Modifications etc. (not altering text)
C1Pt. 6 modified by Airports Act 1986 (c. 31), s. 77(3) (as substituted (with effect in accordance with s. 105(1) of the amending Act) by Finance Act 1996 (c. 8), Sch. 14 para. 3 (with Sch. 15))
C2Pt. 6 modified by Gas Act 1986 (c. 44), s. 60(3) (as substituted (with effect in accordance with s. 105(1) of the amending Act) by Finance Act 1996 (c. 8), Sch. 14 para. 4 (with Sch. 15))
C3Pt. 6 modified by British Steel Act 1988 (c. 35), s. 11(7) (as substituted (with effect in accordance with s. 105(1) of the amending Act) by Finance Act 1996 (c. 8), Sch. 14 para. 55 (with Sch. 15))
(1)M1Subject to section 224, where the company making the purchase is immediately before the purchase a member of a group and—
(a)immediately after the purchase the vendor owns shares in one or more other members of the group (whether or not he then owns shares in the company making the purchase), or
(b)immediately after the purchase the vendor owns shares in the company making the purchase and immediately before the purchase he owned shares in one or more other members of the group,
the vendor’s interest as a shareholder in the group must be substantially reduced.
(2)In subsections (5) to (7) below “relevant company” means the company making the purchase and any other member of the group in which the vendor owns shares immediately before or immediately after the purchase, but subject to subsection (4) below.
(3)M2Subject to section 224, where the company making the purchase is immediately before the purchase a member of a group and at that time an associate of the vendor owns shares in any member of the group, the combined interests as shareholders in the group of the vendor and his associates must be substantially reduced.
(4)M3The question whether the combined interests as shareholders in the group of the vendor and his associates are substantially reduced shall be determined in the same way as is (under the following subsections) the question whether a vendor’s interest as a shareholder in a group is substantially reduced, except that the vendor shall be assumed to have the interests of his associates as well as his own (and references in subsections (5) to (7) below to a relevant company shall be construed accordingly).
(5)M4The vendor’s interest as a shareholder in the group shall be ascertained by—
(a)expressing the total nominal value of the shares owned by him in each relevant company as a fraction of the issued share capital of the company,
(b)adding together the fractions so obtained, and
(c)dividing the result by the number of relevant companies (including any in which he owns no shares).
(6)Subject to subsection (7) below, the vendor’s interest as a shareholder in the group shall be taken to be substantially reduced if and only if it does not exceed 75 per cent. of the corresponding interest immediately before the purchase.
(7)The vendor’s interest as a shareholder in the group shall not be taken to be substantially reduced if—
(a)he would, if every member of the group distributed all its profits available for distribution immediately after the purchase (including any profits received by it on a distribution by another member), be entitled to a share of the profits of one or more of them, and
(b)that share, or the aggregate of those shares, expressed as a fraction of the aggregate of the profits available for distribution of every member of the group which is—
(i)a relevant company, or
(ii)a 51 per cent. subsidiary of a relevant company,
exceeds 75 per cent. of the corresponding fraction immediately before the purchase.
(8)Subsections (6) and (7) of section 221 shall apply for the purposes of subsection (7) above as they apply for the purposes of subsection (5) of that section.
(9)M5Subject to the following subsections, in this section “group” means a company which has one or more 51 per cent. subsidiaries, but is not itself a 51 per cent. subsidiary of any other company, together with those subsidiaries.
(10)M6Where the whole or a significant part of the business carried on by an unquoted company (“the successor company”) was previously carried on by—
(a)the company making the purchase, or
(b)a company which is (apart from this subsection) a member of a group to which the company making the purchase belongs, the successor company and any company of which it is a 51 per cent. subsidiary shall be treated as being a member of the same group as the company making the purchase (whether or not, apart from this subsection, the company making the purchase is a member of a group).
(11)Subsection (10) above shall not apply if the successor company first carried on the business there referred to more than three years before the time of the purchase.
(12)For the purposes of this section a company which has ceased to be a 51 per cent. subsidiary of another company before the time of the purchase shall be treated as continuing to be such a subsidiary if at that time there exist arrangements under which it could again become such a subsidiary.