PART VII GENERAL PROVISIONS RELATING TO TAXATION OF INCOME OF INDIVIDUALS

CHAPTER IIIENTERPRISE INVESTMENT SCHEME

F1291 Individuals qualifying for relief.

(1)

An individual qualifies for relief in respect of eligible shares in a company (referred to in this section and sections 291A and 291B as the “issuing company”) if—

(a)

he subscribes for the shares on his own behalf, and

F2(b)

subject to section 291A(4), he is not at any time in the period—

(i)

beginning two years before the issue of the shares, and

(ii)

ending immediately before the termination date relating to those shares,

connected with the company (whether before or after its incorporation).

(2)

For the purposes of this section F3 . . . , an individual is connected with the issuing company if he, or an associate of his, is—

(a)

an employee of, or of a partner of, the issuing company or any subsidiary,

(b)

a partner of the issuing company or any subsidiary, or

(c)

subject to section 291A, a director of, or of a company which is a partner of, the issuing company or any subsidiary,

or if he, or an associate of his, is so connected by virtue of section 291B.

F4(3)

In subsection (2) above “subsidiary”, in relation to the issuing company, means a company which at any time in the relevant period is a 51 per cent subsidiary of the issuing company, whether or not it is such a subsidiary while the individual concerned or his associate is such an employee, partner or director as is mentioned in that subsection.

(4)

For the purposes of subsections (2) and (3) above and section 291A, in the case of a person who is both a director and an employee of a company—

(a)

references (however expressed) to him in his capacity as a director of the company include him in his capacity as an employee of the company, but

(b)

(apart from that) he is not to be treated as an employee of the company.

(5)

Section 312(1A)(a) applies to determine the relevant period for the purposes of this section and sections 291A and 291B.

F5F6(6)

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