Corporation Tax Act 2010 section 160

Meaning of "ordinary shares"

Section 160 defines "ordinary shares" for the purposes of the equity holder rules by excluding shares that qualify as restricted preference shares, which must meet all five specified conditions (A to E).

• Ordinary shares are all shares other than restricted preference shares; a share is only a restricted preference share if it satisfies every one of five conditions (A to E)
• The shares must have been issued for consideration that is or includes new consideration (Condition A), and must not carry rights to convert into other shares or securities except certain permitted categories, or rights to acquire additional shares or securities (Conditions B and C)
• The shares must either carry no right to dividends or only a restricted right to dividends as defined elsewhere in the legislation (Condition D)
• On repayment, the shares must not entitle the holder to receive more than the original new consideration, unless the excess is reasonably comparable with the rights carried by fixed-dividend shares listed on a recognised stock exchange (Condition E)