Finance Act, 1991

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Amounts raised by companies acting in concert, or for trade of subsidiary.

17.—(1) Subject to subsection (3), section 13A (inserted by the Finance Act, 1989 ) of the Finance Act, 1984 , is hereby amended—

(a) by the insertion, after subsection (1) (as amended by section 15 (1) (c)), of the following subsections:

“(1A) Where a company raises any amount through a relevant issue on any day falling on or after the 12th day of March, 1991, and—

(a) any agreement, arrangement or understanding exists whereby—

(i) a qualifying trading operation or qualifying trading operations is or are carried on, or is or are to be carried on, by that company, or its qualifying subsidiary, and one or more other companies, or

(ii) different parts of what was formerly a single qualifying trading operation or a single set of qualifying trading operations are, or are to be, carried on by that company, or its qualifying subsidiary, and one or more other companies, or

(iii) separate qualifying trading operations—

(I) which together produce a single product or provide a single service, or

(II) which separately produce products or provide services that closely resemble, or are similar to, or are of the same kind or nature as, each other,

are, or are to be, carried on by that company, or its qualifying subsidiary, and one or more other companies, or

(iv) separate qualifying trading operations are, or are to be, carried on by that company, or its qualifying subsidiary, and one or more other companies acting together in pursuit of a common purpose or, either directly or indirectly, in accordance with the wishes or directions of, or under the control of, any person or any group of persons or groups of persons having a reasonable commonality of identity and who have or had the means or power, either directly or indirectly, to determine the trading operations to be carried on by each company,

and

(b) it could reasonably be considered that the purpose of, or one of the purposes of, the aforesaid agreement, arrangement or understanding is to circumvent the limitation imposed by subsection (1),

then, as respects that company, relief shall not be given in respect of the excess of the amount so raised over the amount determined by the formula—

where—

B  is an amount equal to so much, as does not exceed £500,000, of the aggregate of all amounts raised through the issue of eligible shares at any time before the relevant issue by all of the companies (including that company) which are party to the aforesaid agreement, arrangement or understanding, and

C  is the total number of companies, apart from that company or any of its qualifying subsidiaries, which are party to the aforesaid agreement, arrangement or understanding.

(1B) In subsection (1A), ‘qualifying subsidiary’, in relation to a company, has the same meaning as it has for the purposes of section 15.”,

(b) by the substitution of the following subsection for subsection (2):

“(2) In determining, for the purposes of the formula in subsection (1) or, as the case may be, the formula in subsection (1A), the amount to which paragraph (b) in subsection (1) or, as the case may be, the amount to which B in subsection (1A), relates, account shall not be taken of any amount—

(a) which is subscribed by a person other than an individual who qualifies for relief, or

(b) in respect of which relief is precluded by virtue of section 13.”,

and

(c) by the insertion, in subsection (3), of “or subsection (1A)” after “subsection (1)”,

and the said subsection (3), as so amended, is set out in the Table to this subsection.

TABLE

(3) Where, as a consequence of subsection (1) or subsection (1A), the giving of relief would be precluded on claims in respect of shares issued to two or more individuals, the available relief shall be divided between them respectively in proportion to the amounts which have been subscribed by them for the shares to which their claims relate and which would, apart from this section, be eligible for relief.

(2) Subject to subsection (3), section 15 of the Finance Act, 1984 , is hereby amended, in subsection (2), by the insertion after paragraph (b) of the following proviso to that paragraph:

“Provided that where a company raises any amount through the issue of eligible shares on any day falling on or after the 12th day of March, 1991, for the purposes of raising money for a qualifying trade which is being carried on by a qualifying subsidiary or which such a qualifying subsidiary intends to carry on the amount so raised shall be used for the purpose of acquiring eligible shares in the qualifying subsidiary and for no other purpose.”.

(3) Subsections (1) and (2) shall not apply or have effect in relation to—

(a) eligible shares issued on or before the 31st day of August, 1991, by a company to which section 16 applies, or

(b) eligible shares issued by a company, other than a company referred to in paragraph (a), which, on or before the 11th day of March, 1991—

(i) had made an application in writing to the Revenue Commissioners for the opinion of the Revenue Commissioners as to whether the company would be a qualifying company for the purposes of Chapter III of Part I of the Finance Act, 1984 , or

(ii) had published, or had published on its behalf, a prospectus:

Provided that the date on which the prospectus was published shall be confirmed in a certificate by the auditor of the company.

(4) In subsection (3) “auditor”, in relation to a company, and “prospectus”, in relation to a company, have the same meanings, respectively, as they have in section 16 .