Finance Act 1985

78 Takeovers

(1) Subsection (2) below applies where a company (company A) issues relevant securities (but issues or transfers no other property) in exchange for shares in another company (company B) and company A—

(a) has control of company B, or

(b) will have such control in consequence of the exchange or of a general offer as a result of which the exchange is made.

(2) Stamp duty under the heading " Conveyance or Transfer on Sale " in Schedule 1 to the [1891 c. 39.] Stamp Act 1891 shall not be chargeable on an instrument transferring the shares in company B by way of the exchange.

(3) Where subsection (2) above would apply but for the fact that company A not only issues relevant securities but also issues or transfers other property (whether or not it is or includes money) by way of the exchange, the value of the relevant securities shall be ignored in calculating stamp duty under the heading mentioned in that subsection on an instrument transferring the shares in company B by way of the exchange.

(4) In this section " securities " includes shares, and " relevant securities " means securities which may be registered in a register kept by or on behalf of company A and in relation to which the terms of the general offer or other arrangement providing for the exchange make no provision for partial or total conversion directly or indirectly into money (whether by way of redemption, sale or otherwise) at a time which falls or may fall before the expiry of the period of three years commencing with the day on which the exchange is completed.

(5) For the purposes of this section relevant securities shall not be taken to have been issued unless they are registered, in a register kept by or on behalf of company A, in the name of the person transferring the shares in company B by way of the exchange.

(6) References in this section to shares in company B include references to convertible loan capital of the company ; and " convertible loan capital" means loan capital mentioned in section 126(2) of the [1976 c. 40.] Finance Act 1976.

(7) For the purposes of this section company A has control of company B if company A has power to control company B's affairs by virtue of holding shares in, or possessing voting power in relation to, company B or any other body corporate.

(8) In this section " general offer " means an offer made to the members of company B or any class of them, and—

(a) includes an offer made with exceptions for persons connected with company A, but

(b) excludes an offer made with exceptions for persons who are not connected with company A,

and a person is connected with a company if he would be so connected for the purposes of the [1979 c. 14.] Capital Gains Tax Act 1979.

(9) An instrument in respect of which stamp duty is not chargeable by virtue only of subsection (2) above shall not be taken to be duly stamped unless it is stamped with the duty to which it would be liable but for that subsection or it has, in accordance with section 12 of the [1891 c. 39.] Stamp Act 1891, been stamped with a particular stamp denoting that it is not chargeable with any duty.

(10) An instrument in respect of which reduced stamp duty Part III is chargeable by virtue of subsection (3) above shall not be taken to be duly stamped unless it is stamped with the duty to which it would be liable but for that subsection or it has, in accordance with section 12 of the [1891 c. 39.] Stamp Act 1891, been stamped with a particular stamp denoting that it is duly stamped.

(11) The preceding provisions of this section apply to—

(a) instruments executed on or after 26th March 1985, and

(b) instruments executed on or after 19th March 1985 which are stamped on or after 26th March 1985.

(12) For the purposes of section 14(4) of the Stamp Act 1891 (instruments not to be given in evidence etc. unless stamped in accordance with the law in force at the time of first execution), the law in force at the time of execution of an instrument falling within subsection (11)(b) above shall be deemed to be that as varied in accordance with this section.

(13) An instrument to which this subsection applies shall be taken to be duly stamped in accordance with the law in force at the time when it was executed—

(a) if it is treated by the Commissioners as if stamp duty were not chargeable on it and if, had it been executed on or after 26th March 1985, stamp duty under the heading mentioned in subsection (2) above would by virtue of that subsection not have been chargeable on it, or

(b) if it is stamped with duty of an amount no less than the reduced duty with which, had it been so executed, it would have been chargeable under that heading by virtue of subsection (3) above ;

and the instruments to which this subsection applies are instruments executed on or after 28th July 1984 and before 26th March 1985, other than instruments executed on or after 19th March 1985 which are stamped on or after 26th March 1985.

(14) This section shall be deemed to have come into operation on 26th March 1985.