(1)If this section applies, subsections (2) to (8) have effect to determine the extent to which, and the times for which, the requirements of the following provisions of Chapter 4 are met in relation to the new shares—
section 287 (the maximum qualifying investment requirement),
section 289 (the proportion of eligible shares requirement),
section 290 (the trading requirement),
section 291 (the carrying on of a qualifying activity requirement),
[F1section 292A (the maximum amount raised annually through risk finance investments requirement),
section 292AA (the maximum amount raised through risk finance investments when relevant holding is issued requirement),
section 292AB (the maximum risk finance investments during the 5-year post-investment period requirement),]
section 293 (the use of the money raised requirement),
section 294 (the relevant company to carry on the relevant qualifying activity requirement),
[F2 section 294A (the permitted company age requirement),]
section 296 (the control and independence requirement), F3...
section 297 (the gross assets requirement),F4...
section 297A (the number of employees requirement) [F5, and
section 297B (the proportion of skilled employees requirement).]
(2)If the requirements of sections 290 and 291 were met in relation to the old company and any old shares immediately before the beginning of the period for giving effect to the arrangements, then (so far as it would not otherwise be the case) those requirements are treated as being met in relation to the new company and the matching new shares at all times which—
(a)fall in that period, and
(b)do not fall after a time when (apart from the arrangements) those requirements would have ceased by virtue of—
(i)section 291(4) or (5), or
(ii)any cessation of a trade by any company,
to be met in relation to the old company and the matching old shares.
(3)For the purposes of section 291, the period of two years mentioned in subsection (4) of that section is treated, in the case of any new shares, as expiring at the same time as it would have expired (or by virtue of this subsection would have been treated as expiring) in the case of the matching old shares.
(4)Subject to subsection (5), if—
(a)there is an exchange under the arrangements of any new shares for any old shares, and
(b)those old shares are shares in relation to which the requirements of sections [F6292A, 292AA, 292AB], 293, 294 [F7, 294A], 297 [F8, 297A and 297B] were (or were treated as being) met to any extent immediately before the exchange,
those requirements are to be treated, at all times after that time, as met to the same extent in relation to the matching new shares.
[F9(4A)If—
(a)there is an exchange under the arrangements of any new shares for any old shares,
(b)that exchange occurs during the period of 5 years beginning with the day after the day on which the old shares were issued, and
(c)those old shares are shares in relation to which the requirement of section 292AB (maximum risk finance investments during 5-year post-investment period) applies and is met,
that requirement is to be treated as applying and met in relation to the matching new shares.
(4B)But, where that requirement applies in relation to the old shares, it is met in relation to those shares if (and only if) it would be met were—
(a)the first reference to the relevant company in section 292AB(4), and
(b)the references to the relevant company in section 292AB(5) and (7)(a)(i),
read, in relation to times in that 5 year period which fall at or after the time of the exchange, as references to the new company.
(4C)For the purposes of subsections (4A) and (4B), the requirement in section 292AB is treated as applying in relation to the old shares if condition A or B in that section would be met if references in section 292AB(5) and (7)(a)(i) to the relevant company were read as references to the new company.
(4D)The requirement in section 293 (the use of money raised) is met in relation to the old shares if (and only if) it would be met if references to the relevant company in section 293(5ZA) were read as including a reference to the new company.
(4E)The requirement of section 294A (permitted company age) is met in relation to the old shares if (and only if) it would be met if—
(a)in section 294A(4) the reference to relevant investments made in the relevant company included a reference to relevant investments made in the new company,
(b)in section 294A(6)(d) and (f) the references to the relevant company included a reference to the new company,
(c)in paragraphs (a)(ii) and (b)(iii) of the definition of “the total relevant turnover amount” in section 294A(8) the reference to a company which becomes a 51% subsidiary of the relevant company after the investment date included a reference to a company which becomes a 51% subsidiary of the new company after that date otherwise than as a result of the exchange.
(4F)If—
(a)there is an exchange under the arrangements of any new shares for any old shares,
(b)that exchange occurs during the period of 3 years beginning with the issue of the old shares, and
(c)those old shares are shares in relation to which the requirement of section 297B (proportion of skilled employees requirement) is met,
that requirement is to be treated as met in relation to the matching new shares.
(4G)The requirement of section 297B is met in relation to the old shares if (and only if) it would be met in relation to those shares were references to the relevant company, in subsections (1) and (3) of that section (and, in the definitions of the terms mentioned in subsection (4) as they apply for the purposes of those subsections), read as references to the new company in relation to times in that 3 year period which fall at or after the exchange.]
(5)If there is a time following any exchange under the arrangements of any new shares for any old shares when (apart from the arrangements) the requirement of section 293 would have ceased under—
(a)subsection (1) of that section, or
(b)this subsection,
to be met in relation to those old shares, that requirement ceases at that time to be met in relation to the matching new shares.
(6)For the purposes of section 287, any new shares acquired under the arrangements are to be treated as representing an investment which—
(a)raised the same amount of money as was raised (or, by virtue of this subsection, is treated as having been raised) by the issue of the matching old shares, and
(b)raised that amount by an issue of shares in the new company made at the time when the issue of the matching old shares took place (or, as the case may be, is treated as having taken place).
(7)In determining whether the requirements of section 296 are met in relation to the old company or the new company at a time in the period for giving effect to the arrangements, ignore both—
(a)the arrangements themselves, and
(b)any exchange of new shares for old shares that has already taken place under the arrangements.
(8)For the purposes of section 289, the value of the new shares, both—
(a)immediately after the time of their acquisition, and
(b)immediately after the time of any subsequent relevant event occurring by virtue of the arrangements,
is to be taken to be the same as the value, when last valued in accordance with that section, of the old shares for which they are exchanged.
Textual Amendments
F1Words in s. 327(1) inserted (18.11.2015) by Finance (No. 2) Act 2015 (c. 33), Sch. 6 para. 18(2)(a)
F2Words in s. 327(1) inserted (18.11.2015) by Finance (No. 2) Act 2015 (c. 33), Sch. 6 para. 18(2)(b)
F3Word in s. 327(1) repealed (19.7.2007) by Finance Act 2007 (c. 11), Sch. 27 Pt. 2(16)
F4Word in s. 327(1) omitted (18.11.2015) by virtue of Finance (No. 2) Act 2015 (c. 33), Sch. 6 para. 18(2)(c)
F5Words in s. 327(1) inserted (18.11.2015) by Finance (No. 2) Act 2015 (c. 33), Sch. 6 para. 18(2)(c)
F6Words in s. 327(4) inserted (18.11.2015) by Finance (No. 2) Act 2015 (c. 33), Sch. 6 para. 18(3)(a)
F7Words in s. 327(4) inserted (18.11.2015) by Finance (No. 2) Act 2015 (c. 33), Sch. 6 para. 18(3)(b)
F8Words in s. 327(4) substituted (18.11.2015) by Finance (No. 2) Act 2015 (c. 33), Sch. 6 para. 18(3)(c)
F9S. 327(4A)-(4G) inserted (18.11.2015) by Finance (No. 2) Act 2015 (c. 33), Sch. 6 para. 18(4)