ANNEX 1:: MINOR CHANGES IN THE LAW MADE BY THE BILL The change in section 291(8)
Section 291 of this Act is based on paragraph 3(3), (4), (5), (5A) and (5B) of Schedule 28B to ICTA.
Paragraph 3(3)(b) and (4)(a) of Schedule 28B to ICTA set out certain required activities for a qualifying company (emphasis added):
“(3)Subject to sub-paragraph (4) below, when the relevant holding was issued and at all times since, a qualifying company (whether or not the same such company at every such time) must have been either …. or(b)preparing to carry on a qualifying trade which at the time when the relevant holding was issued was intended to be carried on wholly or mainly in the United Kingdom by a qualifying company(4)The requirements of sub-paragraph (3) shall not be capable of being satisfied by virtue of paragraph (b) of that sub-paragraph at any time after the end of the period of 2 years beginning with the issue of the relevant holding unless(a)the intended trade was begun to be carried on by a qualifying company before the end of that period, and …”
A “qualifying company” is defined in paragraph 3(5A) as:
“the relevant company or any relevant qualifying subsidiary of that company.”
A relevant qualifying subsidiary is defined in paragraph 5A of Schedule 28B to ICTA. This is rewritten as a qualifying 90% subsidiary in section 301 of this Act.
There is an indication in paragraph 3(5B) of Schedule 28B to ICTA that participation as a qualifying company is not restricted to existing subsidiaries (this is in relation to the commencement of the trade in paragraph 3(4)(a) of that Schedule).
This is also the intention behind the references to a qualifying company in paragraph 3(3)(b) of Schedule 28B to ICTA, rewritten in section 291(3). This phrase includes a subsidiary that is acquired after the date the shares are issued so long as other requirements such as those in paragraph 6 (2B) to (2AG) of that Schedule, rewritten in section 294 of this Act, are met.
But, to make this clearer, section 291(8) of this Act provides an interpretation of the reference in subsection (7) to a qualifying company which is a qualifying 90% subsidiary:
“The reference in subsection (7) to a qualifying company which is a qualifying 90% subsidiary of the relevant company includes, in its application to subsection (3), a reference to any existing or future qualifying company which will be a qualifying 90% subsidiary of the relevant company at any future time.”