SCHEDULES

SCHEDULE 5Enterprise management incentives

Part 6Company reorganisations

Meaning of “qualifying exchange of shares”

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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).