CTM36810 | Particular topics: transactions in securities: definitions

Securities

ITA07/S713 defines securities as including shares and stock and any interest held as a member of a company including a company not limited by shares, such as a company limited by guarantee or an unlimited company. This list is not exhaustive.

Transactions in securities

These are transactions, of whatever description, relating to securities (ITA07/S684) including, but not limited to:

• purchase, sale or exchange of securities,

• issue, or securing the issue, of new securities,

• applying or subscribing for new securities, and

• altering or securing the alteration of rights attached to securities.

From 6 April 2016, two further transactions are specified in ITA07/S684 (2):

• repayment of share capital or share premium, and

• distribution in respect of securities in a winding up.

The first is for the sake of clarity. The second extends the scope of the provisions with effect from 6 April 2016, although earlier transactions involving a winding up could in some circumstances fall within the earlier provisions.

The legislation is widely drawn and applies to 'transactions, of whatever description, relating to securities' and goes on to give particular, but not comprehensive, examples.

An officer who becomes aware of a transaction in securities 'of whatever description' will need to consider whether the legislation applies. BAI Clearance and Counteraction Team will advise. See CTM36860.

The meaning of transactions in securities has been clarified by case law as including the following:

The payment of a dividend is not a transaction in securities. In IRC v Laird [2003] UKHL 54 Lord Millett explained that 'the distribution of the undistributed profits of a company to the shareholders entitled thereto merely gives effect to the rights attaching to the shares'.