Textual Amendments
F1Sch. 7AD inserted (24.7.2002) by Finance Act 2002 (c. 23), s. 85(2), Sch. 31
2(1)A “venture capital investment partnership” means a partnership in relation to which the following conditions are met.U.K.
(2)The first condition is that the sole or main purpose of the partnership is to invest in unquoted shares or securities.
This condition shall not be regarded as met unless it appears from—
(a)the agreement constituting the partnership, or
(b)any prospectus issued to prospective partners,
that that is the sole or main purpose of the partnership.
(3)The second condition is that the partnership does not carry on a trade.
(4)The third condition is that not less than 90% of the book value of the partnership’s investments is attributable to investments that are either—
(a)shares or securities that were unquoted at the time of their acquisition by the partnership, or
(b)shares that were quoted at the time of their acquisition by the partnership but which it was reasonable to believe would cease to be quoted within the next twelve months.
(5)For the purposes of the third condition—
(a)the following shall be disregarded—
(i)any holding of cash, including cash deposited in a bank account or similar account but not cash acquired wholly or partly for the purpose of realising a gain on its disposal;
(ii)any holding of quoted shares or securities acquired by the partnership in exchange for unquoted shares or securities;
(b)whether the 90% test is met shall be determined by reference to the values shown in the partnership’s accounts at the end of a period of account of the partnership.
(6)Where a partnership ceases to meet the above conditions, the company shall be treated as if the partnership had continued to be a venture capital investment partnership until the end of the period of account of the partnership during which it ceased to meet the conditions.
(7)A partnership that ceases to meet those conditions cannot qualify again as a venture capital investment partnership.
For this purpose a partnership is treated as the same partnership notwithstanding a change in membership if any person who was a member before the change remains a member.]