Finance Act 1986

4 (1) After paragraph 2A there shall be inserted the following paragraph—

Modification of paragraph 2 in relation to oil exploration

2B (1) Where eligible shares in a company are issued for the purpose of enabling the company to raise money for oil exploration—

(a) to be carried on by the company, or by any subsidiary of the company; and

(b) from which it is intended that a qualifying trade (to be so carried on) will be derived;

paragraph 2 above shall apply in relation to the company with the modifications set out in this paragraph.

(2) For paragraph (b) of sub-paragraph (1) there shall be substituted the following paragraphs—

‘(b) those shares are issued to him for the purpose of raising money for oil exploration which—

(i) is being carried on by the company, or by any subsidiary of the company, on the date on which the shares are issued; or

(ii) begins so to be carried on immediately thereafter;

and from which it is intended that a qualifying trade (to be so carried on) will be derived;

(c) throughout the period of three years beginning with that date, the company, or any subsidiary of the company, holds an exploration licence which was granted to it, or to another such subsidiary;

(d) the exploration is carried out solely within the area to which the licence applies; and

(e) on the date on which the shares are issued, neither the company nor any subsidiary of the company holds an appraisal licence or a development licence relating to that area or any part of that area.’

(3) After sub-paragraph (1) there shall be inserted the following sub-paragraph—

‘(1A) Where, at any time after the issue of the shares, but before the end of the period mentioned in paragraph (c) of sub-paragraph (2) above, the company, or any subsidiary of the company, comes to hold an appraisal licence or development licence which relates to the area, or any part of the area, to which the exploration licence relates, the exploration licence and that other licence shall be treated for the purposes of that paragraph as a single exploration licence.’

(4) For sub-paragraph (4) there shall be substituted the following sub-paragraph—

‘(4) The relief shall be given on a claim and shall not be allowed unless and until the company has carried on the exploration for four months’.

(5) In sub-paragraph (5), for the word 'trade' there shall be substituted the word 'exploration'.

(6) In sub-paragraph (7)(b), for the words from 'either' to the end there shall be substituted the words 'three years after that date'.

(7) A trade which consists to any substantial extent of oil extraction activities shall, if it would be a qualifying trade were it not for paragraph 6(2)(d) below, be treated as a qualifying trade for the purposes of this paragraph (including those of paragraph 2(1)(b) as modified).”

(2) This paragraph has effect in relation to shares issued at any time after the passing of" this Act.