CTM81015 - Groups & consortia: groups - entitlement to profits or assets available for distribution: convertible shares and securities

CTA10/S162

A share in a company:

• can still be a restricted preference share, and

• a loan to a company can still be a normal commercial loan,even though it is convertible, provided the rights are to convert into:

• shares or securities in a quoted unconnected company or the company’s quoted parent company, or
• shares which meet all of certain conditions, or

• securities which meet all of certain conditions.The conditions for shares are that they:

• are not convertible except into shares or securities in the company’s quoted parent company, and
• do not carry rights to the acquisition of any additional shares or securities, and

• satisfy the conditions in the first, third and fourth bullets under fixed rate preference shares in CTM81010.The conditions for securities are that they are securities which:

• represent a loan of, or including, new consideration, and
• are not convertible, except into shares or securities in a quoted unconnected company or the company’s quoted parent company, and
• do not carry rights to the acquisition of any additional shares or securities, and

• satisfy the conditions of the third and fourth bullets of normal commercial loan in CTM81010.Example

  N Plc is Company C’s ‘quoted parent company’ if:

• Company C is a 75% subsidiary of N Plc,
• N Plc is not a 75% subsidiary of any company, and
• N Plc’s ordinary shares (of all classes if more than one) are quoted on a recognised stock exchange (CTM60310 (g)).