Part 7U.K.[F1Employment income: income and exemptions relating to securities]

Textual Amendments

F1Pt. 7 heading substituted (with effect in accordance with Sch. 22 para. 2(2) of the amending Act) by Finance Act 2003 (c. 14), Sch. 22 para. 2(1)

Modifications etc. (not altering text)

C1Pt. 7: power to modify conferred (7.4.2005) by Finance Act 2005 (c. 7), s. 21(8)-(10)

Chapter 9U.K.Enterprise management incentives

Tax advantages where disqualifying eventsU.K.

538Share conversions excluded for purposes of section 536U.K.

(1)This section has effect for the purposes of section 536(1)(d) (other disqualifying events: share conversions).

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

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

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

(c)one of the conditions in subsection (3) is met.

(3)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;

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

[F2(4)“associated company” has the same meaning as, by virtue of section 416 of ICTA, it has for the purposes of Part 11 of ICTA,

“director” has the same meaning as in the benefits code (see section 67) but also includes a person who is to be or has been a director,

“employee” includes a person who is to be or has been an employee, and

“employee-controlled” has the same meaning as in Chapters 1 to 4 of this Part (see section 421H(1)).]

Textual Amendments