VCM60154 - VCT scheme: general: exchange of shares or securities for those in another company: valuation of the new holding
SI2661/2002 Regulation 8 (2) & (3)
ITA/S278 & S289
A VCT can exchange a holding of old shares or securities in
its’ investee company A for new shares or securities issued
by company B (see
VCM62400). Company B has acquired shares
in Company A and issued, in consideration, its own new shares.
Company B is sometimes called the ‘predator Company’
and Company A the ‘target Company’.
The shares or securities issued by company B are valued for
the 15% holding limit condition, the 70% qualifying holding
condition and the 30% eligible shares condition (see
VCM60110 onwards) as follows.
The aggregate value of the new shares and new securities is
calculated immediately after the last of the shares in or
securities of company B to be issued in consequence of the exchange
is issued, using the formula below. This value will then be used
until the shares or securities fall to be revalued in accordance
with ITA/S278(3) (see
VCM60150).
The formula is:
| Nv = | Ov x | Nmv
|
|
|
| Nmv + C |
where
| Nv = | the aggregate value of the new shares and securities that you are calculating |
| Ov = | the aggregate value of the old shares and securities when they were last valued (see VCM60150) |
| Nmv = | the aggregate market value of the new shares and securities immediately after the last of the shares in or securities of company B to be issued in consequence of the exchange is issued |
| C = | the aggregate market
value immediately after the last of the shares in or securities of
company B to be issued in consequence of the exchange is issued of:
(i) any monetary amount, (ii) any monetary amount (without any discount for postponement of the right to receive payment or any part of it), and (iii) any other consideration of receipt (except the new shares and securities, received by the VCT as consideration for, or in respect of, the old shares or securities. |
This same method of valuation is to be used to check that each
qualifying holding comprises at least 10% eligible shares required
by ITA/S289 (see
VCM62030).
Where the value of the new shares or new securities issued to
the VCT needs to be apportioned, see
VCM60157.
