Introduction Details of the Schedule New section 236D of TCGA: Shares not exempt if shareholder or connected person has material interest in company
40.New section 236D of TCGA prevents an individual from benefiting from exemption on employee shareholder shares where they, or persons connected with them, have a material interest in their employer or a parent company of their employer; or have had such a material interest at any time in the 12 months prior to the acquisition of employee shareholder shares. New subsections (1) and (2) set out this condition.
41.New subsections (4) and (5) define a material interest for the purposes of this condition. New subsection (4) provides that an individual has a material interest in a company if at least 25 per cent of the voting rights in that company are exercisable by that individual, by persons connected with that individual, or by the individual and persons connected with them together. New subsection (5) provides that in the case of a close company, an individual has a material interest if, in any circumstances, at least 25 per cent of the net assets of the company would be available for distribution to that individual, persons connected with that individual, or the individual and persons connected with them together.
42.New subsection (7) provides that for the purposes of this condition, an individual has a material interest in a company if they, or persons connected with them, have an entitlement to acquire rights that would give them a material interest in the company. This also applies where an individual and any connected persons together have such an entitlement.
43.New subsection (8) provides that for the purposes of this condition, an individual has a material interest in a company if there are arrangements in place that would enable them, or persons connected with them, to acquire such an interest. This also applies where such arrangements would enable an individual and any connected persons together to acquire a material interest in a company.
44.New subsection (9) provides definitions for ‘arrangements’ and other terms used in this section.