[F1[F2257MNDLimit on investment in shorter applicable periodU.K.
(1)This section applies where condition A or condition B is met.
(2)Condition A is that—
(a)a company becomes a 51% subsidiary of the social enterprise at any time during the shorter applicable period,
(b)all or part of the money raised by the investment is employed for the purposes of a qualifying activity which consists wholly or partly of a trade carried on by that company, and
(c)that trade (or part of it) was carried on by that company before it became a 51% subsidiary as mentioned in paragraph (a).
(3)Condition B is that all or part of the money raised by the investment is employed for the purposes of a qualifying activity which consists wholly or partly of a trade which, during the shorter applicable period, becomes a transferred trade (see subsection (9)).
(4)Where this section applies, at each time in the shorter applicable period (“the relevant time”) the total of the relevant investments made in the social enterprise before that time must not exceed £1.5 million.
(5)In subsection (4) the reference to relevant investments “made in the social enterprise” includes—
(a)relevant investments made in a company which at any time before the relevant time has been a 51% subsidiary of the social enterprise,
(b)any other relevant investment made in a company to the extent that the money raised by that relevant investment has been employed for the purposes of a trade carried on by another company (“company X”) which at any time before the relevant time has been a 51% subsidiary of the social enterprise, and
(c)any other relevant investment made in a company if—
(i)the money raised by that relevant investment has been employed for the purposes of a trade carried on by that company or another person, and
(ii)after that relevant investment was made, but before the relevant time, that trade (or part of it) became a transferred trade.
(6)The investments within paragraph (a) of subsection (5)—
(a)include investments made in a company mentioned in that paragraph before it became a 51% subsidiary of the social enterprise, but
(b)where a company mentioned in that paragraph is not a 51% subsidiary of the social enterprise at the relevant time, do not include any investments made in that company after it last ceased to be such a subsidiary.
(7)For the purposes of subsection (5)(b), where company X is not a 51% subsidiary of the social enterprise at the relevant time, any money employed after company X last ceased to be such a subsidiary is to be ignored.
(8)Where only a proportion of the money raised by a relevant investment is employed for the purposes of a trade which becomes a transferred trade, only the corresponding proportion of that relevant investment is to be treated as falling within subsection (5)(c).
(9)For the purposes of this section, if—
(a)before the relevant time, a trade is transferred—
(i)to the social enterprise,
(ii)to a company which, at the relevant time, is or has been a 51% subsidiary of the social enterprise, or
(iii)to a partnership of which the social enterprise, or a company within sub-paragraph (ii), is a member, and
(b)the trade or part of it was at any time before the transfer carried on by another person,
the trade or part mentioned in paragraph (b) becomes a “ transferred trade ” when it is transferred as mentioned in paragraph (a).
(10)The cases within subsection (9)(a)—
(a)include the case where the trade is transferred to a company within subsection (9)(a)(ii), or a partnership of which such a company is a member, before the company became a 51% subsidiary of the social enterprise, but
(b)where a company within subsection (9)(a)(ii) is not a 51% subsidiary of the social enterprise at the relevant time, do not include the case where the trade is transferred to that company, or a partnership of which that company is a member, after that company last ceased to be such a subsidiary.
(11)In this section—
“qualifying activity” has the same meaning as in section 257MNA (see subsection (4) of that section);
“relevant investment” has the meaning given by section 173A(3) (reading references in section 173A(3) to a company as including any social enterprise).
(12)Section 173A(4) and (5) apply to determine for the purposes of this section when a relevant investment is made.
(13)Section 173A(6) and (7) (meaning of “trade” etc) apply also for the purposes of this section.]]
Textual Amendments
F1Pt. 5B inserted (17.7.2014) by Finance Act 2014 (c. 26), Sch. 11 para. 1
F2Ss. 257MNA-257MNE and cross-heading inserted (with effect in accordance with Sch. 1 para. 14(1)(2) of the amending Act) by Finance (No. 2) Act 2017 (c. 32), Sch. 1 para. 6(3)