Convertible securities: convertible securities acquired before 1 September 2003 (grandfathering)
The new legislation applies to convertible securities whether or not they were acquired before 1 September 2003 (see ERSM40020). The legislation is therefore not “grandfathered”, but where a flowering share was acquired before 16 April 2003 the new Chapter 2 on restricted securities cannot apply to it. Where the conditions attached to such a share were:
- conditions or restrictions falling within either the original Chapters 2 (conditional shares) or 4 (restricted shares) of ITEPA, and
- could not have come within the original Chapter 3 of ITEPA on convertible shares,
then HM Revenue & Customs will not seek to argue Chapter 3 could apply in such circumstances, provided there is no evidence of manipulation or avoidance.