VCM50360 - CVS: investors and reliefs: no material interest

FA00/SCH15/PARA5 & PARA7

A qualifying investing company must not have a ‘material interest’ in the company issuing the shares, or in any subsidiary of that company, at any time during the qualification period.

A material interest is defined as possession of over 30% of either the company’s ‘ordinary share capital’ or the voting power in the company. There are elaborations of this rule bringing in the interests of connected persons and associates, indirect possession of share capital and entitlement to acquire (see VCM50370 and VCM50380).

For this purpose ‘ordinary share capital’ is defined as all the issued share capital except ‘relevant preference shares’ (see VCM50410), plus any loan capital which carries a right to acquire shares other than relevant preference shares. (Normally that right will take the form of a right of ‘conversion’, that is, a right to exchange rights as a loan creditor for shares, but other arrangements are possible.) Loan capital is defined in the usual way (see VCM25140); sums owing to a bank in respect of an overdraft on a current account are excluded.