Section 394 Meaning of “material interest” in section 393

United Kingdom

(1)

For the purposes of section 393(4)(a) an individual has a material interest in a company if a relevant person meets condition A or B.

(2)

In this section “relevant person” means—

(a)

the individual, either alone or with one or more associates (see section 395), or

(b)

any associate of the individual with or without such other associates.

(3)

Condition A is that the relevant person is the beneficial owner of, or able directly or indirectly to control, more than 5% of the ordinary share capital of the company.

(4)

Condition B is that the relevant person possesses, or is entitled to acquire, such rights as would, in the event of the winding up of the company or in any other circumstances, give an entitlement to receive more than 5% of the assets which would then be available for distribution among the participators.

(5)

In this section—

“control” F1is to be read in accordance with sections 450 and 451 of CTA 2010, and
“participator” has the meaning given by F2section 454 of CTA 2010.

Annotations

Textual amendments

F1: Words in s. 394(5) substituted (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 522(a) (with Sch. 2)
F2: Words in s. 394(5) substituted (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 522(b) (with Sch. 2)

Notes on Loans for interests in close companies etc

Textual amendments

F1: Word in s. 392 cross-heading inserted (with effect in accordance with s. 13(5) of the amending Act) by Finance Act 2014 (c. 26), s. 13(4)(b)