Corporation Tax Act 2010

1164 More about the meaning of “holding in a company”

(1) Subsection (2) applies if, in connection with a scheme of reconstruction—

(a) a company issues shares or securities,

(b) the shares or securities are issued to persons holding shares or securities in a second company in respect of and in proportion to (or as nearly as may be in proportion to) their holdings in the second company, and

(c) those persons do not become liable to give any consideration for the shares or securities.

(2) For the purposes of this Chapter-

(a) a holding of the shares or securities of the second company, and

(b) a corresponding holding of the shares or securities issued by the first company,

are to be regarded as the same holding.

(3) For the purposes of this Chapter, holdings in two or more companies which are members of the same group are treated as holdings in a single company.

(4) Subsection (3) does not apply to a holding in—

(a) an investment trust, or

(b) a company that would qualify as an investment trust but for condition B (listing in the official UK list).

(5) For the purposes of subsection (3) it does not matter whether or not the group is one that includes the company which has the holdings.

(6) If a company (“company A”) is a member of a group, money owed to it by another member of the group is treated, for the purpose of determining whether condition E is met—

(a) as a security of the latter held by company A, and

(b) accordingly as, or as part of, the holding of company A in the company owing the money.

(7) In this section “group” means a company and all its 51% subsidiaries.