The Commissioners for Her Majesty’s Revenue and Customs must not approve a company under section 1158 for an accounting period unless it is shown to their satisfaction that each of conditions A to F is met.

• Condition A

  The company must be UK resident throughout the accounting period.

• Condition B

  The shares making up the company’s ordinary share capital (or if they are of more than one class, those of each class) must be included in the official UK list throughout the accounting period.

• Condition C

  The company’s income of the accounting period must be derived wholly or mainly from shares or securities.

• Condition D

  The company must not retain in respect of the accounting period an amount which is greater than 15% of the income it derives from shares or securities (but see section 1161).

• Condition E

  The company must not at any time in the accounting period have a holding in a company that represents more than 15% by value of the investing company’s investments (but see section 1162).

• Condition F

  The company’s memorandum or articles of association must prohibit the distribution as dividend of surpluses arising from the realisation of investments.

The conditions lettered A to F in subsection (1) are referred to by those letters in this Chapter.