Part III Income Tax, Corporation Tax and Capital Gains Tax
Chapter II Other provisions
Employee share ownership
I152 Approved profit sharing schemes: restriction on type of shares.
1
Schedule 9 to the Taxes Act 1988 (share option schemes and profit sharing schemes) is amended in accordance with subsections (2) to (4).
2
In paragraph 9(1) (requirements to be satisfied by shares in share option schemes), after “below" insert “
(disregarding paragraph 11A)
”
.
3
After paragraph 11 (requirements as to listing etc.) insert—
11A
1
In the case of a profit sharing scheme, scheme shares must not be shares—
a
in an employer company, or
b
in a company that—
i
has control of an employer company, and
ii
is under the control of a person or persons within sub-paragraph (2)(b)(i) below in relation to an employer company.
2
For the purposes of this paragraph a company is “an employer company” if—
a
the business carried on by it consists substantially in the provision of the services of the persons employed by it, and
b
the majority of those services are provided to—
i
a person who has, or two or more persons who together have, control of the company, or
ii
a company associated with the company.
3
For the purposes of sub-paragraph (2)(b)(ii) above a company shall be treated as associated with another company if both companies are under the control of the same person or persons.
4
For the purposes of sub-paragraphs (1) to (3) above—
a
references to a person include a partnership, and
b
where a partner, alone or together with others, has control of a company, the partnership shall be treated as having like control of that company.
5
For the purposes of this paragraph the question whether a person controls a company shall be determined in accordance with section 416(2) to (6).
4
In paragraph 12—
a
in sub-paragraph (1), in paragraph (c) for “other than" to the end of that paragraph there shall be substituted “
other than those permitted by sub-paragraph (1A) below.
”
, and
b
after sub-paragraph (1) insert—
1A
Subject to sub-paragraph (1B) below, scheme shares may be subject to—
a
restrictions which attach to all shares of the same class, or
b
a restriction authorised by sub-paragraph (2) below.
1B
In the case of a profit sharing scheme, scheme shares must not be subject to any restrictions affecting the rights attaching to those shares which relate to—
a
dividends, or
b
assets on a winding-up of the company,
other than restrictions which attach to all other ordinary shares in the same company.
5
Subsections (1) to (4) shall be deemed to have come into force on 21st March 2000.
6
Subsections (3) and (4) do not have effect in relation to shares acquired before 21st March 2000 by the trustees of a profit sharing scheme approved under Schedule 9 to the Taxes Act 1988.