(1)For the purposes of this Chapter an interest in shares is “only conditional” for so long as the terms on which the person is entitled to it—
(a)provide that if certain circumstances arise, or do not arise, there will be a transfer, reversion or forfeiture as a result of which that person will cease to be entitled to any beneficial interest in the shares, and
(b)are not such that, on the transfer, reversion or forfeiture, that person will be entitled to receive in respect of the interest an amount that is equal to or more than its market value at that time.
(2)But a person is not to be regarded as having an interest in shares which is only conditional by reason only that one or more of the following is the case—
(a)the shares are unpaid or partly paid and may be forfeited for non-payment of calls, in a case where there is no restriction on the meeting of calls by that person;
(b)the articles of association of the company require the shares to be offered for sale or transferred, if that person ceases to hold a relevant office or employment;
(c)that person may be required to offer the shares for sale or transfer them on ceasing, as a result of misconduct, to hold a relevant office or employment;
(d)in the case of an interest in a security, the security may be redeemed on payment of any amount.
(3)In subsection (1)(a) the references, in relation to the terms of a person’s entitlement, to circumstances arising include references to—
(a)the expiry of a period specified in or determined under those terms,
(b)the death of that or any other person, and
(c)the exercise by any person of a power conferred on that person by or under those terms.
(4)For the purposes of subsection (1)(b) the market value of the interest is to be determined as if there were no provision for transfer, reversion or forfeiture.
(5)In subsection (2)(b) “articles of association” includes, in the case of a company incorporated under the law of a country outside the United Kingdom, any equivalent document relating to the company.
(6)The references in subsection (2)(b) and (c) to a person ceasing to hold a relevant office or employment are to that person ceasing to be an officer or employee of the company in question, or of one or more group companies or of any group company.
(7)For the purposes of subsection (6)—
(a)a company is a “group company” in relation to another company if they are members of the same group, and
(b)companies are taken to be members of the same group if, and only if, one is a 51% subsidiary of the other or both are 51% subsidiaries of a third company.