IFM16340 - Meaning of scheme of reconstruction: other investment funds

Schedule 5AA to Taxation of Chargeable Gains Act 1992 (TCGA)

This Schedule defines scheme of reconstruction for the purposes of sections 136 TCGA. A scheme of reconstruction means any scheme of merger, division or other restructuring that meets the first and second condition and either the third or fourth of the following conditions.

First condition

The first condition is that the scheme involves the issue of ordinary share capital of an investment fund (the successor fund) or of more than one investment funds (the successor funds) to the holders of ordinary share capital (or of one or more classes of ordinary share capital) of one or more investment funds (the original funds) and does not involve the issue of share capital of the successor investment fund (or funds) to anyone else.

Second condition

The second condition is that the entitlement of any person to acquire ordinary share capital of the successor investment fund or funds is that same as any other person owning the same class of ordinary share capital in the original investment fund.

Third condition

The third condition is that the effect of the restructuring is that the business or substantially the whole of the business carried on by the original investment fund or funds is carried on by a successor investment fund or funds.

Fourth condition

The fourth condition is that the scheme is carried out as part of a compromise or arrangement to which Part 26 of the Companies Act 2006 (arrangements and reconstructions) applies or under any corresponding provision of the law of a country or territory outside the United Kingdom. In addition no part of the business of the original investment fund or funds is transferred to any other person.