Finance Act, 1987

Amendment of provisions relating to subsidiaries.

12.—(1) Section 26 of the Finance Act, 1984 , is hereby amended by the insertion, after subsection (1), of the following subsection:

“(1A) (a) Notwithstanding the provisions of subsection (1), a qualifying company whose trade consists wholly or mainly of the carrying on of qualifying shipping activities within the meaning of section 28 (1) of the Finance Act, 1987, may have one or more subsidiaries which do not satisfy either of the conditions in paragraph (b) of subsection (1): Provided that the condition mentioned in paragraph (b) of this subsection is satisfied.

(b) The said condition is that the subsidiary or each subsidiary is a company which exists for the purpose of carrying on a trade consisting wholly or mainly of the carrying on of qualifying shipping activities.

(c) In paragraph (b), ‘qualifying shipping activities’ has the meaning assigned to it by section 28 (1) of the Finance Act, 1987, as if, in the definition of a ‘qualifying ship’ for the purposes of the said meaning, paragraphs (a) and (b) of that definition were deleted.

(d) In this subsection, the question of whether a trade consists wholly or mainly of the carrying on of qualifying shipping activities shall, with any necessary modifications, be construed in accordance with the proviso to section 16 (2).”.

(2) The Second Schedule to the Finance Act, 1984 , is hereby amended, by the substitution for paragraph 1 of the following paragraph:

“1. The shares issued by the qualifying company may, instead of, or as well as, being issued for the purpose mentioned in subsection (1) (b) of section 12, be issued for the purpose of raising money for a qualifying trade which is being carried on by a subsidiary (other than a subsidiary which is a qualifying subsidiary by virtue of section 26 (1A) (inserted by the Finance Act, 1987)) or which such a subsidiary intends to carry on; and where shares are so issued subsections (1) (c), (4), (5), (7) (b) and (8) of section 12 shall have effect as if references to the company were or, as the case may be, included, references to the subsidiary.”.