Corporation Tax Act 2010 section 164

Sections 160 and 162: supplementary

Section 164 provides supplementary rules for determining whether shares qualify as restricted preference shares and whether securities qualify as normal commercial loans, particularly where conversion rights exist and a quoted parent company is involved.

• Shares meeting conditions A, C, D and E in section 160 qualify under this section provided any conversion rights they carry are limited to conversion into shares or securities of the relevant company's quoted parent company
• Securities representing a loan of or including new consideration that meet conditions B, C and D in section 162 qualify under this section provided any conversion rights are limited to conversion into shares or securities of a quoted unconnected company or the relevant company's quoted parent company
• A company is the relevant company's quoted parent company only if the relevant company is its 75% subsidiary, it is not itself a 75% subsidiary of any other company, and all classes of its ordinary shares are listed on a recognised stock exchange
• Where a circularity arises because determining whether a company is a 75% subsidiary depends on knowing whether the candidate company is already its quoted parent company, the law resolves this by assuming the candidate company is indeed the quoted parent company