[F1135Exchange of securities for those in another companyU.K.
(1)This section applies in the following circumstances where a company (“company B”) issues shares or debentures to a person in exchange for shares in or debentures of another company (“company A”).
(2)The circumstances are:
Case 1
Where company B holds, or in consequence of the exchange will hold, more than 25% of the ordinary share capital of company A.
Case 2
Where company B issues the shares or debentures in exchange for shares as the result of a general offer—
(a)made to members of company A or any class of them (with or without exceptions for persons connected with company B), and
(b)made in the first instance on a condition such that if it were satisfied company B would have control of company A.
Case 3
Where company B holds, or in consequence of the exchange will hold, the greater part of the voting power in company A.
(3)Where this section applies, sections 127 to 131 (share reorganisations etc) apply with the necessary adaptations as if company A and company B were the same company and the exchange were a reorganisation of its share capital.
(4)In this section “ordinary share capital” has the meaning given by section 832(1) of the Taxes Act and also includes—
(a)in relation to a unit trust scheme, any rights that are treated by section 99(1)(b) of this Act (application of Act to unit trust schemes) as shares in a company, and
(b)in relation to a company that has no share capital, any interests in the company possessed by members of the company.
(5)This section applies in relation to a company that has no share capital as if references to shares in or debentures of the company included any interests in the company possessed by members of the company.
(6)This section has effect subject to section 137(1) (exchange must be for bona fide commercial reasons and not part of tax avoidance scheme).]
Textual Amendments
F1S. 135 substituted (with effect in accordance with Sch. 9 paras. 7, 8 of the amending Act) by Finance Act 2002 (c. 23), Sch. 9 para. 1
Modifications etc. (not altering text)
C1Ss. 135, 136 excluded (with effect in accordance with s. 63(4) of the amending Act) by Finance Act 2000 (c. 17), Sch. 15 para. 82 (with s. 84)
C2Ss. 135, 136 excluded by Income and Corporation Taxes Act 1988 (c. 1), s. 757 (as amended (with effect in accordance with Sch. 9 paras. 7, 8 of the amending Act) by Finance Act 2002 (c. 23), Sch. 9 para. 4(5))