Part 23Company distributions

Chapter 2Matters which are distributions

Distributions in respect of special securities

1015Meaning of “special securities”

1

Securities of a company are special securities for the purposes of paragraph F in section 1000(1) if they meet any of conditions A to E.

2

Condition A is that the securities are issued as described in paragraph D in section 1000(1) (securities issued otherwise than for new consideration).

3

Condition B is that—

a

the securities—

i

are convertible (directly or indirectly) into shares in the company, or

ii

carry a right to receive shares in or securities of the company, and

b

the securities are neither listed on a recognised stock exchange nor issued on terms which are reasonably comparable with the terms of issue of securities listed on a recognised stock exchange.

4

Condition C is that under the securities the consideration given by the company for the use of the principal secured depends (to any extent) on the results of—

a

the company's business, or

b

any part of the company's business.

5

Condition D is that the securities are connected with shares in the company (see section 1017(2)).

6

Condition E is that the securities are equity notes—

a

issued by the company (“the issuing company”), and

b

held by a company which—

i

is associated with the issuing company, or

ii

is a funded company (see section 1017(3)).