Paragraph 7 C1
Subject to paragraph 8 below, the trust deed must provide that securitiesacquired by the trustees must be shares in the founding company which—
form part of the ordinary share capital of the company,
are fully paid up,
are not redeemable, and
are not subject to any restrictions other than restrictions which attachto all shares of the same class or a restriction authorised by sub-paragraph(2) below.
Subject to sub-paragraph (3) below, a restriction is authorised by thissub-paragraph if—
it is imposed by the founding company’s articles of association,
it requires all shares held by directors or employees of the foundingcompany, or of any other company which it controls for the time being, to bedisposed of on ceasing to be so held, and
it requires all shares acquired, in pursuance of rights or interestsobtained by such directors or employees, by persons who are not (or haveceased to be) such directors or employees to be disposed of when they areacquired.
A restriction is not authorised by sub-paragraph (2) above unless—
any disposal required by the restriction will be by way of sale for aconsideration in money on terms specified in the articles of association, and
the articles also contain general provisions by virtue of which any persondisposing of shares of the same class (whether or not held or acquired asmentioned in sub-paragraph (2) above) may be required to sell them on termswhich are the same as those mentioned in paragraph (a) above.
The trust deed must provide that shares in the founding company may notbe acquired by the trustees at a price exceeding the price they mightreasonably be expected to fetch on a sale in the open market.
The trust deed must provide that shares in the founding company may notbe acquired by the trustees at a time when that company is controlled byanother company.
Annotations
Modifications
- C1
See Finance Act 1990 (c. 29) ss.31–40—roll-over relief for disposal of shares to employeeshare ownership trusts
Notes on Schedule 5
Modifications
- C1
Sch. 5 applied (6.3.1992 with effect as mentioned in s. 289(1)(2) of the applying Act) by Taxation of Chargeable Gains Act 1992 (c. 12), ss. 228(7), 235(8), 289 (with ss. 60, 101(1), 171, 201(3))