Made | 22nd October 2002 | ||
Laid before the House of Commons | 23rd October 2002 | ||
Coming into force | 13th November 2002 |
(2) References in these Regulations (except regulation 5(1)(a), (b) and (d)) to an exchange of shares or securities shall be construed in accordance with paragraph 11B(2) of Schedule 28B, and "exchanged" has a corresponding meaning.
(3) For the purposes of these Regulations, old shares and new shares are matching shares in relation to each other if the old shares are the shares for which the new shares are exchanged under the arrangements, and the same provision shall apply, with any necessary modifications, as between old securities and new securities, and old securities and new shares.
(4) References in these Regulations to a section, without more, are to that section of the Taxes Act.
Scope of Regulations
3.
These Regulations apply to any exchange of shares or securities held by a venture capital trust -
Exchange of shares or securities for those in the same company
4.
- (1) The case described in this regulation is an exchange of shares or securities where -
(2) In paragraph (1) and regulation 7 -
Exchange of shares or securities for those in another company
5.
- (1) The case described in this regulation is where -
(c) the person in question is a venture capital trust,
(d) the new shares are issued in exchange for old shares or old securities, and the new securities are issued solely in exchange for old securities, and
(e) the arrangements under which the exchange takes place are not arrangements to which paragraph 10C of Schedule 28B[9] (acquisitions for restructuring purpose) applies.
(2) In paragraph (1)(a), (b) and (d) and regulation 8 -
Scheme of reconstruction involving issue of shares or securities
6.
- (1) The case described in this regulation is where -
is entered into for the purposes of, or in connection with, a scheme of reconstruction,
(b) under the arrangement -
(c) the person in question is a venture capital trust, and
(d) the new shares are issued in respect of old shares or old securities, and the new securities are issued solely in respect of old securities.
(2) In paragraph (1) and regulation 9 -
Provision where there is an exchange of shares or securities in the same company
7.
- (1) In relation to any case described in regulation 4 the following paragraphs have effect.
(2) For the purposes of subsection (2)(b) to (d) of section 842AA[12], the aggregate value of the new shares and new securities shall be determined, immediately after the exchange and until such time as those shares or securities fall to be revalued in accordance with subsection (5) of that section, in accordance with the following formula:
Nv = Ov × | |
Nmv + C |
received by the venture capital trust as consideration for, or in respect of, the old shares or old securities, and
(3) For the purposes of subsection (2)(b) to (d) of section 842AA, where the venture capital trust retains original shares or securities in the company which are not included in the exchange of old shares or old securities for new shares or new securities, such original shares or securities shall, immediately after the exchange, continue to be valued at their value, or apportioned value, as the case may be, when last valued before the exchange in accordance with subsection (5) of section 842AA, until such time as they fall to be revalued in accordance with that subsection.
(4) For the purposes of paragraph 10B[13] of Schedule 28B the like provisions as are contained in paragraphs (2) and (3) shall apply (substituting references to valuations in accordance with paragraph 10B for references to valuations in accordance with subsection (5) of section 842AA).
(5) Where the company in which the venture capital trust holds the old shares or old securities is deemed to satisfy the requirements of paragraph 2 of Schedule 28B (unquoted company) by virtue of sub-paragraph (6) of that paragraph for a period of five years after ceasing to be an unquoted company, the company shall be deemed to satisfy those requirements in relation to the new shares or new securities for the same five year period.
(6) Subject to paragraph (7), where the old shares or old securities are shares or securities in relation to which the requirements of paragraphs 6 and 8[14] of Schedule 28B were (or were deemed to be satisfied to any extent immediately before the exchange, those requirements shall be deemed, at all times after that time, to be satisfied to the same extent in relation to the matching new shares or new securities.
(7) Where there is a time following the exchange when (apart from the exchange) the requirements of paragraph 6 of Schedule 28B would have ceased under -
to be satisfied in relation to the old shares or old securities, those requirements shall cease at that time to be satisfied in relation to the matching new shares or new securities.
(8) For the purposes of paragraph 7 of Schedule 28B any new shares or new securities shall be deemed -
(9) In determining whether the requirements of paragraph 9[15] of Schedule 28B are satisfied in relation to the company at any time in the period for giving effect to the exchange, the exchange shall be disregarded.
(10) The reference in paragraph (9) to the period for giving effect to the exchange is to the period which -
Provision where exchange of shares or securities for those in another company
8.
- (1) In relation to a case described in regulation 5, the following paragraphs have effect.
(2) For the purposes of subsection (2)(b) to (d) of section 842AA, the aggregate value of the new shares and new securities issued to the venture capital trust shall be determined, immediately after the exchange and until such time as those shares or securities fall to be revalued in accordance with subsection (5) of that section, in accordance with the formula in regulation 7(2) (substituting references to the period for giving effect to the exchange for references to the events mentioned in regulation 4(1)(d)).
(3) For the purposes of paragraph 10B of Schedule 28B, the like provisions as are contained in paragraph (2) shall apply (substituting references to valuations in accordance with paragraph 10B for references to valuations in accordance with subsection (5) of section 842AA).
(4) The new shares and new securities held by the venture capital trust shall be treated, during the period for giving effect to the exchange, as meeting the requirements of Schedule 28B.
(5) The requirements of and arrangements referred to in paragraph 9 of Schedule 28B, to the extent that they are incidental to the exchange, shall be disregarded before and during that period.
(6) The new shares and new securities shall be treated at all times following the end of the period for giving effect to the exchange as having met the requirements of paragraphs 6 and 7 of Schedule 28B.
(7) Where, immediately after the end of the period for giving effect to the exchange, any of the new shares or new securities are found not to meet the requirements of paragraph 2 of Schedule 28B, or of that paragraph and any other paragraphs of that Schedule (other than paragraph 6 or 7), those shares or securities shall be treated as meeting those requirements until the end of the period specified in paragraph (8) or the disposal by the venture capital trust of those shares or securities, whichever is the earlier to occur.
(8) The period specified is the period that -
(9) Where, immediately after the end of the period for giving effect to the exchange, any of the new shares or new securities are found not to meet the requirements of any paragraph of Schedule 28B other than paragraph 2, 6 or 7, those shares or securities shall be treated as meeting those requirements until the end of the period -
(10) Where, in a case falling within the terms of paragraph (9)(b)(ii), before the relevant date there mentioned, the new shares or new securities become marketed to the general public (within the meaning of paragraph 2(3) of Schedule 28B), there shall be substituted for that date the second anniversary of the date on which the new shares or new securities became so marketed or, if later, the second anniversary of the date on which those shares or securities became fully tradeable.
(11) References in this regulation to the period for giving effect to the exchange are references to the period which -
(12) Shares or securities become fully tradeable for the purposes of this regulation and regulation 9 when, in circumstances where they are offered for issue to the shareholders or holders of securities of company A, they cease to be subject to -
Provision where scheme of reconstruction involving issue of shares or securities
9.
- (1) In relation to a case described in regulation 6 the following paragraphs have effect as regards -
(2) For the purposes of subsection (2)(b) to (d) of section 842AA[16], the aggregate value of the new shares and new securities and any company A shares or securities shall be determined, immediately after the reorganisation period and until such time as those shares or securities fall to be revalued in accordance with subsection (5) of that section, in accordance with the formula in regulation 7(2) but where -
any reference to events mentioned in regulation 4(1)(d) is replaced with a reference to the reorganisation period.
(3) For the purposes of paragraph 10B of Schedule 28B[17], the like provisions as are contained in paragraph (2) shall apply (substituting references to valuations in accordance with paragraph 10B for references to valuations in accordance with subsection (5) of section 842AA).
(4) The new shares and new securities held by the venture capital trust shall be treated, during the reorganisation period, as meeting the requirements of Schedule 28B.
(5) The requirements of and arrangements referred to in paragraph 9 of Schedule 28B, to the extent that they are incidental to the scheme of reconstruction, shall be disregarded before and during the reorganisation period.
(6) The new shares or new securities held by the venture capital trust shall be treated at all times following the date on which they were issued to the trust company as having met the requirements of paragraphs 6 and 7 of Schedule 28B.
(7) Where, immediately after the date on which the new shares or new securities were issued to the venture capital trust, those shares or securities are found not to meet the requirements of paragraph 2 of that Schedule, or of that paragraph and any other paragraph of that Schedule excepting paragraph 6 or 7, those shares or securities shall be treated as meeting those requirements until the end of the period specified in paragraph (8) or the disposal by the venture capital trust of those shares or securities, whichever is the earlier to occur.
(8) The period specified is the period that -
(9) Where, immediately after the date on which the new shares or new securities were issued to the venture capital trust, those shares or securities are found not to meet the requirements of any paragraph of Schedule 28B other than paragraph 2, 6 or 7, those shares or securities shall be treated as meeting the requirements of that Schedule until the end of the period -
(10) Where, in a case falling within the terms of paragraph (9)(b)(ii), before the relevant date there mentioned, the new shares or new securities become marketed to the general public (within the meaning of paragraph 2(3) of Schedule 28B), there shall be substituted for that date the second anniversary of the date on which the new shares or new securities became so marketed or, if later, the second anniversary of the date on which those shares or securities became fully tradeable.
(11) In this regulation references to the reorganisation period are to the period which -
Earn-outs
10.
- (1) Where, in a case described in either regulation 5 or 6 -
(2) The recalculation shall be made -
(3) An election under this regulation in respect of any right -
Apportionment
11.
- (1) For the purposes of these Regulations (and of subsection (2)(b) to (d) of section 842AA and paragraph 10B of Schedule 28B), where it is necessary to apportion any value between the new shares or new securities issued to the venture capital trust (or one or more classes thereof), such apportionment shall be carried out -
(2) In the application of paragraph (1) to regulation 9, references to new shares and new securities shall be construed as extending to company A shares or securities (as defined in that regulation) with any necessary modifications.
John Heppell
Jim Fitzpatrick
Two of the Lords Commissioners of Her Majesty's Treasury
22nd October 2002
[2] Schedule 28B was inserted by section 70(2) of, and Schedule 14 to, the Finance Act 1995, and paragraph 11B was inserted by paragraph 8(1) of Schedule 18 to the Finance Act 2000.back
[3] Section 138A was inserted by section 89 of the Finance Act 1997.back
[4] Section 135 was substituted by paragraph 1 of Schedule 9 to the Finance Act 2002 (c. 23).back
[5] Section 272 was amended by paragraph 12 of Schedule 38 to the Finance Act 1996.back
[6] Section 841 was amended by paragraph 4 of Schedule 20 to the Financial Services and Markets Act 2000 (c. 8).back
[8] Paragraph 10D was inserted by section 69 of the Finance Act 1999.back
[9] Paragraph 10C was inserted by section 69 of the Finance Act 1999 (c. 16).back
[10] Section 135 was substituted by paragraph 1 of Schedule 9 to the Finance Act 2002.back
[11] Section 136 was substituted by paragraph 2 of Schedule 9 to the Finance Act 2002.back
[12] Section 842AA was inserted by section 70(1) of the Finance Act 1995 (c. 4) and amended by paragraph 7 of Schedule 38 to the Finance Act 1996 (c. 8), section 75 of the Finance Act 1997 (c. 16), section 73 of the Finance Act 1998 (c. 36), section 69(4) of the Finance Act 1999 (c. 16) and paragraph 8(2) of Schedule 18 to the Finance Act 2000 (c. 17).back
[13] Paragraph 10B of Schedule 28B was inserted by section 72(2) of the Finance Act 1998.back
[14] Paragraph 6 of Schedule 28B was amended by paragraph 4 of Schedule 9 to the Finance Act 1997 and section 73(4) of the Finance Act 1998.back
[15] Paragraph 9 of Schedule 28B was amended by section 161(2) of, and Part V(22) of Schedule 41 to, the Finance Act 1996.back
[16] Section 842AA was inserted by section 70(1) of the Finance Act 1995 (c. 4).back
[17] Schedule 28B was inserted by section 70(2) of the Finance Act 1995. Paragraph 10B was inserted by section 72(2) of the Finance Act 1998 (c. 36).back