PART IV CLOSE COMPANIES

Transfers by close companies

C197 Transfers within group, etc.

1

Where a close company (“the transferor company”) is a member, but not the principal F1company, of a group and—

a

a disposal by the transferor company of any asset is a disposal to which section F2171(1) of the 1992 Act applies and is also a transfer of value, and

b

the transfer of value has only a small effect on the value of the minority participators’ rights and interests in that company compared with its effect on the value of the other participators’ rights and interests in the company,

the rights and interests of the minority participators shall be left out of account in determining the respective rights and interests of the transferor company’s participators for the purpose of apportioning the value transferred under section 94 above.

2

For the purposes of subsection (1) above—

a

F3Section F2170 of the 1992 Act (groups of companies: definitions) applies as for the purposes of sections F2171 to 181 of that Act, and

b

a minority participator is a participator of the transferor company who is not, and is not a person connected with, a participator of the principal F4company of the group or of any of the principal F4company’s participators;

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