Part 5Enterprise investment scheme

Chapter 4The issuing company

Excluded activities

199Excluded activities: provision of services or facilities for another business

(1)

Providing services or facilities for a business carried on by another person (other than a company of which the provider of the services or facilities is a qualifying subsidiary) is an excluded activity if—

(a)

the business consists wholly or as to a substantial part of activities falling within any of paragraphs (a) to (k) of section 192(1), and

(b)

a controlling interest in the business is held by a person who also has a controlling interest in the business carried on by the provider of the services or facilities.

(2)

Subsections (3) to (5) explain what is meant by a controlling interest in a business for the purposes of subsection (1)(b).

(3)

In the case of a business carried on by a company, a person (“A”) has a controlling interest in the business if—

(a)

A controls the company,

(b)

the company is a close company and A or an associate of A is a director of the company and is either—

(i)

the beneficial owner of more than 30% of the ordinary share capital of the company, or

(ii)

able, directly or through the medium of other companies or by any other indirect means, to control more than 30% of that share capital, or

(c)

at least half the business could, in accordance with section 344(2) of ICTA (persons to whom company’s trade may be treated as belonging), be regarded as belonging to A for the purposes of section 343 of that Act (company reconstructions without a change of ownership).

(4)

In any other case, a person has a controlling interest in a business if the person is entitled to at least half the assets used for, or of the income arising from, the business.

(5)

For the purposes of this section—

(a)

any rights or powers of a person who is an associate of another are to be attributed to that other person, and

(b)

“business” includes any trade, profession or vocation.