Corporation Tax Act 2010 section 1162

The 15% holding limit: exceptions

Section 1162 sets out the exceptions to the general rule (condition E) that limits an investment trust's holding in any single company to no more than 15% of that company's shares or securities.

• The 15% holding limit in condition E is subject to certain exceptions that allow an investment trust to exceed the threshold in specific circumstances.
• The exceptions recognise that an investment trust may acquire holdings above 15% through events outside its direct control, such as corporate reorganisations or changes in the investee company's share capital.
• Where a holding exceeds the 15% limit, the investment trust is not automatically disqualified provided it takes steps to reduce the holding or the excess arose in permitted circumstances.
• Specific rules govern the disposal of shares or securities from holdings that exceed the limit, codifying a long-standing HMRC practice into legislation to provide certainty for investment trusts managing their portfolios.