(1)Paragraph (b) of section 90(3) of the Finance Act 1986 (which provides that section 87 shall not apply as regards an agreement to transfer securities constituted by or transferable by means of an inland bearer instrument which does not fall within exemption 3 in the heading “Bearer Instrument” in Schedule 1 to the [1891 c. 39.] Stamp Act 1891) shall cease to have effect.
(2)After section 90(3) of that Act there shall be inserted—
“(3A)Section 87 above shall not apply as regards an agreement to transfer chargeable securities constituted by or transferable by means of an inland bearer instrument within the meaning of the heading “Bearer Instrument” in Schedule 1 to the Stamp Act 1891 unless subsection (3B), (3C) or (3E) below applies to the instrument.
(3B)This subsection applies to any instrument which falls within exemption 3 in the heading “Bearer Instrument” in Schedule 1 to the Stamp Act 1891 (renounceable letter of allotment etc. where rights are renounceable not later than six months after issue).
(3C)This subsection applies to an instrument if—
(a)the instrument was issued by a body corporate incorporated in the United Kingdom;
(b)stamp duty under the heading “Bearer Instrument” in Schedule 1 to the [1891 c. 39.] Stamp Act 1891 was not chargeable on the issue of the instrument by virtue only of—
(i)section 30 of the [1967 c. 54.] Finance Act 1967 (exemption for bearer instruments relating to stock in foreign currencies); or
(ii)section 7 of the [1967 c. 20 (N.I.).] Finance Act (Northern Ireland) 1967 (which makes similar provision for Northern Ireland); and
(c)the instrument is not exempt.
(3D)An instrument is exempt for the purposes of subsection (3C) above if—
(a)the chargeable securities in question are, or a depositary receipt for them is, listed on a recognised stock exchange; and
(b)the agreement to transfer those securities is not made in contemplation of, or as part of an arrangement for, a takeover of the body corporate which issued the instrument.
(3E)This subsection applies to an instrument if—
(a)the instrument was issued by a body corporate incorporated in the United Kingdom;
(b)stamp duty under the heading “Bearer Instrument” in Schedule 1 to the Stamp Act 1891 was not chargeable on the issue of the instrument—
(i)by virtue only of subsection (2) of section 79 above (exemption for bearer instruments relating to loan capital); or
(ii)by virtue only of that subsection and one or other of the provisions mentioned in subsection (3C)(b)(i) and (ii) above;
(c)by virtue of section 79(5) (convertible loan capital) or 79(6) (loan capital carrying special rights) above, stamp duty would be chargeable on an instrument transferring the loan capital to which the instrument relates; and
(d)the instrument is not exempt.
(3F)An instrument is exempt for the purposes of subsection (3E) above if—
(a)the chargeable securities in question are, or a depositary receipt for them is, listed on a recognised stock exchange;
(b)the agreement to transfer those securities is not made in contemplation of, or as part of an arrangement for, a takeover of the body corporate which issued the instrument; and
(c)those securities do not carry any right of the kind described in section 79(5) above (right of conversion into, or acquisition of, shares or other securities) by the exercise of which securities which are not listed on a recognised stock exchange may be obtained.”
(3)At the end of that section there shall be added—
“(8)For the purposes of subsections (3D) and (3F) above—
(a)references to a depositary receipt for chargeable securities shall be construed in accordance with section 94(1) below;
(b)“recognised stock exchange” has same meaning as it has in the Tax Acts by virtue of section 841 of the [1988 c. 1.] Income and Corporation Taxes Act 1988;
(c)there is a takeover of a body corporate if a person, on his own or together with connected persons, loses or acquires control of it.
(9)For the purposes of subsection (8) above—
(a)any question whether a person is connected with another shall be determined in accordance with section 286 of the [1992 c. 12.] Taxation of Chargeable Gains Act 1992;
(b)“control” shall be construed in accordance with section 416 of the Income and Corporation Taxes Act 1988.”
(4)This section applies to an agreement if the inland bearer instrument in question was issued on or after 26th November 1996 and—
(a)in the case of an agreement which is not conditional, the agreement is made on or after 26th November 1996; or
(b)in the case of a conditional agreement, the condition is satisfied on or after 26th November 1996.