VCM62370 - VCT scheme: qualifying holdings: effect of reorganisation
ITA/S330, SI2661/2002 Regulations
A company in which a VCT has invested may undergo a
reconstruction or reorganisation, or be taken over by another
company. This can result in the VCT coming to hold different shares
or securities in the same company, or shares or securities in a
different company, which would not, were it not for these
Regulations, be qualifying holdings because they do not satisfy
certain requirements of ITA/Part 6 Chapter 4.
The provisions of ITA/S330were introduced by FA2000 and
contain a power to make regulations to address this kind of
situation. Those Regulations, in the form of SI2661/2002, came into
force in November 2002,
but they have effect for such reconstructions,
reorganisations and take-overs taking place on or after 21 March
2000, when it was announced that these Regulations would be
made.
The effect of the Regulations is that that the requirements
of certain paragraphs of ITA/Part 6 Chapter 4B are deemed to be
satisfied after the reorganisation etc, and, providing the
requirements of other paragraphs of Chapter 4are met, the new
holding may be treated as a qualifying holding of the VCT. In cases
where those other paragraphs of Chapter 4are not met, the new
holding may be treated as a qualifying company for a certain
period, thereby giving the VCT time to arrange the disposal of the
holding if it wishes.
The Regulations cover the situations where:
- There is an exchange of shares or securities for shares or securities in the same company - see VCM62380.
- There is an exchange of shares or securities for shares in another company - see VCM62400.
- There is a scheme of reconstruction involving an issue of shares or securities - see VCM62420.
Note that these Regulations are in addition to, and do not replace, the existing provisions at ITAS326 which cover the situation where a new holding company is formed - see VCM62350.
