VCM50390 - CVS: investors and reliefs: arrangements for reciprocal investment

FA00/SCH15/PARA6

A qualifying investing company must not subscribe for shares under arrangements which also provide for some other person to subscribe for shares in a company in which any party to the arrangements has a material interest (see VCM50360).

This would apply, for example, where A Ltd (which owns AA Ltd) agrees to subscribe for shares in B Ltd (which is owned by Mr B) if Mrs B subscribes for shares in a subsidiary of AA Ltd.

There is one exception to the rule. It does not apply where the other person is the company issuing the shares and the arrangements are arrangements under which the money raised by the issue is to be lent to a subsidiary.

‘Arrangements’ is defined at FA00/SCH15/PARA102 (1) as including any scheme, agreement or understanding, whether or not legally enforceable.