Section 177 | The no pre-arranged exits requirement

(1)The issuing arrangements for the relevant shares must not include—

(a)arrangements with a view to the subsequent repurchase, exchange or other disposal of those shares or of other shares in or securities of the issuing company,

(b)arrangements for or with a view to the cessation of any trade which is being or is to be or may be carried on by the issuing company or a person connected with that company,

(c)arrangements for the disposal of, or of a substantial amount (in terms of value) of, the assets of the issuing company or of a person connected with that company, or

(d)arrangements the main purpose or one of the main purposes of which is (by means of any insurance, indemnity or guarantee or otherwise) to provide partial or complete protection for persons investing in shares in the issuing company against what would otherwise be the risks attached to making the investment.

(2)The arrangements referred to in subsection (1)(a) do not include—^F1

(a)any arrangements with a view to such an exchange of shares, or shares and securities, as is mentioned in section 247(1), or^F1

(b)any arrangements with a view to any shares in the issuing company being exchanged for, or converted into, shares in that company of a different class.^F1

(3)The arrangements referred to in subsection (1)(b) and (c) do not include any arrangements applicable only on the winding up of a company except in a case where—

(a)the issuing arrangements include arrangements for the company to be wound up, or

(b)the arrangements are applicable on the winding up of the company otherwise than for genuine commercial reasons.

(4)The arrangements referred to in subsection (1)(d) do not include any arrangements which are confined to the provision—

(a)for the issuing company itself, or

(b)if the issuing company is a parent company that meets the trading requirement in section 181(2)(b), for the issuing company itself, for the issuing company itself and one or more of its subsidiaries or for one or more of its subsidiaries,

of any such protection against the risks arising in the course of carrying on its business as might reasonably be expected to be provided in normal commercial circumstances.

(5)In this section “the issuing arrangements” means—

(a)the arrangements under which the shares are issued to the individual, and

(b)any arrangements made before the issue of the shares to the individual in relation to or in connection with that issue.