Corporation Tax Act 2010 section 1164

More about the meaning of "holding in a company"

Section 1164 provides further guidance on how a holding in a company is interpreted for the purposes of condition E of the investment trust rules, particularly in the context of schemes of reconstruction.

• Where a scheme of reconstruction results in new shares or securities being issued in one company in exchange for shares or securities in another, the newly issued shares are treated as part of the existing holding in the second company.
• Because the new shares or securities are issued for no consideration, the overall size of the holding (as defined elsewhere in the legislation) is not treated as having been enlarged.
• This treatment ensures that schemes of reconstruction do not inadvertently cause an investment trust to breach the conditions for maintaining its investment trust status.
• The rule applies specifically in the context of condition E, which governs the maximum proportion of an investment trust's holdings that may be held in any single company.