Particular topics: transactions in securities: excluded circumstances
The transactions in securities provisions will not apply where there is a fundamental change in ownership of the close company.
There is a fundamental change in ownership if, as a result of the transaction or transactions, conditions A, B and C are met for a period of two years.
Condition A – at least 75 per cent of the ordinary share capital of the close company is held beneficially by a buyer who is not connected with the seller, and has not been connected during the two year period prior to the transaction.
Condition B – that capital must carry an entitlement to at least 75 per cent of the distributions that may be made by the company.
Condition C – that capital must carry at least 75 per cent of the voting rights in the company.
Where all these conditions are satisfied the anti-avoidance legislation will not apply.
ITA07/S993 and 994 set out the meaning of ‘connected person’.