Corporation Tax Act 2010 section 528

Conditions for company

Section 528 sets out the conditions that a company (or the principal company of a group) must meet throughout each accounting period in order to qualify as a UK REIT.

• The company must be UK-based, must not be an open-ended investment company, and its ordinary shares must either be traded on a recognised stock exchange or at least 70% owned by institutional investors — with a 12-month grace period if the 70% ownership threshold ceases to be met.
• The company must satisfy the non-close condition, meaning it is either not a close company, or is only close because it has an institutional investor as a direct or indirect participator; special rules apply when determining close company status, including disregarding certain attribution rules for partners and voting power held by managers of collective investment vehicles.
• Every share the company has issued must be either ordinary share capital or a non-voting restricted preference share, and there must be only one class of ordinary share; a restricted preference share is one that would qualify under the normal definition (or would but for conversion rights), and "non-voting" means it carries no voting rights or only contingent voting rights triggered by non-payment of a dividend.
• Any loan where the company is the borrower must not carry interest linked to business performance or asset values, must not exceed a reasonable commercial return, and the repayment amount must not exceed the sum lent or must be comparable with amounts repayable under listed securities — though terms that reduce interest when results improve or increase it when they deteriorate do not count as being linked to business performance.