Corporation Tax Act 2009

530 The redemption return condition: excepted shares

(1) A share is an “excepted share” for the purposes of section 529 if—

(a) it is a qualifying publicly issued share (see subsections (2) and (3)),

(b) it is a share which mirrors a public issue (see subsections (4) and (5)), or

(c) the investing company’s purpose in acquiring the share is not an unallowable purpose (see section 531).

(2) A share is a “qualifying publicly issued share” for the purposes of this section if—

(a) it was issued by a company as part of an issue of shares to persons not connected with the company, and

(b) less than 10% of the shares in that issue are held by the investing company or persons connected with it.

(3) But a share is not a qualifying publicly issued share for those purposes if the investing company’s purpose in acquiring the share is an unallowable purpose because of section 531(1)(a).

(4) The first case where shares (“the mirroring shares”) mirror a public issue is where—

(a) a company (“company A”) issues shares (“the public issue”) to persons not connected with the company,

(b) within 7 days of that issue, one or more other companies (“companies BB”) issue the mirroring shares to company A on the same terms as the public issue or substantially the same terms,

(c) company A and companies BB are associated companies (see subsection (6)), and

(d) the total nominal value of the mirroring shares does not exceed the nominal value of the public issue.

(5) The second case where shares (“the second-level mirroring shares”) mirror a public issue is where, in the circumstances of the first case—

(a) within 7 days of the public issue, one or more other companies (companies CC) issue the second-level mirroring shares to one or more of companies BB on the same terms as the public issue or substantially the same terms,

(b) company A, companies BB and companies CC are associated companies, and

(c) the total nominal value of the second-level mirroring shares does not exceed the nominal value of the public issue.

(6) For the purposes of this section companies are associated companies if they are members of the same group of companies for the purposes of Chapter 4 of Part 10 of ICTA (group relief) (see section 413(3)(a) of that Act).