Land Transaction Tax and Anti-avoidance of Devolved Taxes (Wales) Act 2017 section Schedule 16 paragraph 6

Exclusion from company control provisions where shares are subject to a mortgage

Schedule 16 paragraph 6 provides an exemption from the company control change rules where a company's shares or securities are used as security for a mortgage, provided the lender has not yet enforced its rights.

• Where a company's shares or securities are used as collateral for a mortgage, the arrangement is not treated as a change of company control under paragraph 4, provided the lender has not yet exercised its enforcement rights against the borrower.
• The exemption does not apply if the lender holds rights over the shares or securities that go beyond what is necessary to protect its position as a secured creditor.
• The exemption also does not apply if the lender, alone or together with connected persons, could control the terms or timing of a default or other triggering event that would allow enforcement.
• For the purposes of assessing connectedness, a lender is not treated as connected with the company merely because it holds a mortgage over that company's shares or securities.