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4(1)This paragraph applies if any of the equity holders—
(a)to whom the profit distribution is made, or
(b)who is entitled to participate in the notional winding-up,
holds, as such an equity holder, any shares or securities which carry rights in respect of dividend or interest or assets on a winding-up which are wholly or partly limited by reference to a specified amount or amounts (whether the limitation takes the form of the capital by reference to which a distribution is calculated or operates by reference to an amount of profits or otherwise).
(2)Where this paragraph applies there shall be determined—
(a)the percentage of profits to which, on the profit distribution, the first company referred to in paragraph 2(1) above would be entitled, and
(b)the percentage of assets to which, on the notional winding-up, the first company referred to in paragraph 3(1) above would be entitled,
if, to the extent that they are limited as mentioned in sub-paragraph (1) above, the rights of every equity holder falling within that sub-paragraph (including the first company concerned if it is such an equity holder) had been waived.
(3)If, on the profit distribution, the percentage of profits determined as mentioned in sub-paragraph (2)(a) above is less than the percentage of profits determined under paragraph 2(1) above without regard to that sub-paragraph, the lesser percentage shall be taken for the purposes of [F1sections 403C and 413(7)] to be the percentage of profits to which, on the profit distribution, the first company referred to in paragraph 2(1) above would be entitled as mentioned in that paragraph.
(4)If, on the notional winding-up, the percentage of assets determined as mentioned in sub-paragraph (2)(b) above is less than the percentage of assets determined under paragraph 3(1) above without regard to that sub-paragraph, the lesser percentage shall be taken for the purposes of [F1sections 403C and 413(7)] to be the percentage to which, on the notional winding-up, the first company mentioned in paragraph 3(1) above would be entitled of any assets of the other company available for distribution to its equity holders on a winding-up.
[F2(5)In determining in a case in which paragraph 5F below applies whether any rights in respect of dividend or interest or assets on a winding-up are limited as mentioned in sub-paragraph (1) above, the limitations so mentioned shall be treated as not including so much of any limitation as has effect as mentioned in sub-paragraph (2) of that paragraph.]
Textual Amendments
F1Words in Sch. 18 paras. 1(1), 2(1), 3(1), 4(3)(4), 5A(3)(4), 5C(3)(4), 5D(3)(4), 5E(3)(4), 6 substituted (retrospectively) by Finance Act 2000 (c. 17), s. 100(4)(a)(5)
F2Sch. 18 para. 4(5) inserted (with effect in accordance with Sch. 27 para 6(3)(4) of the amending Act) by Finance Act 2000 (c. 17), Sch. 27 para. 5(4) (with Sch. 27 para. 6(1))
Modifications etc. (not altering text)
C1 See 1990 s.32(12)(b).References to
“section 413(7) to (9)”
construed as references to 1990 s.31(4)where Sch.18applies to disposals of shares to employee share ownership trusts.
C2 See 1990 s.32(12)(b).References to
“section 413(7) to (9)”
construed as references to 1990 s.31(4)where Sch.18applies to disposals of shares to employee share ownership trusts.
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