Section 257LG | The requirement not to be interested in capital etc of social enterprise

(1)This section applies—

(a)to the investor, and

(b)to any individual who is an associate of the investor.

(2)In this section “related company” means—

(a)the social enterprise, or

(b)a company which at any time in the longer applicable period is a 51% subsidiary of the social enterprise (and such a company is therefore a related company for the purposes of this section even at times when it is not a 51% subsidiary of the social enterprise).

(3)There must not be any time in the longer applicable period when an individual to whom this section applies has control of a related company.

(4)There must not be any time in the longer applicable period when an individual to whom this section applies directly or indirectly possesses or is entitled to acquire—

(a)more than 30% of the ordinary share capital of a related company,

(b)more than 30% of the loan capital of a related company, or

(c)more than 30% of the voting power in a related company.

(5)For the purposes of subsections (3) and (4) ignore any shares in a related company held by the individual, or by an associate of the individual, at a time when that company—

(a)has not issued any shares other than subscriber shares, and

(b)has not begun to carry on, or make preparations for carrying on, any trade or business.

(6)For the purposes of this section, the loan capital of a company—

(a)is treated as including any debt incurred by the company—

(i)for any money borrowed or capital assets acquired by the company,

(ii)for any right to receive income created in favour of the company, or

(iii)for consideration the value of which to the company was (at the time when the debt was incurred) substantially less than the amount of the debt (including any premium on it), and

(b)is treated as not including any debt incurred by the company by overdrawing an account with a person carrying on a business of banking if the debt arose in the ordinary course of that business.

(7)For the purposes of this section—

(a)an individual is treated as entitled to acquire anything which the individual is entitled to acquire at a future date or will at a future date be entitled to acquire, and

(b)there is attributed to any individual any rights or powers of any other person who is an associate of the individual.