Substantial shareholdings exemption: the substantial shareholding requirement – additional definition of substantial shareholding where investee co owned by Qualifying Institutional Investors.
F(2)A 2017 PARA 28 AND TCGA92/SCH7AC/PARA8A
Paragraph 8A of Schedule 7AC, introduced by F(2)A 2017, provides an additional definition of “substantial shareholding” where at least 25% of the investing company is owned by one or more Qualifying Institutional Investors (“QIIs”)
Where this condition is met, the investing company is treated as holding a substantial shareholding for the purposes of Para 7 if it holds shares (or interests in shares) which cost on acquisition at least £20m, and by virtue of which the investing company is beneficially entitled to
at least a proportionate percentage of the profits available for distribution to equity holders of the company invested in, and
would be beneficially entitled to the same proportion of assets available for distribution on winding up.
Para 8A(3) defines cost for the purposes of sub-paragraph 2 as the amount or value of the consideration in money or money’s worth given wholly and exclusively for the acquisition of the share (or interest in shares) together with the incidental costs of acquisition. The amount may be given by the company, or on its behalf, and may be as a single transaction or series of transactions.
Para 8A(3) defines “proportionate percentage” as percentage equal to the percentage of the OSC held by the investing company by virtue of the shares (and interests in shares) in sub-paragraph 2(a)