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Contents

Official guidance
Company Taxation Manual

CTM81000 · Groups & consortia: groups - entitlement to profits or assets available for distribution

  • CTM81005 · Introduction
  • CTM81010 · Definitions of terminology
  • CTM81015 · Convertible shares and securities
  • CTM81020 · Business results dependency test
  • CTM81025 · Equity holders - special rule
  • CTM81030 · Equity holders - banks
  • CTM81035 · Equity holders - subsidiary profits available to
  • CTM81040 · Equity holders - subsidiary assets available to
  • CTM81045 · Equity holders - percentage of profits available to
  • CTM81050 · Equity holders - notional winding-up
  • CTM81055 · Returned amounts
  • CTM81060 · Limited rights
  • CTM81065 · Effect of limitation of rights
  • CTM81070 · Varying rights for different accounting periods
  • CTM81075 · Varying rights for different accounting periods - effect
  • CTM81080 · Varying and limited rights - effect
  • CTM81085 · Entitlement different - effect
  • CTM81090 · Option arrangements
  • CTM81095 · Effective rights
  • CTM81100 · Option rights exist
  • CTM81105 · Option, limited & varying rights
  • CTM81110 · Option, limited & varying rights: referable to UK trade of non-resident company
  • CTM81115 · Option arrangements - Board's policy
  • CTM81120 · Examples - background
  • CTM81121 · Example 1 - basic rule
  • CTM81122 · Example 2 - limited rights
  • CTM81123 · Example 3 - varying rights for different accounting periods
  • CTM81124 · Example 4 - option rights
  1. Groups & consortia: groups - entitlement to profits or assets available for distribution: contents
  2. Groups & consortia: groups - entitlement to profits or assets available for distribution: convertible shares and securities

CTM81015 | Groups & consortia: groups - entitlement to profits or assets available for distribution: convertible shares and securities

From HM Revenue & Customs · Company Taxation Manual

CTA10/S162

A share in a company:

  • can still be a restricted preference share, and

  • a loan to a company can still be a normal commercial loan,even though it is convertible, provided the rights are to convert into:

  • shares or securities in a quoted unconnected company or the company’s quoted parent company, or

  • shares which meet all of certain conditions, or

  • securities which meet all of certain conditions.The conditions for shares are that they:

  • are not convertible except into shares or securities in the company’s quoted parent company, and

  • do not carry rights to the acquisition of any additional shares or securities, and

  • satisfy the conditions in the first, third and fourth bullets under fixed rate preference shares in CTM81010.The conditions for securities are that they are securities which:

  • represent a loan of, or including, new consideration, and

  • are not convertible, except into shares or securities in a quoted unconnected company or the company’s quoted parent company, and

  • do not carry rights to the acquisition of any additional shares or securities, and

  • satisfy the conditions of the third and fourth bullets of normal commercial loan in CTM81010.Example

    N Plc is Company C’s ‘quoted parent company’ if:

  • Company C is a 75% subsidiary of N Plc,

  • N Plc is not a 75% subsidiary of any company, and

  • N Plc’s ordinary shares (of all classes if more than one) are quoted on a recognised stock exchange (CTM60310 (g)).

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