C1Part 8A company's members

Annotations:
Modifications etc. (not altering text)

Chapter 4Prohibition on subsidiary being member of its holding company

Subsidiary acting as personal representative or trustee

138Subsidiary acting as personal representative or trustee

1

The prohibition in section 136 (prohibition on subsidiary being a member of its holding company) does not apply where the subsidiary is concerned only—

a

as personal representative, or

b

as trustee,

unless, in the latter case, the holding company or a subsidiary of it is beneficially interested under the trust.

2

For the purpose of ascertaining whether the holding company or a subsidiary is so interested, there shall be disregarded—

a

any interest held only by way of security for the purposes of a transaction entered into by the holding company or subsidiary in the ordinary course of a business that includes the lending of money;

b

any interest within—

  • section 139 (interests to be disregarded: residual interest under pension scheme or employees' share scheme), or

  • section 140 (interests to be disregarded: employer's rights of recovery under pension scheme or employees' share scheme);

c

any rights that the company or subsidiary has in its capacity as trustee, including in particular—

i

any right to recover its expenses or be remunerated out of the trust property, and

ii

any right to be indemnified out of the trust property for any liability incurred by reason of any act or omission in the performance of its duties as trustee.

139Interests to be disregarded: residual interest under pension scheme or employees' share scheme

1

Where shares in a company are held on trust for the purposes of a pension scheme or employees' share scheme, there shall be disregarded for the purposes of section 138 any residual interest that has not vested in possession.

2

A “residual interest” means a right of the company or subsidiary (“the residual beneficiary”) to receive any of the trust property in the event of—

a

all the liabilities arising under the scheme having been satisfied or provided for, or

b

the residual beneficiary ceasing to participate in the scheme, or

c

the trust property at any time exceeding what is necessary for satisfying the liabilities arising or expected to arise under the scheme.

3

In subsection (2)—

a

the reference to a right includes a right dependent on the exercise of a discretion vested by the scheme in the trustee or another person, and

b

the reference to liabilities arising under a scheme includes liabilities that have resulted, or may result, from the exercise of any such discretion.

4

For the purposes of this section a residual interest vests in possession—

a

in a case within subsection (2)(a), on the occurrence of the event mentioned there (whether or not the amount of the property receivable pursuant to the right is ascertained);

b

in a case within subsection (2)(b) or (c), when the residual beneficiary becomes entitled to require the trustee to transfer to him any of the property receivable pursuant to the right.

5

In this section “pension scheme” means a scheme for the provision of benefits consisting of or including relevant benefits for or in respect of employees or former employees.

6

In subsection (5)—

a

“relevant benefits” means any pension, lump sum, gratuity or other like benefit given or to be given on retirement or on death or in anticipation of retirement or, in connection with past service, after retirement or death; and

b

“employee” shall be read as if a director of a company were employed by it.

140Interests to be disregarded: employer's rights of recovery under pension scheme or employees' share scheme

1

Where shares in a company are held on trust for the purposes of a pension scheme or employees' share scheme, there shall be disregarded for the purposes of section 138 any charge or lien on, or set-off against, any benefit or other right or interest under the scheme for the purpose of enabling the employer or former employer of a member of the scheme to obtain the discharge of a monetary obligation due to him from the member.

2

F1In the case of a trust for the purposes of a pension scheme there shall also be disregarded any right to receive from the trustee of the scheme, or as trustee of the scheme to retain, an amount that can be recovered or retained, under F2... section 57 of the Pension Schemes (Northern Ireland) Act 1993 (c. 49) (deduction of contributions equivalent premium from refund of scheme contributions) or otherwise, as reimbursement or partial reimbursement for any contributions equivalent premium paid in connection with the scheme under Part 3 of that Act.

3

In this section “pension scheme” means a scheme for the provision of benefits consisting of or including relevant benefits for or in respect of employees or former employees.

“Relevant benefits” here means any pension, lump sum, gratuity or other like benefit given or to be given on retirement or on death or in anticipation of retirement or, in connection with past service, after retirement or death.

4

In this section “employer” and “employee” shall be read as if a director of a company were employed by it.