Corporation Tax Act 2010 section 170

Shares or securities with limited rights

Section 170 requires an alternative calculation of a company's share of profits or assets where one or more equity holders hold shares or securities whose distribution rights are capped or restricted by reference to a specified amount.

• Where equity holders hold shares or securities with distribution rights that are wholly or partly capped by reference to a specified amount, an alternative calculation must be performed
• The "alternative proportion" is calculated by assuming all such restricted distribution rights are waived to the extent they are limited — this may increase or decrease the company's share depending on whose rights are restricted
• If the alternative proportion is lower than the company's share calculated under the basic rules, the alternative proportion replaces the basic calculation as the company's share
• Restrictions linked to profits or assets of a UK trade carried on by a non-UK resident company are dealt with under separate rules and are excluded from this calculation