SCHEDULES
SCHEDULE 5Enterprise management incentives
Part 6Company reorganisations
Meaning of “qualifying exchange of shares”
40
1
For the purposes of the EMI code there is a “qualifying exchange of shares” where—
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).