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Legislation
Corporation Tax Act 2010

Crossheading Purchase of own shares

  • Section 1033 Purchase by unquoted trading company of own shares
  • Section 1034 Requirements as to residence
  • Section 1035 Requirement as to period of ownership
  • Section 1036 Determining the period of ownership
  • Section 1037 Requirement as to reduction of seller's interest as shareholder
  • Section 1038 Section 1037: effect of entitlement to profits
  • Section 1039 Requirements where purchasing company is a member of a group
  • Section 1040 Determining whether interests as shareholders in a group are substantially reduced
  • Section 1041 Section 1040: effect of entitlement to profits
  • Section 1042 Other requirements
  • Section 1043 Relaxation of requirements in certain cases
  1. Purchase of own shares
  2. Requirement as to reduction of seller's interest as shareholder

Section 1037 | Requirement as to reduction of seller's interest as shareholder

From legislation.gov.uk

(1)If, immediately after the purchase, the seller owns shares in the company, the seller's interest as a shareholder must be substantially reduced.This is subject to section 1043.

(2)If, immediately after the purchase, any associate of the seller owns shares in the company, the combined interests as shareholders of the seller and the seller's associates must be substantially reduced.This is subject to section 1043.

(3)The seller's interest as a shareholder is substantially reduced if (and only if) the seller's subsequent interest is not more than 75% of the seller's prior interest.This is subject to section 1038.

(4)“The seller's prior interest” means the total nominal value of the shares owned by the seller immediately before the purchase, expressed as a fraction of the issued share capital of the company at that time.

(5)“The seller's subsequent interest” means the total nominal value of the shares owned by the seller immediately after the purchase, expressed as a fraction of the issued share capital of the company at that time.

(6)The question whether the combined interests as shareholders of the seller and the seller's associates are substantially reduced is determined in the same way as the question whether a seller's interest as shareholder is substantially reduced, except that the seller is assumed to have the interests of the seller's associates as well as the seller's own.

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