VCT: VCT approval: conditions for full approval
To be approved as a VCT a company must not be a close company and must satisfy HMRC that in relation to its most recent complete accounting period:
|* the VCT’s ordinary share capital has been or will be admitted to trading on a regulated market in accordance with Directive 2004/39/EC of the European Parliament (seeVCM54040)||listing condition|
|* its income in that accounting period was derived wholly or mainly from shares or securities (see VCM54050).||nature of income condition|
|* it did not retain more than 15% of its income derived in that accounting period from shares and securities (see VCM54060).||income retention condition|
|* no holding in any company represented more than 15% by value of the VCT’s investments at any time during that accounting period (see VCM54070)||15% holding limit condition|
|* at least 70% by value of its investments were in qualifying holdings of shares or securities throughout that accounting period (see VCM54080 onwards)||70% qualifying holdings condition|
|* for accounting periods ending before 6 April 2018, and in relation only to shares issued before 6 April 2011, and to shares acquired using protected money before 6 April 2018: at least 30% by value of its qualifying holdings were in holdings of eligible shares throughout that accounting period (see VCM54140)||30% eligible shares condition|
|* at least 70% by value of its qualifying holdings were in eligible shares throughout that accounting period (see VCM54140)||70% eligible shares condition|
|* the VCT has not made, and will not make in future, an investment which is neither of: an investment included in the company’s qualifying holdings; an investment within subsection (3A)||non-qualifying investments condition|
|* the VCT has not made, and will not make in future, an investment, which breaches the permitted investment limit (see VCM54180)||investment limits condition|
|* for investments made in accounting periods starting on or after 6 April 2018: the company has not breached, and will not breach in future, the minimum investment on further issue condition (see VCM54182)||minimum investment on further issue condition|
|* the VCT has not made, and will not make in future, an investment in a company which breaches the permitted maximum age limit (see VCM54183)||permitted maximum age condition|
|* the VCT has not made, and will not make in future, an investment in a company which breaches the prohibition on business acquisitions (see VCM54184)||no business acquisition condition|
If the VCT issues further ordinary shares, the relaxation described in VCM54170 will apply.
A company satisfying these conditions will receive an approval notice (VCM54300) specifying:
- the date on which the approval is given, and
- the date from which approval shall have effect.
The term ‘investment’ throughout ITA07/Part 6/CH3 includes cash and other funds held by the VCT or held by a third party on its behalf- see VCM54090.