Section 257ML | The issue must be to raise money for chosen trade or preparing for it

(1)The social enterprise must be a party to the making of the investment (so far as not in bonus shares) in order to raise money for the carrying-on, by the social enterprise or a 90% social subsidiary of the social enterprise, of—

(a)a qualifying trade which on the investment date is carried on by the social enterprise or a 90% social subsidiary of the social enterprise, or

(b)the activity of preparing to carry on (or preparing to carry on and then carrying on) a qualifying trade—

(i)which on the investment date is intended to be carried on by the social enterprise or a 90% social subsidiary of the social enterprise, and

(ii)which is begun to be carried by the social enterprise or such a subsidiary within 2 years after that date.

(2)In this Chapter—

(a)the purpose within subsection (1) for which money is raised is referred to as “the funded purpose”,

(b)the qualifying trade mentioned in subsection (1)(a) or (b) is referred to as “the chosen trade”, and

(c)if the funded purpose is the carrying-on of the activity mentioned in subsection (1)(b), “relevant preparation work” means preparations that form the whole or part of the activity.

(3)In determining for the purposes of subsection (1)(b) when a qualifying trade is begun to be carried on by a 90% social subsidiary of the social enterprise, any carrying-on of the trade by it before it became such a subsidiary is ignored.

(4)The reference in subsection (1)(b)(i) to a 90% social subsidiary of the social enterprise includes a reference to any existing or future body which will be such a subsidiary at any future time.

(5)This section does not apply if the social enterprise is an accredited social impact contractor.