SCHEDULES

SCHEDULE 3Qualifying scheme

Part 4Schemes involving hybrid effect and connected persons

Schemes involving hybrid effect and connected persons

9

A scheme falls within this Part if it satisfies the requirements of paragraph 10 or 11.

Scheme including issue of shares not conferring a qualifying beneficial entitlement

10

1

A scheme satisfies the requirements of this paragraph if it includes the issue by a company to a person connected with the company of shares other than shares falling within sub-paragraph (2).

2

Shares issued by a company fall within this sub-paragraph if—

a

on their issue, they are ordinary shares that are fully paid-up,

b

at all times in the accounting period of the company in which the issue takes place, the shares confer a qualifying beneficial entitlement, and

c

when the issue takes place, there is no arrangement or understanding under which the rights attaching to the shares may be amended.

3

A share in a company confers a qualifying beneficial entitlement if it confers a beneficial entitlement to the relevant proportion of—

a

any profits available for distribution to equity holders of the company, and

b

any assets of the company available for distribution to its equity holders on a winding-up.

4

For the purposes of sub-paragraph (3) the relevant proportion, in relation to a share, is the same as the proportion of the issued share capital represented by that share.

5

Schedule 18 to ICTA (equity holders and profits or assets available for distribution) applies for the purposes of sub-paragraph (3) as it applies for the purposes of section 403C of ICTA.

Scheme including transfer of rights under a security

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1

A scheme satisfies the requirements of this paragraph if it includes a transaction or a series of transactions under which a person (“the transferor”)—

a

transfers rights to receive a payment under a relevant security to one or more other persons, or

b

otherwise secures that one or more other persons are similarly benefited,

and sub-paragraphs (3) and (4) are satisfied.

2

A person is similarly benefited for these purposes if he receives a payment which would, but for the transaction or series of transactions, have arisen to the transferor.

3

This sub-paragraph is satisfied if—

a

the transferor, and

b

at least one of the persons to whom a transfer of rights is made or a similar benefit is secured,

are connected with each other.

4

This sub-paragraph is satisfied if following the transfer of rights or the securing of the similar benefit—

a

two or more persons either hold rights to receive a payment under the security or enjoy a similar benefit, and

b

the rights held and benefits enjoyed by such of those persons as are connected have, taken together, a value equal to or greater than the value of any other rights to receive a payment under the security and of any other similar benefits, taken together.

5

In sub-paragraph (4)(b) references to the value of rights to receive a payment under a relevant security are references to the market value of those rights; and references to the value of similar benefits are to be construed accordingly.

6

In this paragraph a relevant security is—

a

a security (within the meaning of Part 6 of ICTA), or

b

any agreement under which a person receives an annuity or other annual payment (whether it is payable annually or at shorter or longer intervals) for a term which is not contingent on the duration of a human life or lives.

Interpretation

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Section 839 of ICTA has effect for the purposes of this Part.