Taxation of Chargeable Gains Act 1992 Schedule 5AA paragraph 7

Subsequent issue of shares or debentures to be disregarded

Section 7 provides that certain later issues of shares or debentures by a successor company are to be ignored when testing whether the first and second conditions of the demerger relief rules are met.

• Any shares or debentures issued by a successor company after the final date on which ordinary share capital is issued by any successor company are disregarded for the purposes of the first and second conditions.
• This disregard applies where the later issue is made in consideration for the transfer of a business, or part of a business, under the demerger scheme.
• The disregard also applies where the later issue is made in pursuance of the compromise or arrangement with members described in the fourth condition.
• The rule prevents later, incidental share or debenture issues from disrupting the analysis of whether the ownership and control tests in the first and second conditions are satisfied.