CTM81015 | Groups & consortia: groups - entitlement to profits or assets available for distribution: convertible shares and securities
From HM Revenue & Customs · Company Taxation Manual
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)).