Taxation of Chargeable Gains Act 1992 Schedule 7ZA paragraphs 5–8

5–8 Shareholding test

Section 5–8 of Schedule 7ZA sets out the shareholding test that a person (P) must satisfy in relation to a joint venture company, including how direct and indirect shareholdings are calculated and the assumptions used when determining indirect ownership through investing companies.

• P passes the shareholding test if the combined direct and indirect ownership of the joint venture company's ordinary share capital is at least 5% throughout the relevant period.
• Indirect ownership is calculated by reference to each investing company through which P holds shares in the joint venture company, using the formula R × S × 100.
• Where there are multiple investing companies, the indirect percentages through each are added together to give P's total indirect shareholding percentage.
• Where an investing company or a fellow group member directly owns more than 50% of another company's ordinary shares, it is assumed to own 100% of that company's shares for the purposes of the calculation.