Taxation of Chargeable Gains Act 1992 Schedule 5AZA paragraph 3

First condition: issue of units

Section 3 of Schedule 5AZA sets out the first condition that must be met for a scheme of reconstruction involving collective investment schemes to qualify for special capital gains tax treatment: that new units are issued only to existing unitholders.

• When a collective investment scheme undergoes a reconstruction, units in the new successor scheme (or a feeder fund) must be issued to the holders of units in the original scheme or schemes.
• If the original scheme has different classes of units, the reconstruction may involve holders of one or more specific classes, known as the classes "involved in the scheme of reconstruction".
• Where multiple original schemes are merging or restructuring, units in the successor scheme may be issued to holders across any of those original schemes or specific classes within them.
• No units in the successor scheme or feeder fund may be issued to anyone other than the existing unitholders of the original scheme or schemes — outside investors cannot receive units as part of the reconstruction.