Corporation Tax Act 2009 (c. 4)

Valid from 01/04/2009

Part 6 U.K. Relationships treated as loan relationships etc

Chapter 7 U.K. Shares with guaranteed returns etc

Non-qualifying shares U.K.

529 The redemption return condition U.K.

(1) The redemption return condition is that the share—

(a) is redeemable (see subsection (2)),

(b) is designed to produce a return which equates, in substance, to the return on an investment of money at a commercial rate of interest, and

(c) is not an excepted share (see section 530).

(2) For the purposes of this section, a share is regarded as redeemable only if it meets condition A, B or C.

(3) Condition A is that it is redeemable as a result of its terms of issue (or any collateral arrangements)—

(a) requiring redemption,

(b) entitling the holder to require redemption, or

(c) entitling the issuing company to redeem.

(4) Condition B is that there are arrangements which will or might entitle the investing company to qualifying redemption amounts.

(5) In subsection (4) “qualifying redemption amounts” means amounts which, when taken together, are the same, or substantially the same, as an amount which might be payable on the redemption of the share.

(6) Condition C is that it is reasonable to assume that the investing company will or might become entitled to qualifying redemption amounts.

(7) For the purposes of this section—

(a) “arrangements” includes any agreement or understanding, and

(b) it does not matter whether or not the agreement or understanding—

(i) is legally enforceable, or

(ii) forms part of the share's terms of issue.