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Version Superseded: 29/04/1996
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(1)M1Subject to the following provisions of this section, a company is not to be treated as being at any time a close company if—
(a)shares in the company carrying not less than 35 per cent. of the voting power in the company (and not being shares entitled to a fixed rate of dividend, whether with or without a further right to participate in profits) have been allotted unconditionally to, or acquired unconditionally by, and are at that time beneficially held by, the public, and
(b)any such shares have within the preceding 12 months been the subject of dealings on a recognised stock exchange, and the shares have within those 12 months been quoted in the official list of a recognised stock exchange.
(2)Subsection (1) above shall not apply to a company at any time when the total percentage of the voting power in the company possessed by all of the company’s principal members exceeds 85 per cent.
(3)For the purposes of subsection (1) above shares in a company shall be deemed to be beneficially held by the public if, and only if, they—
(a)fall within subsection (4) below, and
(b)are not within the exceptions in subsection (5) below,
and a corresponding construction shall be given to the reference to shares which have been allotted unconditionally to, or acquired unconditionally by, the public.
(4)Shares shall fall within this subsection (as being beneficially held by the public)—
(a)M2if beneficially held by a company resident in the United Kingdom which is not a close company, or by a company not so resident which would not be a close company if it were so resident, or
(b)M3if held on trust for an exempt approved scheme as defined in section 592, or
(c)M4If they are not comprised in a principal member’s holding.
(5)M5Shares shall not be deemed to be held by the public if they are held—
(a)by any director or associate of a director of the company, or
(b)by any company which is under the control of any such director or associate, or of two or more persons each of whom is such a director or associate, or
(c)by any associated company of the company, or
(d)as part of any fund the capital or income of which is applicable or applied wholly or mainly for the benefit of, or of the dependants of, the employees or directors, or past employees or directors, of the company, or of any company within paragraph (b) or (c) above.
References in this subsection to shares held by any person include references to any shares the rights or powers attached to which could, for the purposes of section 416, be attributed to that person under subsection (5) of that section.
(6)For the purposes of this section—
(a)a person is a principal member of a company if he possesses a percentage of the voting power in the company of more than 5 per cent. and, where there are more than five such persons, if he is one of the five persons who possess the greatest percentages or if, because two or more persons possess equal percentages of the voting power in the company, there are no such five persons, he is one of the six or more persons (so as to include those two or more who possess equal percentages) who possess the greatest percentages, and
(b)a principal member’s holding consists of the shares which carry the voting power possessed by him.
(7)In arriving at the voting power which a person possesses, there shall be attributed to him any voting power which, for the purposes of section 416, would be attributed to him under subsection (5) or (6) of that section.
(8)In this section “ ” include stock.
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