Section 18H | Associated companies: fixed-rate preference shares

(1)In determining for the purposes of section 18E(4) whether a company is under the control of another, fixed-rate preference shares held by a company are ignored if the company holding them—

(a)is not a close company,

(b)takes no part in the management or conduct of the company which issued the shares, or in the management or conduct of its business, and

(c)subscribed for the shares in the ordinary course of a business which includes the provision of finance.

(2)In this section “fixed-rate preference shares” means shares which—

(a)were issued wholly for new consideration,

(b)do not carry any right either to conversion into shares or securities of any other description or to the acquisition of any additional shares or securities, and

(c)do not carry any right to dividends other than dividends which—

(i)are of a fixed amount or at a fixed rate per cent of the nominal value of the shares, and

(ii)together with any sum paid on redemption, represent no more than a reasonable commercial return on the consideration for which the shares were issued.

(3)In subsection (2)(a) “new consideration” has the meaning given by section 1115.