Part 23

Company distributions
Chapter 2

Matters which are distributions

Distributions in respect of special securities

Meaning of “special securities”
1015
1
Securities of a company are special securities for the purposes of paragraph F in section 1000(1) if they meet any of conditions A to E.
1A
But hybrid capital instruments (within the meaning of section 475C of CTA 2009) are not special securities by reason of meeting condition E.
2
Condition A is that the securities are issued as described in paragraph D in section 1000(1) (securities issued otherwise than for new consideration).
3
Condition B is that—
a
the securities—
i
are convertible (directly or indirectly) into shares in the company, or
ii
carry a right to receive shares in or securities of the company, and
b
the securities are neither listed on a recognised stock exchange nor issued on terms which are reasonably comparable with the terms of issue of securities listed on a recognised stock exchange.
4
Condition C is that under the securities the consideration given by the company for the use of the principal secured depends (to any extent) on the results of—
a
the company's business, or
b
any part of the company's business.
5
Condition D is that the securities are connected with shares in the company (see section 1017(2)).
6
Condition E is that the securities are equity notes—
a
issued by the company (“the issuing company”), and
b
held by a company which—
i
is associated with the issuing company, or
ii
is a funded company (see section 1017(3)).
Pt. 23 applied (with modifications) by 2003 c. 1, s. 554AC(3) (as inserted (with effect in accordance with Sch. 1 para. 14 of the amending Act) by Finance Act 2018 (c. 3), Sch. 1 para. 2)
S. 1015(1A) inserted (with effect in accordance with Sch. 20 paras. 10(a), 16 of the amending Act) by Finance Act 2019 (c. 1), Sch. 20 para. 4