Companies Act 1985

Residual interests under pension and employees' share schemes

1 (1) Where shares in a company are held on trust for the purposes of a pension scheme or an employees' share scheme, there is to be disregarded any residual interest which has not vested in possession, being an interest of the company or, as respects—

• section 23(4),

• paragraph 60(2) of Schedule 4, or

• paragraph 19(3) of Schedule 9,

of any subsidiary of the company.

(2) In this paragraph, "a residual interest" means a right of the company or subsidiary in question (" the residual beneficiary ") to receive any of the trust property in the event of—

(a) all the liabilities arising under the scheme having been satisfied or provided for, or

(b) the residual beneficiary ceasing to participate in the scheme, or

(c) the trust property at any time exceeding what is necessary for satisfying the liabilities arising or expected to arise under the scheme.

(3) In sub-paragraph (2), references to a right include a right dependent on the exercise of a discretion vested by the scheme in the trustee or any other person; and references to liabilities arising under a scheme include liabilities that have resulted or may result from the exercise of any such discretion.

(4) For purposes of this paragraph, a residual interest vests in possession—

(a) in a case within (a) of sub-paragraph (2), on the occurrence of the event there mentioned, whether or not the amount of the property receivable pursuant to the right mentioned in that sub-paragraph is then ascertained, and

(b) in a case within (b) or (c) of that sub-paragraph, when the residual beneficiary becomes entitled to require the trustee to transfer to that beneficiary any of the property receivable pursuant to that right

(5) As respects paragraph 60(2) of Schedule 4 and paragraph 19(3) of Schedule 9, sub-paragraph (1) has effect as if references to shares included debentures.

2 (1) The following has effect as regards the operation of sections 23, 144, 145 and 146 to 149 in cases where a residual interest vests in possession.

(2) Where by virtue of the vesting in possession of a residual interest a subsidiary ceases to be exempt from section 23, that section does not prevent the subsidiary from continuing to be a member of its holding company ; but subject to subsection (4) of that section, the subsidiary has no right from the date of vesting to vote at meetings of the holding company or any class of its members.

(3) Where by virtue of paragraph 1 of this Schedule any shares are exempt from section 144 or 145 at the time when they are issued or acquired but the residual interest in question vests in possession before they are disposed of or fully paid up, those sections apply to the shares as if they had been issued or acquired on the date on which that interest vests in possession.

(4) Where by virtue of paragraph 1 any shares are exempt from sections 146 to 149 at the lime when they are acquired but the residual interest in question vests in possession before they are disposed of, those sections apply to the shares as if they had been acquired on the date on which that interest vests in possession.

(5) The above sub-paragraphs apply irrespective of the date on which the residual interest vests or vested in possession; but where the date on which it vested was before 26th July 1983 (the passing of the [1983 c. 50.] Companies (Beneficial Interests) Act 1983), they have effect as if the vesting had occurred on that date.