IFM14422 - Summary
A company may not apply for approval as an investment trust unless it meets the eligibility conditions in CTA10/S1158. Section 1158 contains three such conditions -
- Condition A is that all or substantially all of the business of the company consists of investing its funds in shares, land or other assets with the aim of spreading investment risk and giving members of the company the benefit of the results of the management of its funds (S1158(2)) (see IFM14424);
- Condition B is that the shares making up the company’s ordinary share capital (or, if there are such shares of more than one class, those of each class) are admitted to trading on a regulated market (S1158(3)) (see IFM14426); and
- Condition C is that the company is neither a venture capital trust nor a UK REIT (S1158(5)) (see IFM14428).
If an approved company ceases to meet one or more of these conditions then it will be treated as if it were no longer an investment trust from the start of the accounting period in which the company first failed to meet one of the conditions. The company may apply for re-approval for a later period if it again meets all of the conditions from the start of that period (regulation 30).
Conditions A and B to are deemed to be met in certain circumstances (regulations 14 to 16) – see IFM14424 and IFM14430.