Finance Act 2022

Ownership condition U.K.

3 (1) The ownership condition is met in relation to a company if—

(a) the sum of relevant interests in it held by persons who are not category A investors does not exceed 30%, and

(b) where the company has issued securities that entitle their holders to a greater proportion of profits or assets of a particular class (“an enhanced class”) than to other profits or assets of the company, the sum of relevant interests in that class of profits or assets held by persons who are not category A investors does not exceed 30%.

(2) A person has a relevant interest in a company if, as a result of a direct or indirect interest the person has in the company, the person—

(a) is beneficially entitled to a proportion of the profits available for distribution to equity holders of the company,

(b) is beneficially entitled to a proportion of the assets of the company for distribution to its equity holders on a winding up, or

(c) has a proportion of the voting power in the company,

and the amount of that relevant interest, for the purposes of the calculation in sub-paragraph (1)(a), is the greatest of such of those proportions as arise as a result of that interest.

(3) A person has a relevant interest in an enhanced class of a company if, as a result of a direct or indirect interest the person has in the company, the person—

(a) is beneficially entitled to a proportion of the profits that fall within that class that are available for distribution to equity holders of the company, or

(b) is beneficially entitled to a proportion of the assets of the company that fall within that class for distribution to its equity holders on a winding up,

and the amount of that relevant interest, for the purposes of the calculation in sub-paragraph (1)(b), is the greatest of such of those proportions as arise as a result of that interest.

(4) Paragraphs 4 to 7 set out how to determine the amounts of relevant interests.

(5) Those amounts are to be expressed as percentages, but there is no need to adjust any of those amounts if the application of the rules in those paragraphs has the result that the total amount of relevant interests in a company or an enhanced class of a company is more than 100% (as may sometimes be the case).

[F1 (5A) See also paragraph 59, which makes provision for parties to alternative finance arrangements who are equivalent to equity holders to be treated as such.]

(6) In this paragraph—

• “securities” means—

  (a)

  ordinary shares within the meaning of section 160 of CTA 2010 (meaning of ordinary shares for the purposes of section 158(1)(a) of that Act), and

  (b)

  loans, other than normal commercial loans;

• “normal commercial loan” is to be construed in accordance with section 162 of that Act (meaning of normal commercial loan for the purposes of sections 158(1)(b) and 159(4)(b) of that Act).

Textual Amendments

F1 Sch. 2 para. 3(5A) inserted (11.7.2023) by Finance (No. 2) Act 2023 (c. 30), Sch. 4 para. 15(2)