Finance Act 2000

50 (1) A conversion of shares is not a disqualifying event if—

(a) the conversion is a conversion of shares of one class only (“the original class”) into shares of one other class only (“the new class”);

(b) all shares of the original class are converted into shares of the new class; and

(c) one of the conditions in sub-paragraph (2) is fulfilled.

(2) The conditions are—

(a) that immediately before the conversion the majority of the relevant company’s shares of the original class are held otherwise than by or for the benefit of—

(i) directors or employees of the relevant company,

(ii) an associated company of the relevant company, or

(iii) directors or employees of such an associated company; and

(b) that immediately before the conversion the relevant company is employee-controlled by virtue of holdings of shares of the original class.

(3) For the purposes of this paragraph “director”, “employee”, “associated company” and “employee-controlled” have the same meaning as in section 140D of the Taxes Act 1988 (convertible shares).