Income Tax Act 2007 section 809VD

Condition A

Section 809VD sets out Condition A for a qualifying investment, which requires the target company to fall into one of four categories of eligible company: trading, stakeholder, hybrid, or holding.

• The target company must be a private limited company (a limited liability body corporate, not an LLP, with no shares listed on a recognised stock exchange) that qualifies as an eligible trading, stakeholder, hybrid, or holding company
• An eligible trading company carries on (or is preparing to carry on within 5 years) one or more commercial trades as all or substantially all of its activities; an eligible stakeholder company exists wholly to invest in eligible trading companies and holds or is preparing to hold such investments within 5 years
• An eligible hybrid company combines both commercial trading and investing in eligible trading companies (or is preparing to do both within 5 years), where these activities together represent all or substantially all of what it does, but it does not qualify as either an eligible trading company or an eligible stakeholder company on its own
• An eligible holding company is a member of an eligible trading group (or a group expected to become one within 5 years), has a 51% subsidiary that is an eligible trading company, and where shares are held indirectly, every intermediary company must also be a group member