Corporation Tax Act 2009 section 931U

Meaning of "ordinary share" and "redeemable"

Section 931U defines the terms "ordinary share" and "redeemable" for the purposes of the distribution exemption rules applicable to companies that are not small.

• An "ordinary share" is one that carries no preferential rights to dividends or to company assets on winding up, whether now or in the future.
• A share is "redeemable" only if its terms of issue or any collateral arrangements require redemption, entitle the holder to demand redemption, or entitle the issuing company to redeem.
• These definitions are relevant to determining whether distributions received on shares qualify for exemption from corporation tax.
• Collateral arrangements — not just the formal terms of issue — are taken into account when deciding whether a share is redeemable.