SolvedBLM80350 | Sale of lessor companies and similar arrangements: establishing change of ownership: control and companies without share capital
From HM Revenue & Customs · Business Leasing Manual
Companies without share capital present a risk because they can be used to break a chain of ownership. Companies without share capital can be incorporated within otherwise normal group structures.
The problem is illustrated by the following example.
In this example B Co is a company limited by guarantee. It has no share capital. It holds 100% of the shares in A Ltd, the lessor company. It is not a subsidiary of C Ltd because C Ltd holds no shares in B Co.
Commercially, the relationship between C Ltd and B Co will ensure that C Ltd controls B Co - otherwise D Ltd’s group would lose any profits from A and B. In this example it is assumed that C Ltd holds all the voting rights in B Co and is entitled to all of the distributable profits and the assets on a winding up.
Without special rules B Co is the principal company in relation to A Ltd. The 75% chain cannot continue above B Co.
The sale of B Co would not trigger a charge because there is no change in the relationship between B Co and A Ltd.
The special rules for companies with no share capital change this outcome where there is control for the purposes of section 1124 CTA2010.
If, in this example, C Ltd holds all the voting rights in B Co and is entitled to all of the distributable profits and the assets on a winding up B Co is treated as a 75% subsidiary of C Ltd and the chain continues up to D Ltd which is now the principal company in relation to A Ltd.
With this adjustment the sale of B Co becomes a relevant change in the relationship between A Ltd and its principal company, D Ltd.