Section 1016 Conditions relating to shares acquired

United Kingdom

(1)

Each of the following conditions must be met in relation to the shares acquired.

Condition 1

The shares are ordinary shares that are fully paid-up and not redeemable.

Condition 2

The shares are—

(a)

shares of a class listed on a recognised stock exchange,

(b)

shares in a company that is not under the control of another company, F1...

(c)

shares in a company that is under the control of a listed company F2, or

(d)

shares within subsection (1A).

Condition 3

The shares are shares in—

(a)

the employing company,

(b)

a company that, when the option is obtained, is a parent company of the employing company,

(c)

a company that, when the option is obtained, is a member of a consortium that owns the employing company,

(d)

a company that, when the option is obtained, is a member of a consortium that owns a parent company of the employing company,

(e)

a company within subsection (2), or

(f)

a qualifying successor company (see section 1022).

F3(1A)

Shares are within this subsection if—

(a)

after the option is obtained, the company in which the shares are to be acquired (“the relevant company”) comes to be controlled by another company (“the takeover”),

(b)

immediately before the takeover, the shares were within any of paragraphs (a) to (c) of Condition 2,

(c)

as a result of the takeover, the shares cease to be within any of those paragraphs,

(d)

the shares are acquired pursuant to the option within the period of 90 days beginning with the day of the takeover, and

(e)

the avoidance of tax is not the main purpose (or one of the main purposes) of the takeover.

(2)

A company (“company A”) is within this subsection if when the option is obtained—

(a)

the employing company or a parent company of the employing company is a member of a consortium that owns another company (“company B”), and

(b)

company A is—

(i)

a member of that consortium or a parent company of a member of that consortium, and

(ii)

a member of the same commercial association of companies as company B.

Annotations

Textual amendments

F1: Word in s. 1016(1) omitted (17.7.2014) by virtue of Finance Act 2014 (c. 26), Sch. 9 para. 44(2)
F2: Words in s. 1016(1) inserted (17.7.2014) by Finance Act 2014 (c. 26), Sch. 9 para. 44(2)
F3: S. 1016(1A) inserted (17.7.2014) by Finance Act 2014 (c. 26), Sch. 9 para. 44(3)

Notes on Part 12

Modifications

C1: Pt. 12 applied by 2010 c. 8, s. 425(5) (as inserted (with effect in accordance with Sch. 5 para. 25(1)-(3) of the amending Act) by Finance (No. 2) Act 2017 (c. 32), Sch. 5 para. 1 (with Sch. 5 paras. 27, 32-34))