Income Tax Act 2007 section 257MD

The unquoted status requirement

Section 257MD requires that a social enterprise seeking investment under the social investment tax relief scheme must not be a quoted company and must have no plans to become one, either directly or through a corporate restructuring.

• At the start of the shorter applicable period, the social enterprise must not be a quoted company, meaning none of its shares, stocks, debentures or other securities are listed on a recognised stock exchange, a designated overseas exchange, or dealt in outside the UK by designated means.
• There must be no arrangements in existence for the social enterprise to become a quoted company, whether directly or indirectly through becoming a subsidiary of a new parent company that itself plans to become quoted.
• This restriction applies to all securities issued by the enterprise, not only those in respect of which social investment tax relief is being claimed.
• An exception exists where securities subsequently become listed solely because of a new order recognising a stock exchange or designating an overseas exchange, provided that order was made after the start of the shorter applicable period — the enterprise is not penalised for a change in the rules it could not have anticipated.