Finance Act 2006

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Demutualisation of assurance companies.

104.— (1) The Principal Act is amended by inserting the following after section 80:

“80A.— (1) In this section—

‘acquiring company’ means a limited company which is incorporated in the State, in another Member State or in an EEA State;

‘assurance business’ has the meaning assigned to it by section 3 of the Insurance Act 1936 ;

‘assurance company’ means—

(a) an assurance company within the meaning of section 3 of the Insurance Act 1936 , or

(b) a person that holds an authorisation within the meaning of the European Communities (Life Assurance) Framework Regulations 1994 ( S.I. No. 360 of 1994 );

‘demutualisation’ means an arrangement between an assurance company, being an assurance company which carries on a mutual life business, and its members under which—

(a) the assurance business or part of the business carried on by the assurance company is transferred to an acquiring company, and

(b) shares or the right to shares in the issuing company are issued or, as the case may be, granted to the members;

‘EEA Agreement’ means the Agreement on the European Economic Area signed at Oporto on 2 May 1992, as adjusted by the Protocol signed at Brussels on 17 March 1993;

‘EEA State’ means a state which is a contracting party to the EEA Agreement;

‘employee’, in relation to a company, includes any officer or director of the company and any other person taking part in the management of the affairs of the company;

‘issuing company’, in relation to a demutualisation, means an acquiring company or a parent company in relation to an acquiring company, including a company which becomes a parent company in relation to an acquiring company as part of the demutualisation;

‘member’, in relation to a reference to a member of an assurance company, or to a person who is entitled to be a member of an assurance company, includes a reference to a member of any particular class or description;

‘parent company’, in relation to an acquiring company, means a limited company incorporated in the State, in another Member State or in an EEA State, which owns directly or indirectly 100 per cent of the ordinary share capital of the acquiring company;

‘pensioner’, in relation to a company, means a person who is entitled, whether now or in the future, to a pension, lump sum, gratuity or other like benefit referable to the service of any person as an employee of the company;

‘shares’ includes stock.

(2) Stamp duty shall not be chargeable on any instrument made for the purposes of or in connection with a demutualisation where the conditions set out in subsection (3) are satisfied.

(3) The conditions referred to in subsection (2) are—

(a) shares in the issuing company must be offered to at least 90 per cent of the persons who immediately prior to the demutualisation are members of the assurance company, and

(b) all the shares in the issuing company which will be in issue immediately after the demutualisation, other than shares which are to be or have been issued pursuant to an offer to the public, must be offered to persons who, at the time of the offer, are—

(i) members of the assurance company,

(ii) persons who are entitled to become members of the assurance company, or

(iii) employees, former employees or pensioners of the assurance company or of a company which is a wholly-owned subsidiary of the assurance company.

(4) For the purposes of subsection (3)(b)(iii), a company is a wholly-owned subsidiary of another company (in this subsection referred to as the ‘parent’) if it has no members other than the parent and the wholly-owned subsidiaries of the parent, or persons acting on behalf of the parent or its wholly-owned subsidiaries.

(5) This section shall not apply to an instrument unless it has, in accordance with section 20, been stamped with a particular stamp denoting that it is not chargeable with any duty.

(6) This section shall not apply unless the demutualisation is carried out for bona fide commercial reasons and does not form part of a scheme or arrangement of which the main purpose, or one of the main purposes, is avoidance of liability to stamp duty, income tax, corporation tax, capital gains tax or capital acquisitions tax.

(7) (a) Where a claim is made for exemption under this section, the Commissioners may require the delivery to them of a statement in such form as they may direct, made by or on behalf of the person claiming the exemption in support of such claim, and of such further evidence (if any) as they may require.

(b) The powers conferred on the Commissioners by paragraph (a) shall be in addition to and not in substitution for the powers conferred on them by section 20.

(8) Where, in respect of any claim for exemption from duty under this section which has been allowed, it is subsequently found that any statement or other evidence furnished in support of the claim was untrue in any material particular, or that the conditions set out in subsection (3) are not fulfilled in the demutualisation as actually carried out, then the exemption shall cease to be applicable and stamp duty shall be chargeable on the instrument as if subsection (2) had not been enacted together with interest on the duty, by means of penalty, calculated in accordance with section 159D, from the date of the instrument to the date on which the duty is paid.”.

(2) This section shall apply as respects instruments executed on or after the date of the passing of this Act.