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Finance Act 2012

Details of the Section

2.Subsection (1) provides that these changes will be made to the Corporation Tax Act (CTA) 2010.

3.Subsection (2) amends section 162(2)(c) of CTA 2010. Section 162(2) contains condition A which must be met in order for the loan to be a normal commercial loan. The amendment provides that condition A is satisfied if the loan carries a right to conversion into shares or securities in a quoted unconnected company (this is defined in subsection (4) of this section).

4.Subsection (3) amends of section 164(2)(c) so that condition A in section 162(2) is also satisfied where the loan carries a right to conversion into securities that themselves carry a right to conversion into shares or securities in a quoted unconnected company.

5.Subsection (4) inserts a new subsection into section 162(2).  New section 162(2A) provides that for the purposes of sections 162 and 164 a company is a quoted unconnected company where it is not connected to the company in which the relevant loan is held and its ordinary shares are listed on a recognised stock exchange.

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