Finance Act 2003

63Demutualisation of insurance companyU.K.

(1)A land transaction is exempt from charge if it is entered into for the purposes of or in connection with a qualifying transfer of the whole or part of the business of a mutual insurance company (“the mutual”) to a company that has share capital (“the acquiring company”).

(2)A transfer is a qualifying transfer if—

(a)it is a transfer of business consisting of the effecting or carrying out of contracts of insurance and takes place under an insurance business transfer scheme, or

[F1(b)it is a transfer of business of a general insurance company carried on through a permanent establishment in the United Kingdom and takes place in accordance with authorisation granted outside the United Kingdom for the purposes of the Solvency 2 Directive, and the requirements of subsection (3) and (4) are met in relation to the shares of a company (“the issuing company”) which is either the acquiring company or a company of which the acquiring company is a wholly-owned subsidiary.]

(3)Shares in the issuing company must be offered, under the scheme, to at least 90% of the persons who are members of the mutual immediately before the transfer.

(4)Under the scheme all of the shares in the issuing company that will be in issue immediately after the transfer has been made, other than shares that are to be or have been issued pursuant to an offer to the public, must be offered to the persons who (at the time of the offer) are—

(a)members of the mutual,

(b)persons who are entitled to become members of the mutual, or

(c)employees, former employees or pensioners of—

(i)the mutual, or

(ii)a wholly-owned subsidiary of the mutual.

(5)The Treasury may by regulations—

(a)amend subsection (3) by substituting a lower percentage for the percentage mentioned there;

(b)provide that any or all of the references in subsections (3) and (4) to members shall be construed as references to members of a class specified in the regulations.

Regulations under paragraph (b) may make different provision for different cases.

(6)For the purposes of this section a company is the wholly-owned subsidiary of another company (“the parent”) if the company has no members except the parent and the parent’s wholly-owned subsidiaries or persons acting on behalf of the parent or the parent’s wholly-owned subsidiaries.

(7)In this section—

  • “contract of insurance” has the meaning given by Article 3(1) of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (S.I. 2001/544);

  • “employee”, in relation to a mutual insurance company or its wholly-owned subsidiary, includes any officer or director of the company or subsidiary and any other person taking part in the management of the affairs of the company or subsidiary;

  • “general insurance company” means a company that has permission under [F2Part 4A] of the Financial Services and Markets Act 2000 (c. 8) F3... to effect or carry out contracts of insurance;

  • “insurance company” means a company that carries on the business of effecting or carrying out contracts of insurance;

  • “insurance business transfer scheme” has the same meaning as in Part 7 of the Financial Services and Markets Act 2000;

  • F4. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

  • “mutual insurance company” means an insurance company carrying on business without having any share capital;

  • F5. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

  • “pensioner”, in relation to a mutual insurance company or its wholly-owned subsidiary, means a person entitled (whether presently or prospectively) to a pension, lump sum, gratuity or other like benefit referable to the service of any person as an employee of the company or subsidiary.

  • [F6“the Solvency 2 Directive” means Directive 2009/138/EC of the European Parliament and of the Council of 25 November 2009 on the taking-up and pursuit of the business of Insurance and Reinsurance (Solvency II).]

Textual Amendments

F2Words in s. 63(7) substituted (1.4.2013) by Financial Services Act 2012 (c. 21), s. 122(3), Sch. 18 para. 98 (with Sch. 20); S.I. 2013/423, art. 3, Sch.

F4Words in s. 63(7) omitted (1.1.2016) by virtue of The Solvency 2 Regulations 2015 (S.I. 2015/575), reg. 1(2), Sch. 1 para. 24(3)(a)

F5Words in s. 63(7) omitted (1.1.2016) by virtue of The Solvency 2 Regulations 2015 (S.I. 2015/575), reg. 1(2), Sch. 1 para. 24(3)(b)

Commencement Information

I1Pt. 4 wholly in force at Royal Assent subject to Sch. 19, see s. 124, Sch. 19 para. 1(1)