Joint ventures: Joint Venture Look-Through Notice: requirements
Provided the venturing company and the joint venture company or joint venture group meet the necessary conditions, they can jointly give notice that they want the provisions in the Joint Venture regulations to apply. In the case of a Group REIT, the principal company must give the notice on behalf of the group.
Joint election required
In both cases, the notice must be signed by the company secretary or a director of the joint venture company (regulation 2(4) SI 2006/2866). This is to ensure that the joint venture company is aware of its obligation to meet the Entry Charge in relation to the UK-REIT’s interests in its assets, and of other constraints relating to conduct of its business. For a joint venture group the notice is to be signed by the company secretary or director of the venturing company and the principal company of the joint venture group (Regulation 5 SI2007/3425)
Timing and duration
The notice must be given before the start of the first accounting period to which the ‘look-through’ treatment is to apply, and it must specify the accounting period from the beginning of which it to apply. Elsewhere the regulations refer to the date the notice takes effect - this is the beginning of the accounting period specified as the first in the notice (and not the date the notice is given).
The notice continues in effect until the interests of the venturing company (or venturing group) falls below 40% (regulation 4 SI 2006/2866 and regulations 7 and 19 SI2007/3425).
Multiple ventures and venturers
A Joint Venture Look-Through notice applies in respect only of the named venturing company and the named joint venture company or group. If the venturing company is involved in other joint ventures, a separate notice is required in respect of each of them, although the venturing company need prepare only one set of financial statements in respect of all of its joint ventures.
It is possible for a joint venture company to have more than one look through notice served in respect of it and for a share of its results to be aggregated with more than one REIT. If there is another 40% shareholder, and that person is also UK-REIT, if they want ‘look-through’ treatment to apply in respect of their interest in the joint venture company or group, they need to give a separate notice.