof, published by an authorised distributor in respect of that day;
"Supervisor" means, in respect of an Applicable Benchmark Rate, the supervisor or competent authority that is responsible for supervising that Applicable Benchmark Rate or the Administrator of that Applicable Benchmark Rate, or any committee officially endorsed or convened by any such supervisor or competent authority that is responsible for supervising that Applicable Benchmark Rate or the Administrator of that Applicable Benchmark Rate;
"Supervisor Recommended Rate" means the rate formally recommended for use as the temporary replacement for the BBSW Rate by the Supervisor of the BBSW Rate; and
"Temporary Disruption Trigger" means, in respect of any Applicable Benchmark Rate which is required for any determination:
(a) the Applicable Benchmark Rate has not been published by the applicable Administrator or an authorised distributor and is not otherwise provided by the Administrator, in respect of, on, for or by the time and date on which that Applicable Benchmark Rate is required; or
"BKBM" means the New Zealand Bank Bill Reference Rate;
"CMS" means the Constant Maturity Swap rate;
"CMS Rate" means, subject as provided in Condition 4(b)(ii)(D), the applicable swap rate for swap transactions in the relevant Specified Currency with a maturity of the Designated Maturity, expressed as a percentage, which appears on the Relevant Screen Page as at the Relevant Time on the Interest Determination Date in question, all as determined by the Principal Paying Agent and the Issuer;
"CMS Reference Banks" means (i) where the Specified Currency is euro, the principal office of five leading swap dealers in the Euro-zone inter-bank market, (ii) where the Specified Currency is pounds sterling, the principal London office of five leading swap dealers in the London interbank market, (iii) where the Specified Currency is U.S. dollars, the principal New York City office of five leading swap dealers in the New York City inter-bank market, or (iv) in the case of any other Specified Currency, the principal Relevant Financial Centre office of five leading swap dealers in the Relevant Financial Centre inter-bank market, in each case selected by the Principal Paying Agent;
"CNH HIBOR" means the CNH Hong Kong interbank offered rate;
"Compounded Daily SONIA", with respect to an Interest Period, the rate of return of a daily compound interest investment during the Observation Period corresponding to such Interest Period (with the daily SONIA reference rate as the reference rate for the calculation of interest) as calculated by the Principal Paying Agent (or such other party responsible for the calculation of the Rate of Interest, as specified in the applicable Final Terms) as at the relevant Interest Determination Date in accordance with the following formula (and the resulting percentage will be rounded if necessary to the fourth decimal place, with 0.00005 being rounded upwards):
$$\left| \prod_{l=1}^{d_o} \left( 1 + \frac{SOMA_{l-pLBD} \times n_l}{365} \right) \right| \times \frac{365}{d}$$
where:
"d" means, in relation to any Interest Period, the number of calendar days in such Interest Period;
"dO" means, in relation to any Interest Period, the number of London Banking Days in such Interest Period;
"i" means, in relation to any Interest Period, a series of whole numbers from one to dO, each representing the relevant London Banking Day in chronological order from, and including, the first London Banking Day in such Interest Period;
"London Banking Day" or "LBD" means any day on which commercial banks are open for general business (including dealing in foreign exchange and foreign currency deposits) in London;
"ni" means, in relation to any London Banking Day "i", the number of calendar days from and including such London Banking Day "i" up to but excluding the following London Banking Day;
"Observation Period" means, in relation to an Interest Period, the period from and including the date which is "p" London Banking Days prior to the first day of such Interest Period and ending on, but excluding, the date which is "p" London Banking Days prior to the Interest Payment Date for such Interest Period (or the date falling "p" London Banking Days prior to such earlier date, if any, on which the Notes become due and payable);
"p" means the whole number specified as the Observation Look-Back Period in the applicable Final Terms, such number representing a number of London Banking Days, or if no such number is specified, five London Banking Days;
"SONIAi" means, in respect of any London Banking Day "i", a reference rate equal to the daily SONIA rate for such London Banking Day as provided by the administrator of SONIA to authorised distributors and as then published on the Relevant Screen Page (or, if the Relevant Screen Page is unavailable, as otherwise published by such authorised distributors) on the London Banking Day immediately following such London Banking Day;
"SONIAi-pLBD" means, in respect of any London Banking Day "i" falling in the relevant Interest Period, the SONIA reference rate for the London Banking Day falling "p" London Banking Days prior to such London Banking Day "i";
"CORRA" means the Canadian Overnight Repo Rate Average, as published by the Bank of Canada, as the administrator of CORRA (or any successor CORRA Reference Rate Administrator), on the website of the Bank of Canada or any successor website;
"EURIBOR" means, in respect of any specified currency and any specified period, the interest rate benchmark known as the Euro zone interbank offered rate which is calculated and published by a designated distributor (currently Thomson Reuters) in accordance with the requirements from time to time of the European Banking Federation based on estimated interbank borrowing rates for a number of designated currencies and maturities which are provided, in respect of each such currency, by a panel of contributor banks;
"HIBOR" means the Hong Kong interbank offered rate;
"Hong Kong" means the Hong Kong Special Administrative Region of the People's Republic of China;
"Interest Determination Date" shall mean (except in the case of Condition 4(b)(ii)(K)) the date specified as such in the relevant Final Terms, or if none is so specified:
final Interest Period, preceding the maturity date of the Notes, or, if applicable, preceding the date of redemption of any Notes;
"Margin" has the meaning given in the relevant Final Terms;
"NDBB" means the New Zealand Dollar Bank Bills Standard rate;
"NIBOR" means the Norwegian interbank offered rate;
"Reference Banks" means those banks whose offered rates were used to determine such quotation when such quotation last appeared on the Relevant Screen Page or, as the case may be, those banks whose offered quotations last appeared on the Relevant Screen Page when no fewer than three such offered quotations appeared;
"Reference Rate" shall mean (i) EURIBOR, (ii) BBSW, (iii) BKBM, (iv) CMS, (v) CNH HIBOR, (vi) Compounded Daily SONIA, (vii) HIBOR, (viii) NDBB, (ix) NIBOR, (x) SOFR, (xi) SONIA, (xii) SORF, (xiii) STIBOR, (xiv) TIBOR (xv) Compounded Daily SOFR, (xvi) Compounded SOFR Index, (xvii) TONA, (xvii) Compounded Daily CORRA, (xviii) CORRA Compounded Index, (xix) SARON and (xx) WIBOR, in each case for the relevant currency and for the relevant period, as specified in the relevant Final Terms;
"Reference Swap Rate" means:
leg, calculated on a 30/360 day count basis, of a fixed-for-floating U.S. dollar interest rate swap transaction with a term equal to the Designated Maturity commencing on the first day of the relevant Interest Period and in a Representative Amount with an acknowledged dealer of good credit in the swap market, where the floating leg, calculated on an Actual/360 day count basis, is equivalent to USD-LIBOR-BBA (as defined in the ISDA Definitions) with a designated maturity of three months; and
(d) where the Specified Currency is any other currency or if the relevant Final Terms specify otherwise, the mid-market swap rate as determined in accordance with the relevant Final Terms;
"Relevant Financial Centre" shall mean (i) London, in the case of a determination of CMS (where the Relevant Currency is Sterling), Compounded Daily SONIA or SONIA, (ii) Brussels, in the case of a determination of CMS (where the Relevant Currency is euro) or EURIBOR, (iii) Sydney, in the case of a determination of BBSW Rate or AONIA Rate, (iv) Auckland and Wellington, in the case of a determination of BKBM or NDBB, (v) Toronto, in the case of a determination of Compounded Daily CORRA or CORRA Compounded Index, (vi) Hong Kong, in the case of a determination of CNH HIBOR or HIBOR, (vii) Oslo, in the case of a determination of NIBOR, (viii) New York, in the case of a determination of CMS (where the Relevant Currency is U.S. dollar), Compounded Daily SOFR, Compounded SOFR Index or SOFR, (ix) Singapore, in the case of a determination of SORF, (x) Stockholm, in the case of a determination of STIBOR, (xi) Tokyo, in the case of a determination of TIBOR and TONA, (x) Zurich, in the case of a determination of SARON, (xi) Warsaw, in the case of WIBOR, as specified in the relevant Final Terms;
"Relevant Time" has the meaning given in the relevant Final Terms;
"Representative Amount" means an amount that is representative for a single transaction in the relevant market at the relevant time;
"SARON" means the Swiss Average Rate Overnight;
"SOFR" means the secured overnight financing rate;
"SONIA" means the sterling overnight index average, or any successor or replacement thereto;
"SORF" means the Association of Banks in Singapore Swap Offer Rate Fixing;
"STIBOR" means the Stockholm interbank offered rate;
"TIBOR" means the Tokyo interbank offered rate;
"TONA" means the daily Tokyo Over Night Average rate; and
"WIBOR" means the Warsaw interbank offered rate.
(iv) Benchmark Discontinuation (other than Notes where the Rate of Interest is SOFR, Compounded Daily SOFR or Compounded SOFR Index)
This Condition 4(b)(iv) applies only where Screen Rate Determination (other than SOFR, Compounded Daily SOFR, Compounded SOFR Index, TONA Lookback Compound, TONA Shift Compound, Compounded Daily CORRA, CORRA Compounded Index, SARON, BBSW Rate or AONIA Rate) is specified in the applicable Final Terms as the manner in which the Rate of Interest is to be determined.
Notwithstanding Conditions 4(b)(ii)(B), 4(b)(ii)(C) and 4(b)(ii)(D), if a Benchmark Event occurs (as determined by the Issuer) in relation to an Original Reference Rate when any Rate of Interest (or any component part thereof) remains to be determined by reference to such Original Reference Rate, then the Issuer shall use its reasonable endeavours to appoint and consult with an Independent Adviser, as soon as reasonably practicable, with a view to the Issuer determining a Successor Rate, failing which an Alternative Rate (in accordance with Condition 4(b)(iv)(B)) and, in either case, an Adjustment Spread (if any) (in accordance with Condition 4(b)(iv)(C) and any Benchmark Amendments (in accordance with Condition 4(b)(iv)(D)).
An Independent Adviser appointed pursuant to this Condition 4(b)(iv) shall act in good faith and in a commercially reasonable manner as an expert and in consultation with the Issuer. In the absence of bad faith or fraud, the Independent Adviser shall have no liability whatsoever to the Noteholders for any advice given to the Issuer in connection with any determination made by the Issuer pursuant to this Condition 4(b)(iv)(A).
If (i) the Issuer is unable to appoint an Independent Adviser, or (ii) the Issuer fails to determine a Successor Rate or, failing which, an Alternative Rate in accordance with this Condition 4(b)(iv)(A) prior to the relevant Interest Determination Date, the Rate of Interest applicable to the next succeeding Interest Period shall be equal to the Rate of Interest last determined in relation to the Notes in respect of the immediately preceding Interest Period. If there has not been a first Interest Payment Date, the Rate of Interest shall be the initial Rate of Interest. Where a different Margin (if any) or Maximum or Minimum Rate of Interest is to be applied to the relevant Interest Period from that which applied to the last preceding Interest Period, the Margin (if any) or Maximum or Minimum Rate of Interest relating to the relevant Interest Period shall be substituted in place of the Margin (if any) or Maximum or Minimum Rate of Interest relating to the last preceding Interest Period. For the avoidance of doubt, this sub-paragraph shall apply to the relevant next succeeding Interest Period only and any subsequent Interest Periods are subject to the subsequent operation of, and adjustment as provided in, this Condition 4(b)(iv).
If the Issuer, following consultation with the Independent Adviser and acting in good faith and in a commercially reasonable manner, determines that:
If the Issuer, following consultation with the Independent Adviser and acting in good faith and in a commercially reasonable manner, determines (i) that an Adjustment Spread is required to be applied to the Successor Rate or the Alternative Rate (as the case may be) and (ii) the quantum of, or a formula or methodology for determining, such Adjustment Spread, then such Adjustment Spread shall be applied to the Successor Rate or the Alternative Rate (as the case may be).
If any Successor Rate or Alternative Rate (and in either case, the applicable Adjustment Spread) is determined in accordance with this Condition 4(b)(iv) and the Issuer, following consultation with the Independent Adviser and acting in good faith and in a commercially reasonable manner, determines (i) that amendments to these Terms and Conditions and/or the Agency Agreement are necessary to ensure the proper operation of such Successor Rate or Alternative Rate and/or (in either case) the applicable Adjustment Spread (such amendments, the "Benchmark Amendments") and (ii) the terms of the Benchmark Amendments, then the Issuer shall, subject to giving notice thereof in accordance with Condition 4(b)(iv)(E), without any requirement for the consent or approval of Noteholders, vary these Terms and Conditions and/or the Agency Agreement to give effect to such Benchmark Amendments with effect from the date specified in such notice.
At the request of the Issuer, but subject to receipt by the Agents of a certificate signed by authorised signatories of the Issuer pursuant to Condition 4(b)(iv)(E), the Agents shall (at the expense and direction of the Issuer), without any requirement for the consent or approval of the Noteholders, be obliged to concur with the Issuer in effecting any Benchmark Amendments and the Agents shall not be liable to any party for any consequences thereof, provided that the Agents shall not be obliged to concur if in the opinion of the Agents doing so would impose more onerous obligations upon it or expose it to any additional duties, responsibilities or liabilities or reduce or amend rights and/or the protective provisions afforded to the Agents in these Terms and Conditions and/or any documents to which they are a party in any way.
In connection with any such variation in accordance with this Condition 4(b)(iv)(D), the Issuer shall comply with the rules of the London Stock Exchange or any stock exchange on which the Notes are for the time being listed or admitted to trading.
(E) Notices
Any Successor Rate, Alternative Rate, Adjustment Spread and the specific terms of any Benchmark Amendments, determined under this Condition 4(b)(iv) will be notified promptly by the Issuer to the Agents and, in accordance with Condition 13, the Noteholders. Such notice shall be irrevocable and shall specify the effective date of the Benchmark Amendments (if any).
No later than notifying the Agents of the same, the Issuer shall deliver to the Agents a certificate signed by authorised signatories of the Issuer:
(A) confirming (a) that a Benchmark Event has occurred, (b) the Successor Rate or, as the case may be, the Alternative Rate, (c) where applicable, any Adjustment Spread and (d) the specific terms of any Benchmark Amendments, in each case as determined in accordance with the provisions of this Condition 4(b)(iv); and
(B) certifying that the Benchmark Amendments are necessary to ensure the proper operation of such Successor Rate, Alternative Rate and/or Adjustment Spread.
The Agents shall be entitled to rely on such certificate (without enquiry or liability to any person) as sufficient evidence thereof. The Successor Rate or Alternative Rate and the Adjustment Spread (if any) and the Benchmark Amendments (if any) specified in such certificate will (in the absence of manifest error in the determination of the Successor Rate or Alternative Rate and the Adjustment Spread (if any) and the Benchmark Amendments (if any) and without prejudice to the Agents' ability to rely on such certificate as aforesaid) be binding on the Issuer, the Agents and the Noteholders.
Without prejudice to the obligations of the Issuer under this Condition 4(b)(iv), the Original Reference Rate and the fallback provisions provided for in Condition 4(b)(ii) will continue to apply unless and until a Benchmark Event has occurred and the Agents have been notified of the Successor Rate or the Alternative Rate (as the case may be), and any Adjustment Spread and Benchmark Amendments, in accordance with Condition 4(b)(iv)(E).
"Adjustment Spread" means (except in the case of Condition 4(b)(ii)(K)) either a spread (which may be positive, negative or zero), or a formula or methodology for calculating a spread, in either case to be applied to the Successor Rate or the Alternative Rate (as the case may be) and being the spread, formula or methodology which:
"Alternative Rate" means an alternative benchmark or screen rate which the Issuer, following consultation with the Independent Adviser and acting in good faith and in a commercially reasonable manner, determines in accordance with Condition 4(b)(iv)(B) has replaced the Original Reference Rate in customary market usage in the international debt capital markets for the purposes of determining floating rates of interest (or the relevant component part thereof) in the same Specified Currency as the Notes;
"Benchmark Amendments" has the meaning given to it in Condition 4(b)(iv)(D);
"Benchmark Event" means:
"Independent Adviser" means an independent financial institution of international repute or an independent financial adviser with appropriate expertise appointed by the Issuer at its own expense under Condition 4(b)(iv)(A) and notified in writing to the Agents;
"Original Reference Rate" means the originally-specified benchmark or screen rate (as applicable) used to determine the Rate of Interest (or any component part thereof) on the Notes or, if applicable, any other successor or alternative rate (or any component part thereof) determined and applicable to the Notes pursuant to the earlier operation of Condition 4(b)(iv)(D);
"Relevant Nominating Body" means, in respect of a benchmark or screen rate (as applicable):
(i) the central bank for the currency to which the benchmark or screen rate (as applicable) relates, or any central bank or other supervisory authority which is responsible for supervising the administrator of the benchmark or screen rate (as applicable); or
(ii) any working group or committee sponsored by, chaired or co-chaired by or constituted at the request of (a) the central bank for the currency to which the benchmark or screen rate (as applicable) relates, (b) any central bank or other supervisory authority which is responsible for supervising the administrator of the benchmark or screen rate (as applicable), (c) a group of the aforementioned central banks or other supervisory authorities or (d) the Financial Stability Board or any part thereof; and
"Successor Rate" means a successor to or replacement of the Original Reference Rate which is formally recommended by any Relevant Nominating Body.
(v) Benchmark Discontinuation (SOFR, Compounded Daily SOFR or Compounded SOFR Index)
This Condition 4(b)(v) shall only apply where SOFR, Compounded Daily SOFR or Compounded SOFR Index is specified as the Screen Rate Determination and Benchmark Discontinuation (SOFR) is specified as applicable in the applicable Final Terms:
(A) Benchmark Replacement
If the Issuer or its designee determines on or prior to the relevant Reference Time that a SOFR Benchmark Event and its related Benchmark Replacement Date have occurred with respect to the-then current Benchmark, the Benchmark Replacement will replace the thencurrent Benchmark for all purposes relating to the Notes in respect of all determinations on such date and for all determinations on all subsequent dates.
In connection with the implementation of a Benchmark Replacement, the Issuer or its designee will have the right to make Benchmark Replacement Conforming Changes from time to time. For the avoidance of doubt, any of the Agents shall, at the direction and expense of the Issuer, effect such consequential amendments to the Agency Agreement and these Conditions as may be required to give effect to this Condition 4(b)(v). Noteholders' consent shall not be required in connection with effecting any such changes, including the execution of any documents or any steps to be taken by any of the Agents (if required). Further, none of the Agents shall be responsible or liable for any determinations, decisions or elections made by the Issuer or its designee with respect to any Benchmark Replacement or any other changes and shall be entitled to rely conclusively on any certifications provided to each of them in this regard.
Any determination, decision or election that may be made by the Issuer or its designee pursuant to this Condition 4(b)(v), including any determination with respect to a tenor, rate or adjustment or of the occurrence or non-occurrence of an event, circumstance or date and any decision to take or refrain from taking any action or any selection (i) will be conclusive and binding absent manifest error, (ii) will be made in the sole discretion of the Issuer or its designee, as applicable, and (iii) notwithstanding anything to the contrary in the documentation relating to the Notes, shall become effective without consent from the holders of the Notes or any other party.
(D) Definitions
The following defined terms shall have the meanings set out below for purpose of this Condition 4(b)(v):
"Benchmark" means, initially, the relevant SOFR benchmark specified in the applicable Final Terms; provided that if the Issuer or its designee determines on or prior to the Reference Time that a SOFR Benchmark Event and its related Benchmark Replacement Date have occurred with respect to the relevant Benchmark (including any daily published component used in the calculation thereof) or the then-current Benchmark, then "Benchmark" means the applicable Benchmark Replacement;
"SOFR Benchmark Event" means the occurrence of one or more of the following events with respect to the then-current Benchmark (including any daily published component used in the calculation thereof):
"Benchmark Replacement" means the first alternative set forth in the order below that can be determined by the Issuer or its designee as of the Benchmark Replacement Date:
"Benchmark Replacement Adjustment" means the first alternative set forth in the order below that can be determined by the Issuer or its designee as of the Benchmark Replacement Date:
"Benchmark Replacement Conforming Changes" means, with respect to any Benchmark Replacement, any technical, administrative or operational changes (including changes to the timing and frequency of determining rates and making payments of interest, rounding of amounts or tenors, and other administrative matters) the Issuer or its designee decides may be appropriate to reflect the adoption of such Benchmark Replacement in a manner substantially consistent with market practice (or, if the Issuer or its designee decides that adoption of any portion of such market practice is not administratively feasible or if the Issuer or its designee determine that no market practice for use of the Benchmark Replacement exists, in such other manner as the Issuer or its designee determines is reasonably necessary);
"Benchmark Replacement Date" means the earliest to occur of the following events with respect to the then-current Benchmark (including any daily published component used in the calculation thereof):
(ii) in the case of sub-paragraph (iii) of the definition of "SOFR Benchmark Event", the date of the public statement or publication of information referenced therein.
For the avoidance of doubt, if the event giving rise to the Benchmark Replacement Date occurs on the same day as, but earlier than, the Reference Time in respect of any determination, the Benchmark Replacement Date will be deemed to have occurred prior to the Reference Time for such determination;
"designee" means a designee as selected and separately appointed by the Issuer in writing;
"ISDA Definitions" for the purposes of this Condition means the 2006 ISDA Definitions published by the International Swaps and Derivatives Association, Inc. or any successor thereto, as amended or supplemented from time to time, or any successor definitional booklet for interest rate derivatives published from time to time;
"ISDA Fallback Adjustment" means the spread adjustment (which may be a positive or negative value or zero) that would apply for derivatives transactions referencing the ISDA Definitions to be determined upon the occurrence of an index cessation event with respect to the Benchmark;
"ISDA Fallback Rate" means the rate that would apply for derivatives transactions referencing the ISDA Definitions to be effective upon the occurrence of an index cessation date with respect to the Benchmark (including any daily published component used in the calculation thereof) for the applicable tenor excluding the applicable ISDA Fallback Adjustment;
"Reference Time" with respect to any determination of the Benchmark means (1) if the Benchmark is the SOFR Benchmark, the SOFR Determination Time (where Compounded Daily SOFR is specified as applicable in the applicable Final Terms) or SOFR Index Determination Time (where Compounded SOFR Index is specified as applicable in the applicable Final Terms), or (2) if the Benchmark is not the SOFR Benchmark, the time determined by the Issuer or its designee after giving effect to the Benchmark Replacement Conforming Changes;
"Relevant Governmental Body" means the Federal Reserve Board and/or the Federal Reserve Bank of New York, or a committee officially endorsed or convened by the Federal Reserve Board and/or the Federal Reserve Bank of New York or any successor thereto; and
"Unadjusted Benchmark Replacement" means the Benchmark Replacement excluding the Benchmark Replacement Adjustment.
If the applicable Final Terms specifies a Minimum Rate of Interest for any Interest Period, then, in the event that the Rate of Interest in respect of such Interest Period determined in accordance with the above provisions is less than such Minimum Rate of Interest, the Rate of Interest for such Interest Period shall be such Minimum Rate of Interest. If the applicable Final Terms specifies a Maximum Rate of Interest for any Interest Period, then, in the event that the Rate of Interest in respect of such Interest Period determined in accordance with the above provisions is greater than such Maximum Rate of Interest, the Rate of Interest for such Interest Period shall be such Maximum Rate of Interest.
The Principal Paying Agent or such other party specified in the applicable Final Terms (the "Calculation Agent") will at or as soon as practicable after each time at which the Rate of Interest is to be determined, determine the Rate of Interest for the relevant Interest Period. The Calculation Agent, if applicable, will notify the Principal Paying Agent of the Rate of Interest for the relevant Interest Period as soon as practicable after calculating the same.
The Principal Paying Agent or Calculation Agent will calculate the amount of interest (the "Interest Amount") payable on the Floating Rate Notes for the relevant Interest Period by applying the Rate of Interest to:
and, in each case, multiplying such sum by the applicable Day Count Fraction, and rounding the resultant figure to the nearest sub-unit of the relevant Specified Currency, half of any such subunit being rounded upwards or otherwise in accordance with applicable market convention. Where the Specified Denomination of a Floating Rate Note in definitive form is a multiple of the Calculation Amount, the Interest Amount payable in respect of such Note shall be the product of the amount (determined in the manner provided above) for the Calculation Amount and the amount by which the Calculation Amount is multiplied to reach the Specified Denomination without any further rounding.
"Day Count Fraction" means, in respect of the calculation of an amount of interest for any Interest Period:
$$\text{Day Count Fraction} = \frac{[360 \times (Y_2 - Y_1)] + [30 \times (M_2 - M_1)] + (D_2 - D_1)}{360}$$
where:
"Y1" is the year, expressed as a number, in which the first day of the Interest Period falls;
"Y2" is the year, expressed as a number, in which the day immediately following the last day of the Interest Period falls;
"M1" is the calendar month, expressed as a number, in which the first day of the Interest Period falls;
"M2" is the calendar month, expressed as a number, in which the day immediately following the last day of the Interest Period falls;
"D1" is the first calendar day, expressed as a number, of the Interest Period, unless such number would be 31, in which case D1 will be 30; and
"D2" is the calendar day, expressed as a number, immediately following the last day included in the Interest Period, unless such number would be 31 and D1 is greater than 29, in which case D2 will be 30;
(F) if "30E/360" or "Eurobond Basis" is specified in the applicable Final Terms, the number of days in the Interest Period divided by 360, calculated on a formula basis as follows:
$$\text{Day Count Fraction} = \frac{[360 \times (Y_2 - Y_1)] + [30 \times (M_2 - M_1)] + (D_2 - D_1)}{360}$$
where:
"Y1" is the year, expressed as a number, in which the first day of the Interest Period falls;
"Y2" is the year, expressed as a number, in which the day immediately following the last day of the Interest Period falls;
"M1" is the calendar month, expressed as a number, in which the first day of the Interest Period falls;
"M2" is the calendar month, expressed as a number, in which the day immediately following the last day of the Interest Period falls;
"D1" is the first calendar day, expressed as a number, of the Interest Period, unless such number would be 31, in which case D1 will be 30; and
"D2" is the calendar day, expressed as a number, immediately following the last day included in the Interest Period, unless such number would be 31, in which case D2 will be 30; and
(G) if "30E/360 (ISDA)" is specified in the applicable Final Terms, the number of days in the Interest Period divided by 360, calculated on a formula basis as follows:
$$\text{Day Count Fraction} = \frac{[360 \times (Y_2 - Y_1)] + [30 \times (M_2 - M_1)] + (D_2 - D_1)}{360}$$
where:
"Y1" is the year, expressed as a number, in which the first day of the Interest Period falls;
"Y2" is the year, expressed as a number, in which the day immediately following the last day of the Interest Period falls;
"M1" is the calendar month, expressed as a number, in which the first day of the Interest Period falls;
"M2" is the calendar month, expressed as a number, in which the day immediately following the last day of the Interest Period falls;
"D1" is the first calendar day, expressed as a number, of the Interest Period, unless (i) that day is the last day of February or (ii) such number would be 31, in which case D1 will be 30; and
"D2" is the calendar day, expressed as a number, immediately following the last day included in the Interest Period, unless (i) that day is the last day of February but not the Maturity Date or (ii) such number would be 31 in which case D2 will be 30.
(viii) Linear Interpolation
Where Linear Interpolation is specified as applicable in respect of an Interest Period in the applicable Final Terms, the Rate of Interest for such Interest Period shall be calculated by the Principal Paying Agent by straight line linear interpolation by reference to two rates based on the relevant Reference Rate (where Screen Rate Determination is specified as applicable in the applicable Final Terms) or the relevant Floating Rate Option (where ISDA Determination is specified as applicable in the applicable Final Terms), one of which shall be determined as if the Designated Maturity were the period of time for which rates are available next shorter than the length of the relevant Interest Period and the other of which shall be determined as if the Designated Maturity were the period of time for which rates are available next longer than the relevant Interest Period, provided, however, that if there is no rate available for a period of time next shorter or (as the case may be) next longer, then the Principal Paying Agent shall determine such rate at such time and by reference to such sources as it determines appropriate.
For the purposes of this Condition 4(b)(vii), "Designated Maturity" means, in relation to Screen Rate Determination, the period designated in the Reference Rate.
The Principal Paying Agent will cause the Rate of Interest and each Interest Amount for each Interest Period and the relevant Interest Payment Date to be notified to the Issuer and any stock exchange on which the relevant Floating Rate Notes are for the time being listed and notice thereof to be published in accordance with Condition 13 as soon as possible after their determination but in no event later than the fourth London Business Day thereafter. Each Interest Amount and Interest Payment Date so notified may subsequently be amended (or appropriate alternative arrangements made by way of adjustment) in the event of an extension or shortening of the Interest Period. Any such amendment will be promptly notified to each stock exchange on which the relevant Floating Rate Notes are for the time being listed and to the Noteholders in accordance with Condition 13. For the purposes of this paragraph, the expression "London Business Day" means a day (other than a Saturday or a Sunday) on which banks and foreign exchange markets are open for general business in London.
All certificates, communications, opinions, determinations, calculations, quotations and decisions given, expressed, made or obtained for the purposes of the provisions of this Condition 4(b), by the Principal Paying Agent or such other agent as is specified in the applicable Final Terms, shall (in the absence of wilful default, bad faith or manifest error) be binding on the Issuer, the Guarantor, the other Agents and all Noteholders, Receiptholders and Couponholders and (in the absence of wilful default, bad faith or manifest error) no liability to the Issuer, the Guarantor, the Noteholders, the Receiptholders or the Couponholders shall attach to the Principal Paying Agent or that other agent in connection with the exercise or non-exercise by it of its powers, duties and discretions pursuant to such provisions.
The rate or amount of interest payable in respect of Dual Currency Interest Notes shall be determined in the manner specified in the applicable Final Terms.
If the applicable Final Terms specify that the Notes are Index Linked Interest Notes the provisions of Additional Condition 1 (Index Linked Notes) set out in the Annex to these Terms and Conditions shall apply and the Interest Rate and the Interest Amount per Calculation Amount with respect to the relevant Interest Period shall be determined by the Calculation Agent (i) by applying the applicable rate of interest to the Calculation Amount and multiplying such sum by the applicable Day Count Fraction, and rounding the resultant figure to the nearest sub-unit of the relevant Specified Currency, half of any such sub-unit being rounded upwards or (ii) as otherwise specified in these Terms and Conditions, the relevant Additional Conditions and the applicable Final Terms.
Each Note (or, in the case of the redemption of part only of a Note, that part only of such Note) will cease to bear interest (if any) from the due date for its redemption (or, in the case of an Instalment Note, in respect of each instalment of principal, on the due date for payment of the relevant Instalment Amount) unless payment of principal is improperly withheld or refused. In such event, interest will continue to accrue until whichever is the earlier of:
Subject as provided below:
Payments will be subject in all cases to (i) any fiscal or other laws and regulations applicable thereto, but without prejudice to the provisions of Condition 7 and (ii) any withholding or deduction required pursuant to an agreement described in Section 1471(b) of the United States Internal Revenue Code of 1986 or otherwise imposed pursuant to Sections 1471 through 1474 of the United States Internal Revenue Code of 1986, any regulations or agreements thereunder, any official interpretations thereof, or any law implementing an intergovernmental approach thereto (in each case without prejudice to the provisions of Condition 7).
This Condition 5(b) is only applicable to Bearer Notes.
Payments of principal in respect of definitive Bearer Notes (if issued) will (subject as provided below) be made in the manner provided in paragraph (a) above only against presentation and surrender (or, in the case of part payment of any sum due, endorsement) of the relevant definitive Bearer Note, and payments of interest in respect of definitive Bearer Notes will (subject as provided below) be made as aforesaid only against presentation and surrender (or, in the case of part payment of any sum due, endorsement) of Coupons, in each case at the specified office of any Paying Agent outside the United States (which expression, as used herein, means the United States of America (including the States and the District of Columbia, its territories, its possessions and other areas subject to its jurisdiction)).
Payments of instalments of principal (if any) in respect of definitive Bearer Notes (if issued), other than the final instalment, will (subject as provided below) be made in the manner provided in paragraph (a) above against presentation and surrender (or, in the case of part payment of any sum due, endorsement) of the relevant Receipt in accordance with the preceding paragraph. Payment of the final instalment will be made in the manner provided in paragraph (a) above against presentation and surrender (or, in the case of part payment of any sum due, endorsement) of the relevant definitive Bearer Note in accordance with the preceding paragraph. Each Receipt must be presented for payment of the relevant instalment together with the definitive Bearer Note to which it appertains. Unmatured Receipts and Receipts presented without the definitive Bearer Note to which they appertain do not constitute valid obligations of the Issuer. Upon the date on which any definitive Bearer Note becomes due and repayable, unmatured Receipts (if any) relating thereto (whether or not attached) shall become void and no payment shall be made in respect thereof.
Fixed Rate Notes in definitive Bearer Note form (other than Dual Currency Notes, Index Linked Notes or Long Maturity Notes (as defined below)) should be presented for payment together with all unmatured Coupons appertaining thereto (which expression shall for this purpose include Coupons falling to be issued on exchange of matured Talons), failing which the amount of any missing unmatured Coupon (or, in the case of payment not being made in full, the same proportion of the amount of such missing unmatured Coupon as the sum so paid bears to the sum due) will be deducted from the sum due for payment. Each amount of principal so deducted will be paid in the manner mentioned above against surrender of the relative missing Coupon at any time before the expiry of ten years after the Relevant Date (as defined in Condition 7) in respect of such principal (whether or not such Coupon would otherwise have become void under Condition 8) or, if later, five years from the date on which such Coupon would otherwise have become due but in no event thereafter. Upon any Fixed Rate Note in definitive Bearer Note form becoming due and repayable prior to its Maturity Date, all unmatured Talons (if any) appertaining thereto will become void and no further Coupons will be issued in respect thereof.
Upon the date on which any Floating Rate Note, Dual Currency Note, Index Linked Notes or Long Maturity Note in definitive Bearer Note form becomes due and repayable, unmatured Coupons and Talons (if any) relating thereto (whether or not attached) shall become void and no payment or, as the case may be, exchange for further Coupons shall be made in respect thereof. A "Long Maturity Note" is a Fixed Rate Note (other than a Fixed Rate Note which on issue had a Talon attached) whose nominal amount on issue is less than the aggregate interest payable thereon provided that such Note shall cease to be a Long Maturity Note on the Interest Payment Date on which the aggregate amount of interest remaining to be paid after that date is less than the nominal amount of such Note.
If the due date for redemption of any Bearer Note is not an Interest Payment Date, interest (if any) accrued in respect of such Note from (and including) the preceding Interest Payment Date or, as the case may be, the Interest Commencement Date shall be payable only against surrender of the relevant Bearer Note.
Payments of principal and interest (if any) in respect of Notes represented by any global Bearer Note will (subject as provided below) be made in the manner specified above in relation to definitive Bearer Notes and otherwise in the manner specified in the relevant global Bearer Note against presentation or surrender, as the case may be, of such global Bearer Note at the specified office of any Paying Agent outside the United States, subject as provided below. A record of each payment made, distinguishing between any payment of principal and any payment of interest, will be made on such global Bearer Note either by such Paying Agent to which it was presented or in the records of Euroclear and Clearstream, Luxembourg, as applicable.
The holder of a global Bearer Note shall be the only person entitled to receive payments in respect of Notes represented by such global Bearer Note and the Issuer or, in the case of Notes issued by MHCUK, the Guarantor will be discharged by payment to, or to the order of, the holder of such global Bearer Note in respect of each amount so paid. Each of the persons shown in the records of Euroclear or Clearstream, Luxembourg as the beneficial holder of a particular nominal amount of Notes represented by such global Bearer Note must look solely to Euroclear or Clearstream, Luxembourg, as the case may be, for his share of each payment so made by the Issuer or, in the case of Notes issued by MHCUK, the Guarantor to, or to the order of, the holder of such global Bearer Note. No person other than the holder of such global Bearer Note shall have any claim against the Issuer or, in the case of Notes issued by MHCUK, the Guarantor in respect of any payments due on that global Bearer Note.
Notwithstanding the foregoing, U.S. dollar payments of principal and interest in respect of the Notes will be made at the specified office of a Paying Agent in the United States (which expression, as used herein, means the United States of America (including the States and the District of Columbia, its territories, its possessions and other areas subject to its jurisdiction)) if:
(i) the Issuer and the Guarantor have appointed Paying Agents with specified offices outside the United States with the reasonable expectation that such Paying Agents would be able to make payment in U.S. dollars at such specified offices outside the United States of the full amount of principal and interest on the Notes in the manner provided above when due;
This Condition 5(c) is only applicable to Registered Notes.
Payments of principal (including the final instalment of principal) in respect of definitive Registered Notes will be made against presentation and surrender (or, in the case of part payment of any sum due, endorsement) of the relevant definitive Registered Note at the specified office of any of the Paying Agents. Such payments will be made in accordance with paragraph (a) above but only by transfer to the Designated Account (as defined below) of the holder (or, in the case of joint holdings, the first named thereof) of the definitive Registered Note appearing in the Register at the close of business on the third business day (being for this purpose a day on which banks are open for business in the city where the specified office of the Registrar is located) before the relevant due date for payment.
For these purposes, "Designated Account" means the account in the relevant Specified Currency (which, in the case of a payment in Japanese Yen to a non-resident of Japan, shall be a non-resident account) maintained by a holder with a Designated Bank and identified as such in the Register and "Designated Bank" means (1) in the case of payment in a Specified Currency other than euro and Renminbi, a bank in the principal financial centre of the country of such Specified Currency (which, if the Specified Currency is Australian dollars or New Zealand dollars, shall be Sydney or Auckland respectively), (2) in the case of a payment in euro, any bank which processes payments in euro and (3) in the case of a payment in Renminbi, a bank in Hong Kong or an Additional Renminbi Clearing Financial Centre specified in the Final Terms.
Payments of interest and payments of instalments of principal (other than the final instalment of principal and other than any interest or instalment payments in Renminbi) in respect of definitive Registered Notes will be made by a cheque in the Specified Currency drawn on a Designated Bank and mailed by uninsured mail on the business day in the city where the specified office of the relevant Paying Agent is located immediately preceding the relevant due date for payment to the holder (or, in the case of joint holdings, the first named thereof) of the definitive Registered Note appearing in the Register at the close of business on the fifteenth day (whether or not such fifteenth day is a business day) before the relevant due date for payment (the "Record Date") at his address shown in the Register at the close of business on the Record Date and at his risk. In the case of interest payments or instalments in Renminbi, and for any other Specified Currency upon application of the holder to the specified office of any Paying Agent not less than three business days in the city where the specified office of the relevant Paying Agent is located before the due date for any payment of interest or an instalment of principal (other than the final instalment) in respect of a definitive Registered Note, the payment will be made in accordance with paragraph (a) above but only by transfer to a Designated Account on the due date in the manner provided in the second paragraph of this Condition 5(c). Any application for transfer shall be deemed to relate to all future payments of interest (other than interest due on redemption) and instalments of principal (other than the final instalment) in respect of the definitive Registered Note which become payable to the holder who has made the initial application until such time as the Registrar is notified in writing to the contrary by such holder. Payment of the interest due in respect of each definitive Registered Note on redemption and the final instalment of principal will be made in the same manner as payment of the principal amount of such definitive Registered Note as set out in the first sentence of the second paragraph of this Condition 5(c).
So long as the Registered Notes are represented by a global Registered Note and such global Registered Note is held on behalf of a clearing system, the requirement that the relevant global Registered Notes shall be surrendered in order to receive payment shall not apply. Each payment in respect of a global Registered Note will be made in the same manner specified in this Condition 5(c) provided that such payments will be made to the person whose name is entered on the Register at the close of business on the Clearing System Business Day immediately prior to the date for payment, where "Clearing System Business Day" means a day on which each clearing system for which the relevant global Registered Note is being held is open for business.
Holders of Registered Notes will not be entitled to any interest or other payment for any delay in receiving any amount due in respect of any Registered Note as a result of any cheque posted in accordance with this Condition arriving after the due date for payment or being lost in the post.
If the date for payment of any amount in respect of any Note, Receipt or Coupon is not a Payment Day the holder thereof shall not be entitled to payment until the next following Payment Day in the relevant place and shall not be entitled to any further interest or other payment in respect of such delay. For these purposes, "Payment Day" means any day which (subject to Condition 8) is:
provided, however, that in the case of any payment of any amount in respect of a Note represented by a global Note held on behalf of Euroclear and/or Clearstream, Luxembourg, paragraph (i) above shall be disregarded for the purposes of this definition of "Payment Day".
Any reference in these Terms and Conditions to principal in respect of the Notes shall be deemed to include, as applicable:
Any reference in these Terms and Conditions to interest in respect of the Notes shall be deemed to include, as applicable, any additional amounts which may be payable with respect to interest under Condition 7.
This Condition 5(f) applies to Notes denominated in Renminbi (the "Renminbi Notes").
Notwithstanding the foregoing, if by reason of Inconvertibility, Non-transferability or Illiquidity, the Issuer or, in the case of Notes issued by MHCUK and MHFA, the Guarantor is not able to satisfy payments of principal or interest (in whole or in part) in respect of Renminbi Notes when due in Renminbi, the Issuer or, in the case of Notes issued by MHCUK and MHFA, the Guarantor may settle any such payment (in whole or in part) in U.S. dollars on the due date at the U.S. Dollar Equivalent of any such Renminbi amount. Upon the determination that a condition of Inconvertibility, Nontransferability or Illiquidity prevails, the Issuer shall no later than 10.00 a.m. (Hong Kong time) on the Rate Calculation Date, (i) notify the Calculation Agent and the Paying Agents, and (ii) notify the Noteholders in accordance with Condition 13 of such determination.
Any payment made in the U.S. Dollar Equivalent of a Renminbi amount under this Condition 5(f) will constitute valid payment, and will not constitute a default in respect of the Renminbi Notes.
For the purposes of these Terms and Conditions, "U.S. Dollar Equivalent" of a Renminbi amount means the relevant Renminbi amount converted into U.S. dollars using the Spot Rate for the relevant Rate Calculation Date as determined by the Calculation Agent at or around 11.00 a.m. (Hong Kong time) on the Rate Calculation Date.
For this purpose:
"Governmental Authority" means any de facto or de jure government (or any agency or instrumentality thereof), court, tribunal, administrative or other governmental authority or any other entity (private or public) charged with the regulation of the financial markets (including the central bank) of Hong Kong or the PRC.
"Illiquidity" means the general Renminbi exchange market in Hong Kong becomes illiquid, other than as a result of an event of Inconvertibility or Non-transferability, as determined by the Issuer in good faith and in a commercially reasonable manner following consultation with two Renminbi Dealers, as a result of which the Issuer or, in the case of Notes issued by MHCUK and MHFA, the Guarantor cannot, having used its reasonable endeavours, obtain sufficient Renminbi in order fully to satisfy its obligation to pay interest or principal (in whole or in part) in respect of the Renminbi Notes.
"Inconvertibility" means that the Issuer or, in the case of Notes issued by MHCUK and MHFA, the Guarantor determines (in good faith and in a commercially reasonable manner) that it is impossible or, having used its reasonable endeavours, impracticable, for it to convert any amount due in respect of the Renminbi Notes in the general Renminbi exchange market in Hong Kong, other than where such impossibility or impracticability is due solely to the failure of the Issuer to comply with any law, rule or regulation enacted by any Governmental Authority (unless such law, rule or regulation is enacted after the Issue Date and it is impossible or, having used its reasonable endeavours, impracticable for the Issuer, due to an event beyond its control, to comply with such law, rule or regulation).
"Non-transferability" means that the Issuer or, in the case of Notes issued by MHCUK and MHFA, the Guarantor determines (in good faith and in a commercially reasonable manner) that it is impossible or, having used its reasonable endeavours, impracticable, for it to deliver Renminbi (i) between accounts inside Hong Kong or (ii) from an account outside Hong Kong to an account inside Hong Kong, other than where such impossibility or impracticability is due solely to the failure of the Issuer or, in the case of Notes issued by MHCUK and MHFA, the Guarantor to comply with any law, rule or regulation enacted by any Governmental Authority (unless such law, rule or regulation is enacted after the Issue Date and it is impossible or, having used its reasonable endeavours, impracticable for the Issuer or, in the case of Notes issued by MHCUK and MHFA, the Guarantor, due to an event beyond its control, to comply with such law, rule or regulation).
"PRC" means the People's Republic of China.
"Rate Calculation Business Day" means a day (other than a Saturday or Sunday) on which commercial banks are open for general business (including dealings in foreign exchange) in Hong Kong and New York City.
"Rate Calculation Date" means the day which is two Rate Calculation Business Days before the due date of the relevant amount under these Terms and Conditions.
"Renminbi", "RMB" or "CNH" means the official currency of the People's Republic of China.
"Renminbi Dealer" means an independent foreign exchange dealer of international repute active in the Renminbi exchange market in Hong Kong.
"Spot Rate" means, for a Rate Calculation Date, the spot USD/RMB exchange rate for the purchase of U.S. dollars with Renminbi in the over-the-counter Renminbi exchange market in Hong Kong, as determined by the Calculation Agent at or around 11.00 a.m. (Hong Kong time) on a deliverable basis by reference to Reuters Screen Page TRADCNH3, or if no such rate is available, on a non-deliverable basis by reference to Reuters Screen Page TRADNDF. If neither rate is available, the Calculation Agent will determine the spot rate at or around 11.00 a.m. (Hong Kong time) on the Rate Calculation Date as the most recently available USD/RMB official fixing rate for settlement on the due date for payment reported by The State Administration of Foreign Exchange of the PRC, which is reported on the Reuters Screen Page CNH=SAEC. Reference to a page on the Reuters Screen means the display page so designated on the Reuter Monitor Money Rates Service (or any successor service) or such other page as may replace that page for the purpose of displaying a comparable currency exchange rate.
All notifications, opinions, determinations, certificates, calculations, quotations and decisions given, expressed, made or obtained for the purposes of the provisions of this Condition 5(f) by the Calculation Agent, will (in the absence of wilful default, bad faith or manifest error) be binding on the Issuer, in the case of Notes issued by MHCUK and MHFA, the Guarantor, the Agents and all Noteholders, Receiptholders and Couponholders.
(i) The Australian Agent will act (through its office in Sydney) as paying agent for AMTNs pursuant to the Australian Agency Agreement.
In this Condition 5(g) in relation to AMTNs: "Austraclear Regulations" means the regulations known as the "Austraclear Regulations", together with any instructions or directions, (as amended or replaced from time to time) established by Austraclear to govern the use of the Austraclear System and binding on the participants in that system; and "Record Date" means, in the case of payments of principal or interest, the close of business in Sydney on the date which is the 15th calendar day before the due date of the relevant payment of principal or interest.
Unless previously redeemed or purchased and cancelled as specified below, each Note (including each Index Linked Redemption Note and Dual Currency Redemption Note) will be redeemed by the Issuer at (i) its Final Redemption Amount (or, in the case of Instalment Notes, such number of instalments and such Instalment Amounts) specified in, or determined in the manner specified in, the applicable Final Terms in the relevant Specified Currency on the Maturity Date as may be specified in, or determined in accordance with the provisions of, the relevant Final Terms or (ii) in the case of an Index Linked Redemption Note, its Index Linked Redemption Amount specified in, or determined in the manner specified in, the applicable Final Terms in the relevant Specified Currency on the Maturity Date and in accordance with the provisions of Additional Condition 1 (Index Linked Notes) set out in the Annex to these Terms and Conditions.
The Notes may be redeemed at the option of the Issuer in whole, but not in part, at any time (in the case of Notes other than Floating Rate Notes or Dual Currency Interest Notes) or on any Interest Payment Date (in the case of Floating Rate Notes or Dual Currency Interest Notes), on giving not less than 30 nor more than 60 days' notice (or such other period as is indicated in the applicable Final Terms) to the Noteholders in accordance with Condition 13 and to the Principal Paying Agent and the Registrar (which notices shall be irrevocable), if:
provided that no such notice of redemption shall be given earlier than 90 days prior to the earliest date on which the Issuer or, in the case of Notes issued by MHCUK or MHFA, the Guarantor (as the case may be) would be obliged to pay such additional amounts were a payment in respect of the Notes or, in the case of Notes issued by MHCUK or MHFA, the Guarantee (as the case may be) then due. Prior to the publication of any notice of redemption pursuant to this paragraph, the Issuer shall deliver to the Principal Paying Agent and the Registrar a certificate signed by two Directors of the Issuer or, in the case of Notes issued by MHCUK or MHFA, a Representative Director of the Guarantor (as the case may be) stating that the Issuer is entitled to effect such redemption and setting forth a statement of facts showing that the conditions precedent to the right of the Issuer so to redeem have occurred, and an opinion of independent legal advisers of recognised standing to the effect that the Issuer or, in the case of Notes issued by MHCUK or MHFA, the Guarantor (as the case may be) has or will become obliged to pay such additional amounts as a result of such change or amendment. Any such certificate shall be conclusive and binding on the Noteholders.
Notes redeemed pursuant to this Condition 6(b) will be redeemed at their Early Redemption Amount referred to in paragraph (e) below together (if appropriate) with interest accrued to (but excluding) the date of redemption.
If Issuer Call is specified in the applicable Final Terms the Issuer may, having given:
(which notices shall be irrevocable and shall specify the date fixed for redemption), redeem all or some only of the Notes then outstanding on the Optional Redemption Date(s) and at either (i) the Optional Redemption Amount(s) specified in the applicable Final Terms together or (ii) in the case of Index Linked Redemption Notes, at their Early Redemption Amount referred to in paragraph (e) below, together, if appropriate, with interest accrued to (but excluding) the Optional Redemption Date(s). Upon expiry of such notice to the Noteholders, the Issuer shall be bound to redeem the Notes accordingly.
Any such redemption must be of a nominal amount not less than the Minimum Redemption Amount or not more than a Maximum Redemption Amount, in each case as may be specified in the applicable Final Terms. In the case of a partial redemption of Notes (other than AMTNs), the Notes to be redeemed (the "Redeemed Notes") will be selected, in the case of Redeemed Notes represented by definitive Notes, individually by lot, and, in the case of Redeemed Notes represented by a global Note, in accordance with the rules of Euroclear and/or Clearstream, Luxembourg, (to be reflected in the records of Euroclear and Clearstream, Luxembourg as either a pool factor or a reduction in nominal amount, at their discretion) in each case not more than 20 days prior to the date fixed for redemption (such date of selection being hereinafter called the "Selection Date"). In the case of Redeemed Notes represented by definitive Bearer Notes, a list of the certificate numbers of such Redeemed Notes and, in the case of Redeemed Notes represented by definitive Registered Notes, the nominal amount of such Redeemed Notes will be published in accordance with Condition 13 not less than 10 days (or such other period as is indicated in the applicable Final Terms) prior to the date fixed for redemption. The aggregate nominal amount of Redeemed Notes represented by definitive Notes shall bear the same proportion to the aggregate nominal amount of all Redeemed Notes as the aggregate nominal amount of definitive Notes outstanding bears to the aggregate nominal amount of the Notes outstanding, in each case on the Selection Date, provided that such first mentioned nominal amount shall, if necessary, be rounded downwards to the nearest integral multiple of the Specified Denomination, and the aggregate nominal amount of Redeemed Notes represented by a global Note shall be equal to the balance of the Redeemed Notes. No exchange of the relevant global Note will be permitted during the period from and including the Selection Date to and including the date fixed for redemption pursuant to this paragraph (c) and notice to that effect shall be given by the Issuer to the Noteholders in accordance with Condition 13 at least five days prior to the Selection Date.
In the case of a partial redemption of AMTNs, the AMTNs to be redeemed must be specified in the notice and selected: (x) in a fair and reasonable manner; and (y) in compliance with any applicable law, directive or requirement of any stock exchange or other relevant authority on which the AMTNs are listed.
For the purpose of this Condition 6(c):
"Gross Redemption Yield" means, with respect to a security, the gross redemption yield on such security, expressed as a percentage and calculated by the Independent Financial Adviser on the basis set out by the UK Debt Management Office in the paper "Formulae for Calculating Gilt Prices from Yields – 3rd edition", page 5, Section One: Price/Yield Formulae "Conventional Gilts"; Double dated and Undated Gilts with Assumed (or Actual) Redemption on a Quasi-Coupon Date" (published 16 March 2005, as amended or updated from time to time) on a semi-annual compounding basis (converted to an annualised yield and rounded up (if necessary) to four decimal places).
"IFA Selected Bond" means a government security or securities selected by the Independent Financial Adviser as having an actual or interpolated maturity comparable with the remaining term of the Notes up to and including the Maturity Date or (if earlier) the Par Redemption Date specified in the applicable Final Terms, that would be utilised, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities denominated in the same currency as the Notes and of a comparable maturity to the remaining term of the Notes.
"Independent Financial Adviser" means an independent financial institution of international repute appointed by the Issuer at its own expense.
"Make-Whole Redemption Amount (Non-Sterling)" means an amount calculated by the Independent Financial Adviser equal to the higher of (i) 100 per cent. of the principal amount outstanding of the Notes to be redeemed; and (ii) the sum of the present values of the principal amount outstanding of such Notes to be redeemed and the Remaining Term Interest of such Notes (exclusive of interest accrued to the date of redemption) discounted to the date of redemption on an annual basis at the Reference Bond Rate, plus the Redemption Margin (if applicable), provided, however, that if the Optional Redemption Date occurs on or after the Par Redemption Date (if any) specified in the applicable Final Terms, the Make-Whole Redemption Amount (Non-Sterling) will be equal to 100 per cent. of the principal amount outstanding of the Notes to be redeemed.
"Make-Whole Redemption Amount (Sterling)" means an amount calculated by the Independent Financial Adviser equal to the higher of (i) 100 per cent. of the principal amount outstanding of the Notes to be redeemed; and (ii) the nominal amount outstanding of the Notes to be redeemed multiplied by the price, as reported to the Issuer by the Independent Financial Adviser, at which the Gross Redemption Yield on such Notes on the Reference Date is equal to the Gross Redemption Yield (determined by reference to the middle market price) at the Quotation Time specified in the applicable Final Terms on the Reference Date of the Reference Bond, plus the Redemption Margin, all as determined by the Independent Financial Adviser, provided, however, that if the Optional Redemption Date occurs on or after the Par Redemption Date (if any) specified in the applicable Final Terms, the Make-Whole Redemption Amount (Sterling) will be equal to 100 per cent. of the principal amount outstanding of the Notes to be redeemed.
"Par Redemption Amount" means an amount equal to the principal amount of the Notes or (in case of a partial redemption of Notes) of the Redeemed Notes.
"Optional Redemption Amount" means (i) the Par Redemption Amount, (ii) the Make-Whole Redemption Amount (Sterling) or (iii) the Make-Whole Redemption Amount (Non-Sterling), in each case as specified in the applicable Final Terms.
"Redemption Margin" will be set out in the applicable Final Terms.
"Reference Bond" shall be as set out in the applicable Final Terms or, if no such bond is set out or if such bond is no longer outstanding, the IFA Selected Bond.
"Reference Bond Price" means, with respect to any date of redemption, (A) the arithmetic average of the Reference Government Bond Dealer Quotations for such date of redemption, after excluding the highest and lowest such Reference Government Bond Dealer Quotations, or (B) if the Independent Financial Adviser obtains fewer than four such Reference Government Bond Dealer Quotations, the arithmetic average of all such quotations.
"Reference Bond Rate" means, with respect to any date of redemption the rate per annum equal to the annual or semi-annual yield (as the case may be) to maturity or interpolated yield to maturity (on the relevant day count basis) of the Reference Bond, assuming a price for the Reference Bond (expressed as a percentage of its nominal amount) equal to the Reference Bond Price for such date of redemption.
"Reference Date" will be set out in the relevant notice of redemption.
"Reference Government Bond Dealer" means each of five banks selected by the Issuer (or the Independent Financial Adviser on its behalf), or their affiliates, which are (A) primary government securities dealers, and their respective successors, or (B) market makers in pricing corporate bond issues.
"Reference Government Bond Dealer Quotations" means, with respect to each Reference Government Bond Dealer and any date for redemption, the arithmetic average, as determined by the Independent Financial Adviser, of the bid and offered prices for the Reference Bond (expressed in each case as a percentage of its nominal amount) at the Quotation Time specified in the applicable Final Terms on the Reference Date quoted in writing to the Independent Financial Adviser by such Reference Government Bond Dealer.
"Remaining Term Interest" means, with respect to any Note, the aggregate amount of scheduled payment(s) of interest on such Note for the remaining term of such Note up to and including the Maturity Date or (if earlier) the Par Redemption Date specified in the applicable Final Terms, determined on the basis of the rate of interest applicable to such Note from (and including) the date on which such Note is to be redeemed by the Issuer pursuant to this Condition 6(c).
If Investor Put is specified in the applicable Final Terms, upon the holder of any Note giving to the Issuer in accordance with Condition 13 not less than 30 nor more than 60 days' notice (or such other period as is indicated in the applicable Final Terms) or such other period of notice as is specified in the applicable Final Terms (which notice shall be irrevocable), the Issuer will, upon the expiry of such notice, redeem (subject to, and in accordance with, the terms specified in the applicable Final Terms) such Note on the Optional Redemption Date and at either (i) the Optional Redemption Amount specified in the applicable Final Terms together or (ii) in the case of Index Linked Redemption Notes, at their Early Redemption Amount referred to in paragraph (e) below, if appropriate, with interest accrued to (but excluding) the Optional Redemption Date.
To exercise the right to require redemption of the Note, the holder of the Note must, if this Note is a definitive Note and held outside Euroclear and Clearstream, Luxembourg, deliver, at the specified office of any Paying Agent (in the case of Bearer Notes) or the Registrar (in the case of Registered Notes) outside the United States and its possessions at any time during the business hours of such Paying Agent or the Registrar, as the case may be, falling within the notice period, a duly signed and completed notice of exercise in the form (for the time being current) obtainable from any specified office of any Paying Agent or the Registrar (the "Put Notice") and in which the holder must specify a bank account (or, if payment is required to be made by cheque, an address) to which payment is to be made under this Condition 6(d) and, in the case of definitive Registered Notes, the nominal amount thereof to be redeemed and, if less than the full nominal amount of the definitive Registered Note so surrendered is to be redeemed, an address to which a new definitive Registered Note in respect of the balance of such definitive Registered Note is to be sent subject to and in accordance with the relevant provisions of Condition 1.
If this Note is a global Note, held through Euroclear or Clearstream, Luxembourg, to exercise the right to require redemption of this Note the holder of this Note must, within the notice period, give notice to any Paying Agent (in the case of Bearer Notes) or the Registrar (in the case of Registered Notes) of such exercise in accordance with the standard procedures of Euroclear or Clearstream, Luxembourg (which may include notice being given on his instruction by Euroclear or Clearstream, Luxembourg or any common depositary for them to a Paying Agent (in the case of Bearer Notes) or the Registrar (in the case of Registered Notes) by electronic means) in a form acceptable to Euroclear or Clearstream, Luxembourg from time to time and at the same time present or procure the presentation of the relevant global Note to the Paying Agent (in the case of Bearer Notes) or the Registrar (in the case of Registered Notes) for notation accordingly.
Any Put Notice or other notice given by a holder of any Note pursuant to this paragraph (d) shall be irrevocable except where prior to the due date of redemption an Event of Default shall have occurred and be continuing in which event such holder, at its option, may elect by notice to the Issuer to withdraw the notice given pursuant to this paragraph and instead to declare such Note forthwith due and payable pursuant to Condition 9.
For the purpose of paragraph (b) above and Condition 9, the Notes will be redeemed at the Early Redemption Amount calculated as follows:
Early Redemption Amount = RP x (1 + AY)y
where:
"RP" means the Reference Price;
"AY" means the Accrual Yield expressed as a decimal; and
"y" is a fraction the numerator of which is equal to the number of days (calculated on the basis of a 360-day year consisting of 12 months of 30 days each) from (and including) the Issue Date of the first Tranche of the Notes to (but excluding) the date fixed for redemption or (as the case may be) the date upon which such Note becomes due and repayable and the denominator of which is 360; or
(iv) in the case of Index Linked Notes, if Early Redemption (Market Value) is specified in the applicable Final Terms, the Specified Currency amount which is determined by the Calculation Agent in its sole and absolute discretion to be the fair market value of such Notes immediately prior to such early redemption, adjusted to account fully for any reasonable expenses and costs to the Issuer of unwinding any underlying and/or related hedging and funding arrangements (including, without limitation, any equity or currency options hedging the Issuer's obligations under the Notes) together with accrued interest (if any) thereon.
If the applicable Final Terms specifies that automatic early redemption applies with respect to the Index Linked Redemption Notes, in the case that the Calculation Agent determines, in accordance with Additional Condition 1.4(a) that an Automatic Early Redemption Event occurs, the Notes shall be redeemed at the Automatic Early Redemption Amount as specified in the applicable Final Terms on the Automatic Early Redemption Date.
If the Notes are repayable in instalments, they will be redeemed in the Instalment Amounts and on the Instalment Dates specified in the applicable Final Terms. The outstanding nominal amount of each such Note shall be reduced by the Instalment Amount for all purposes with effect from the related Instalment Date, unless payment of the Instalment Amount is improperly withheld or refused on presentation of the related Receipt, in which case, such amount shall remain outstanding until the Relevant Date relating to such Instalment Amount.
In the case of early redemption, the Early Redemption Amount will be determined pursuant to paragraph (e) above.
The Issuer, the Guarantor (in the case of Notes issued by MHCUK and MHFA) or any of their subsidiaries may at any time purchase Notes (provided that, in the case of definitive Bearer Notes, all unmatured Receipts, Coupons and Talons appertaining thereto are purchased therewith) at any price in the open market or otherwise. Such Notes may be held, reissued, resold or, at the option of the Issuer or, in the case of Notes issued by MHCUK and MHFA, the Guarantor, surrendered to any Paying Agent for cancellation.
All Notes which are redeemed will forthwith be cancelled (together with (in the case of Bearer Notes) all unmatured Receipts and Coupons attached thereto or surrendered therewith at the time of redemption). All Notes so cancelled and Notes purchased and cancelled pursuant to paragraph (h) above (together with (in the case of Bearer Notes) all unmatured Receipts and Coupons cancelled therewith) shall be forwarded to the Principal Paying Agent (in the case of Bearer Notes) or the Registrar (in the case of Registered Notes) and cannot be reissued or resold.
If the amount payable in respect of any Zero Coupon Note upon redemption of such Zero Coupon Note pursuant to paragraph (a), (b), (c) or (d) above or upon its becoming due and repayable as provided in Condition 9 is improperly withheld or refused, the amount due and repayable in respect of such Zero Coupon Note shall be the amount calculated as provided in paragraph (e)(iii) above as though the references therein to the date fixed for the redemption or the date upon which such Zero Coupon Note becomes due and payable were replaced by references to the date which is the earlier of:
All payments of principal and interest in respect of the Notes, Receipts and Coupons by the Issuer or, in the case of Notes issued by MHCUK or MHFA, under the Guarantee by the Guarantor shall be made free and clear of, and without withholding or deduction for or on account of, any present or future taxes, duties, assessments or other governmental charges of whatever nature imposed or levied by or on behalf of any Tax Jurisdiction (as defined below), unless such withholding or deduction is required by law. In such event, the Issuer or, in the case of Notes issued by MHCUK or MHFA, the Guarantor, as the case may be, will pay such additional amounts as shall be necessary in order that the net amounts received by the holders of the Notes, Receipts or Coupons after such withholding or deduction shall equal the respective amounts of principal and interest which would otherwise have been receivable in respect of the Notes, Receipts or Coupons, as the case may be, in the absence of such withholding or deduction; except that no such additional amounts shall be payable with respect to any Note, Receipt or Coupon:
For the avoidance of doubt, and the purposes of paragraphs (a), (b) and (c) above, no additional amounts will be paid by the Issuer or, in the case of Notes issued by MHCUK or MHFA, the Guarantor on account of any deduction or withholding from a payment on, or in respect of, the Notes, Receipts or Coupons where such deduction or withholding is imposed pursuant to Sections 1471 through 1474 of the Code, or any regulations or agreements thereunder, official interpretations thereof, or intergovernmental agreement (including any implementing law, regulation or official guidance) with respect thereto. In addition, no additional amounts will be payable to any Noteholder who is a fiduciary or partnership or any person other than the sole beneficial owner of the Note to the extent that any fiduciary, member or beneficial owner would not have been entitled to such additional amounts had that beneficiary, settlor, partner or beneficial owner been the Noteholder.
As used herein:
The Notes and relating Receipts and Coupons (if any, in the case of Bearer Notes) will become void unless claims in respect of principal and/or interest are made within a period of ten years (in the case of principal) and five years (in the case of interest) after the Relevant Date (as defined in Condition 7) therefor.
There shall be no prescription period for Talons but there shall not be included in any Coupon sheet issued on exchange of a Talon any Coupon the claim for payment in respect of which would be void pursuant to this Condition or Condition 5(b) or any Talon which would be void pursuant to Condition 5(b).
If any one or more of the following events (each an "Event of Default") shall have occurred, namely:
by a consolidation, amalgamation, merger or reconstruction the terms of which have previously been approved by an Extraordinary Resolution of the Noteholders;
then any Noteholder may, by written notice to the Issuer and, in the case of Notes issued by MHCUK and MHFA, the Guarantor (with a copy to the Principal Paying Agent and the Registrar for information purposes only), declare such Note held by the holder to be forthwith due and payable, whereupon the same shall become immediately due and payable at the Early Redemption Amount (as described in Condition 6I), together with accrued interest (if any) to the date of repayment, without presentment, demand, protest or other notice of any kind, unless such Event of Default shall be cured within five business days of receipt of such written notice by the Issuer and, in the case of Notes issued by MHCUK and MHFA, the Guarantor.
For the purpose of paragraph (c) above, any indebtedness for borrowed money which is in a currency other than U.S. dollars shall be translated at the "spot" rate for the sale of the relevant currency against the purchase of U.S. dollars in London as quoted by a leading bank selected by the Principal Paying Agent for this purpose on the day in London on which such premature repayment becomes due or, as the case may be, such default occurs (or, if for any reason such a rate is not available on that day, on the earliest possible date thereafter).
Should any Note, Receipt, Coupon or Talon be lost, stolen, mutilated, defaced or destroyed, it may be replaced at the specified office of the Principal Paying Agent (in the case of Bearer Notes) or the Registrar (in the case of Registered Notes), upon payment by the claimant of such costs and expenses as may be incurred in connection therewith and on such terms as to evidence and indemnity as the Issuer and the Principal Paying Agent or the Registrar, as the case may be, may reasonably require. Mutilated or defaced Notes, Receipts, Coupons or Talons must be surrendered before replacements will be issued.
The names of the initial Agents and their initial specified offices are set out below. If any additional Paying Agents are appointed in connection with any Series, the names of such Paying Agents will be specified in Part B of the applicable Final Terms.
The Issuer and, in the case of Notes issued by MHCUK and MHFA, the Guarantor are entitled to vary or terminate the appointment of any Agent and/or appoint additional or other Agents and/or approve any change in the specified office through which any Agent acts, provided that:
In addition, the Issuer and, in the case of Notes issued by MHCUK and MHFA, the Guarantor shall forthwith appoint a Paying Agent having a specified office in New York City in the circumstances described in the final paragraph of Condition 5(b). Any variation, termination, appointment or change shall only take effect (other than in the case of insolvency, when it shall be of immediate effect) after not less than 30 nor more than 60 days' prior notice thereof shall have been given to the Noteholders in accordance with Condition 13.
In acting under the Agency Agreement, the Agents will act solely as agents of the Issuer and the Guarantor and will not assume any obligations or relationships of agency or trust to or with the Noteholders, the Receiptholders and the Couponholders, except that (without affecting the obligations of the Issuer or the Guarantor, as the case may be, to the Noteholders, the Receiptholders and the Couponholders to repay the Notes and to pay interest thereon) funds received by the Agents for the payment of any sums due in respect of the Notes shall be held by them on behalf of the Noteholders, the Receiptholders and the Couponholders until the expiry of the relevant period of prescription under Condition 8. The Agency Agreement contains provisions for the indemnification of the Agents and for their relief from responsibility in certain circumstances, and entitles any of them to enter into business transactions with the Issuer and the Guarantor without being liable to account to the Noteholders, the Receiptholders or the Couponholders for any resulting profit.
On and after the Interest Payment Date, as appropriate, on which the final Coupon comprised in any Coupon sheet matures, the Talon (if any) forming part of such Coupon sheet may be surrendered at the specified office of the Principal Paying Agent or any other Paying Agent in exchange for a further Coupon sheet including (if such further Coupon sheet does not include Coupons to (and including) the final date for the payment of interest due in respect of the Bearer Note to which it appertains) a further Talon, subject to the provisions of Condition 8. Each Talon shall, for the purposes of these Terms and Conditions, be deemed to mature on the Interest Payment Date on which the final Coupon comprised in the relative Coupon sheet matures.
All notices regarding the Bearer Notes shall be valid if published in a leading English language daily newspaper of general circulation in London. It is expected that any such publication in a newspaper will be made in the Financial Times in London. Any such notice will be deemed to have been given on the first date on which publication shall have been made in such newspaper.
All notices regarding the Registered Notes will be deemed to be validly given if sent by (first class) mail or (if posted to an address overseas) by airmail to the holders (or, in the case of a joint holding, the first named thereof) at their respective addresses recorded in the Register and will be deemed to have been given on the fourth day after mailing.
In addition, for so long as any Notes are listed by or on a competent authority or stock exchange and the rules of that competent authority or stock exchange so require, the Issuer shall also ensure that notices are duly published in a manner which complies with the rules and regulations of that competent authority or stock exchange on which the Notes are for the time being listed or by which they have been admitted to trading. Any such notice will be deemed to have been given on the date of publication or, if published more than once or if required to be published in more than one newspaper, on the date of the first publication in all the required newspapers.
Until such time as any definitive Notes are issued, so long as the global Note(s) is or are held in its or their entirety on behalf of Euroclear and/or Clearstream, Luxembourg, notices to Noteholders may be given by delivery of the relevant notice to Euroclear and/or Clearstream, Luxembourg provided that, for so long as such Notes are admitted to trading on a stock exchange or are admitted to trading by another relevant authority and the rules of that stock exchange (or any other relevant authority) so require, such notice will be published in a daily newspaper of general circulation in the place or places required by that stock exchange or other relevant authority. Any such notice shall be deemed to have been given to the holders of the Notes on the day on which the said notice was given to Euroclear and/or Clearstream, Luxembourg.
Notices to be given by any holder of the Notes shall be in writing and (other than a notice under Condition 9) given by lodging the same, together with the relative Note or Notes, with the Principal Paying Agent (in the case of Bearer Notes), the Registrar (in the case of Registered Notes) or the Australian Agent (in the case of AMTNs). Whilst any of the Notes are represented by a global Note, such notice may be given by any holder of a Note to the Principal Paying Agent or the Registrar, as the case may be, via Euroclear and/or Clearstream, Luxembourg, as the case may be, in such manner as the Principal Paying Agent or Registrar and Euroclear and/or Clearstream, Luxembourg, as the case may be, may approve for this purpose.
So long as AMTNs are held on behalf of the Austraclear System, such notices may also be given by delivery to the Austraclear System for communication by it to the AMTN holders in accordance with the rules and regulations of the Austraclear System. Any such notice shall be deemed to have been given to the AMTN holders on the day on which the said notice was given to the Austraclear System.
In relation to Notes other than AMTNs:
The Agency Agreement contains provisions for convening meetings of the Noteholders to consider any matter affecting their interests, including the sanctioning by Extraordinary Resolution of a modification of the Notes, the Receipts, the Coupons (as applicable) or certain provisions of the Agency Agreement. Such a meeting may be convened by the Issuer, the Guarantor (in the case of Notes issued by MHCUK and MHFA) or by Noteholders holding not less than 10 per cent. in nominal amount of the Notes of any Series for the time being remaining outstanding. The quorum at any such meeting for passing an Extraordinary Resolution is one or more persons holding or representing a clear majority in nominal amount of the Notes for the time being outstanding, or at any adjourned meeting one or more persons being or representing Noteholders whatever the nominal amount of the Notes so held or represented, except that at any meeting the business of which includes the modification of certain provisions of the Notes, Receipts or Coupons (as applicable) (including modifying the date of maturity of the Notes or any date for payment of interest thereon, reducing or cancelling the amount of principal or the rate of interest payable in respect of the Notes or altering the currency of payment of the Notes, Receipts or Coupons (as applicable)) or certain of the provisions of the Agency Agreement, the necessary quorum for passing an Extraordinary Resolution will be one or more persons holding or representing not less than two-thirds, or at any adjourned such meeting not less than one-third, in nominal amount of the Notes for the time being outstanding. An Extraordinary Resolution passed at any meeting of the Noteholders shall be binding on all the Noteholders, whether or not they are present at the meeting, and on all Receiptholders and Couponholders (as applicable).
The Agency Agreement provides that a resolution in writing signed by or on behalf of the holders of not less than 75 per cent. in principal amount of the Notes outstanding shall for all purposes be as valid and effective as an Extraordinary Resolution passed at a meeting of Noteholders duly convened and held. Such a resolution in writing may be contained in one document or several documents in the same form, each signed by or on behalf of one or more Noteholders.
The Principal Paying Agent and/or the Registrar, the Issuer and, in the case of Notes issued by MHCUK and MHFA, the Guarantor may agree, without the consent of the Noteholders, Receiptholders or Couponholders (as applicable), to:
(i) any modification (except such modifications in respect of which an increased quorum is required as mentioned above) of the Agency Agreement which is not materially prejudicial to the interests of the Noteholders; or
Any such modification shall be binding on the Noteholders, the Receiptholders and the Couponholders (as applicable) and any such modification shall be notified to the Noteholders in accordance with Condition 13 as soon as is practicable thereafter.
In the case of AMTNs:
The Note (AMTN) Deed Poll contains provisions for convening meetings of holders of AMTNs to consider any matter affecting their interests.
In the case of Notes issued by MHCUK and MHFA, the Guarantor and any of its subsidiaries (each a "Substitute Obligor") may, without the consent of the holders of any such Notes, Receipts or Coupons, assume the obligations of the Issuer (or any previous Substitute Obligor) under and in respect of any Notes upon and subject to:
Upon the execution of such documents and compliance with the requirements stated in this Condition 15, the Substitute Obligor will be deemed to be named in these Terms and Conditions, the Notes, the Receipts and Coupons as if it had been named herein and therein as the principal debtor in place of the Issuer (or of any previous substitute under this Condition 15) and the Notes, the Receipts and the Coupons will be deemed to be amended in such manner as necessary to give effect to the substitution and any references in the Notes, the Receipts and the Coupons to the Issuer will be references to the Substitute Obligor.
The Issuer shall be at liberty from time to time without the consent of the Noteholders, Receiptholders or Couponholders to create and issue further notes having terms and conditions the same as the Notes or the same in all respects save for the amount and date of the first payment of interest thereon and so that the same shall be consolidated and form a single series with the outstanding Notes.
In the case of Bearer Notes issued in accordance with TEFRA D and initially represented by a Temporary Global Note exchangeable for interests in a Permanent Global Note or definitive Bearer Notes, consolidation can only occur following exchange of interests in the Temporary Global Note for interests in a Permanent Global Note or definitive Bearer Notes upon certification of non-U.S. beneficial ownership.
This Condition 17 shall apply to Notes other than AMTNs.
No rights are conferred on any person under the Contracts (Rights of Third Parties) Act 1999 to enforce any term of this Note, but this does not affect any right or remedy of any person which exists or is available apart from the Contracts (Rights of Third Parties) Act 1999.
The Agency Agreement, the Deed of Covenant, the Guarantees, the Notes (other than AMTNs), the Receipts, the Coupons and any non-contractual obligations arising out of or in connection with them are governed by, and shall be construed in accordance with, English law.
Each of MHC and MHFA irrevocably agrees, for the benefit of the Noteholders, the Receiptholders and the Couponholders, that the courts of England are to have exclusive jurisdiction to settle any disputes which may arise out of or in connection with the Notes, the Receipts and/or the Coupons (including a dispute relating to any non-contractual obligations arising out of or in connection with the Notes, the Receipts and/or the Coupons) and accordingly submit to the exclusive jurisdiction of the English courts.
Each of MHC and MHFA waives any objection to the courts of England on the grounds that they are an inconvenient or inappropriate forum. The Noteholders, the Receiptholders and the Couponholders, may take any suit, action or proceedings (together referred to as "Proceedings") arising out of or in connection with the Notes, the Receipts and the Coupons (including any Proceedings relating to any non-contractual obligations arising out of or in connection with the Notes, the Receipts and the Coupons), against MHC and MHFA in any other court of competent jurisdiction and concurrent Proceedings in any number of jurisdictions.
Each of MHC and MHFA appoint Mitsubishi HC Capital UK PLC at its registered office at Novuna House, Thorpe Road, Staines-upon-Thames, Surrey TW18 3HP (attention: Legal Department) as their agent for service of process, and each undertakes that, in the event of Mitsubishi HC Capital UK PLC ceasing so to act, it will appoint another person as its agent for service of process in England in respect of any Proceedings. Nothing herein shall affect the right to serve proceedings in any other manner permitted by law.
MHC has in the Agency Agreement, the Guarantee and the Deed of Covenant, and with regard to any non-contractual obligations arising out of or in connection with them, submitted to the jurisdiction of the English courts and appointed an agent for service of process in terms substantially similar to those set out above. MHFA has in the Agency Agreement and the Deed of Covenant, and with regard to any non-contractual obligations arising out of or in connection with them, submitted to the jurisdiction of the English courts and appointed an agent for service of process in terms substantially similar to those set out above.
This Condition 18(e) shall only apply to AMTNs.
(i) The AMTNs, the Australian Agency Agreement and the Note (AMTN) Deed Poll shall be governed by the laws in force in New South Wales, Australia.
The following are additional conditions ("Additional Conditions") relating to the Notes:
Under the Programme, an Index Linked Note shall be an Note where the Interest Rate, automatic early redemption and/or Index Linked Redemption Amount shall be calculated or determined by reference to a single index or a basket of indices, including, without limitation, (i) Notes in respect of which all or any of the interest amounts are linked to a specified index or basket of specified indices, (ii) Notes in respect of which automatic early redemption and/or final redemption are linked to a specified index or basket of specified indices, or (iii) any combination of the foregoing. If the applicable Final Terms provide that the relevant Notes are Index Linked Notes, the terms and conditions applicable to Index Linked Notes are the Terms and Conditions, including the terms and conditions for Index Linked Notes set out in these Additional Conditions (the "Index Linked Conditions"), as completed by the applicable Final Terms. In the event of any inconsistency between the Terms and Conditions and the Index Linked Conditions, the Index Linked Conditions shall prevail.
For the purposes of these Index Linked Conditions:
"Additional Disruption Event" means, if so specified in the Final Terms, (i) a Change in Law, (ii) a Hedging Disruption and/or (iii) Increased Cost of Hedging.
"Automatic Early Redemption Amount" means the Automatic Early Redemption Amount specified in the applicable Final Terms.
"Automatic Early Redemption Date" means each Automatic Early Redemption Date specified in the applicable Final Terms.
"Automatic Early Redemption Event" has the meaning given to it in Additional Condition 1.4(a) below.
"Automatic Early Redemption Valuation Date" means each Automatic Early Redemption Valuation Date specified in the applicable Final Terms, or if that is not a Scheduled Trading Day or is a Disrupted Day, then the provisions related to a Disrupted Day in the definition "Valuation Date" shall apply as if the relevant Automatic Early Redemption Valuation Date were a Valuation Date.
"Barrier Event" shall be either Barrier Event (closing) or Barrier Event (intraday), as specified in the applicable Final Terms.
"Barrier Event (closing)" shall be deemed to have occurred if:
Event Valuation Time (closing) on any Barrier Event Determination Day is (x) less than or equal to or (y) less than, as specified in the applicable Final Terms, the corresponding Barrier Level for such Index on such Barrier Event Determination Day.
"Barrier Event (intraday)" shall be deemed to have occurred if:
For the purpose of determining whether a Barrier Event (intraday) has occurred on any day, the definition of Market Disruption Event specified in these Index Linked Conditions shall be amended such that (i) all references to "during the one hour period that ends at the relevant Valuation Time" shall be deleted, and (ii) if Early Closure is specified to apply in the applicable Final Terms, in the definition of "Early Closure" appearing in these Index Linked Conditions, each reference to "Valuation Time" and "Scheduled Closing Time" shall be construed as a reference to "Barrier Event Valuation Time (intraday)".
"Barrier Event Determination Day" means, in respect of each Index and each Observation Period:
as specified in the applicable Final Terms; or
(b) if the applicable Final Terms provide that the Barrier Event (closing) provisions shall apply, each Scheduled Trading Day for such Index during such Observation Period that is not a Disrupted Day for such Index.
(a) in relation to an Index which is specified in the applicable Final Terms as being a Unitary Index, the Scheduled Closing Time on the relevant Exchange on the relevant Barrier Event Determination Day, as the case may be, in relation to such Index to be valued. If the relevant Exchange closes prior to its Scheduled Closing Time, then the Barrier Event Valuation Time (closing) shall be such actual closing time; and
(b) in relation to an Index which is specified in the applicable Final Terms as being a Multi-Exchange Index, (i) for the purposes of determining whether a Market Disruption Event has occurred: (x) in respect of any Component Security, the Scheduled Closing Time on the relevant Exchange and (y) in respect of any options contracts or futures contracts on the Index, the close of trading on the relevant Related Exchange, and (ii) in all other circumstances, the time at which the official closing level of the Index is calculated and published by the Index Sponsor.
"Barrier Event Valuation Time (intraday)" means any time during the regular trading session (without regard to any after hours or any other trading outside of the regular session) on the Exchange.
"Barrier Level" means, in respect of an Index, such level for such Index as is specified in the applicable Final Terms, rounded, if necessary, to the second decimal place, with 0.005 being rounded upwards.
"Barrier Level 1" means, in respect of an Index, such level for such Index as is specified in the applicable Final Terms, rounded, if necessary, to the second decimal place with 0.005 being rounded upwards.
"Barrier Level 2" means, in respect of an Index, such level for such Index as is specified in the applicable Final Terms, rounded, if necessary, to the second decimal place with 0.005 being rounded upwards.
"Base Price" means:
"Base Price Fixing Date" means, either (I), (II) or (III) below, as specified in the applicable Final Terms:
(I)
Price Valuation Cut-Off Date shall be deemed to be the Base Price Fixing Date, notwithstanding the fact that such day is a Disrupted Day for any Index, and the Calculation Agent shall determine in its sole and absolute discretion the Base Price of each of the Indices by reference to such sources as it deems appropriate; or
(II)
(III)
estimate of the value for the relevant security as of the Valuation Time on the Base Price Fixing Date).
"Base Price Valuation Cut-Off Date" means (i) the date specified in the applicable Final Terms or, (ii) if not so specified, the second Scheduled Trading Day immediately following the initially scheduled Base Price Fixing Date.
"Basket" means a basket composed of indices in the relative proportions or number of indices specified in the applicable Final Terms.
"Basket of Indices" means, subject to adjustment in accordance with these Index Linked Conditions, a basket composed of indices in their relative proportions or number of indices, as specified in the applicable Final Terms.
"Change in Law" means that, on or after the Issue Date of the Notes (i) due to the adoption of or any change in any applicable law or regulation (including, without limitation, any tax law), or (ii) due to the promulgation of or any change in the interpretation by any court, tribunal or regulatory authority with competent jurisdiction of any applicable law or regulation (including any action taken by a taxing authority), the Calculation Agent determines in good faith that (a) it has become illegal to hold, acquire or dispose of one or more Component Securities, or (b) the Calculation Agent or its affiliates will incur a materially increased cost in performing its obligations in relation to the Notes (including, without limitation, due to any increase in tax liability, decrease in tax benefit or other adverse effect on its tax position).
"Common Scheduled Trading Day" means the day which is the Scheduled Trading Day for all of the Indices.
"Component Security" means, in respect of an Index, any share or other component security included in such Index as determined by the Calculation Agent and related expressions shall be construed accordingly.
"Correction Publication Cut-Off Date" means the Correction Publication Cut-Off Date specified in the applicable Final Terms.
"Disrupted Day" means:
The Calculation Agent shall, as soon as reasonably practicable under the circumstances, notify the Issuer, the Guarantor and the Principal Paying Agent or the Registrar, as the case may be, of the occurrence of a Disrupted Day on any day that, but for the occurrence of a Disrupted Day, would have been the Base Price Fixing Date or a Valuation Date. Without limiting the obligation of the Calculation Agent to notify the parties as set forth in the preceding sentence, failure by the Calculation Agent to notify the parties of the occurrence of a Disrupted Day shall not affect the validity of the occurrence and effect of such Disrupted Day.
(a) in relation to an Index which is specified in the applicable Final Terms as being a Unitary Index, any event (other than an Early Closure) which, in the discretion of the Calculation Agent, disrupts or impairs the ability of market participants in general to: (i) effect transactions in, or obtain market values for, securities that comprise 20 per cent. or more of the level of the Index on the Exchange; or (ii) effect transactions in, or obtain market values for, futures or options contracts relating to the Index on the Related Exchange; or
(b) in relation to an Index which is specified in the applicable Final Terms as being a Multi-Exchange Index, any event (other than an Early Closure) which, in the discretion of the Calculation Agent, disrupts or impairs the ability of market participants in general to effect transactions in, or obtain market values for: (i) any Component Security on the Exchange in respect of such Component Security; or (ii) futures or options contracts relating to the Index on the relevant Related Exchange.
"Final Index Final" means the Index Final on the Final Valuation Date.
"Final Valuation Date" means the Valuation Date immediately preceding the Maturity Date.
"Hedging Disruption" means that the Hedging Entity is unable, after using commercially reasonable efforts, to (i) acquire, establish, re-establish, substitute, maintain, unwind or dispose of any transaction(s) or asset(s) it deems necessary to hedge the price risk of the Issuer issuing, and the Issuer performing its obligations with respect to or in connection with, the Index Linked Notes, or (ii) realise, recover or remit the proceeds of any such transaction(s) or asset(s).
"Hedging Entity" means any entity (or entities) engaged in any underlying or hedging transactions relating to the Index Linked Notes and/or the Index in respect of the Issuer's obligations under the Index Linked Notes.
"Increased Cost of Hedging" means that the Issuer or any of its agents would incur a materially increased (as compared with circumstances existing on the Issue Date) amount of tax, duty, expense or fee (other than brokerage commissions) to (i) acquire, establish, re-establish, substitute, maintain, unwind or dispose of any transaction(s) or asset(s) it deems necessary to hedge the risk of the Issuer issuing and performing its obligations with respect to the Index Linked Notes, or (ii) realise, recover or remit the proceeds of any transaction(s) or asset(s), provided that any such materially increased amount that is incurred solely due to the deterioration of the creditworthiness of the Issuer shall not be deemed an Increased Cost of Hedging.
"Index" and "Indices" mean, subject to adjustment in accordance with the Index Linked Conditions, the index or indices specified in the applicable Final Terms and related expressions shall be construed accordingly.
"Index Final" means the Index Level as of the Valuation Time on any date, as determined by the Calculation Agent, subject to Additional Conditions 1.5 and 1.6.
"Index Level" means the level of the Index as calculated and announced by the Index Sponsor or with reference to the Reference Source.
"Index Performance" means, in respect of each Index, the figure calculated as: Final Index Final /Base Price.
The Index Performance may, if so specified in the applicable Final Terms, be either (x) rounded down, (y) rounded up or (z) rounded, to the nearest whole number or any number of decimal places (in case of (z), with half of such whole number or number of decimal place, as applicable, being rounded up) as specified in the applicable Final Terms.
"Index Sponsor" means, in relation to an Index, the corporation or other entity that (i) is responsible for setting and reviewing the rules and procedures and the methods of calculation and adjustments, if any, related to such Index and (ii) announces (directly or through an agent) the level of such Index on a regular basis during each Scheduled Trading Day, which as of the Issue Date is the index sponsor specified for such Index in the applicable Final Terms.
"Knock-out Price" means, in respect of an Index, such level for such Index as is specified in the applicable Final Terms, rounded, if necessary, to the second decimal place with 0.005 being rounded upwards.
For the purposes of determining whether a Market Disruption Event in respect of a Multi-Exchange Index exists at any time, if a Share Disruption Event occurs in respect of a Component Security at that time, then the relevant percentage contribution of such Component Security, to the level of the Index shall be based on a comparison of (x) the portion of the level of the Index attributable to that Component Security, and (y) the overall level of the Index, (if applicable) using the official opening weightings as published by the Index Sponsor as part of the market "opening data".
"Maximum Rate" has the meaning specified in the applicable Final Terms.
"Medium Rate" has the meaning specified in the applicable Final Terms.
"Minimum Rate" has the meaning specified in the applicable Final Terms.
"Multi-Exchange Index" means any Index which is specified as such in the applicable Final Terms, or, if not specified, any Index the Calculation Agent determines as such.
"Observation Period" means, in respect of an Index, each period commencing on the Observation Period Start Date, prior to any adjustment of such date pursuant to these Index Linked Conditions, if applicable (and including or excluding such Observation Period Start Date, as specified in the applicable Final Terms) and ending on the immediately following Observation Period End Date, prior to any adjustment of such date pursuant to these Index Linked Conditions, if applicable (and including or excluding such Observation Period End Date, as specified in the applicable Final Terms).
"Observation Period End Date" means, in respect of an Index, each date specified as such in the applicable Final Terms.
"Observation Period Start Date" means, in respect of an Index, each date specified as such in the applicable Final Terms.
"Reference Index" means the Index, the Index Performance of which is lowest of the Indices. If the Index Performances of two or more Indices are the same, the Calculation Agent shall determine the Reference Index in its sole discretion.
"Reference Source" means, in relation to an Index, the source as is specified in the applicable Final Terms.
"Related Exchange" means either (I) or (II) below, as specified in the applicable Final Terms:
"Scheduled Closing Time" means, in respect of an Exchange or Related Exchange and a Scheduled Trading Day, the scheduled weekday closing time of such Exchange or Related Exchange on such Scheduled Trading Day, without regard to after hours or any other trading outside of the regular trading session hours.
"Scheduled Valuation Date" means any original date that, but for the occurrence of an event causing a Disrupted Day, would have been a Valuation Date.
"Share Disrupted Day" means, for any exchange upon which the relevant Component Security is traded or any exchange or quotation system(s) upon which futures or options contracts relating to such Component Security are traded, any day upon which trading is scheduled to take place on such exchange or system, such exchange or system fails to open for trading during its regular trading session or on which a Share Disruption Event has occurred. The Calculation Agent shall as soon as reasonably practicable under the circumstances, notify the Issuer and the Agent of the occurrence of a Share Disrupted Day on any day that but for the occurrence of a Share Disrupted Day would have been the Valuation Date or any other date as is specified in the Final Terms to be applicable, provided that failure by the Calculation Agent to notify the parties of the occurrence of a Share Disrupted Day shall not affect the validity of the occurrence and effect of such Share Disrupted Day.
"Share Disruption Event" means, in relation to each relevant Component Security, the occurrence or existence of (i) a Share Trading Disruption, (ii) a Share Exchange Disruption or (iii) a Share Early Closure, as determined by the Calculation Agent in its sole and absolute discretion, if, in any such case, that Share Trading Disruption, Share Exchange Disruption or Share Early Closure is, in the determination of the Calculation Agent, material.
"Share Early Closure" means the closure on any day on which such exchange or quotation system is open for business, with respect to the exchange upon which the relevant Component Security is traded or any exchange or quotation system(s) upon which futures or options contracts relating to such Component Security are traded, prior to its scheduled closing time unless such earlier closing time is announced by such exchange or quotation system at least one hour prior to the earlier of (i) the actual closing time for the regular trading session on such exchange or quotation system on such day on which such exchange or quotation system is open for business, and (ii) the submission deadline for orders to be entered into such exchange or quotation system for execution at the scheduled closing time on the relevant exchange or quotation system on such day.
"Share Exchange Disruption" means any event (other than a Share Early Closure) that disrupts or impairs (as determined by the Calculation Agent) the ability of market participants in general (a) to effect transactions in, or obtain market values for, relevant Component Security on the exchange upon which the relevant Component Security is traded or (b) to effect transactions in, or obtain market values for, futures or options contracts relating to the relevant Component Security on any relevant exchange or quotation system(s) upon which futures or options contracts relating to such Component Security are traded, in either case, at any time during the one-hour period that ends at the scheduled closing time on the relevant exchange or quotation system on the relevant Valuation Date.
"Strike Price" means, in respect of an Index, such level for such Index as is specified in the applicable Final Terms, rounded, if necessary, to the second decimal place, with 0.005 being rounded upwards.
"Share Trading Disruption" means any suspension of or limitation imposed on trading (by reason of movements in prices exceeding limits permitted by (a) the exchange upon which the relevant Component Security is traded for the purposes of the Index or (b) the exchange or quotation system upon which futures or options contracts relating to such Component Security are traded, or otherwise) in (i) the relevant Component Security or options contracts or (ii) futures contracts on the relevant Component Security, as applicable.
"Unitary Index" means any Index which is specified as such in the applicable Final Terms, or, if not specified, any Index the Calculation Agent determines as such.
"Valuation Cut-Off Date" means, (i) the date specified in the applicable Final Terms, or (ii) if not so specified, the second Scheduled Trading Day immediately following the Scheduled Valuation Date.
"Valuation Date" means each Valuation Date specified in the applicable Final Terms or if such date is not a Scheduled Trading Day or is a Disrupted Day, then:
Scheduled Trading Day that is not a Disrupted Day with respect to the Affected Index, unless each of the Scheduled Trading Days immediately following the Scheduled Valuation Date up to and including the Valuation Cut-Off Date is a Disrupted Day relating to the Affected Index. In that case, (x) the Valuation Cut-Off Date shall be deemed to be the Valuation Date for the Affected Index (notwithstanding the fact that such day is a Disrupted Day) and (y) the Calculation Agent shall determine in its sole and absolute discretion the relevant level or price using, in relation to the Affected Index, the level of that Index as of the Valuation Time on the Valuation Cut-Off Date in accordance with the formula for and method of calculating that Index last in effect prior to the occurrence of the first Disrupted Day using the Exchange traded or quoted price as of the Valuation Time on the Valuation Cut-Off Date of each security comprised in that Index (or, if an event giving rise to a Share Disrupted Day in relation to a share) has occurred in respect of the relevant security on the Valuation Cut-Off Date, its good faith estimate of the value for the relevant security as of the Valuation Time on the Valuation Cut-Off Date); or
(ii) the Valuation Date shall be the first succeeding Common Scheduled Trading Day that is not a Disrupted Day with respect to all Indices, unless there is no such Common Scheduled Trading Day that is not a Disrupted Day on or prior to the Valuation Cut-Off Date. In that case, (x) the Valuation Cut-Off Date shall be deemed to be the Valuation Date for all Indices (notwithstanding the fact that such day is a Disrupted Day for any of the Index) and (y) the Calculation Agent shall determine in its sole and absolute discretion the relevant level or price of the Index affected by the occurrence of the relevant Disrupted Day (the "Affected Index") using the level of that Index as of the Valuation Time on the Valuation Cut-Off Date in accordance with the formula for and method of calculating the Affected Index last in effect prior to the occurrence of the first Disrupted Day using the Exchange traded or quoted price as of the Valuation Time on the Valuation Cut-Off Date of each security comprised in the Affected Index (or, if an event giving rise to a Share Disrupted Day has occurred in respect of the relevant security on the Valuation Cut-Off Date, its good faith estimate of the value for the relevant security as of the Valuation Time on the Valuation Cut-Off Date).
If the applicable Final Terms provide that Index Linked Interest is applicable, the details of the method of the calculation and/or determination of the amount of such interest shall be the Index Linked Interest Formula specified in such Final Terms, and the dates of payment of such Index Linked Interest shall be specified in such Final Terms.
If the applicable Final Terms provide that Index Linked Automatic Early Redemption is applicable, it shall constitute an Automatic Early Redemption Event if the Calculation Agent determines that, as of any Automatic Early Redemption Valuation Date, either of the following events has occurred:
and the Issuer shall redeem the Notes in whole or in part in an amount per Calculation Amount equal to the Automatic Early Redemption Amount on the relevant Automatic Early Redemption Date.
(b) Index Linked Final Redemption
If the applicable Final Terms provide that the Notes are the Index Linked Redemption Notes, the Notes shall be redeemed in accordance with the applicable Index Linked Redemption Formula specified in the applicable Final Terms.
Where the Index Linked Notes relate to a single Index, the Index Linked Redemption Formula is one of the items (I) through (IV) below as specified in the applicable Final Terms.
Calculation Amount x (Final Index Final /Strike Price).
(II) The Index Linked Redemption Amount per Calculation Amount payable on the Maturity Date shall be calculated by the Calculation Agent in accordance with the following:
Calculation Amount x (Final Index Final /Strike Price).
Calculation Amount x (Final Index Final /Strike Price).
Calculation Amount x (Final Index Final /Strike Price).
Where the Index Linked Notes relate to a Basket of Indices, the Index Linked Redemption Formula is one of the items (I) through (IV) below as specified in the Final Terms.
Calculation Amount x (Final Index Final of Reference Index /Strike Price of Reference Index).
(II) The Index Linked Redemption Amount per Calculation Amount payable on the Maturity Date shall be calculated by the Calculation Agent in accordance with the following formula:
Calculation Amount x (Final Index Final of Reference Index /Strike Price of Reference Index).
Calculation Amount x (Final Index Final of Reference Index /Strike Price of Reference Index).
Calculation Amount x (Final Index Final of Reference Index /Strike Price of Reference Index).
In the event that the level of the Index published by the Index Sponsor and which is utilised for the calculation of the Index Final or the determination of the occurrence of a Barrier Event or an Automatic Early Redemption Event, is corrected or subsequently corrected and the correction is published by the Index Sponsor as a replacement to the level of the Index on the original date of publication or, if specified in the applicable Final Terms, on any date thereafter until the Correction Publication Cut-Off Date, then the Calculation Agent shall use such corrected level of the Index instead of the level of the Index that was originally published.
If the Index is (A) not calculated and announced by the Index Sponsor but is calculated and announced by a successor sponsor (such successor sponsor will be deemed to be the Index Sponsor) acceptable to the Calculation Agent, or (B) replaced by a successor index using, in the determination of the Calculation Agent, the same or a substantially similar formula for and method of calculation as used in the calculation of the Index, then in each case that index (the "Successor Index") will be deemed to be the Index.
If (a) on or prior to the Base Price Fixing Date, any Valuation Date or any Scheduled Trading Day during the Observation Period, the Index Sponsor (or its successor) announces that it will make a material change in the formula for or the method of calculating the Index or in any other way materially modifies the Index (other than a modification prescribed in that formula or method to maintain the Index in the event of changes in constituent stock and capitalisation and other routine events) (an "Index Modification") or permanently cancels the Index and no Successor Index exists (an "Index Cancellation") or (b) on the Base Price Fixing Date, any Valuation Date or any Scheduled Trading Day during the Observation Period, the Index Sponsor or a successor sponsor fails to calculate and announce the Index (an "Index Disruption" and together with an Index Modification and an Index Cancellation, each an "Index Adjustment Event"), then:
(a) If an Additional Disruption Event occurs, the Issuer in its sole and absolute discretion may take the action described in (i) or (ii) below:
The Calculation Agent has been appointed as such in order to determine in its sole discretion the calculations with respect to certain amounts payable under the Notes and the determination with respect to certain events as more fully specified herein in accordance with the calculation agency agreement entered into between the Issuer and the Calculation Agent which constitutes the "Calculation Agency Agreement". All certificates, communications, opinions, determinations, calculations, quotations and decisions given, expressed, made or obtained for the purposes of the determinations by the Calculation Agent shall, in the absence of manifest error, be binding on the Issuer, the Principal Paying Agent, the Registrar, the other Paying Agents and the Holders and (in the absence as aforesaid) no liability to the Issuer or the Holders shall attach to the Calculation Agent in connection with the exercise by it of its powers, duties and discretion pursuant to the provisions therein. Any notice to be given by the Calculation Agent shall be deemed to have been given if given in accordance with the Calculation Agency Agreement. The Calculation Agent shall notify the Principal Paying Agent or the Registrar, as the case may be, the Issuer and the Guarantor of the results of all calculations and determinations conducted or made pursuant to the provisions in these Index Linked Conditions as soon as practicably possible. The Principal Paying Agent or the Registrar, as the case may be, shall give notice to the Holders in accordance with Condition 13 (Notices) as soon as practicable thereafter.
Failure by the Calculation Agent to notify the parties of the occurrence of certain events shall not affect the validity of the occurrence and effect of such determination.
The net proceeds from each issue of Notes by MHC may be applied for the general corporate purposes of MHC which include making a profit, or such other reason as may be specified in the applicable Final Terms. If, in respect of any particular issue of Notes which are derivative securities, there is a particular identified use of proceeds, this will be stated in the applicable Final Terms.
In relation to Notes issued by MHCUK, the net proceeds of an issue of Notes may be applied by MHCUK for (i) the general corporate purposes of MHCUK, which include making a profit, (ii) financing or refinancing, in whole or in part, the Eligible Project Portfolio, which comprises a portfolio of projects meeting the eligibility criteria set out in the Green Finance Framework, as published on the website of MHCUK and updated from time to time, in which case the applicable Final Terms will provide additional information in relation to the intended use of proceeds in respect of such Notes (such issue of Notes, "Green Bonds"), or (iii) such other reason as may be specified in the applicable Final Terms.
MHCUK has established a Green Finance Framework, as published on its website (https://www.mitsubishihccapital.co.uk/investors/#investorreports), which has been prepared in alignment with ICMA's 2018 edition of the Green Bond Principles (the "ICMA Green Bond Principles"). MHCUK may amend or update the Green Finance Framework from time to time and will publicly announce any change to the Green Finance Framework on its website.
Pursuant to the Green Finance Framework, proceeds of a relevant issue of Notes will be allocated to finance or refinance assets within the Eligible Project Portfolio, which include:
MHCUK has set up a Environmental Social Governance – Environmental ("ESG") committee to discuss ESG targets, to agree on activities to meet these targets, and to discuss the addition of any new categories of assets to be eligible for the Eligible Project Portfolio.
The allocation of net proceeds of the issue of Green Bonds will be managed on a portfolio basis by the Treasury team of MHCUK, and the finance of eligible green assets by MHCUK and its subsidiaries utilising these proceeds will be recorded and tracked centrally via internal reporting systems, in line with MHCUK's reporting requirements.
Prior to the issuance of any such Notes, MHCUK will engage a second party opinion provider to provide a second party opinion regarding its Green Finance Framework (the "second party opinion"). The Green Finance Framework, any second party opinion and associated reporting are available on MHCUK's website at https://www.mitsubishihccapital.co.uk/investors/#investorreports. For the avoidance of doubt, the Green Finance Framework and any second party opinions published are not incorporated in, and do not form part of, this Offering Circular.
In accordance with the ICMA Green Bond Principles, MHCUK will keep its investors updated on the allocation of proceeds and intends to also report on the expected impact of the eligible projects within the Eligible Project Portfolio.
While MHCUK will monitor and account for the net proceeds of an issue of Green Bonds relative to the Eligible Project Portfolio, no assurance is or can be given by MHCUK, the Guarantor, the Dealers, the Paying Agents or any other person that the Eligible Project Portfolio will meet any criteria, expectations and objectives of investors regarding the environmental or social impact of sustainability performance of any "green", "social", "sustainable" or equivalently-labelled projects or that adverse environmental, social and/or other impacts will not occur during the implementation of any projects within the Eligible Project Portfolio.
None of the Dealers will verify the proposed use of proceeds of any issue of Notes, nor shall they be responsible for the ongoing monitoring of the use of proceeds in respect of any issue of such Notes.
None of MHCUK, the Guarantor, the Dealers, the Paying Agents or any other person shall be responsible for assuring that the use of such proceeds will satisfy, in whole or in part, any present or future investor expectations or requirements as regards to any investment criteria or guidelines with which any investor or its investments are required to comply (in particular with regard to any direct or indirect environmental, sustainable or social impact of any projects or uses, the subject of or related to, the relevant projects in the Eligible Project Portfolio).
The net proceeds from each issue of Notes by MHFA may be applied for the general corporate purposes of MHFA which include making a profit, or such other reason as may be specified in the applicable Final Terms. If, in respect of any particular issue of Notes which are derivative securities, there is a particular identified use of proceeds, this will be stated in the applicable Final Terms.
The following is the form of Guarantee given by the Guarantor in respect of Notes issued by Mitsubishi HC Capital UK PLC under the Programme:
This Deed of Guarantee is made on 29 August 2025 by MITSUBISHI HC CAPITAL INC. (the "Guarantor") in favour of the Beneficiaries (as defined in the Deed of Covenant referred to below) and the holders of AMTNs (as defined below) (collectively, the "Beneficiaries").
Now this Deed witnesses as follows:
rank pari passu and without any preference among themselves and (with the exception of obligations in respect of national and local taxes and certain other statutory exceptions and subject as aforesaid) equally with all of its other unsecured obligations (other than subordinated obligations, if any) from time to time outstanding.
8. Negative Pledge: So long as any of the Notes remains outstanding (as defined in the Agency Agreement) or any sum remains payable under the Deed of Covenant or the Note (AMTN) Deed Poll the Guarantor will not create or permit to be outstanding any pledge, lien, mortgage or other charge upon the whole or any part of the property or assets, present or future, of the Guarantor to secure for the benefit of the holders of any Securities (i) payment of any sum due in respect of Securities or (ii) any payment under any guarantee of Securities or (iii) any payment under any indemnity or other like obligation relating to Securities, in any such case in which either such Securities are by their terms payable, or confer a right to receive payment, in any currency other than Yen, or such Securities are denominated in Yen and more than 50 per cent. of the aggregate principal amount thereof is initially distributed outside Japan by or with the authorisation of the Guarantor, without in any such case at the same time according to the Notes the same security as is granted to or is existing in respect of such Securities or such other security or guarantee as shall be approved by an Extraordinary Resolution (as defined, in respect of the Notes other than AMTNs, in the Agency Agreement or, in respect of AMTNs, in the Note (AMTN) Deed Poll) of the holders of the Notes.
For the purposes of this Clause 8, "Securities" means bonds, debentures, notes or other similar investment securities of the Guarantor, or any other person which are capable of being listed on any stock exchange.
Bank plc as Principal Paying Agent until all the obligations of the Guarantor have been discharged in full.
The Guarantor irrevocably waives any objection which it may have now or hereafter to the laying of the venue of any Proceedings in the courts of England, irrevocably agrees that a final judgment in any Proceedings brought in the courts of England shall be conclusive and binding upon the Guarantor and irrevocably waives any objection to the enforcement of that judgment in the courts of any other jurisdiction. Nothing contained in this Clause shall limit any right to take Proceedings against the Guarantor in any other court of competent jurisdiction, nor shall the taking of Proceedings in one or more jurisdictions preclude the taking of Proceedings in any other jurisdiction, whether concurrently or not.
The Guarantor has appointed the Issuer at its registered office for the time being in England (being at the date of execution hereof Novuna House, Thorpe Road, Staines-upon-Thames, Surrey TW18 3HP (attention: Legal Department)) as its agent for service of process in England in respect of any Proceedings and undertakes that in the event of it ceasing so to act it will appoint another person as its agent for that purpose.
The following is the form of Guarantee given by the Guarantor in respect of Notes issued by Mitsubishi HC Finance America LLC under the Programme:
This Deed of Guarantee is made on 29 August 2025 by MITSUBISHI HC CAPITAL INC. (the "Guarantor") in favour of the Beneficiaries (as defined in the Deed of Covenant referred to below).
the illegality, invalidity or unenforceability of or any defect in any provision of any Note or the Deed of Covenant or any of the Issuer's obligations under any of them).
For the purposes of this Clause 8, "Securities" means bonds, debentures, notes or other similar investment securities of the Guarantor, or any other person which are capable of being listed on any stock exchange.
9. Withholding or deduction: All payments under this Guarantee by the Guarantor shall be made free and clear of, and without withholding or deduction for, or on account of any present or future taxes, duties, assessments or governmental charges of whatever nature imposed, levied, collected, withheld or assessed by the United States, Japan or any political subdivision or any authority of either jurisdiction thereof or therein having power to tax, unless such withholding or deduction is required by law. In such event, the Guarantor will pay such additional amounts as shall be necessary in order that the net amounts received by a Beneficiary after such withholding or deduction shall equal the respective amounts of principal and interest which would otherwise have been receivable in respect of the Notes in the absence of such withholding or deduction, except that no such additional amounts shall be payable:
(including a dispute relating to any non-contractual obligations arising out of or in connection with this Guarantee) and that accordingly any suit, action or proceedings (together referred to as "Proceedings") arising out of or in connection with this Guarantee (including any Proceedings relating to any noncontractual obligations arising out of or in connection with this Guarantee) may be brought in the courts of England.
The Guarantor irrevocably waives any objection which it may have now or hereafter to the laying of the venue of any Proceedings in the courts of England, irrevocably agrees that a final judgment in any Proceedings brought in the courts of England shall be conclusive and binding upon the Guarantor and irrevocably waives any objection to the enforcement of that judgment in the courts of any other jurisdiction. Nothing contained in this Clause shall limit any right to take Proceedings against the Guarantor in any other court of competent jurisdiction, nor shall the taking of Proceedings in one or more jurisdictions preclude the taking of Proceedings in any other jurisdiction, whether concurrently or not.
The Guarantor has appointed Mitsubishi HC Capital UK PLC at its registered office for the time being in England (being at the date of execution hereof Novuna House, Thorpe Road, Staines-upon-Thames, Surrey TW18 3HP (attention: Legal Department)) as its agent for service of process in England in respect of any Proceedings and undertakes that in the event of it ceasing so to act it will appoint another person as its agent for that purpose.
The financial figures appearing herein have been prepared in accordance with accounting principles generally accepted in Japan, with the following exceptions:
MHC's interim consolidated financial statements have been prepared in accordance with the Article 4-1 of the Tokyo Stock Exchange's standard for preparation of quarterly financial statements and in accordance with accounting principles for interim financial statements generally accepted in Japan, omitting certain disclosures under the Article 4-2 of the Tokyo Stock Exchange's standard for preparation of quarterly financial statements. A part of the disclosures required under accounting principles generally accepted in Japan is omitted under the Article 4-2 of the Tokyo Stock Exchange's standard for preparation of quarterly financial statements.
MHC was formerly known as Mitsubishi UFJ Lease & Finance Company Limited until it was renamed "Mitsubishi HC Capital Inc." following a merger with Hitachi Capital Corporation on 1 April 2021, following which MHC was the surviving entity.
MHC is an equity method affiliate of both Mitsubishi Corporation and Mitsubishi UFJ Financial Group (which includes MUFG Bank, Ltd. ("MUFG Bank", formerly The Bank of Tokyo-Mitsubishi UFJ, Ltd.)) ("MUFG"), which own 18.40 per cent. and 20.04 per cent., respectively, of MHC's voting rights (both as of 31 March 2025, on a consolidated basis).
MHC's registered head office is 5-1 Marunouchi 1-chome, Chiyoda-ku, Tokyo 100-6525, Japan, telephone number +81 3-6865-3005 and its company registration number is 0100-01-049866.
MHC was established in 1971 as Diamond Lease Company Limited by the Mitsubishi group companies and was listed on the Tokyo Stock Exchange in March 1985. On 1 April 2007, Diamond Lease Company Limited and UFJ Central Leasing Co., Ltd. merged and changed its corporate name to Mitsubishi UFJ Lease & Finance Company Limited. Thereafter, in February 2009 Mitsubishi Auto Leasing Corporation merged with Central Auto Leasing and became Mitsubishi Auto Leasing Corporation, the main company in the auto leasing business within the Group. On 1 April 2023, Mitsubishi Auto Leasing Corporation and Mitsubishi HC Capital Auto-Lease Corporation completed the merger with Mitsubishi Auto Leasing Corporation as the surviving company. From 2013 onwards, MHC acquired companies abroad, such as JSA International Holdings, L.P. (an aircraft leasing company), PT. Takari Kokoh Sejahtera (an Indonesian auto leasing company), Engine Lease Finance Corporation (an aircraft engine leasing company), Beacon Intermodal Leasing, LLC (a marine container leasing company) and ENGS Holdings Inc. (a customer finance company) ("ENGS") with the aim of growing its businesses internationally. As of 1 April 2023, Mitsubishi HC Capital America, Inc. ("MHCA"), Mitsubishi HC Capital (U.S.A.) Inc. and ENGS Commercial Finance Co. merged through an absorption-type merger with MHCA as the surviving company.
Hitachi Capital Corporation was established in 1957, and primarily engaged in the provision of financial services such as leasing and loans to customers. In 2000, Hitachi Credit Corporation and Hitachi Leasing Corporation merged to form Hitachi Capital Corporation, which has built its position as a manufacturer-based financing company. In recent years, in addition to conventional financial services, Hitachi Capital Corporation, as a "Social Values Creating Company", had been providing value-added services and businesses in response to the needs of its customers and the society. Hitachi Capital Corporation developed community-focused financial services and businesses and had been actively expanding its business on a global level.
Based on the capital and business alliance concluded in May 2016, MHC and Hitachi Capital Corporation had been in collaboration, including incorporation of the Japan Infrastructure Initiative Company Limited ("JII") in order to reinforce its overseas infrastructure investment business. As of 1 April 2023, JII was merged through an absorption type merger with MHC. Also, MHC and Hitachi Capital Corporation had considered business integration as one of the options and constructively continued discussions to strengthen this relationship. Through that process, MHC and Hitachi Capital Corporation recognised that JII's business had steadily progressed, and that MHC and Hitachi Capital Corporation's businesses had little duplication and were in an ideal complementary relationship. Eventually, MHC and Hitachi Capital Corporation reached an agreement, determining that business integration through merger is the optimal means to promptly adapt to drastic environmental changes and further open up new areas of their advanced asset businesses based on a constructive discussion in the spirit of mutual respect and fairness.
On 24 September 2020, both companies entered into a merger agreement and a business integration agreement, pursuant to which MHC and Hitachi Capital Corporation agreed to an absorption-type merger to integrate their businesses with MHC being the surviving entity. All relevant conditions have been fulfilled and the Merger duly took effect on 1 April 2021. After that, in November 2021, MHC obtained all shares of CAI International, Inc. and it became a wholly-owned subsidiary of MHC and in January 2023, CAI International, Inc. merged with Beacon Intermodal Leasing, LLC, with CAI International, Inc. being the surviving entity.
As a manufacturer affiliated financial services company, Hitachi Capital Corporation had consistently pursued a policy of a distinct emphasis on the products it had financed over its history of more than 50 years. The products Hitachi Capital Corporation had financed had gradually expanded from the original range of household appliances to automobiles, information equipment, industrial machinery, medical devices, agricultural equipment and housing. Hitachi Capital Corporation's conception of products had expanded to include those things that contribute to healthy economic activity. In addition, Hitachi Capital Corporation had expanded into areas used in corporate finance, such as discounting of receivables. The one strength that had differentiated Hitachi Capital Corporation from competitors had been its ability to capitalise on its extensive experience and knowledge of such areas and products to provide seamless services that range from leases, loans and other financial services to function-oriented services. These services were based on a new perspective of a greater need for utility value in a product as a service. This fitted with the shift from industrial economy to a knowledgebased economy in Japan and included services such as asset management, securitisation, sale of lease matured assets, credit guarantees, receivables collection, trust services, and tax representation which save customers' time and resources.
The following is a summary of certain consolidated financial information of MHC as of 31 March 2024 and 31 March 2025 and for the years then ended.
| Year ended/as of 31 March (Consolidated) (audited) |
|||
|---|---|---|---|
| 2024 | 2025 | ||
| Millions of Yen | |||
| Total current assets | ¥6,040,826 | ¥6,018,651 |
Three months ended / as of 30 June
| 2024 | 2025 | |
|---|---|---|
| Millions of Yen | ||
| Total property and equipment | 4,236,715 | 4,771,529 |
| Total investments and other assets | 868,490 | 968,505 |
| Total assets | 11,149,858 | 11,762,332 |
| Total current liabilities | 3,545,972 | 3,558,970 |
| Total long-term liabilities | 5,898,539 | 6,398,838 |
| Total equity | 1,705,345 | 1,804,523 |
| Revenues | 1,950,583 | 2,090,808 |
| Operating income | 146,176 | 187,126 |
| Income before income taxes | 167,676 | 195,685 |
| Net income | 124,663 | 135,641 |
| Net income attributable to non-controlling interests | 820 | 475 |
| Net income attributable to owners of the parent | 123,842 | 135,165 |
The following is a summary of certain consolidated financial information of MHC as of 30 June 2025 and for the three months then ended:
| (Consolidated) (unaudited) 2025 |
||
|---|---|---|
| Millions of Yen | ||
| Total current assets | ¥6,009,593 | |
| Total property and equipment | 4,623,687 | |
| Total investments and other assets | 696,744 | |
| Total assets | 11,560,761 | |
| Total current liabilities | 3,544,093 | |
| Total non-current liabilities | 6,235,839 | |
| Total equity | 1,780,828 | |
| Revenues | 584,500 | |
| Operating income | 82,487 | |
| Income before income taxes | 79,799 | |
| Net income | 57,527 | |
| Net income attributable to non-controlling interests | 255 | |
| Net income attributable to owners of the parent | 57,271 |
181
The volume of new transactions for the year ended 31 March 2025 was ¥3,311.7 billion, an 8.5 per cent. increase compared to the year ended 31 March 2024.
Total revenues for the year ended 31 March 2025 increased by ¥140,224 million, or 7.2 per cent., to ¥2,090,808 million, compared to ¥1,950,583 million for the year ended 31 March 2024.
Gross profit for the year ended 31 March 2025 increased by ¥82,541 million, or 21.7 per cent., to ¥462,637 million, compared to ¥380,095 million for the year ended 31 March 2024.
Selling, general and administrative expenses for the year ended 31 March 2025 increased by ¥41,591 million, or 17.8 per cent., to ¥275,510 million, compared to ¥233,919 million for the year ended 31 March 2024.
Operating income for the year ended 31 March 2025 increased by ¥40,950 million, or 28.0 per cent., to ¥187,126 million, compared to ¥146,176 million for the year ended 31 March 2024.
Other income for the year ended 31 March 2025 decreased by ¥12,941 million, or 60.2 per cent., to ¥8,558 million, compared to ¥21,500 million for the year ended 31 March 2024.
Net income for the year ended 31 March 2025 increased by ¥10,978 million, or 8.8 per cent., to ¥135,641 million, compared to ¥124,663 million for the year ended 31 March 2024.
Net income attributable to owners of the parent for the year ended 31 March 2025 increased by ¥11,322 million, or 9.1 per cent., to ¥135,165 million, compared to ¥123,842 million for the year ended 31 March 2024.
Total current assets as of 31 March 2025 decreased by ¥22,174 million, or 0.4 per cent., to ¥6,018,651 million, compared to ¥6,040,826 million as of 31 March 2024. Cash and cash equivalents decreased by ¥44,501 million, or 13.3 per cent. to ¥290,805 million, compared to ¥335,307 million as of 31 March 2024.
Total property and equipment as of 31 March 2025 increased by ¥534,813 million, or 12.6 per cent., to ¥4,771,529 million, compared to ¥4,236,715 million, as of 31 March 2024.
Total investments and other assets as of 31 March 2025 increased by ¥100,014 million, or 11.5 per cent., to ¥968,505 million, compared to ¥868,490 million as of 31 March 2024.
Total assets as of 31 March 2025 increased by ¥612,474 million, or 5.5 per cent., to ¥11,762,332 million, compared to ¥11,149,858 million as of 31 March 2024.
Total current liabilities as of 31 March 2025 increased by ¥12,998 million, or 0.4 per cent., to ¥3,558,970 million, compared to ¥3,545,972 million as of 31 March 2024.
Total long-term liabilities as of 31 March 2025 increased by ¥500,298 million, or 8.5 per cent., to ¥6,398,838 million, compared to ¥5,898,539 million as of 31 March 2024.
Total equity as of 31 March 2025 increased by ¥99,177 million, or 5.8 per cent., to ¥1,804,523 million, compared to ¥1,705,345 million as of 31 March 2024.
Cash flows of MHC for the year ended 31 March 2025 compared to cash flows for the year ended 31 March 2024
Net cash used in operating activities for the year ended 31 March 2025 increased by ¥247,755 million or 504.3 per cent. to ¥296,884 million, compared to ¥49,128 million for the year ended 31 March 2024.
Net cash used in investing activities for the year ended 31 March 2025 was ¥96,977 million, compared to ¥143,336 million provided by investing activities for the year ended 31 March 2024.
Net cash provided by financing activities for the year ended 31 March 2025 was ¥353,628 million, compared to ¥222,977 million used in financing activities for the year ended 31 March 2024.
As a result of the above, cash and cash equivalents as of 31 March 2025 decreased by ¥44,501 million, or 13.3 per cent., to ¥290,805 million, compared to ¥335,307 million as of 31 March 2024.
The Group's policy concerning the procurement of funds to support business activities is to procure funds in a stable and cost-effective manner. For funding purposes, MHC selects and utilises, as needed, both direct financing, such as commercial paper and corporate bonds, and indirect financing, including bank loans. The Group seeks to use the most advantageous means and suitable terms, according to market conditions at the time. Substantially all of MHC's short-term bank loans are made under agreements as is customary in Japan, which provide that, at the request of such banks, MHC will provide additional collateral or guarantees with respect to the loan. As of 30 June 2025, MHC has not received any such request.
The Group's annual maturities of interest-bearing debt as of 31 March 2025 for the next five years were as follows:
| 31 March 2025 | Due in one year or less |
Due after one year through two years |
Due after two years through three years |
Due after three years through four years |
Due after four years through five years |
|---|---|---|---|---|---|
| Millions of Yen | |||||
| Short-term loans from banks and other | |||||
| financial institutions | ¥475,421 | ||||
| Commercial paper | 965,408 | ||||
| Bonds | 469,064 | ¥408,218 | ¥545,472 | ¥266,954 | ¥277,693 |
| Long-term loans from banks and other financial institutions |
846,999 | 876,205 | 848,426 | 617,694 | 473,664 |
|---|---|---|---|---|---|
| Nonrecourse loans | 1,595 | 1,642 | 1,690 | 1,740 | 1,792 |
| Lease obligations | 13,729 | 9,371 | 5,903 | 4,458 | 2,168 |
| Loans from the securitisations of the minimum future rentals on lease |
|||||
| contracts and other | 225,864 | 149,449 | 93,291 | 86,322 | 14,521 |
| Total | ¥2,998,081 | ¥1,444,886 | ¥1,494,784 | ¥977,170 | ¥769,840 |
On the Merger, the Group formulated its basic management policy, including the following mission and vision:
The Group formulated a Medium-term Management Plan covering the three-year period from the fiscal year ended 31 March 2024 (the "2025 MTMP"), which was announced in May 2023. The Group established its 10 year Vision, "Together we innovate, challenge and explore the frontiers of the future". To achieve this vision, the Group will proceed with the evolution and layering of business models by developing services and promoting business investment, utilising tangible and intangible assets, such as data and other elements, to their fullest potential. For the promotion of the above, the Group will aim for sustainable growth by solving environmental, social, and economic issues. At the same time, the Group will aim to enhance its medium- to long-term corporate value by achieving an optimal balance sheet based on well-balanced growth potential, return on capital, and financial soundness. The 2025 MTMP is positioned as the "hop" plan of its three Mediumterm Management Plans ("hop", "step", and "jump") toward its 10-year Vision. The Group will address the management plan with "sowing seeds" and "gaining a solid foothold" leading to a leap to the "step" and "jump" plans as keywords.
The Group conducts its business through the following seven segments: (i) Customer Solutions, (ii) Global Business, (iii) Environment & Energy, (iv) Aviation, (v) Logistics, (vi) Real Estate and (vii) Mobility. The details of the reportable segments are as described below:
| Reportable segment | Main service and business description | |
|---|---|---|
| Customer Solutions | Finance solutions for companies and government agencies, energy saving business, sales finance provided through collaboration with vendors, real estate leasing and financial services |
|
| Global Business | Finance solutions, sales finance provided through collaboration with vendors in Europe, the Americas, China and ASEAN region |
|
| Environment & Energy | Renewable energy power generation business, environment related finance solution business |
|
| Aviation | Aircraft leasing business, aircraft engine leasing business | |
| Logistics | Marine container leasing business, railway freight car leasing business | |
| Real Estate | Real estate securitisation finance, real estate revitalisation investment business and real estate asset management business |
|
| Mobility | Auto leasing business and supplementary services |
The following tables set forth the segment profit and segment assets for each of the MHC's reportable segments as of 31 March 2024 and 2025 and for the years then ended.
| Year ended 31 March 2024 |
Reportable segments | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Customer Solutions |
Global Business |
Environm ent & Energy |
Aviation | Logistics | Real Estate | Mobility | Adjustments(1) | Consolidated(2) | |||
| Millions of yen | |||||||||||
| Segment profit | ¥38,159 | ¥16,609 | ¥7,331 | ¥27,338 | ¥17,835 | ¥11,934 | ¥2,796 | ¥1,837 | ¥123,842 | ||
| Segment assets(3) |
2,966,569 | 3,070,801 | 416,600 | 2,020,037 | 1,099,079 | 525,414 | 51,952 | 999,401 | 11,149,858 |
| Reportable segments | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Year ended 31 March 2025 |
Customer Solutions |
Global Business |
Environm ent & Energy |
Aviation | Logistics | Real Estate Millions of yen |
Mobility | Adjustments(1) (4) |
Consolidated(2) | |
| Segment profit | ¥36,887 | ¥2,671 | ¥4,766 | ¥47,208 | ¥23,213 | ¥12,215 | ¥3,100 | ¥5,102 | ¥135,165 | |
| Segment assets(3) |
3,004,569 | 3,074,970 | 486,366 | 2,448,114 | 1,289,344 | 570,575 | 58,869 | 829,522 | 11,762,332 |
Notes:
(1) Adjustments of segment profit consist mostly of adjustments of company-wide expenses not allocated to any reportable segments and elimination of intersegment transaction. It also includes profit adjustments of ¥1,387 million and ¥403 million for the years ended 31 March 2024 and 2025, respectively, related to the merger with Hitachi Capital Corporation under the purchase method.
Adjustments of segment assets include goodwill recognised when Diamond Lease Company Limited and UFJ Central Leasing Company Limited merged and became Mitsubishi UFJ Lease & Finance Company Limited in 2007 and other segment assets not attributable to any reportable segments, such as investment securities related to corporate division and elimination of intersegment transactions, amounting to ¥29,016 million and ¥2,842 million as of 31 March 2024 and 2025, respectively, and the sum of such amount and the segment assets of all reportable segments amounted to ¥10,179,473 million and ¥10,935,652 million as of 31 March 2024 and 2025, respectively.
The remainder of the adjustments of segment assets of ¥970,385 million and ¥826,680 million as of 31 March 2024 and 2025, respectively, represents the difference between total segment assets including corporate division and total consolidated assets, which consists of assets other than segment assets such as cash and deposits and own-used assets.
The following table sets forth transaction volume of the MHC for each of the business segments for the years ended 31 March 2024 and 2025.
The Group has standardised collection procedures for its lease receivables and loans in compliance with applicable laws. In particular, the Group establishes internal standards for non-performing loans and loan loss reserving for such purposes.
Note:
(1) For the fiscal year ended 31 March 2024, "Adjustments" in transaction volume include the transfer of the auto leasing business from the Global Business segment to the Mobility segment.
An allowance for doubtful receivables is established from time to time as a reserve against potential losses on delinquent and uncollectible receivables. The allowance is stated in amounts considered to be appropriate based on past credit loss experience and an evaluation of potential losses in the receivables outstanding.
MHC established the Mitsubishi HC Capital Group Code of Ethics and Code of Conduct in order to share fundamental values and ethics to be embraced by all members of the Group and reflect them in business. MHC also established a system for ensuring that the officers and employees of the Group comply with laws and regulations and the Articles of Incorporation, by establishing and announcing internal rules and the Compliance Manual.
The Compliance Committee deals with establishment, maintenance and management of the Group's compliance system, with the Chief Compliance Officer (Head of Risk Management Division), who is responsible for the compliance of the Group, and the Legal & Compliance Department, which is tasked with enforcing compliance. Each member of the Group cooperates with MHC as necessary if there are any legal risks inherent to the business activities of such member, and develops an appropriate compliance system.
MHC formulates compliance programmes (specific plans to ensure that the executives and employees of the Group comply with laws and regulations, including education for the Group's executives and employees) and MHC monitors how the Group's executives and employees are working on those programmes. In addition, MHC established the Compliance Hotline System as an internal whistleblowing system under which the Group's executives and employees can report to or seek consultations with MHC regarding unfair practices and other conduct.
The Group takes a resolute stance against anti-social forces, which threaten the peace and stability of civil society, and works to prevent transactions with such forces. MHC is aware of the possibility that funds transacted through the Group may be used for various criminal activities and/or terrorism, and it works to prevent money laundering.
The Group comprehensively manages risks of primary businesses that could have a substantial impact on investors' decisions. The important risks managed include, but are not limited to, credit risks, asset risks, investment risks, market risks, liquidity risks, country risks and operational risks.
To manage envisaged risk factors, the departments overseeing specific risks monitor issues arising from developments in the external environment or other changes, regularly consider measures to address such risks, and then report and deliberate them at meetings of each committee including the Risk Management Committee. In addition, the Group operates a risk management system in which important matters are reported to and discussed by the Executive Committee and the Board of Directors.
When considering each deal, the Group carefully reviews the customer's credit standing using its own rating system and makes a thorough study in light of the value of the leased property, country risk, and other factors in an effort to ensure a reasonable return for the risk. Additionally, the Group continues monitoring the customers' credit standing on an ongoing basis after entering into transactions and has a system in place to take the necessary steps in the event that the customer's credit standing worsens. Moreover, its credit management with respect to the portfolio as a whole takes into account risk diversification to ensure that credit is not concentrated in certain customers, industries, countries and regions, while striving to ensure sound management by regularly measuring the credit risk of its portfolio and monitoring to ensure that it is within a certain range of capital.
When engaging in operating leases of global assets, the Group conducts a comprehensive review that includes a checklist for deals involving movable property and future asset liquidity prior to working on each deal to ensure a reasonable return for the credit risk and asset value fluctuation risk. Furthermore, the Group has established internal criteria to maintain a diversified portfolio, including asset types, geographic regions, and maturity dates. Moreover, the Group continues monitoring the customers' credit standing and industry trends on an ongoing basis after entering into transactions and has a system in place to take the necessary steps in the event that the customers' credit standing worsens, such as collecting a deposit from the customers to cover asset wear and tear as necessary. Additionally, the Risk Management Division conducts predictive management monitoring for each major asset category through time series observation of industry trends and indicators that could impact asset value fluctuations, while also maintaining ongoing risk communication with the business divisions. The Group also regularly measures customer credit risk and asset value fluctuation risk of its portfolio to monitor whether it is within a certain range of capital, in an effort to ensure sound management.
The Group makes a careful decision based on a comprehensive review of future asset value and liquidity prior to working on each deal to ensure a reasonable return for the asset value fluctuation risk. Furthermore, the Group continues monitoring the status of asset management, price trends, and industry trends on an ongoing basis after entering into transactions and has a system in place to maximise revenue. Additionally, the Risk Management Division conducts predictive management monitoring through time series observation of industry trends and signs that could impact asset value fluctuations, while also maintaining ongoing risk communication with the business divisions. The Group also regularly measures the asset value fluctuation risk of its portfolio to monitor whether it is within a certain range of capital, in an effort to ensure sound management.
The Group holds investment meetings according to the individual investment amounts and severity of risk to gather the opinions of the relevant departments and makes a careful decision based on a comprehensive review of future investment value and liquidity from a broad point of view when considering each investment, thereby to ensure a reasonable return for the risk. Additionally, the Group continues monitoring the status of investment management and industry trends on an ongoing basis after entering into transactions and has a system in place to maximise revenue. The Group also regularly measures the risk of fluctuations in the value of investments in its portfolio to monitor whether it is within a certain range of capital, in an effort to ensure sound management.
The Group constantly watches movements in the financial markets and, as needed, monitors through asset liability management ("ALM") any imbalances in the form of interest rates or currency exchange for asset management and for procurement of funds. It then manages interest rate fluctuation risk through appropriate hedge operations while taking interest rate movements into account. To address exchange rate fluctuation risk, in principle, the Group raises funds in the same currency as the operating asset in an effort to minimise loss on currency valuation of assets. The Group also regularly measures the quantitative risk of the position of portfolio holdings incurring a loss over a certain period of time at a certain probability and to what extent in the event that interest or currency exchange rates take a disadvantageous turn based on past statistics, and monitors whether it is within a certain scope of capital in an effort to ensure sound management. Meanwhile, the ALM Committee meets quarterly or as required to analyse scenarios and data in connection with geopolitical risk, pandemics, and various other risk factors and to determine ALM policy based on trends in the financial market environment, the risk situation, and other considerations.
With respect to the procurement of funds, the Group tries to ensure the liquidity of funds through efforts to diversify by procuring funds directly from the market including corporate bonds, commercial paper, and securitisation of lease receivables in addition to borrowing from financial institutions as well as through procurement with long- and short-term balance, careful management of cash flow, and measures to supplement liquidity during emergencies, such as through the acquisition of commitment lines.
Additionally, the Group conducts stage-by-stage management of liquidity, putting in place funding arrangements to ensure that the immediately necessary funds can be secured, including funds for repayment, even if the fundraising environment deteriorates, and reporting on the status of funding to the ALM Committee.
In addition to conducting interest rate sensitivity analysis (analysing the impact of interest rate fluctuations on revenue), the ALM Committee carries out comprehensive investigations of market risk and liquidity risk in the event of stress in the financial markets or other relevant areas, including the potential impact on profit and loss. It then determines a fund procurement strategy and risk response policies to implement a Group-wide strategy aligned with the market environment. Regarding risk management in particular, it coordinates with the Risk Management Committee, which is one arm of the Group-wide integrated risk management system. By strengthening the warning sign management system and coordinating with contingency planning, it makes efforts to improve the flexibility and resilience of financial structures in the event of a crisis situation emerging.
Additionally, to support the recent globalisation of its operations and enhance its foreign currency funding capacity, the Group has established a regional financial base in North America, where it holds a large asset balance, and has put in place a Group financing system that includes the consolidation of financing. The regional financial base offers not only indirect financing but also various forms of fund procurement, including issuance of commercial paper and corporate bonds, thus providing funds to Group companies expanding into North America.
The Group sets upper limits on transaction volumes based on each country's economic strength and creditworthiness. Additionally, the Group monitors whether the balances of credit transactions and investments involving country risk remain within the prescribed limits. In this way, the Group works to diversify its reliance on specific countries and regions to reduce the impact of losses in the event that country risk materialises.
The Group has established responsible departments depending on the envisioned risk to prepare for such circumstances and has a system in place to establish a crisis response headquarters to respond to a critical situation. The Group is also working to establish a system for business continuity by putting together a business continuity plan, implementing redundancy measures for backbone systems, establishing a system infrastructure that allows work from home, and implementing office shifts limited to operations that must continue.
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The Group has a system in place to properly manage and maintain these systems through internal cooperation and partnership with other companies to ensure their stable operation. The Group is equipped with an integrated response system for failures that includes swift action and sharing of information internally and externally where the failure occurs as well as establishment and implementation of measures to prevent subsequent recurrence. Additionally, Group-wide IT control is implemented for system development at the Group companies in Japan and other countries by using standardised methods as part of a proprietary process.
The Group has established a cross-organizational Security Incident Response Team (MHC-SIRT) to address these risks and has a system in place to prevent incidents at the entrance, internal, and exit stages and respond to them if they occur. Specifically, in preparation for cyberattacks that exploit vulnerabilities, the Group keeps software up to date to detect unauthorised access, malware, and other cyberattacks and maintains management preparedness to prevent problems. At the same time, the Group has established an internal and external coordination system and conducts drills to prepare for incidents. Moreover, targeted email training is provided for all employees, and internal education on information security is carried out on an ongoing basis.
The Group conducts its business activities in accordance with laws, regulations, and internal rules. To ensure legal compliance, the Group has established the necessary internal regulations and set up the Legal Office that includes qualified legal professionals. This department provides various forms of legal support, conducts education and training for officers and employees, and works to strengthen the legal risk management system on a consolidated basis.
The Group's corporate centres, business divisions, sales bases in Japan, and sites in each country continuously monitor revisions and changes to the various systems in and outside Japan, such as legal, accounting, and tax systems, applying to the relevant country and services. In addition, the Group gathers information on and implements measures to address changes and revisions as quickly as possible while reinforcing such monitoring by actively utilising outside experts.
The Group has established administrative rules for each transaction and conducts business according to these rules while reviewing them as needed. Additionally, an internal reporting system is in place for internal administrative incidents. Should such an incident occur, the system includes internal reporting, swiftly addressing the incident, identifying the cause, and establishing/implementing measures to prevent recurrence.
The Company has established the Legal & Compliance Department, which oversees the Group's compliance. Additionally, the Group has formulated and implemented a compliance program to ensure thorough adherence to laws and regulations. Specifically, to promote awareness and shared understanding of fundamental compliance-related values and ethics, the Group has established the Group Code of Ethics and Conduct as a set of guidelines for its officers and employees. Furthermore, the Group has prepared various policies and internal rules related to compliance to supplement the Code of Ethics and Conduct and conducts ongoing compliance education.
The Group also conducts regular compliance awareness surveys of officers and employees to verify the penetration of the Code of Conduct and the situation within the workplace environment.
In addition, the Group is working to strengthen its compliance system by preparing and operating an internal whistleblowing system that allows officers and employees to report and consult on misconduct (any violation of legislation, internal rules, or the Code of Ethics, including corruption, or any action that could potentially be a violation).
The Group emphasises integrity as one of the core elements of the Action Principles, which set forth the values and attitude each employee should have along with the actions they should take within the Basic Management Policy. This means maintaining high ethical standards and constantly returning to the basics. The Group ensures that all officers and employees conduct themselves accordingly.
The Group actively promotes recruitment by conducting not only hiring of new graduates but also mid-career hiring. To strengthen its recruitment structure, the Group has introduced various hiring practices, including referral recruitment through employee introductions and rehiring of former employees, to promote the recruitment of diverse personnel. Additionally, to encourage each employee to take initiative and continuously create value, the Group promotes employee development under themes such as "career", "organisational level", "digital transformation ("DX")", and "self-development". The Group supports employee growth through various opportunities, including training programs, assistance with obtaining qualifications, and the introduction of the Career Challenge Program (an internal and external open application system for various positions) that contributes to employees' career development, thereby fostering employee development.
The Group promotes operational improvements through the use of DX and introduces systems that enable diverse workstyles, such as flexitime without core hours, remote work, and satellite offices. In this way, the Group works not only to reduce long working hours but also to create a work environment that supports employees with childcare or nursing care responsibilities. Additionally, to address harassment and other personnel issues, the Group has introduced measures for employees in Japan and overseas, including internal whistleblowing systems and advice services. To enable employees to develop their abilities to the fullest, the Group is addressing workplace enhancement as a major focus of initiatives.
In addition to review by the relevant departments according to the individual investment amounts and severity of risks, the Group brings in outside experts for a comprehensive review of the fitness of the investment structure and the future investment effect from a broad point of view when considering each M&A or partnership deal. Even after an M&A deal is executed, the Group's rules are applied to establish a system for proper operational management, and monitoring is carried out on the business plan, results management, and other aspects so that the necessary actions can be taken in a timely manner.
When entering new business areas, the Group identifies potential risks based on a preliminary risk assessment and considers appropriate countermeasures prior to proceeding. In evaluating risks, the Group conducts multifaceted analysis of information and data while also working to enhance evaluation methods by leveraging experience and knowledge gained through existing businesses. Additionally, the Group continuously monitors the progress of its expanded business domains and the latest risk conditions and has a system in place in which relevant departments coordinate as necessary to implement prompt countermeasures.
The Group is advancing various initiatives to maintain and strengthen its competitiveness, including the provision of higher value-added services to customers, enhanced value creation as an asset holder, low-cost funding, and the accelerated promotion of its digital strategy. Through these initiatives, the Group aims to mitigate risks associated with intensifying competition and achieve sustainable growth.
The Group recognises promoting decarbonised society as a priority task in achieving sustainable growth that forms a part of its materiality (important issues). Accordingly, the Group has expressed its support for the recommendations of the Task Force on Climate-related Financial Disclosures ("TCFD") and is actively working to enhance identifying and assessing climate-related risk and the related information disclosure in line with the TCFD framework. Additionally, the Group recognises climate change as a significant risk in the Group-wide risk management and is taking relevant initiatives in understanding and management of climate change risks.
The Group established the Human Rights Policy in September 2022, declaring that "[we] recognise that conducting business with the utmost respect of human rights is a major challenge, and we will fulfil our responsibilities in this matter across all our business activities". As part of the internal project to address human rights violation risk launched in October 2022, the Group began implementing human rights due diligence in November 2023 and established an external human rights reporting hotline in January 2025 to receive inquiries related to human rights. The Group will continue promoting initiatives to eliminate human rights violations.
The Group is a party to routine litigation incidental to its business which does not have a material adverse effect on its financial condition or results of operations.
Prior to December 2020, MHCUK provided finance to customers of timeshare providers to purchase timeshare in holiday accommodation. MHCUK has received claims in respect of the mis-selling/misrepresenting of timeshare as an investment by timeshare providers. Although timeshare providers are primarily liable for misselling/misrepresenting timeshare as an investment, many are no longer trading and the customers have brought claims against MHCUK who is, as a matter of law, jointly and severally liable with the timeshare providers. Timeshare finance was disclosed as a contingent liability in MHCUK's March 2022 Annual Report and a provision of £16.2 million was made in respect of such claims at 31 March 2023 in MHCUK's March 2023 Annual Report.
The Group's core lease and finance operations are subject to various regulations and oversight by relevant authorities, including the Financial Services Agency of Japan (the "FSA"). Among other laws and regulations, the principal laws that generally apply to the Group's core lease and finance operations in Japan are as follows:
Other industry rules and regulations deal with the certain aspects of the lease and finance operations, stipulate certain contractual arrangements and procedures, control advertisement and publicity, and regulate modes of debt collection. As a money lending business operator, the Group is also subject to the Act on Issuance, etc. of Bonds for Financial Corporations' Loan Business (Act No. 32 of 1999, as amended) in relation to bond issuances to raise funds for the money lending business operation. In addition, the tightening of regulations prohibiting transactions with so-called "anti-social forces" (criminal elements of society) may have further effects on the Group's business operations.
The Group is also subject to the Personal Information Protection Act and the FSA's guidelines related thereto. Under this legislation, companies that utilise databases containing a significant amount of personal information must generally notify persons whose personal information will be entered into such databases of the specific uses of such information and must not handle such personal information beyond the extent necessary to achieve such specified uses or provide such personal information to third parties without obtaining consent from such persons. Given the nature of the Group's operations, data protection is of particular concern to the Group.
The Group is subject to rules and regulations in each of the overseas jurisdictions in which it operates. In addition to lease and finance regulations (for example, licensing requirements), of particular concern to the Group are regulations which restrict the way in which foreign lease and finance providers may operate in any given jurisdiction.
The history of the Japanese leasing industry dates from 1963 when the first three leasing companies were established by groups of commercial banks and general trading and manufacturing companies. After an initial period during which these companies successfully established themselves, the growth of the industry has rapidly attracted a large number of new participants to the industry, many of which are supported by major commercial banks (whose own direct participation in leasing or other activities akin to banking is restricted by banking regulations) and the general trading and manufacturing companies (attracted by the service characteristics of the industry in relation to their own equipment sales).
In 1971, a group of the largest Japanese leasing companies established the Japan Leasing Association (the "JLA"), which had 79 regular members and 151 associated members as of 1 August 2025. Members of the JLA now account for almost all leasing business in Japan.
The primary leasing arrangement for leasing companies in Japan is the "direct financing lease" on a full payout basis by which the total lease payments received cover the total cost of the leased equipment, including the interest and maintenance costs. In addition, "operating lease" is used in such areas as industrial machinery, computers and measuring equipment. The categories of equipment made available by Japanese leasing companies cover most areas of commercial and industrial activities.
Under the Companies Act, joint stock corporations in Japan may adopt a corporate governance structure comprised of a board of directors and an Audit and Supervisory Committee, commonly referred to as the audit and supervisory committee system, in lieu of the traditional structure comprised of a board of directors and a board of corporate auditors or the alternative structure comprised of a board of directors and three statutory committees. The members of the Audit and Supervisory Committee consist of three or more directors. MHC adopted the audit and supervisory committee system since the Merger in April 2021, order to enhance the fairness and transparency of management, strengthen the supervisory functions of the Board of Directors, and enhance corporate governance.
Pursuant to the audit and supervisory committee system, the Board of Directors is comprised of Directors who are Audit and Supervisory Committee Members and Directors who are not. The articles of incorporation of MHC provide for a Board of Directors consisting of twenty-two Directors at most, including seven Directors of the Audit and Supervisory Committee at most. All Directors are elected by MHC's shareholders at a general meeting of shareholders, with Directors who are Audit and Supervisory Committee Members elected separately from other Directors. The term of office for Directors who are not Audit and Supervisory Committee Members expires at the close of the ordinary general meeting of shareholders held with respect to the last fiscal year ended within one year after their election, and the term of office for Directors who are Audit and Supervisory Committee Members expires at the close of the ordinary general meeting of shareholders held with respect to the last fiscal year ended within two years after their election. All Directors may serve any number of consecutive terms.
The Board of Directors has the ultimate responsibility for the administration of MHC's affairs. The Board of Directors, however, may delegate by resolution some or all of its decision-making authority in respect of the execution of operational matters (excluding certain matters specified in the Companies Act) to individual Directors. The Board of Directors elects one or more Representative Directors from among its members who are not Audit and Supervisory Committee Members. Each of the Representative Directors has the authority to represent MHC in the conduct of MHC's affairs.
The Directors who are Audit and Supervisory Committee Members are not required to be certified public accountants. They may not serve concurrently as executive directors, managers or any other type of employee for MHC or for any of MHC's subsidiaries, or as accounting advisors or corporate executive officers for any of MHC's subsidiaries. In addition, more than half of the Directors who are Audit and Supervisory Committee Members at any one time must be Outside Directors as defined under the Companies Act, who have not served as executive directors, corporate executive officers, managers or any other type of employee for MHC or any of MHC's subsidiaries for ten years prior to their election and fulfil certain other requirements specified in the Companies Act.
The Audit and Supervisory Committee has a statutory duty to audit the administration of MHC's affairs by its Directors, to examine the financial statements and business reports to be submitted to the shareholders by a Representative Director, to prepare an audit report each year, to determine details of proposals concerning the appointment and dismissal of independent auditor and the refusal to reappoint independent auditor for submission to general meetings of shareholders and to determine the opinion on election, removal, resignation of or remuneration for Directors who are not Audit and Supervisory Committee Members, which may be expressed at a general meeting of shareholders. An Audit and Supervisory Committee Member may note his or her opinion in the audit report issued by the Audit and Supervisory Committee if such an opinion differs from that expressed in the audit report.
MHC is required to appoint and have appointed an independent auditor, who has the statutory duties of auditing the financial statements to be submitted to the shareholders by a Representative Director and preparing its audit report thereon. Deloitte Touche Tohmatsu LLC currently acts as MHC's independent auditor.
As a company with an Audit and Supervisory Committee, MHC delegates business execution decisions to the Executive Committee (a body which will deliberate and decide on important management matters) within an appropriate scope, and expedites the decision-making process, in order to further strengthen the supervisory functions of the Board of Directors.
In addition, MHC has adopted an executive officer system, in order to further enhance and invigorate the functions of the Board of Directors by clarifying the responsibilities related to the execution of business. The Executive Committee holds deliberations and makes decisions on important matters, including the business management of the Group, in addition to conducting preliminary deliberations of matters that are to be submitted to the Board of Directors to facilitate decision-making by the Board of Directors.
MHC established the Governance Committee, which consists of Outside Directors, Representative Directors, which exchanges a wide range of opinions on the improvement of the Board of Directors' effectiveness and other matters regarding the Board of Directors, in order to work on the improvement of the soundness, transparency, and fairness of MHC's management. Based on the understanding that appropriate involvement of Independent Outside Directors is important for resolutions related to nomination and remuneration, MHC has established the Nomination Committee and Compensation Committee, of which Independent Outside Directors comprise the majority of each committee. In addition, from the perspective of enhancing the independence and objectivity of the functions of the Board of Directors and its accountability, since 1 April 2025, MHC has assigned Independent Outside Directors as the chairpersons of the committees. The Nomination Committee discusses the appointment of Directors, the succession plan for the President and CEO, the knowledge, experience and skills that the Board of Directors should have, and other matters. Meanwhile, the Compensation Committee regularly monitors MHC Directors' remuneration in comparison with the market standard by using an external specialised agency, and discusses policies concerning the systems, standards for officers' remuneration. The members and the chairperson of each committee shall be selected by the Board of Directors, and items discussed in the committees shall be resolved by a majority of committee members in attendance. It is stipulated in internal rules that the Board of Directors shall make decisions in deference to decisions made by the committees to the fullest extent possible.
The Directors and Audit and Supervisory Committee Members as of the date of this Offering Circular are set out in the table below:
| Name | Title |
|---|---|
| Takahiro Yanai | Director, Chairman |
| Taiju Hisai*1 | Representative Director, President and CEO |
| Name | Title |
|---|---|
| Aiichiro Matsunaga*1 | Representative Director, Deputy President |
| Kazumi Anei*1 | Director, Deputy President |
| Haruhiko Sato*1 | Director, Managing Executive Officer |
| Yuri Sasaki23 | Director |
| Kayoko Kawamura23 | Director |
| Shota Kondo*3 | Director |
| Yoshitaka Shiba | Director, Audit and Supervisory Committee Member |
| Hiroyasu Nakata23 | Director, Audit and Supervisory Committee Member |
| Hiroko Kaneko23 | Director, Audit and Supervisory Committee Member |
| Masayuki Saito23 | Director, Audit and Supervisory Committee Member |
Notes:
None of the Directors have any conflict between their duty to MHC and any private interests and/or other duties except in accordance with the appropriate procedures under the Companies Act.
The names of the Executive Officers of MHC as at the date of this Offering Circular are as follows:
| Name | Title | |
|---|---|---|
| Osamu Muramoto | Senior Managing Executive Officer | |
| Kazuhiko Takeuchi | Managing Executive Officer | |
| Shinji Tanaka | Managing Executive Officer | |
| Kazunori Hamazaki | Managing Executive Officer | |
| Yasuyuki Hirota | Managing Executive Officer | |
| Nozomu Naruse | Managing Executive Officer | |
| Hiroshi Ikebe | Managing Executive Officer | |
| Katsuya Kitahara | Managing Executive Officer | |
| Makoto Sawada | Managing Executive Officer | |
| Masahiko Tanimura | Managing Executive Officer | |
| Katsuji Okamoto | Managing Executive Officer | |
| Yasuhiro Sato | Managing Executive Officer | |
| Takuji Naruse | Managing Executive Officer | |
| Toru Fukuyama | Managing Executive Officer | |
| Takashi Yamaguchi | Managing Executive Officer | |
| Naoshi Ogikubo | Managing Executive Officer | |
| Name | Title |
|---|---|
| Yasuyuki Kusakari | Managing Executive Officer |
| Koji Goto | Managing Executive Officer |
| Isao Someya | Managing Executive Officer |
| Keigo Nakamura | Managing Executive Officer |
| Makoto Nishio | Managing Executive Officer |
| Toshiaki Maekawa | Managing Executive Officer |
The aggregate remuneration paid to the Directors (excluding Audit and Supervisory Committee Members and Outside Directors) by MHC in their capacity as such was ¥414 million for the year ended 31 March 2025. The aggregate remuneration paid to the Audit and Supervisory Committee Members (excluding Outside Directors) by MHC was ¥49 million for the year ended 31 March 2025. The aggregate remuneration paid to the Outside Directors by MHC was ¥88 million for the year ended 31 March 2025.
The articles of incorporation of MHC provide that MHC may enter into agreements limiting liability with any of its Directors (excluding Executive Directors) in order to limit the maximum amount of such damages to the amount provided by applicable laws and regulations.
As of 31 March 2025, MHC's principal subsidiaries and affiliates are as set out below:
| Name of subsidiary or affiliate | Issued share capital (millions of yen or otherwise indicated) |
Ownership or ownership ratio of voting rights |
Principal business(1) |
|---|---|---|---|
| Subsidiaries: | |||
| JAPAN MEDICAL LEASE CORPORATION | ¥100 | 100% | Customer Solutions |
| Mitsubishi HC Capital Estate Plus Inc. | ¥251 | 100% | Customer Solutions |
| Capital Insurance Corporation(3) |
¥6,200 | 79.36% | Customer Solutions |
| Mitsubishi HC Business Lease Corporation(3) |
¥10,000 | 100% | Customer Solutions |
| Mitsubishi HC Capital UK PLC(3)(5) |
£116,168 thousand |
100% | Global Business |
| Mitsubishi HC Capital America, Inc. (2)(3)(4) |
U.S.\$180,000 thousand |
100% (100%) |
Global Business |
| Mitsubishi HC Capital Canada, Inc.(3)(4) |
CA\$97,000 thousand |
100% (100%) |
Global Business |
| Mitsubishi HC Capital Canada Leasing, Inc.(4) |
CA\$10,126 thousand |
100% (100%) |
Global Business |
| Mitsubishi HC Capital (Shanghai) Co., Ltd.(3) |
U.S.\$55,000 thousand |
100% | Global Business |
| Mitsubishi HC Capital Leasing (Beijing) Co., Ltd.(3)(4) |
U.S.\$170,000 thousand |
100% (100%) |
Global Business |
| MHC Management (Shanghai) Co., Ltd.(3)(4) |
RMB306,570 thousand |
100% (100%) |
Global Business |
| Mitsubishi HC Capital Management (China) Limited(3) |
HK\$2,285,516 thousand |
100% | Global Business |
| Mitsubishi HC Capital (Hong Kong) Limited(3)(4) |
HK\$310,000 thousand |
100% (100%) |
Global Business |
| Mitsubishi HC Capital Asia Pacific Pte. Ltd.(3) |
S\$126,400 thousand |
100% | Global Business |
| Issued share capital | Ownership or | ||
|---|---|---|---|
| (millions of yen or | ownership ratio | ||
| Name of subsidiary or affiliate | otherwise indicated) | of voting rights | Principal business(1) |
| Mitsubishi HC Capital (Thailand) Co., Ltd.(3)(4) |
THB1,100,000 | 100% | Global Business |
| thousand | (51%) | ||
| PT. Mitsubishi HC Capital and Finance |
Rp400,000 | 100% | |
| Indonesia(3)(4) |
million | (15%) | Global Business |
| Mitsubishi HC Capital Energy Inc. | ¥150 | 100% | Environment & Energy |
| HSE Ltd. | ¥50 | 85.1% | Environment & Energy |
| JSA International Holdings, L.P. and its 16 | |||
| subsidiaries(3) |
U.S.\$742,183 thousand |
100% | Aviation |
| Engine Lease Finance Corporation(4) |
U.S.\$1 | 100% | |
| thousand | (100%) | Aviation | |
| U.S.\$0 | 100% | ||
| CAI International, Inc.(4) |
thousand | (100%) | Logistics |
| U.S.\$1 | 100% | ||
| PNW Railcars, Inc.(4) |
thousand | (100%) | Logistics |
| Mitsubishi HC Capital Realty Inc. | ¥500 | 100% | Real Estate |
| MHC America Holdings Corporation(3) |
U.S.\$0 | Group financing business | |
| thousand | 100% | ||
| 209 other companies | |||
| Affiliate companies accounted for by the equity | |||
| method: | |||
| Mitsubishi Electric Financial Solutions Corporation | ¥1,010 | 45% | Customer Solutions |
| Chubu Electric Power & MHC Germany | |||
| Transmission GmbH | Environment & Energy | ||
| EUR25 thousand EUR50,538 |
49% 20.09% |
||
| European Energy A/S(4) |
thousand | (20.09%) | Environment & Energy |
| Mitsubishi Auto Leasing Corporation | ¥960 | 50% | Mobility |
| 60 other companies | |||
| Other affiliated companies: | (Owned) | ||
| Mitsubishi Corporation(6) |
¥204,446 | 18.40% | General trading company |
| 20.04% | |||
| Mitsubishi UFJ Financial Group, Inc.(4)(6) |
¥2,141,513 | (5.52%) | Bank holding company |
Notes:
(1) The "Principal business" column of consolidated subsidiaries other than MHC America Holdings Corporation indicates the name of the reportable segment for the principal business operated by the consolidated subsidiaries. Since MHC America Holdings Corporation does not belong to any specific reportable segment, the business it operates is presented.
(2) On 31 March 2025, all shares of Mitsubishi HC Capital America Inc. have been transferred to MHC America Holdings Corporation through a contribution in kind, and Mitsubishi HC Capital America Inc. has become a subsidiary (MHC's sub-subsidiary) of MHC America Holdings Corporation.
(3) These companies are specific subsidiaries (as defined in the Cabinet Office Order on Disclosure of Corporate Affairs of Japan). In addition, three of the 16 subsidiaries of JSA International Holdings, L.P. are specific subsidiaries.
(4) The figures in parentheses in "Ownership or ownership ratio of voting rights" is the included number of indirect ownership or the ownership ratio of indirect ownership.
(5) For Mitsubishi HC Capital UK PLC, net sales (excluding inter-company sales between consolidated companies) exceeds 10% of consolidated net sales.
(6) It is a company that submits annual securities reports.
The following table sets out the consolidated capitalisation and indebtedness of MHC as of 30 June 2025.
| As of 30 June 2025 (Consolidated) (unaudited) |
|
|---|---|
| Millions of Yen | |
| Long-term debt1 : |
|
| Bonds, less current maturities | ¥1,782,681 |
| Long-term loans from banks and other financial institutions, less current maturities |
3,556,209 |
| Loans from the securitisations of the minimum future rentals on lease contracts, less current maturities |
350,405 |
| Total long-term debt | 5,689,296 |
| Equity: | |
| Common stock: | |
| Authorised – 4,800,000,000 shares, Issued – 1,466,912,244 shares | 33,196 |
| Capital surplus | 545,979 |
| Stock acquisition rights | 1,340 |
| Retained earnings | 882,780 |
| Treasury stock – at cost, 31,232,004 shares | (20,029) |
| Accumulated other comprehensive income: | |
| Net unrealized gain on available-for-sale securities | 8,103 |
| Deferred gain on derivatives under hedge accounting | 12,449 |
| Foreign currency translation adjustments | 292,078 |
| Defined retirement benefit plans | 11,489 |
| Total accumulated other comprehensive income | 324,121 |
| Noncontrolling interests | 13,440 |
| Total equity | 1,780,828 |
| Total capitalisation and indebtedness2 |
7,456,684 |
Notes:
2 Total capitalisation and indebtedness is a total of long-term debt and total equity but excludes noncontrolling interests.
1 Long-term debt consists of bonds, long-term loans from banks and other financial institutions, and loans from the securitisations of minimum future rentals on lease contracts excluding current maturities thereof.
MHCUK was incorporated on 21 April 1982 with an indefinite length of life, under the laws of England and Wales with registered number 1630491. The registered office of MHCUK is Novuna House, Thorpe Road, Staines-upon-Thames, Surrey TW18 3HP, telephone number +44 (0)1784 227300. MHCUK's share capital is 100 per cent owned by MHC. MHCUK has five business units operating in three main business areas (commercial finance, vehicle finance, and business finance). MHCUK, together with its subsidiaries, forms the 'MHCUK Group'. MHCUK is authorised by the FCA to provide consumer credit, consumer hire, credit brokerage, debt collection services, and insurance mediation.
MHCUK's vision is to be one of the most trusted financial services brands in the UK and Europe. As a subsidiary of MHC, MHCUK is part of one of the world's largest and most diversified financial groups. MHCUK works with consumers and small to medium enterprises ("SMEs") as well as corporate multinationals in the UK and mainland Europe. A focus on good outcomes for customers is central to MHCUK's business and is reflected in MHCUK's culture, management, controls, and communications.
The MHCUK Group operates through five business units servicing business to consumer and/or business to business markets.
(a) Novuna Consumer Finance
Novuna Consumer Finance is a UK provider of retail point of sale finance, working with over 3,000 online and high street retailers across a number of retail sectors. The business also has a significant presence in the personal loans sector, offering personal loans of between £1,000 and £35,000, which have a typical life of 2 to 5 years. Profit before tax for the year ended 31 March 2025 was £38.9 million.
Novuna Vehicle Solutions delivers vehicle leasing and fleet management services for small, large, and complex fleets. The business operates over 115,000 assets from cars, vans, and heavy goods vehicles to plant and machinery. Its expertise is offering end-to-end decarbonisation solutions to help businesses transition to new, lower carbon technologies. Profit before tax was £41.0 million in the year ended 31 March 2025.
(c) Novuna Business Finance
Novuna Business Finance provides asset finance to SMEs and larger corporations in the UK. The business has a number of routes to market including through brokers, distributors, and manufacturers, as well as directly. Its products include hire purchase, finance lease solutions, stocking, loans and block discounting. In the year ended 31 March 2025, Novuna Business Finance achieved a profit before tax of £22.9 million.
Novuna Business Cash Flow provides financial products and services to provide efficiencies via data driven, high technology solutions, and to support cash flow management to SME's and larger corporate clients across a wide range of sectors in the UK. The business provides innovative underwriting solutions and incorporates digital processes throughout the agreement journey to provide clients with fast on-boarding and flexible contracts. In the year ended 31 March 2025, Novuna Business Cash Flow achieved a profit before tax of £1.8 million.
(e) Mitsubishi HC Capital European Vendor Finance ("European Vendor Finance")
European Vendor Finance provides bespoke end-to-end finance solutions for specialist assets throughout the whole product lifecycle. Working with MHC in Japan, European Vendor Finance supports the sales and distribution channels for Mitsubishi and Hitachi group companies, as well as key Group and global accounts. The business transacts in 25 countries, through its UK operations and a subsidiary of MHCUK in Amsterdam, and has a direct presence in London, Dublin, Helsinki, and transactional capability in Belgium. In the year ended 31 March 2025, European Vendor Finance's profit before tax was £0.7 million in the UK and £0.4 million in Europe.
In 2022, the MHCUK Group incorporated MHC Mobility Europe B.V., which then acquired the MHC Mobility subsidiaries from MHCUK's parent company, MHC, on 1 August 2022. MHC Mobility offers fully integrated, innovative mobility solutions which include leasing, decarbonisation, and consulting to customers in the Netherlands, Belgium, Luxembourg, Germany, Austria, Poland, and Hungary. In the year ended 31 March 2025, the business recorded profit before tax of £15.8 million.
The split of revenue and profit by each business unit is provided in note 3 to the year to end March 2025 MHCUK Group Consolidated Financial Statements.
| Name | Title | Other principal activities |
|---|---|---|
| R. Gordon | Chief Executive Officer | Director of Mitsubishi HC Capital Europe B.V. Director of MHC Mobility Europe B.V. |
| A. Hughes | Chairman | None |
| S. Herbert | Non-Executive Director | Non-Executive Director of Essensys Plc |
| O. Muramoto | Non-Executive Director (corporate representative of shareholder) |
Senior Managing Executive Officer, In charge of Global Customer Business Unit and Head of Europe Division of Mitsubishi HC Capital Inc. |
| D. Corbitt | Chief Financial Officer | None |
As of the date of this Offering Circular, the Board of Directors of MHCUK comprises the following members:
The business address of the Directors is Mitsubishi HC Capital UK PLC, Novuna House, Thorpe Road, Stainesupon-Thames, Surrey TW18 3HP.
| Name | Title | Other principal activities |
|---|---|---|
| J. N. M. Sims | Chief Legal Officer and | None |
| Company Secretary |
The business address of Mr Sims is Mitsubishi HC Capital UK PLC, Novuna House, Thorpe Road, Stainesupon-Thames, Surrey TW18 3HP.
There are no potential conflicts of interest between the duties to MHCUK of the Directors or the persons listed above and their private interests and/or other duties.
The MHCUK Group mitigates the risk of unexpected increase in credit losses through a number of controls and practices, including the following:
MHCUK is aware of the FCA's on-going investigation into the operation of discretionary commission arrangements with agents who sold credit finance to consumers for the purchase of motor vehicles for personal use.
Historically, MHCUK's Novuna Consumer Finance and Novuna Business Finance business units wrote a relatively small amount (compared to the overall Consumer Finance and Business Finance portfolios) of motor finance business on which it did pay sales commissions - a business channel which the Consumer Finance business unit closed entirely in February 2020. However, MHCUK does not believe that the arrangements with brokers on this historic business, in general, have caused poor outcomes for customers and believes customers received transparent and competitive rates of finance. MHCUK will continue to monitor closely any developments in the FCA investigation: however, at this stage there remains significant uncertainty as to the extent of misconduct and customer loss, if any, and the nature and extent of any remediation, if required.
In the year ended 31 March 2025, a provision of £5.0 million was included in relation to historic discretionary commission arrangements in respect of credit provided to finance the purchase of motor vehicles.
MHFA was incorporated in the State of Delaware in May 2021 as a wholly-owned subsidiary of MHC America Holdings Corporation ("AHC"), a wholly owned subsidiary of MHC.
The business of MHFA is to act as a finance subsidiary aiming to enhance U.S. dollar funding capacity which supports the Group's overseas expansion, especially in the United States. In this capacity, MHFA from time to time issues medium-term notes, issues commercial paper and/or obtains bank loans, and intends to use the proceeds of such financing activities to make intercompany loans to group companies of MHC through AHC. MHFA's business office is located at 140 East 45th Street, 30B-2, New York NY 10017, USA.
The following table provides selected financial information extracted from MHFA's financial statements as of and for the years ended 31 December 2023 and 2024 prepared in accordance with accounting principles generally accepted in the United States of America.
| As of 31 December | ||
|---|---|---|
| 2023 | 2024 | |
| Thousands of U.S. dollars | ||
| Assets | ||
| Cash | \$49,735 | \$11,970 |
| Loans receivable – Parent | 8,085,747 | 8,869,247 |
| Accrued interest receivable – Parent | 20,226 | 21,244 |
| Other assets | 1,613 | 4,442 |
| Total assets | \$8,157,321 | \$8,906,903 |
| Liabilities and Member's Equity | ||
| Liabilities: | ||
| Debt | \$7,049,631 | \$7,776,947 |
| Accrued interest payable | 44,608 | 52,765 |
| Due to Parent and affiliate | 1,927 | 1,853 |
| Other liabilities | 3,279 | 2,341 |
| Total liabilities | 7,099,445 | 7,833,906 |
| Member's Equity: | ||
| Member's equity | 1,059,596 | 1,070,970 |
| Accumulated other comprehensive income (loss) | (1,720) | 2,027 |
| Total member's equity | 1,057,876 | 1,072,997 |
| Total liabilities and Member's equity | \$8,157,321 | \$8,906,903 |
| Year ended 31 December | ||
|---|---|---|
| 2023 | 2024 | |
| Thousands of U.S. dollars | ||
| Statement of Income and Comprehensive Income | ||
| Interest income | \$363,113 | \$438,537 |
| Interest expense | 294,595 | 357,807 |
| Net interest income | 68,518 | 80,730 |
| General and administrative expenses | 8,922 | 9,761 |
| Net income | 59,596 | 70,969 |
| Other comprehensive income (loss) – Unrealized gain (loss) on derivative | ||
| instruments accounted for as cash flow hedge | (2,078) | 3,747 |
| Comprehensive income | \$57,518 | \$74,716 |
The following are the names and titles of the managers of MHFA.
| Name | Title | |
|---|---|---|
| Osamu Tominaga | Chairman & Manager | |
| Satoshi Tashiro | President & Manager | |
| Takeshi Sakai | Manager |
There are no potential conflicts of interest between the duties to MHFA of the persons listed in this section and their private interests or other duties.
The following table sets out the capitalisation and indebtedness of MHFA as of 31 December 2024.
| Thousands of U.S. dollars As of 31 December 2024 |
||
|---|---|---|
| Debt | \$7,776,947 | |
| Member's equity: | ||
| Member's equity | 1,070,970 | |
| Accumulated other comprehensive income (loss) | 2,027 | |
| Total member's equity | 1,072,997 | |
| Total capitalisation and indebtedness*1 |
\$8,849,944 |
*1 Total capitalisation and indebtedness is defined as a total of debt and total member's equity for the purpose of Base Prospectus.
The discussion of taxation under the headings "Japan", "United Kingdom" and "United States" in this section is only an indication of certain tax implications under the laws of those jurisdictions as they may affect investors. It applies only to persons who are beneficial owners of Notes and may not apply to certain classes of person (such as dealers). MHC, MHCUK and MHFA make no representations as to the completeness of the information nor undertake any liability of whatsoever nature for the tax implications for investors.
Potential investors are strongly advised to consult their professional advisers on the tax implications of investing in Notes.
The following general description of certain aspects of Japanese taxation (limited to those regarding national taxes) is applicable to the Notes. It is not intended to constitute a complete analysis of all the tax consequences relating to the purchase, ownership and disposition of the Notes. Prospective purchasers should consult their own tax advisers as to the exact tax consequences of their particular situations.
Interest payments on the Notes issued by MHC to an individual resident of Japan or a Japanese corporation (except for (i) a Japanese financial institution, designated in Article 3-2-2, Paragraph (29) of the Cabinet Order which complies with the requirement for tax exemption under Article 6, Paragraph (11) of the Act on Special Taxation Measures, and (ii) a Japanese public corporation, a Japanese financial institution or a Japanese financial instruments business operator, etc. which has received such payments thorough a payment handling agent in Japan, as provided in Article 3-3, Paragraph (6) of the Act on Special Taxation Measures), in compliance with the requirement for tax exemption under that paragraph, or a specially-related person of the issuer, will be subject to withholding tax pursuant to the Income Tax Law (Act No. 33 of 1965, as amended, the "Income Tax Law") at a rate of 15.315 per cent. until 31 December 2037 and 15 per cent. thereafter on the amount of such interest.
It should be noted that (i) if the recipient of interest on the Notes issued by MHC is a Japanese corporation, the amount of such interest will be included in the recipient's income which is subject to Japanese corporate tax (including surtax, if applicable, hereinafter the same) under the Corporate Tax Act of Japan (Act No. 34 of 1965, as amended) and other applicable Japanese tax law (collectively, the "Corporate Tax Law"), provided that the amount of Japanese income tax (including surtax, if applicable, hereinafter the same) withheld under the Income Tax Law will generally be credited against the amount of Japanese corporate tax; and (ii) if the recipient of interest on the Notes issued by MHC is an individual non-resident of Japan or a non-Japanese corporation that is a specially-related person and has any kind of permanent establishment in Japan, the amount of such interest attributable to such permanent establishment will be included in the recipient's income which is subject to Japanese income tax or corporate tax, as appropriate, payable other than by way of withholding tax, with any necessary adjustment, if applicable, pursuant to the Income Tax Law or the Corporate Tax Law, as appropriate, in consideration of the amount of the Japanese income tax withheld under the Income Tax Law.
Under the Act on Special Taxation Measures, payment of interest on the Notes issued by MHC outside Japan to a beneficial owner that is an individual non-resident of Japan or a non-Japanese corporation, other than a specially-related person of the issuer, will not be subject to Japanese withholding tax, provided that the beneficial owner complies with procedures for establishing its eligibility for exemption from the imposition of Japanese income tax, including withholding tax, pursuant to the Act on Special Taxation Measures, as summarised below:
If the recipient of interest on the Notes issued by MHC is an individual non-resident of Japan or a non-Japanese corporation other than a specially-related person of the issuer, failure by such individual non-resident of Japan or non-Japanese corporation to comply with the above requirements will result in the withholding of Japanese income tax. The above exemption from the withholding of Japanese income tax also applies to any Japanese financial institution, designated in Article 3-2-2, paragraph (29) of the Cabinet Order pursuant to Article 6, paragraph (11) of the Act on Special Taxation Measures which receives the interest on the Notes issued by MHC otherwise than through the payment handling agent in Japan.
However, the interest on the Notes issued by MHC in respect of which the amount of the interest is to be calculated by reference to certain indexes (as prescribed under the Cabinet Order relating to Article 6, paragraph (4) of the Act on Special Taxation Measures) relating to MHC or a specially-related person of the issuer will be subject to withholding tax at 15.315 per cent. until 31 December 2037 and 15 per cent. thereafter even if paid to an individual non-resident of Japan or a non-Japanese corporation that is not a specially-related person of the issuer.
If the recipient of interest on the Notes issued by MHC is an individual non-resident of Japan or a non-Japanese corporation other than a specially-related person of the issuer which complies with the above requirements and if such individual non-resident of Japan or non-Japanese corporation has a permanent establishment in Japan and the receipt of interest is attributable to such permanent establishment, such interest will be subject to Japanese income tax or corporate tax, as appropriate, payable other than by way of withholding.
If the recipient of the issue discount is an individual non-resident of Japan or a non-Japanese corporation other than a specially-related person of the issuer having no permanent establishment within Japan or having a permanent establishment within Japan but the receipt of such issue discount is not attributable to such permanent establishment, no income tax or corporate tax is payable with respect to the issue discount. If the receipt of such issue discount is attributable to a permanent establishment in Japan of any such individual non-resident of Japan or non-Japanese corporation other than a specially-related person of the issuer, such issue discount will be subject to Japanese income tax or corporate tax, as appropriate, payable other than by way of withholding. If the recipient of the issue discount is an individual non-resident of Japan or a non-Japanese corporation that is a specially-related person of the issuer, income tax or corporate tax, as appropriate, other than by way of withholding, may be payable with respect to such issue discount. The foregoing description does not address the tax treatment of the original issue discount of the Notes issued by MHC that fall under "discounted bonds" as presented by the Act on Special Taxation Measures.
Except in circumstances where any interest on the Notes issued by MHCUK or MHFA is attributable to a business in Japan conducted by MHCUK or MHFA, as the case may be, through its permanent establishment in Japan as provided for in the Act on Special Taxation Measures, the payment of principal and interest in respect of the Notes issued by MHCUK or MHFA, as the case may be, to an individual non-resident of Japan or a non-Japanese corporation will not be subject to any Japanese income tax or corporation tax, unless the receipt of the relevant payment is the income of such individual non-resident or non-Japanese corporation from sources in Japan. If any interest on the Notes or any excess amount of the redemption price over the acquisition price of any Notes issued by MHCUK or MHFA is attributable to a business in Japan conducted by MHCUK or MHFA, as the case may be, as aforementioned, the consequences stated above relating to the Notes issued by MHC are also applicable to the Notes issued by MHCUK or MHFA, as the case may be.
The Notes (if issued by MHCUK or MHFA, only in circumstances where any interest on the Notes is attributable to a business in Japan conducted by MHCUK or MHFA, as the case may be, through its permanent establishment in Japan as provided for in the Act on Special Taxation Measures) may not, as part of the distribution by the Dealers under the applicable subscription agreement relating to the Notes (if issued by MHCUK or MHFA, as the case may be, only in circumstances where any interest on the Notes is attributable to a business in Japan conducted by MHCUK or MHFA, as the case may be, through its permanent establishment in Japan as provided for in the Act on Special Taxation Measures), at any time be directly or indirectly offered or sold to, or for the benefit of, any person other than a beneficial owner that is, (i) for Japanese tax purposes, neither (a) an individual resident of Japan or a Japanese corporation, nor (b) an individual nonresident of Japan or a non-Japanese corporation that in either case is a specially-related person of the issuer (excluding an underwriter designated in Article 6, Paragraph (12), item 1 of the Act on Special Taxation Measures which purchases unsubscribed portions of the Notes (if issued by MHCUK or MHFA, as the case may be, only in circumstances where any interest on the Notes is attributable to a business in Japan conducted by MHCUK or MHFA, as the case may be, through its permanent establishment in Japan as provided for in the Act on Special Taxation Measures) from the other underwriters), or (ii) a Japanese financial institution, designated in Article 3-2-2, Paragraph (29) of the Cabinet Order.
By subscribing for the Notes (if issued by MHCUK or MHFA, only in circumstances where any interest on the Notes is attributable to a business in Japan conducted by MHCUK or MHFA, as the case may be, through its permanent establishment in Japan as provided for in the Act on Special Taxation Measures), an investor will be deemed to have represented that it is a person who falls into the category of (i) or (ii) above.
The following applies only to persons who are the absolute beneficial owners of the Notes and is an overview of the Issuers' understanding of current United Kingdom law as applied in England and Wales and the practice of H.M. Revenue and Customs ("HMRC") in the United Kingdom (which may be subject to change, sometimes with retrospective effect), in each case as at the latest practicable date before the date of this Offering Circular and relating to the withholding of tax from interest on the Notes. Prospective Noteholders should be aware that the particular terms of issue of any series of Notes as specified in the applicable Final Terms may affect the tax treatment of that and other series of Notes. The following is a general guide for information purposes and should be treated with appropriate caution. The following is not intended as tax advice and it does not purport to describe all of the tax considerations that may be relevant to a prospective purchaser. Some aspects do not apply to certain classes of taxpayer. The following relates only to the position of persons who hold the Notes, Receipts or Coupons as absolute beneficial owners thereof. The following does not deal with any other United Kingdom taxation implications of acquiring, holding or disposing of Notes. The United Kingdom tax treatment of prospective Noteholders depends on their individual circumstances and may be subject to change in the future. Prospective Noteholders who may be subject to tax in a jurisdiction other than the United Kingdom or may be unsure as to their tax position should seek their own professional advice. In particular, Noteholders should be aware that they may be liable to taxation under the laws of other jurisdictions in relation to payments in respect of the Notes even if such payments may be made without withholding or deduction for or on account of taxation under the laws of the United Kingdom.
Payment of interest on Notes by MHCUK may be made without deduction of or withholding on account of United Kingdom income tax where such payments have a UK source provided that such Notes are and continue to be listed on a "recognised stock exchange" within the meaning of section 1005 of the Income Tax Act 2007 (the "ITA") or admitted to trading on a multilateral trading facility operated by a UK, Gibraltar or EEA regulated recognised stock exchange within the meaning of sections 987 and 1005 of the ITA. The London Stock Exchange is a recognised stock exchange for these purposes. Securities will be treated as listed on the London Stock Exchange if they are included in the Official List of the FCA (within the meaning of and in accordance with the provisions of Part 6 of the FSMA) and admitted to trading on the Main Market (excluding the High Growth Segment) of the London Stock Exchange. Provided, therefore, that the Notes remain so listed, interest on such Notes will be payable without withholding or deduction on account of United Kingdom income tax.
Interest on the Notes which has a UK source may also be paid without withholding or deduction on account of United Kingdom tax where the maturity of the Notes does not exceed 364 days and the Notes do not form part of a scheme or arrangement of borrowing intended to be capable of remaining outstanding for more than 364 days.
In other cases, an amount must generally be withheld from payments of interest on the Notes by MHCUK which have a UK source on account of United Kingdom income tax at the basic rate (currently 20 per cent.), subject to any direction to the contrary from HMRC in respect of such relief as may be available pursuant to the provisions of an applicable double taxation treaty or to the interest being paid in circumstances in which any other exemption may apply.
Notes may be issued at an issue price of less than 100 per cent. of their principal amount. Any discount element on any such Notes will not generally be subject to any United Kingdom withholding tax.
Where Notes are to be, or may fall to be, redeemed at a premium, as opposed to being issued at a discount, then any such element of premium may constitute a payment of interest and hence be subject to the United Kingdom withholding tax rules outlined above.
Where interest has been paid under deduction of United Kingdom income tax, Noteholders who are not resident in the United Kingdom may depending on their specific circumstances be able to recover all or part of the tax deducted if there is an appropriate provision in any applicable double taxation treaty.
The United Kingdom withholding tax treatment of payments by the Guarantor under the terms of the Guarantee in respect of interest on the Notes (or other amounts due under the Notes other than the repayment of amounts subscribed for the Notes) is uncertain. In particular, such payments by the Guarantor may not be eligible for the exemption from withholding on account of United Kingdom tax in respect of securities listed on a recognised stock exchange described above in relation to payments of interest by MHCUK. Accordingly, if the Guarantor makes any such payments and they have a United Kingdom source, these may be subject to United Kingdom withholding tax at the basic rate (currently 20 per cent.).
The references to "interest" in sections A and B mean "interest" as understood in United Kingdom tax law as applied in England and Wales. The statements in sections A and B do not take any account of any different definitions of "interest" or "principal" which may prevail under any other law or which may be created by the terms and conditions of the Notes or any related documentation (e.g., see Condition 5 of the Notes). Where a payment on a Note does not constitute (or is not treated as) interest for United Kingdom tax purposes, it would potentially be subject to United Kingdom withholding tax if, for example, it constitutes (or is treated as) an annual payment for United Kingdom tax purposes (which will be determined by, amongst other things, the terms and conditions specified by the Final Terms of the Note). In such a case, the payment may fall to be made under deduction of United Kingdom tax, subject to such relief as may be available following a direction from HMRC pursuant to the provisions of any applicable double taxation treaty, or to any other exemption which may apply.
The above description of the United Kingdom withholding tax position assumes that there will be no substitution of MHCUK or further issues of securities that will form a single series and does not consider the tax consequences of any such substitution or further issue (notwithstanding that such substitution or further issue may be permitted by the terms and conditions of the Notes).
The following is a general discussion of certain U.S. federal income tax consequences of the ownership and disposition of Notes issued by MHFA to Non-U.S. Holders (as defined below) that acquire Notes in their initial offering and hold them as capital assets within the meaning of the U.S. Internal Revenue Code of 1986, as amended (the "Code"). This discussion does not describe all of the tax consequences that may be relevant to a Non-U.S. Holder in light of its particular circumstances or to a Non-U.S. Holder subject to special tax rules (for example, if for U.S. federal income tax purposes the Non-U.S. Holder is a controlled foreign corporation or an expatriate of certain types).
This discussion is based on the Code, administrative pronouncements, judicial decisions and final, temporary and proposed Treasury Regulations as of the date of this Offering Circular, changes to any of which subsequent to the date hereof may affect the tax consequences described herein, possibly with retroactive effect. Investors in the Notes should consult their tax adviser regarding the application of the U.S. federal income tax laws any particular situation, as well as any tax consequences arising under the laws of any state, local, or non-U.S. taxing jurisdiction.
Investors in the Notes are a Non-U.S. Holder if they are, for U.S. federal income tax purposes, a beneficial owner of a Note and:
Investors in the Notes are not a Non-U.S. Holder if they are an individual present in the United States for 183 days or more in the taxable year of disposition, or they are one of certain former citizens or former residents of the United States or their income with respect to a Note is effectively connected with the conduct of a trade or business in the United States, in any of which cases investors should consult their tax adviser regarding the U.S. federal income tax consequences of owning or disposing of a Note.
If an entity or arrangement classified as a partnership for U.S. federal income tax purposes owns Notes, the U.S. federal income tax treatment of its partners will generally depend upon the partners' status and the partnership's activities. Any partnership acquiring the Notes and its partners should consult their tax advisers regarding the consequences of owning and disposing of the Notes.
This discussion does not address the U.S. federal income tax consequences of owning and disposing of all Notes that may be issued under the Program, including without limitation certain types of Index Linked Notes. In addition, this discussion does not address the U.S. federal income tax consequences of owning and disposing of Notes that are not indebtedness for U.S. federal income tax purposes and assumes that the relevant series of Notes will constitute indebtedness for U.S. federal income tax purposes. Accordingly, additional disclosure may be included in a supplement to the Base Prospectus.
Subject to the discussion below under "Backup Withholding and Information Reporting" and "FATCA", payments of principal and interest (including original issue discount, if any) on the Notes generally will not be subject to U.S. federal income or withholding tax, provided that, in the case of interest,
If one of the requirements described above is not satisfied, payments of interest on the Notes (including payments made by MHC in its capacity as a Guarantor) will be subject to withholding tax at a rate of 30 per cent, or a lower rate specified by an applicable treaty.
Subject to the discussion below under "Backup Withholding and Information Reporting", Non-U.S. Holders generally will not be subject to U.S. federal income or withholding tax on gain realized on a sale, redemption or other taxable disposition of Notes, although any amounts attributable to accrued interest will be treated as described above under "Payments on the Notes".
Information returns will be filed with the IRS in connection with payments of interest on the Notes. Unless the Non-U.S. Holder complies with certification procedures to establish that it is not a United States person, information returns may also be filed with the IRS in connection with the proceeds from a sale or other disposition of a Note. The Non-U.S. Holder may be subject to backup withholding on payments on the Notes or on the proceeds from a sale or other disposition of the Notes unless the Non-U.S. Holder complies with certification procedures to establish that it is not a United States person or otherwise establish an exemption. The certification procedures required to claim the exemption from withholding tax on interest described above will avoid backup withholding as well.
Amounts withheld under the backup withholding rules are not additional taxes and may be refunded or credited against the Non-U.S. Holder's U.S. federal income tax liability, provided the required information is timely furnished to the IRS.
Under rules commonly known as "FATCA" withholding of 30 per cent may be imposed on payments of interest on Notes issued by MHFA to "foreign financial institutions" (which is broadly defined for this purpose and in general includes investment vehicles) and certain other non-U.S. entities, including financial intermediaries, unless various U.S. information reporting and due diligence requirements (generally relating to ownership by U.S. persons of interests in or accounts with those entities) have been satisfied, or an exemption applies. This regime could also apply to the payment on Notes at maturity, as well as to proceeds of any sale or other disposition of a Note, although under proposed regulations (the preamble to which specifies that taxpayers are permitted to rely on them pending finalisation), no withholding will apply to payments of gross proceeds. If FATCA withholding is required, the Issuer and the Guarantor will not be required to pay any additional amounts with respect to any amounts so withheld. If FATCA withholding is imposed, a beneficial owner that is not a foreign financial institution generally will be entitled to a refund of any amounts withheld by filing a U.S. federal income tax return (which may entail significant administrative burden). Non-U.S. Holders should consult their tax adviser regarding the effects of FATCA on their investment in the Notes.
The following summary of certain taxation provisions under Taiwan law is based on current law and practice and assumes that the Notes will be issued, offered, sold or re-sold, directly or indirectly, to professional investors as defined under Paragraph 1 of Article 2-1 of the TPEx Rules only. It does not purport to be comprehensive and does not constitute legal or tax advice. Investors (particularly those subject to special tax rules, such as banks, dealers, insurance companies and tax-exempt entities) should consult with their own tax advisers regarding the tax consequences of an investment in the Notes.
As none of the Issuers are Taiwanese statutory tax withholders, there is no Taiwanese withholding tax on the interest or deemed interest to be paid by an Issuer on the Notes issued by such Issuer.
Payments of interest or deemed interest under the Notes to a Taiwanese individual holder are not subject to Taiwan income tax as such payments received by him/her are not considered to be Taiwan-sourced income. However, such holder must include the interest or deemed interest in calculating his/her basic income for the purpose of calculating his/her alternative minimum tax ("AMT"), unless the sum of the interest or deemed interest and other non-Taiwan-sourced income received by such holder and the person(s) who is(are) required to jointly file the tax return in a calendar year is below 1 million New Taiwan Dollar ("NT\$"). If the amount of the AMT exceeds the annual income tax calculated pursuant to the Taiwan Income Basic Tax Act (also known as the AMT Act), the excess becomes such holder's AMT payable.
Taiwanese corporate holders must include the interest or deemed interest receivable under the Notes as part of their taxable income and pay income tax at a flat rate of 20 per cent. (unless the total taxable income for a fiscal year is under NT\$ 500,000), as they are subject to income tax on their worldwide income on an accrual basis. The AMT is not applicable.
In general, the sale of corporate bonds or financial bonds in Taiwan is subject to 0.1 per cent. securities transaction tax ("STT") on the transaction price. However, Article 2-1 of the Taiwan Securities Transaction Tax Act prescribes that STT will cease to be levied on the sale of corporate bonds and financial bonds from 1 January 2010 to 31 December 2026. Therefore, the sale of any Notes in Taiwan will be exempt from STT if the sale is conducted on or before 31 December 2026. Starting from 1 January 2027, any sale of the Notes in Taiwan will be subject to STT at 0.1 per cent. of the transaction price, unless otherwise provided by the applicable tax laws that may be in force at that time.
Capital gains generated from the sale of bonds are exempt from income tax. Accordingly, Taiwanese individual and corporate holders are not subject to income tax on any capital gains generated from the sale of the Notes. In addition, Taiwanese individual holders are not subject to AMT on any capital gains generated from the sale of the Notes. However, Taiwanese corporate holders should include the capital gains in calculating their basic income for the purpose of calculating their AMT. If the amount of the AMT exceeds the annual income tax calculated pursuant to the AMT Act, the excess becomes the Taiwanese corporate holders' AMT payable. Capital losses, if any, incurred by such holders could be carried over 5 years to offset against capital gains of the same category of income for the purposes of calculating their AMT.
Non-Taiwanese corporate holders with a fixed place of business (e.g., a branch) or a business agent in Taiwan are not subject to income tax on any capital gains generated from the sale of the Notes. However, their fixed place of business or business agent should include any such capital gains in calculating their basic income for the purpose of calculating AMT.
As to non-Taiwanese corporate holders without a fixed place of business and a business agent in Taiwan, they are not subject to income tax or AMT on any capital gains generated from the sale of the Notes.
The following is a summary of certain Australian withholding tax matters, at the date of this Offering Circular, in relation to AMTNs issued by MHCUK and certain other matters. It is a general guide and should be treated with appropriate caution. This summary is not intended to be, nor should it be construed as, legal or tax advice to any particular holder of Notes. Prospective holders of Notes should consult their professional advisers on the tax implications of an investment in the Notes for their particular circumstances.
So long as MHCUK continues to be a non-resident of Australia and the Notes issued by it are not attributable to a permanent establishment of MHCUK in Australia, payments of principal and interest made under Notes issued by MHCUK should not be subject to Australian interest withholding tax imposed under Division 11A of Part III of the Income Tax Assessment Act 1936 of Australia) ("Australian Tax Act").
Other Australian tax matters
Under Australian laws as presently in effect:
The Programme Dealers have, in an amended and restated dealer agreement (the "Dealer Agreement") dated 29 August 2025, agreed with the Issuers and the Guarantor a basis upon which the Programme Dealers or any of them may from time to time agree to purchase Notes. Any such agreement will extend to those matters stated under "Form of the Notes" and "Terms and Conditions of the Notes" above. In the Dealer Agreement, each Issuer and, in the case of Notes issued by MHCUK and MHFA, the Guarantor has agreed to reimburse the Programme Dealers for certain of their expenses in connection with the establishment and any further update of the Programme and the issue of Notes under the Programme. Each Issuer may also agree to issue Notes to persons other than the Programme Dealers ("Issue Dealers") on, and subject to, the terms of the Dealer Agreement.
The Notes and the Guarantees have not been and will not be registered under the Securities Act and may not be offered, sold or delivered within the United States or its possessions or to, or for the account or benefit of, U.S. persons unless an exemption from the registration requirements of the Securities Act is available. Terms used in this paragraph have the meanings given to them by Regulation S under the Securities Act.
Bearer Notes are subject to U.S. tax law requirements and may not be offered, sold or delivered within the United States or its possessions or to a United States person, except in certain transactions permitted by U.S. Treasury Regulations. Terms used in this paragraph have the meanings given to them by the U.S. Internal Revenue Code of 1986 and the U.S. Treasury Regulations thereunder, including TEFRA C and TEFRA D. MHFA may not issue Notes in bearer form.
Each Programme Dealer has represented and agreed, and each further Programme Dealer or Issue Dealer appointed under the Programme will be required to represent and agree, that it will only offer, sell or deliver Notes in accordance with Regulation S under the Securities Act, and it will not offer, sell or deliver Notes (i) as part of their distribution at any time or (ii) otherwise until 40 days after the completion of the distribution, as determined and certified by the relevant Dealer or, in the case of an issue of Notes on a syndicated basis, the relevant lead manager of all Notes of the Tranche of which such Notes are a part, within the United States or to, or for the account or benefit of, U.S. persons. Each Programme Dealer has further agreed, and each further Programme Dealer or Issue Dealer appointed under the Programme will be required to agree, that, at or prior to confirmation of the sale of Notes, it will have sent to each distributor, dealer or person receiving a selling concession, fee or other remuneration that purchases Notes from it during the distribution compliance period a confirmation or other notice setting forth the restrictions on offers and sales of the Notes within the United States or to, or for the account or benefit of, U.S. persons. Terms used in this paragraph have the meanings given to them by Regulation S under the Securities Act.
Each Programme Dealer also has represented and agreed (and each further Programme Dealer or Issue Dealer appointed under the Programme will be required to represent and agree) that it, its affiliates or any persons acting on its or their behalf have not engaged and will not engage in any directed selling efforts with respect to any Note, and it, and they have complied and will comply with the offering restrictions requirement of Regulation S under the Securities Act.
Until 40 days after the commencement of the offering of any Series of Notes, an offer or sale of such Notes within the United States by any dealer (whether or not participating in the offering) may violate the registration requirements of the Securities Act if such offer or sale is made otherwise than in accordance with an available exemption from registration under the Securities Act.
Each issue of Index Linked Notes and Dual Currency Notes shall be subject to such additional U.S. selling restrictions as the relevant Issuer and the relevant Dealer shall agree as a term of the issue and purchase of such Notes. Each relevant Dealer has agreed that it shall offer, sell and deliver such Notes only in compliance with such additional U.S. selling restrictions.
Unless the Final Terms in respect of any Notes specifies the "Prohibition of Sales to EEA Retail Investors" as "Not Applicable", each Programme Dealer has represented and agreed, and each further Programme Dealer or Issue Dealer appointed under the Programme will be required to represent and agree, that it has not offered, sold or otherwise made available and will not offer, sell or otherwise make available any Notes which are the subject of the offering contemplated by this Offering Circular as completed by the Final Terms in relation thereto to any retail investor in the EEA. For the purposes of this provision:
If the Final Terms in respect of any Notes specifies "Prohibition of Sales to EEA Retail Investors" as "Not Applicable", each Programme Dealer has represented and agreed, and each further Programme Dealer or Issue Dealer appointed under the Programme will be required to represent and agree that it has not made and will not make an offer of Notes which are the subject of the offering contemplated by this Offering Circular as completed by the Final Terms in relation thereto to the public in any member state of the EEA except that it may make an offer of such Notes to the public in a member state of the EEA:
provided that no such offer of Notes referred to in (i) to (iii) above shall require the relevant Issuer, the Guarantor or any Programme Dealer or Issue Dealer to publish a prospectus pursuant to Article 3 of the Prospectus Regulation, or supplement a prospectus pursuant to Article 23 of the Prospectus Regulation.
For the purposes of this provision, the expression an "offer of Notes to the public" in relation to any Notes in the EEA means the communication in any form and by any means of sufficient information on the terms of the offer and the Notes to be offered so as to enable an investor to decide to purchase or subscribe for the Notes.
Unless the Final Terms in respect of any Notes specifies the "Prohibition of Sales to UK Retail Investors" as "Not Applicable", each Programme Dealer has represented and agreed, and each further Programme Dealer or Issue Dealer appointed under the Programme will be required to represent and agree, that it has not offered, sold or otherwise made available and will not offer, sell or otherwise make available any Notes which are the subject of the offering contemplated by this Offering Circular as completed by the Final Terms in relation thereto to any retail investor in the UK. For the purposes of this provision:
If the Final Terms in respect of any Notes specifies "Prohibition of Sales to UK Retail Investors" as "Not Applicable", each Programme Dealer has represented and agreed, and each further Programme Dealer or Issue Dealer appointed under the Programme will be required to represent and agree that it has not made and will not make an offer of Notes which are the subject of the offering contemplated by this Offering Circular as completed by the Final Terms in relation thereto to the public in the UK except that it may make an offer of such Notes to the public in the UK:
provided that no such offer of Notes referred to in (a) to (c) above shall require the relevant Issuer, the Guarantor or any Programme Dealer or Issue Dealer to publish a prospectus pursuant to section 85 of the FSMA or supplement a prospectus pursuant to Article 23 of the UK Prospectus Regulation.
For the purposes of this provision, the expression "an offer of Notes to the public" in relation to any Notes in the UK means the communication in any form and by any means of sufficient information on the terms of the offer and the Notes to be offered so as to enable an investor to decide to purchase or subscribe for the Notes and the expression "UK Prospectus Regulation" means the Prospectus Regulation as it forms part of domestic UK law.
Each Programme Dealer has represented and agreed, and each further Programme Dealer or Issue Dealer appointed under the Programme will be required to represent and agree, that:
The Notes have not been and will not be registered under the Financial Instruments and Exchange Act and the Notes (if issued by MHCUK or MHFA, only in circumstances where any interest on the Notes is attributable to a business in Japan conducted by MHCUK or MHFA, as the case may be, through its permanent establishment in Japan as provided for in the Act on Special Taxation Measures) are subject to the Act on Special Taxation Measures. Each Dealer has represented and agreed that (i) it has not, directly or indirectly, offered or sold and will not, directly or indirectly, offer or sell, any Notes in Japan or to, or for the benefit of, any resident in Japan for Japanese securities law purposes (including any corporation or other entity organised under the laws of Japan), or to others for reoffering or resale, directly or indirectly, in Japan or to, or for the benefit of, any resident of Japan, except pursuant to an exemption from the registration requirements of, and otherwise in compliance with, the Financial Instruments and Exchange Act and any other applicable laws, regulations and governmental guidelines of Japan, and (ii) it has not, directly or indirectly, offered or sold and will not, as part of its distribution under the dealer agreement or applicable subscription agreement relating to the Notes (if issued by MHCUK or MHFA, only in circumstances where any interest on the Notes is attributable to a business in Japan conducted by MHCUK or MHFA, as the case may be, through its permanent establishment in Japan as provided for in the Act on Special Taxation Measures), at any time, directly or indirectly, offer or sell any of the Notes (if issued by MHCUK or MHFA, only in circumstances where any interest on the Notes is attributable to a business in Japan conducted by MHCUK or MHFA, as the case may be, through its permanent establishment in Japan as provided for in the Act on Special Taxation Measures) to, or for the benefit of, any person other than a beneficial owner that is, (a) for Japanese tax purposes, neither (x) an individual resident of Japan or a Japanese corporation, nor (y) an individual non-resident of Japan or a non-Japanese corporation that in either case is a speciallyrelated person of the issuer (excluding an underwriter designated in Article 6, Paragraph (12), item 1 of the Act on Special Taxation Measures which purchases unsubscribed portions of the Notes (if issued by MHCUK or MHFA, only in circumstances where any interest on the Notes is attributable to a business in Japan conducted by MHCUK or MHFA, as the case may be, through its permanent establishment in Japan as provided for in the Act on Special Taxation Measures) from the other underwriters) or (b) a Japanese financial institution, designated in Article 3-2-2, Paragraph (29) of the Cabinet Order.
Each Programme Dealer has represented and agreed, and each further Programme Dealer or Issue Dealer appointed under the Programme will be required to represent and agree, that Notes will not be offered or sold directly or indirectly within the PRC. This Offering Circular or any information contained or incorporated by reference herein does not constitute an offer to sell or the solicitation of an offer to buy any securities in the PRC. This Offering Circular, any information contained herein or the Notes have not been, and will not be, submitted to, approved by, verified by or registered with any relevant governmental authorities in the PRC and thus may not be supplied to the public in the PRC or used in connection with any offer for the subscription or sale of the Notes in the PRC.
The Notes may only be invested by the PRC investors that are authorised to engage in the investment in the Notes of the type being offered or sold. Investors are responsible for obtaining all relevant governmental approvals, verifications, licences or registrations (if any) from all relevant PRC Government authorities, including, but not limited to, the State Administration of Foreign Exchange, the China Securities Regulatory Commission, the China Banking Regulatory Commission, and other relevant regulatory bodies, and complying with all relevant PRC regulations, including, but not limited to, any relevant foreign exchange regulations and/or overseas investment regulations.
Each Programme Dealer has represented and agreed, and each further Programme Dealer or Issue Dealer appointed under the Programme will be required to represent and agree, that (i) it has not offered or sold and will not offer or sell in Hong Kong, by means of any document, any Notes other than (a) to "professional investors" as defined in the Securities and Futures Ordinance (Cap. 571) of Hong Kong and any rules made under that Ordinance; or (b) in other circumstances which do not result in the document being a "prospectus" as defined in the Companies Ordinance (Cap. 32) of Hong Kong or which do not constitute an offer to the public within the meaning of that Ordinance; and (ii) it has not issued or had in its possession for the purposes of issue, and will not issue or have in its possession for the purposes of issue, whether in Hong Kong or elsewhere, any advertisement, invitation or document relating to the Notes, which is directed at, or the contents of which are likely to be accessed or read by, the public of Hong Kong (except if permitted to do so under the securities laws of Hong Kong) other than with respect to Notes which are or are intended to be disposed of only to persons outside Hong Kong or only to "professional investors" as defined in the Securities and Futures Ordinance and any rules made under that Ordinance.
Each Programme Dealer has acknowledged, and each further Programme Dealer or Issue Dealer appointed under the Programme will be required to acknowledge, that this Offering Circular has not been registered as a prospectus with the Monetary Authority of Singapore under the Securities and Futures Act 2001 of Singapore (the "SFA") and accordingly, each Programme Dealer has represented and agreed, and each further Programme Dealer or Issue Dealer appointed under the Programme will be required to represent and agree, that it has not offered or sold any Notes or caused any Notes to be made the subject of an invitation for subscription or purchase nor will it offer or sell Notes or cause any Notes to be made the subject of an invitation for subscription or purchase, nor has it circulated or distributed nor will it circulate or distribute this Offering Circular or any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of any Notes, whether directly or indirectly, to any person in Singapore other than (a) to an institutional investor (as defined in Section 4A of the SFA) pursuant to Section 274 of the SFA or (b) to an accredited investor (as defined in Section 4A of the SFA) pursuant to and in accordance with the conditions specified in Section 275 of the SFA and (where applicable) Regulation 3 of the Securities and Futures (Classes of Investors) Regulations 2018 of Singapore.
Any reference to the SFA is a reference to the Securities and Futures Act 2001 of Singapore and a reference to any term as defined in the SFA or any provision in the SFA is a reference to that term or provision as modified or amended from time to time including by such of its subsidiary legislation as may be applicable at the relevant time.
Subject to the paragraph below, the offering of the Notes has not been and will not be registered with the Financial Supervisory Commission of Taiwan pursuant to relevant securities laws and regulations and may not be offered or sold in Taiwan through a public offering or in circumstances which constitute an offer within the meaning of the Securities and Exchange Act of Taiwan that requires a registration or approval of the Financial Supervisory Commission of Taiwan. No person or entity in Taiwan has been authorised to offer or sell the Notes in Taiwan.
With respect to the Notes to be listed on the TPEx in Taiwan pursuant to the TPEx Rules, the above selling restriction is not applicable and following selling restriction shall apply instead: the Notes have not been, and shall not be, offered, sold or re-sold, directly or indirectly, to investors other than "professional investors" as defined under Paragraph 1 of Article 2-1 of the TPEx Rules. Purchasers of the Notes are not permitted to sell or otherwise dispose of the Notes except by transfer to a professional investor.
No prospectus or other disclosure document (as defined in the Corporations Act 2001 of Australia (the "Australian Corporations Act")) in relation to the Programme or any Notes has been or will be lodged with the Australian Securities and Investments Commission ("ASIC") or the Australian securities exchange operated by ASX Limited (ABN 98 008 624 691) ("ASX Limited"). Each Dealer has represented and agreed, and each further Dealer appointed under the Programme will be required to represent and agree, that it:
unless:
Each Programme Dealer has agreed, and each further Programme Dealer or Issue Dealer appointed under the Programme will be required to agree, that it will comply with all applicable securities laws and regulations in force in any jurisdiction in which it purchases, offers, sells or delivers Notes or possesses or distributes this Offering Circular and will obtain any consent, approval or permission required by it for the purchase, offer, sale or delivery by it of Notes under the laws and regulations in force in any jurisdiction to which it is subject or in which it makes such purchases, offers, sales or deliveries and none of the Issuers, the Guarantor nor any other Dealer shall have any responsibility therefor.
Without prejudice to the foregoing paragraph, none of the Issuers, the Guarantor or any Dealer represents that Notes may at any time lawfully be sold in compliance with any applicable registration or other requirements in any jurisdiction, or pursuant to any exemption available thereunder, or assumes any responsibility for facilitating such sale.
With regard to each Tranche of Exempt Notes or Notes which are the subject of a Pricing Supplement or Drawdown Prospectus, the relevant Dealer will be required to comply with such other additional restrictions as the relevant Issuer and the relevant Dealer shall agree and as shall be set out in the applicable Pricing Supplement or Drawdown Prospectus.
It is expected that each Tranche of Notes issued by MHC and MHCUK which is to be admitted to the Official List and to trading on the main market of the London Stock Exchange will be admitted separately as and when issued, subject only to the issue of a Temporary Global Note, a Permanent Global Note, or a Global Registered Note, as the case may be, initially representing the Notes of such Tranche. Application has been made to the FCA for Notes issued by MHC and MHCUK under the Programme to be admitted to the Official List and to the London Stock Exchange for such Notes to be admitted to trading on the main market of the London Stock Exchange. The listing of the Programme in respect of Notes is expected to be granted on or around 3 September 2025. MHFA will not issue listed Notes admitted to the Official List or to trading on the main market of the London Stock Exchange.
The update of the Programme and the giving of guarantee by MHC in respect of Notes issued by MHCUK and MHFA during the one-year period from 29 August 2025 were authorised on 22 September 2023 , by the Board of Directors of MHC, on 14 March 2025, by the Representative Director, President and CEO of MHC, and on 25 August 2025, by the Head of the Treasury & Accounting Division of MHC.
The update of the Programme and issue of Notes by MHCUK were authorised by resolutions of the Board of Directors of MHCUK dated 5 August 2025.
The update of the Programme and issue of Notes by MHFA were authorised by written consent of MHFA's board of managers dated 26 August 2025.
MHC's consolidated financial statements for the years ended 31 March 2023, 2024 and 2025 were prepared in accordance with the provisions set forth in the Financial Instruments and Exchange Act and its related accounting regulations and in Japanese GAAP.
MHCUK's consolidated financial statements for the years ended 31 March 2024 and 2025 were prepared under IFRS Accounting Standards as adopted by the United Kingdom.
MHFA's consolidated financial statements for the years ended 31 December 2023 and 2024 were prepared under generally accepted accounting principles in the United States.
For the period of 12 months following the date of this Offering Circular, copies of the following documents will, when published, be available (free of charge) at the website of the UK National Storage Mechanism (https://data.fca.org.uk/#/nsm/nationalstoragemechanism) or the websites of MHC (https://www.mitsubishi-hccapital.com/english/corporate/csr/csr_download.html) or MHCUK (https://www.mitsubishihccapital.co.uk/investors/our-financial-performance/):
(i) the constitutional documents of MHC, MHCUK and MHFA (together with an English translation thereof, in the case of MHC's articles of incorporation);
In addition, copies of each Final Terms relating to the Notes offered to the public in the UK (other than pursuant to one or more of the exemptions set out in Article 3(2) of the UK Prospectus Regulation) or admitted to trading on a regulated market in the UK will be published on the website of the Regulatory News Service operated by the London Stock Exchange at www.londonstockexchange.com/exchange/news/market-news/market-newshome.html. Such Final Terms will also be available for viewing on the UK National Storage Mechanism (https://data.fca.org.uk/#/nsm/nationalstoragemechanism).
The translation into English of MHC's articles of incorporation is a direct and accurate translation of the document. In the event of any discrepancy between the English language version and the original language version of MHC's articles of incorporation, the original language version shall prevail.
The Notes have been accepted for clearance through Euroclear and Clearstream, Luxembourg (which are the entities in charge of keeping the records). The Issuer may also apply to have Notes accepted for clearance through the Austraclear System. The appropriate common code and ISIN for each Tranche allocated by Euroclear and/or Clearstream, Luxembourg and/or the Austraclear System will be specified in the applicable Final Terms. As of the date of this Offering Circular, no arrangements have been made for Renminbi Notes to be cleared through the CMU.
The address of Euroclear is Euroclear Bank SA/NV, 1 Boulevard du Roi Albert II, B-1210 Brussels and the address of Clearstream, Luxembourg is Clearstream Banking S.A., 42 Avenue JF Kennedy, L-1855 Luxembourg.
The price and amount of Notes to be issued under the Programme will be determined by the relevant Issuer and each relevant Dealer at the time of issue in accordance with prevailing market conditions. In the case of different Tranches of a Series of Notes, the issue price may include accrued interest in respect of the period from the interest commencement date of the relevant Tranche (which may be the issue date of the first Tranche of the Series or, if interest payment dates have already passed, the most recent interest payment date in respect of the Series) to the issue date of the relevant Tranche.
The yield of each Tranche of Notes will be calculated on an annual or semi-annual basis using the relevant issue price at the relevant issue date. It is not an indication of future yield.
There has been no significant change in the financial position or financial performance of MHC and its subsidiaries taken as a whole since 30 June 2025, and no material adverse change in the prospects of MHC since 31 March 2025.
There has been no significant change in the financial position or financial performance of the MHCUK Group since 31 March 2025, and no material adverse change in the prospects of MHCUK since 31 March 2025.
There has been no significant change in the financial position or financial performance of MHFA since 31 December 2024, and no material adverse change in the prospects of MHFA since 31 December 2024.
There are no, nor have there been any, governmental, legal, arbitration, administrative or other proceedings (including any such proceedings which are pending or threatened of which MHC is aware) in the 12 months preceding the date of this Offering Circular which may have or have in the recent past had a significant effect on the financial position or profitability of MHC or MHC and its subsidiaries.
Save as disclosed in "Description Of Mitsubishi HC Capital Inc. - Litigation", there are no, nor have there been any, governmental, legal, arbitration, administrative or other proceedings (including any such proceedings which are pending or threatened of which MHCUK is aware) in the 12 months preceding the date of this Offering Circular which may have or have in the recent past had a significant effect on the financial position or profitability of MHCUK, the MHCUK Group.
There are no, nor have there been any, governmental, legal, arbitration, administrative or other proceedings (including any such proceedings which are pending or threatened of which MHFA is aware) in the 12 months preceding the date of this Offering Circular which may have or have in the recent past had a significant effect on the financial position or profitability of MHFA.
The auditor of MHC is Deloitte Touche Tohmatsu LLC (Registered Auditor and member of The Japanese Institute of Certified Public Accountants), who has audited MHC's consolidated annual financial statements, without qualification, as of 31 March 2023, 2024 and 2025 in accordance with auditing standards generally accepted in Japan.
Deloitte LLP (who is registered to carry out audit work by the Institute of Chartered Accountants in England and Wales) audited MHCUK's financial statements, without qualification, for the financial years ended 31 March 2024 and 2025 in accordance with applicable law and International Standards on Auditing (UK and Ireland).
Deloitte & Touche LLP has audited, and rendered unqualified audit opinions on, the financial statements of MHFA, in accordance with generally accepted auditing standards in the United States of America, for the financial years ended 31 December 2023 and 2024.
Save as set out in the Final Terms, the Issuers do not intend to provide any post-issuance information in relation to any issues of Notes.
Certain of the Dealers and their affiliates have engaged, and may in the future engage, in investment banking and/or commercial banking transactions with and may perform services to MHC, MHCUK and MHFA and their affiliates in the ordinary course of business. Certain of the Dealers and their affiliates may have positions, deal or make markets in the Notes issued under the Programme, related derivatives and reference obligations, including (but not limited to) entering into hedging strategies on behalf of MHC, MHCUK and MHFA and their affiliates, investor clients, or as principal in order to manage their exposure, their general market risk, or other trading activities. Such Dealers and their affiliates have received, or may in the future receive, customary fees and commissions for these transactions.
In addition, in the ordinary course of their business activities, the Dealers and their affiliates may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (including bank loans) for their own account and for the accounts of their customers. Such investments and securities activities may involve securities and/or instruments of MHC, MHCUK and MHFA and their affiliates. Certain of the Dealers or their affiliates that have a lending relationship with MHC, MHCUK and MHFA routinely hedge their credit exposure to MHC, MHCUK and MHFA consistent with their customary risk management policies. Typically, such Dealers and their affiliates would hedge such exposure by entering into transactions which consist of either the purchase of credit default swaps or the creation of short positions in securities, including potentially the Notes issued under the Programme. Any such positions could adversely affect future trading prices of Notes issued under the Programme. The Dealers and their affiliates may also make investment recommendations and/or publish or express independent research views in respect of such securities or financial instruments and may hold, or recommend to clients that they acquire, long and/or short positions in such securities and instruments.
| Independent Auditor's Report | F-2 |
|---|---|
| Balance Sheet as of 31 December 2024 | F-4 |
| Statement of Income and Comprehensive Income for the year ended 31 December 2024 | F-5 |
| Statement of Changes in Member's Equity for the year ended 31 December 2024 | F-6 |
| Statement of Cash Flows for the year ended 31 December 2024 | F-7 |
| Notes to Financial Statements | F-8 |
| Independent Auditor's Report | F-13 |
|---|---|
| Balance Sheet as of 31 December 2023 | F-15 |
| Statement of Income and Comprehensive Income for the year ended 31 December 2023 | F-16 |
| Statement of Changes in Member's Equity for the year ended 31 December 2023 | F-17 |
| Statement of Cash Flows for the year ended 31 December 2023 | F-18 |
| Notes to Financial Statements | F-19 |
Deloitte & Touche LLP 30 Rockefeller Plaza New York, NY, 10112 USA
Tel: +1 212 492 4000 www.deloitte.com
To the Board of Managers of Mitsubishi HC Finance America LLC:
We have audited the financial statements of Mitsubishi HC Finance America LLC (the "Company"), which comprise the balance sheet as of December 31, 2024, and the related statements of income and comprehensive income, changes in member's equity, and cash flows for the year then ended, and the related notes to the financial statements (collectively referred to as the "financial statements").
In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024, and the results of its operations and its cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America.
We conducted our audit in accordance with auditing standards generally accepted in the United States of America (GAAS). Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the Company and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
As discussed in Note 1 to the financial statements, the Company has significant transactions with the affiliated companies. Accordingly, the accompanying financial statements may not be indicative of the conditions that would have existed or the results of operations that would have occurred if the Company had operated without such affiliations. Our opinion is not modified with respect to this matter.
Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company's ability to continue as a going concern for one year after the date that the financial statements are available to be issued.
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.
In performing an audit in accordance with GAAS, we:
We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit.
February 14, 2025
| \$ 11,970 |
|---|
| 8,869,247 |
| 21,244 |
| 4,442 |
| \$ 8,906,903 |
| \$ 7,776,947 52,765 1,853 2,341 |
| 7,833,906 |
| 1,070,970 2,027 |
| 1,072,997 |
| \$ 8,906,903 |
| INTEREST INCOME | \$ 438,537 |
|---|---|
| INTEREST EXPENSE | 357,807 |
| NET INTEREST INCOME | 80,730 |
| GENERAL AND ADMINISTRATIVE EXPENSES | 9,761 |
| NET INCOME | 70,969 |
| OTHER COMPREHENSIVE INCOME―Unrealized gains on derivative instruments accounted for as cash flow hedge |
3,747 |
| COMPREHENSIVE INCOME | \$ 74,716 |
| Units | Member's Equity |
Accumulated Other Comprehensive Income (Loss) |
Total Member's Equity |
|
|---|---|---|---|---|
| BALANCE—January 1, 2024 | 300 | \$ 1,059,596 |
\$ (1,720) | \$ 1,057,876 |
| Net income | 70,969 | 70,969 | ||
| Dividend paid | (59,595) | (59,595) | ||
| Other comprehensive income | 3,747 | 3,747 | ||
| BALANCE—December 31, 2024 | 300 | \$ 1,070,970 |
2,027\$ | \$ 1,072,997 |
| CASH FLOWS FROM OPERATING ACTIVITIES: | |
|---|---|
| Net income | \$ 70,969 |
| Adjustments to reconcile net income to net cash provided by operating activities: | |
| Changes in operating assets and liabilities: | |
| Accrued interest receivable―Parent | (1,018) |
| Other assets | 918 |
| Accrued interest payable | 8,157 |
| Due to Parent and affiliate | (74) |
| Other liabilities | (938) |
| Net cash provided by operating activities | 78,014 |
| CASH FLOWS FROM INVESTING ACTIVITIES: | |
| Loans extended to Parent | (1,472,000) |
| Collections of loans from Parent | 50,000 |
| Net cash used in investing activities | (1,422,000) |
| CASH FLOWS FROM FINANCING ACTIVITIES: | |
| Net increase in debt with original maturities of three months or less | 94,847 |
| Proceeds from debt | 1,594,968 |
| Repayments of debt | (324,000) |
| Dividend paid | (59,595) |
| Net cash provided by financing activities | 1,306,220 |
| EFFECT OF EXCHANGE RATE CHANGES ON CASH | 1 |
| NET DECREASE IN CASH | (37,765) |
| CASH―Beginning of year | 49,735 |
| CASH―End of year | \$ 11,970 |
| CASH PAID DURING THE YEAR FOR INTEREST | \$ 384,994 |
| NONCASH INVESTING AND FINANCING ACTIVITIES: | |
| Net settlements of Loans Receivable from and Debt to Parent | \$ 638,500 |
Organization—Mitsubishi HC Finance America LLC (the "Company") was formed in the state of Delaware on May 19, 2021, by MHC America Holdings Corporation (the "Parent"), sole member and a wholly owned subsidiary of Mitsubishi HC Capital Inc. ("MHC").
Nature of Operations—The Company's primary activities are to provide financing services to subsidiaries of MHC though the Parent. The Company's operations are funded through diversified sources, such as borrowings from financial institutions and funding within the international capital markets. The Company has service agreements with the Parent and MHC whereby they provide various operational and administrative services to the Company based on the service agreements.
The Company has extensive transactions with the Parent and MHC. Accordingly, the accompanying financial statements may not be indicative of the financial position or results of operations that would have occurred had the Company operated without such affiliation.
Basis of Presentation—The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States ("U.S. GAAP").
Estimates—The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the reported amounts of income and expenses during the reporting period, and disclosure of contingent assets and liabilities at the date of the financial statements. Such estimates include the allowance for credit losses, valuation of derivative instruments, and accrual of contingent loss among others. Actual results could differ from those estimates.
Loans Receivable—Loans receivable are reported at the principal amount outstanding less allowance for credit losses. The Company periodically evaluates the collectability of receivable and provides an allowance for credit losses to reflect management's best judgment of the net realizable value of the receivable. Allowance for credit losses is determined based upon an assessment of individual loans, actual and anticipated losses, and overall current economic conditions. The Company closely monitors the current payments and financial condition of the borrower, and evaluates the principal risks associated with loans receivable. Loans receivable are charged against allowance for credit losses when management believes that the receivables are not collectible.
Nonaccrual loans are those loans on which the accrual of interest ceases when principal or interest payments are past due 90 days or more, unless, in the opinion of management, based upon a review of the borrower's or guarantor's financial condition, collateral value or other factors, full repayments are expected. A loan may be placed on nonaccrual status prior to the 90-day period if, in management's opinion, conditions warrant nonaccrual status. Generally, accrued interest is reversed when a loan is
placed on nonaccrual status. Interest collections on impaired loans for which the ultimate collectability of principal is uncertain are applied as principal reductions.
At December 31, 2024, the Company had no impaired loans and recorded no allowance for credit losses.
Deferred Financing Costs—Direct financing costs, such as commissions and legal expenses, associated with debt facilities and financing transactions are deferred and amortized over the terms of related debt as an adjustment to interest expense.
Revenue Recognition—Interest income is recognized on an accrual basis in accordance with the terms of each loan agreement. Accrual of interest income is generally suspended (nonaccrual) when, in the opinion of management, full collection of all principal and interest due is doubtful (impaired). Any interest accrued is reversed and charged to earnings, and interest is thereafter included in earnings only to the extent actually received in cash. When there is doubt regarding the ultimate collectability of principal, all cash receipts are thereafter applied to reduce the balance of loans receivable. The accrual of interest income may be resumed when management believes that full collection of all principal and interest due is ensured. At December 31, 2024, there were no nonaccrual or impaired loans.
Income Taxes—The Company is a disregarded entity for income tax purposes. Income taxes on the Company's income are levied on the member at the member level. Accordingly, all profits and losses of the Company are recognized by the member on its respective tax returns. Federal and state tax authorities generally have the right to examine and audit previous tax returns within the statute of limitation. Any interest or penalties assessed to the Company are recorded in operating and administrative expenses. No interest or penalties from federal or state tax authorities were recorded in the accompanying financial statements.
Derivative Instruments and Hedging Activities—The Company enters into interest rate swaps to manage interest rate risk associated with variable-rate debt. Counterparties to these contracts are major financial institutions. The Company monitors the results of each hedging transaction and ensures that management's intent is satisfied. All derivative instruments, whether designated for hedging relationship or not, are recorded as derivative assets or liabilities on the balance sheet at fair value in accordance with Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 815, Derivatives and Hedging. The Company has determined that the interest rate swap and hedging activity qualify as cash flow hedge. For derivative instruments that are designated and qualify as cash flow hedges, the effective portion of changes in fair value of the derivative instruments is reported as a component of other comprehensive income or loss and reclassified into earnings when the hedged transaction affects earnings. Changes in fair value of derivative instruments that do not qualify as hedges are recognized immediately in earnings.
Other Comprehensive Income (Loss)—Other comprehensive income (loss) consists of all changes to member's equity other than those resulting from net income (loss) and member transactions. For the Company, other comprehensive income (loss) consists of the effect of cash flow hedges and unrealized gain (loss) on derivative instruments accounted for as cash flow hedges.
Loans receivable—Parent represents loans receivable from the Parent outstanding at December 31, 2024, with interest rates ranging from 1.54% to 6.30% per annum. The interest income related to the loans receivable from the Parent was \$434,340 thousand for the year ended December 31, 2024.
Maturities of the loans receivable from the Parent at December 31, 2024, are as follows (in thousands):
| 2025 | \$ 3,640,677 |
|---|---|
| 2026 | 605,000 |
| 2027 | 880,000 |
| 2028 | 1,140,750 |
| 2029 | 842,500 |
| 2030 and thereafter | 1,760,320 |
The Company's debt at December 31, 2024, consists of the following (in thousands):
| Financial institutions—interest rates ranging from 1.54% to 6.07% | \$ 3,979,443 |
|---|---|
| Affiliated company—interest rates ranging from 2.73% to 5.8% | 1,873,381 |
| Commercial paper—interest rates ranging from 4.74% to 4.77% | 154,412 |
| Medium-term notes—interest rates ranging from 2.34% to 5.81% | 1,769,711 |
| \$ 7,776,947 |
The accrued interest payable and interest expense related to the debt with the affiliated company were \$10,094 thousand at December 31, 2024, and \$79,266 thousand for the year ended December 31, 2024, respectively. The Company had an unused line of credit of \$120,000 thousand with an affiliated company at December 31, 2024.
The Company also had unused line of credit of \$80,000 thousand with financial institutions at December 31, 2024.
In August 2024, the Company participated in a medium-term note program established by MHC. Under the program, the Company can issue the term notes up to \$6,000,000 thousand.
All of the Company's debts are guaranteed by MHC at December 31, 2024.
Maturities of debt for the future years subsequent to December 31, 2024, are as follows (in thousands):
| Years Ending | |
|---|---|
| December 31 | |
| 2025 | \$ 1,290,000 |
| 2026 | 715,000 |
| 2027 | 1,262,500 |
| 2028 | 1,552,500 |
| 2029 | 1,388,750 |
| 2030 and thereafter | 1,581,250 |
| 7,790,000 | |
| Deferred financing costs | (13,053) |
| \$ 7,776,947 |
The Company enters into derivative instruments, interest rate swaps, to manage the interest rate risk associated with variable-rate debt. The Company does not use derivative instruments for trading purposes. The derivative instruments involve, to varying degrees, credit and market risks. Credit risk is the possibility that a loss may occur if a counterparty to the transaction fails to perform according to the terms of the contract. To minimize credit risk exposure, the Company evaluates the creditworthiness of its counterparties through credit approvals, limits, and monitoring procedures. Market risk is the adverse effect of a change in interest rates, currency rates, or implied volatility rates on the value of a financial instrument. Market risk is managed by establishing exposure limits and monitoring types and degrees of risk that may be undertaken. Management does not anticipate any significant losses as a result of these transactions.
At December 31, 2024, the Company had interest rate swaps designated as cash flow hedges. The Company entered into the interest rate swaps to hedge the exposure to changes in future cash flows from variable-rate debt. The notional amount of the interest rate swaps was \$725,000 thousand at December 31, 2024. The Company recorded the interest rate swaps at its fair value of \$4,275 thousand within other assets and \$2,248 thousand within other liabilities on the balance sheet at December 31, 2024. The cash flow hedges were determined to be highly effective, and as such, the net change in fair value of \$3,747 thousand was recorded in other comprehensive income for the year ended December 31, 2024.
The interest rate swaps are subject to enforceable master netting agreements or similar arrangements with counterparties. In general, the terms of the agreements provide that in the event of an early termination the counterparties have the right to offset amounts owed or owing under that and any other agreement with the same counterparty.
Agreements subject to master netting arrangements with various counterparties, and cash and noncash collateral posted under such agreements as of December 31, 2024 are as follows:
| Gross Amount Not Offset in the Balance Sheet |
||||||
|---|---|---|---|---|---|---|
| Gross Amounts of Recognized Assets/Liabilities Balance Sheet Balance Sheet |
Gross Amounts Offset in the |
Net Amounts Presented in the |
Financial Instruments |
Cash Collateral Received/ Pledged |
Net Amounts |
|
| Derivative assets Derivative liabilities |
4,275\$ (2,248) |
\$ - | 4,275\$ (2,248) |
\$ (799) 799 |
\$ - | \$ 3,476 (1,449) |
ASC 820, Fair Value Measurements, establishes a fair value hierarchy that prioritizes the inputs to the valuation techniques used to measure fair value giving preference to quoted prices in active markets (Level 1) and the lowest priority to unobservable inputs, such as a reporting entity's own data or information, or assumptions developed from this data (Level 3). Level 2 inputs include quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets that are not active; observable inputs other than quoted prices, such as interest rates and yield curves; and inputs that are derived principally from or corroborated by observable market data by correlation or other means.
Interest rate swap is measured at fair value on a recurring basis. The fair value of the interest rate swap is determined using the Level 2 inputs, such as market observable inputs or indices including forward rate interest rate curves. Credit risk related to the counterparty and the Company is considered when estimating the fair value. The fair value of interest rate swap is computed by discounting future cash flows, using market observable inputs or indices including forward rate interest rate curves.
The Company has evaluated subsequent events from the balance sheet date through February 14, 2025, the date at which the financial statements were available to be issued, and determined that there have been no subsequent events that require recognition or disclosure in the financial statements.
******
To the Board of Managers of Mitsubishi HC Finance America LLC:
We have audited the financial statements of Mitsubishi HC Finance America LLC (the "Company"), which comprise the balance sheet as of December 31, 2023, and the related statements of income and comprehensive income, changes in member's equity, and cash flows for the year then ended, and the related notes to the financial statements (collectively referred to as the "financial statements").
In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023, and the results of its operations and its cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America.
We conducted our audit in accordance with auditing standards generally accepted in the United States of America (GAAS). Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the Company and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
As discussed in Note 1 to the financial statements, the Company has significant transactions with the affiliated companies. Accordingly, the accompanying financial statements may not be indicative of the conditions that would have existed or the results of operations that would have occurred if the Company had operated without such affiliations. Our opinion is not modified with respect to this matter.
Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company's ability to continue as a going concern for one year after the date that the financial statements are available to be issued.
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.
In performing an audit in accordance with GAAS, we:
We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit.
February 15, 2024
| ASSETS | |
|---|---|
| CASH | \$ 49,735 |
| LOANS RECEIVABLE―Parent | 8,085,747 |
| ACCRUED INTEREST RECEIVABLE―Parent | 20,226 |
| OTHER ASSETS | 1,613 |
| TOTAL ASSETS | \$8,157,321 |
| LIABILITIES AND MEMBER'S EQUITY | |
| LIABILITIES: Debt Accrued interest payable Due to Parent and affiliate Other liabilities |
\$ 7,049,631 44,608 1,927 3,279 |
| Total liabilities | 7,099,445 |
| MEMBER'S EQUITY: Member's equity Accumulated other comprehensive loss |
1,059,596 (1,720) |
| Total member's equity | 1,057,876 |
| TOTAL LIABILITIES AND MEMBER'S EQUITY | \$8,157,321 |
| INTEREST INCOME | \$ 363,113 |
|---|---|
| INTEREST EXPENSE | 294,595 |
| NET INTEREST INCOME | 68,518 |
| GENERAL AND ADMINISTRATIVE EXPENSES | 8,922 |
| NET INCOME | 59,596 |
| OTHER COMPREHENSIVE LOSS―Unrealized loss on derivative instruments accounted for as cash flow hedge |
(2,078) |
| COMPREHENSIVE INCOME | \$ 57,518 |
| Units | Member's Equity |
Accumulated Other Comprehensive Income (Loss) |
Total Member's Equity |
|
|---|---|---|---|---|
| BALANCE—January 1, 2023 | 300 | \$ 1,017,540 | \$ 358 |
\$ 1,017,898 |
| Net income | 59,596 | 59,596 | ||
| Dividend paid | (17,540) | (17,540) | ||
| Other comprehensive loss | (2,078) | (2,078) | ||
| BALANCE—December 31, 2023 | 300 | \$1,059,596 | \$(1,720) | \$1,057,876 |
| CASH FLOWS FROM OPERATING ACTIVITIES: Net income Adjustments to reconcile net income to net cash provided by operating activities: |
\$ 59,596 |
|---|---|
| Changes in operating assets and liabilities: Accrued interest receivable―Parent Other assets Accrued interest payable Due to Parent and affiliate Other liabilities |
(7,288) (3,181) 30,584 752 3,050 |
| Net cash provided by operating activities | 83,513 |
| CASH FLOWS FROM INVESTING ACTIVITIES: Loans extended to Parent Collections of loans from Parent |
(3,148,570) 150,000 |
| Net cash used in investing activities | (2,998,570) |
| CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from debt Repayments of debt Dividend paid |
4,161,482 (1,251,300) (17,540) |
| Net cash provided by financing activities | 2,892,642 |
| EFFECT OF EXCHANGE RATE CHANGES ON CASH | 1 |
| NET DECREASE IN CASH | (22,414) |
| CASH―Beginning of year | 72,149 |
| CASH―End of year | \$ 49,735 |
| CASH PAID DURING THE YEAR FOR INTEREST | \$ 285,311 |
| NONCASH INVESTING AND FINANCING ACTIVITIES―Net settlements of loans receivable―Parent and debt to Parent |
\$ 677,523 |
Organization—Mitsubishi HC Finance America LLC (the "Company") was formed in the state of Delaware on May 19, 2021, by MHC America Holdings Corporation (the "Parent"), sole member, and a wholly owned subsidiary of Mitsubishi HC Capital Inc. ("MHC").
Nature of Operations—The Company's primary activities are to provide financing services to subsidiaries of MHC through the Parent. The Company's operations are funded through diversified sources, such as borrowings from financial institutions and funding within the international capital markets. The Company has service agreements with the Parent and MHC whereby they provide various operational and administrative services to the Company based on the service agreements.
The Company has extensive transactions with the Parent and MHC. Accordingly, the accompanying financial statements may not be indicative of the financial position or results of operations that would have occurred had the Company operated without such affiliation.
Basis of Presentation—The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States ("US GAAP").
Estimates—The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the reported amounts of income and expenses during the reporting period, and disclosure of contingent assets and liabilities at the date of the financial statements. Such estimates include the allowance for credit losses, valuation of derivative instruments, and accrual of contingent loss among others. Actual results could differ from those estimates.
Loans Receivable—Loans receivable are reported at the principal amount outstanding less allowance for credit losses. The Company periodically evaluates the collectibility of receivable and provides an allowance for credit losses to reflect management's best judgment of the net realizable value of the receivable. Allowance for credit losses is determined based upon an assessment of individual loans, actual and anticipated losses, and overall current economic conditions. The Company closely monitors the current payments and financial condition of the borrower, and evaluates the principal risks associated with loans receivable. Loans receivable are charged against allowance for credit losses when management believes that the receivables are not collectible. At December 31, 2023, the Company had no impaired loans and recorded no allowance for credit losses.
Deferred Financing Costs—Direct financing costs, such as commissions and legal expenses, associated with debt facilities and financing transactions are deferred and amortized over the terms of related debt as an adjustment to interest expense.
Revenue Recognition—Interest income is recognized on an accrual basis in accordance with the terms of each loan agreement. Accrual of interest income is generally suspended (nonaccrual) when, in the opinion of management, full collection of all principal and interest due is doubtful (impaired). Any interest accrued is reversed and charged to earnings, and interest is thereafter included in earnings only to the extent actually received in cash. When there is doubt regarding the ultimate collectibility of principal, all cash receipts are thereafter applied to reduce the balance of loans receivable. The accrual of interest income may be resumed when management believes that full collection of all principal and interest due is ensured. At December 31, 2023, there were no nonaccrual or impaired loans.
Income Taxes—The Company is a disregarded entity for income tax purposes. Income taxes on the Company's income are levied on the member at the member level. Accordingly, all profits and losses of the Company are recognized by the member on its respective tax returns. Federal and state tax authorities generally have the right to examine and audit previous tax returns within the statute of limitation. Any interest or penalties assessed to the Company are recorded in operating and administrative expenses. No interest or penalties from federal or state tax authorities were recorded in the accompanying financial statements.
Derivative Instruments and Hedging Activities—The Company enters into interest rate swaps to manage interest rate risk associated with variable-rate debt. Counterparties to these contracts are major financial institutions. The Company monitors the results of each hedging transaction and ensures that management's intent is satisfied. All derivative instruments, whether designated for hedging relationship or not, are recorded as derivative assets or liabilities on the balance sheet at fair value in accordance with Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 815, Derivatives and Hedging. The Company has determined that the interest rate swap and hedging activity qualify as cash flow hedge. For derivative instruments that are designated and qualify as cash flow hedges, the effective portion of changes in fair value of the derivative instruments is reported as a component of other comprehensive income or loss and reclassified into earnings when the hedged transaction affects earnings. Changes in fair value of derivative instruments that do not qualify as hedges are recognized immediately in earnings.
Other Comprehensive Loss—Other comprehensive loss consists of all changes to member's equity other than those resulting from net income and member transactions. For the Company, other comprehensive loss consists of the effect of cash flow hedges and unrealized loss on derivative instruments accounted for as cash flow hedges.
Recently Issued Accounting Standards—In June 2016, the FASB issued Accounting Standards Updates ("ASU") No. 2016-13, Financial Instruments—Credit Losses (ASC 326): Measurement of Credit Losses on Financial Instruments. This standard sets forth a current expected credit loss model that, when adopted, requires the Company to measure all expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions, and reasonable supportable forecasts. This replaces the existing incurred loss model and is applicable to the measurement of credit losses on financial assets measured at amortized cost, as well as certain off-balance-sheet credit exposures. In November 2019, the FASB issued ASU No. 2019-10, Financial Instruments Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842): Effective Dates, and extended the effective date of ASU No. 2016-13 to fiscal year 2023 although early adoption is permitted. The Company adopted ASC 326 on January 1, 2023, and there was no material impact on the financial statements.
In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. ASU No. 2020-04 provides temporary optional expedients and exceptions to ease financial reporting burdens related to applying current US GAAP modifications of contracts, hedging relationships, and other transactions in connection with the transition from the London InterBank Offered Rate ("LIBOR") and other interbank offered rates to alternative reference rates. The optional amendments are available for all entities from March 12, 2020, through December 31, 2022. In January 2021, the FASB issued ASU No. 2021-01, Reference Rate Reform (Topic 848): An Amendment of the FASB Accounting Standards Codification. ASU No. 2021-01 clarifies that certain optional expedients and exceptions in Topic 848 for contract modifications and hedge accounting apply to derivatives that are affected by the discounting transition. In December 2022, the FASB issued ASU No. 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848. The amendments in ASU No. 2022-06 defer the sunset date of Topic 848 from December 31, 2022 to December 31, 2024, after which entities will no longer be permitted to apply the relief in Topic 848. The amendments in ASU No. 2022-06 apply to all entities, subject to meeting certain criteria, that have contracts, hedging relationship, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform and are effective for all entities upon issuance of ASU No. 2022-06. The Company is currently evaluating the effect of the adoption of the guidance on its financial statements.
Loans receivable—Parent represents loans receivable from the Parent outstanding at December 31, 2023, with interest rates ranging from 1.54% to 7.13% per annum. The interest income related to the loans receivable from the Parent was \$355,937 thousand for the year ended December 31, 2023.
Maturities of the loans receivable from the Parent at December 31, 2023, are as follows (in thousands):
| 2024 | \$ 2,777,177 |
|---|---|
| 2025 | 710,000 |
| 2026 | 555,000 |
| 2027 | 630,000 |
| 2028 | 1,040,750 |
| 2029 and thereafter | 2,372,820 |
The Company's debt at December 31, 2023, consists of the following (in thousands):
| Financial institutions—interest rates ranging from 1.54% to 6.90% | \$ 3,679,830 |
|---|---|
| Affiliated company—interest rates ranging from 2.73% to 6.68% | 1,877,788 |
| Commercial paper—interest rates ranging from 5.69% to 5.84% | 259,525 |
| Medium-term notes—interest rates ranging from 2.34% to 5.81% | 1,232,488 |
| \$7,049,631 |
The Company had an unused line of credit of \$120,000 thousand with an affiliated company at December 31, 2023. The accrued interest payable and interest expense related to the debt with the affiliated company were \$10,041 thousand at December 31, 2023, and \$84,524 thousand for the year ended December 31, 2023.
The Company also had unused line of credit of \$80,000 thousand with financial institutions at December 31, 2023.
In September 2023, the Company participated in a medium-term note program established by MHC. Under the program, the Company can issue the term notes up to \$6,000,000 thousand.
All of the Company's debts are guaranteed by MHC at December 31, 2023.
Maturities of debt for the future years subsequent to December 31, 2023, are as follows (in thousands):
| Years Ending December 31 |
|
|---|---|
| 2024 2025 2026 2027 2028 2029 and thereafter |
\$ 1,071,153 810,000 697,500 820,000 1,252,500 2,410,000 |
| Deferred financing costs | 7,061,153 (11,522) |
| \$7,049,631 |
The Company enters into derivative instruments, interest rate swaps, to manage the interest rate risk associated with variable-rate debt. The Company does not use derivative instruments for trading purposes. The derivative instruments involve, to varying degrees, credit and market risks. Credit risk is the possibility that a loss may occur if a counterparty to the transaction fails to perform according to the terms of the contract. To minimize credit risk exposure, the Company evaluates the creditworthiness of its counterparties through credit approvals, limits, and monitoring procedures. Market risk is the adverse effect of a change in interest rates, currency rates, or implied volatility rates on the value of a financial instrument. Market risk is managed by establishing exposure limits and monitoring types and degrees of risk that may be undertaken. Management does not anticipate any significant losses as a result of these transactions.
At December 31, 2023, the Company had interest rate swaps designated as cash flow hedge. The Company entered into the interest rate swaps to hedge the exposure to changes in future cash flows from variable-rate debt. The notional amount of the interest rate swaps was \$545,000 thousand at December 31, 2023. The Company recorded the interest rate swaps at its fair value of \$1,296 thousand within other assets and \$3,016 thousand within other liabilities on the balance sheet at December 31, 2023. The cash flow hedge was determined to be highly effective, and as such, the net change in fair value of \$2,078 thousand was recorded in other comprehensive loss for the year ended December 31, 2023.
The interest rate swaps are subject to enforceable master netting agreements or similar arrangements with counterparties. In general, the terms of the agreements provide that in the event of an early termination, the counterparties have the right to offset amounts owed or owing under that and any other agreement with the same counterparty.
Agreements subject to master netting arrangements with various counterparties, and cash and noncash collateral posted under such agreements at December 31, 2023, are as follows:
| Gross Amounts Offset in the |
Net Amounts Presented in the |
Gross Amount Not Offset in the Balance Sheet |
|||
|---|---|---|---|---|---|
| Gross Amounts of Recognized Assets/Liabilities |
Financial Instruments |
Cash Collateral Received/ Pledged |
Net Amounts |
||
| \$ 1,296 | \$ - | \$ 1,296 | \$ (382) | \$ - | \$ 914 2,634 |
| 3,016 | - | Balance Sheet Balance Sheet 3,016 |
(382) | - |
ASC 820, Fair Value Measurements, establishes a fair value hierarchy that prioritizes the inputs to the valuation techniques used to measure fair value giving preference to quoted prices in active markets (Level 1) and the lowest priority to unobservable inputs, such as a reporting entity's own data or information, or assumptions developed from this data (Level 3). Level 2 inputs include quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets that are not active; observable inputs other than quoted prices, such as interest rates and yield curves; and inputs that are derived principally from or corroborated by observable market data by correlation or other means.
Interest rate swap is measured at fair value on a recurring basis. The fair value of the interest rate swap is determined using the Level 2 inputs, such as market observable inputs or indices, including forward rate interest rate curves. Credit risk related to the counterparty and the Company is considered when estimating the fair value. The fair value of interest rate swap is computed by discounting future cash flows, using market observable inputs or indices, including forward rate interest rate curves.
The Company has evaluated subsequent events from the balance sheet date through February 15, 2024, the date at which the financial statements were available to be issued, and determined that there have been no subsequent events that require recognition or disclosure in the financial statements.
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5-1 Marunouchi 1-chome Chiyoda-ku Tokyo 100-6525 Japan
Novuna House Thorpe Road Staines-upon-Thames Surrey TW18 3HP United Kingdom
Mitsubishi HC Finance America LLC 140 East 45th Street 30B-2 New York NY 10017 U.S.A
8 Canada Square London E14 5HQ United Kingdom
(ABN 88 111 042 132) Level 4 7 Macquarie Place Sydney NSW 2000 Australia
16, boulevard des Italiens 75009 Paris France
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To Mitsubishi HC Capital Inc. as to Japanese law
(Gaikokuho Kyodo Jigyo) Otemon Tower, 1-1-2 Otemachi Chiyoda-ku Tokyo 100-8124 Japan
To the Programme Dealers as to English law
Linklaters
To Mitsubishi HC Finance America LLC as to U.S. law
Izumi Garden Tower 33F 1-6-1 Roppongi Minato-ku Tokyo 106-6033 Japan
To the Programme Dealers as to Australian law
Level 61, Governor Phillip Tower 1 Farrer Place Sydney NSW 2000 Australia
Marunouchi Nijubashi Building 3-2-3 Marunouchi, Chiyoda-ku Tokyo 100-8360 Japan
To Mitsubishi HC Capital Inc. To Mitsubishi HC Capital UK PLC
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To Mitsubishi HC Finance America LLC
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