40(1)For the purposes of the EMI code there is a “qualifying exchange of shares” where—U.K.
(a)arrangements are made in accordance with which a company (“the new company”) acquires all the shares (“old shares”) in another company (“the old company”), and
(b)the following conditions are met.
(2)The conditions are that—
(a)the consideration for the old shares consists wholly of the issue of shares (“new shares”) in the new company;
(b)new shares are issued in consideration of old shares only at times when there are no issued shares in the new company other than—
(i)subscriber shares, and
(ii)new shares previously issued in consideration of old shares;
(c)the consideration for new shares of each description consists wholly of old shares of the corresponding description;
(d)new shares of each description are issued to holders of old shares of the corresponding description in respect of, and in proportion to, their holdings; and
(e)by virtue of the CGT capital reorganisation provisions, the exchange of shares is not treated as involving a disposal of the old shares or an acquisition of the new shares.
(3)For the purposes of this paragraph old shares and new shares are of a corresponding description if, on the assumption that they were shares in the same company, they would be of the same class and carry the same rights.
(4)In this paragraph—
(a)references to “shares”, except in the expression “subscriber shares”, include securities; and
(b)“the CGT capital reorganisation provisions” means section 127 of TCGA 1992, as applied by section 135(3) of that Act (exchange of securities).