Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013

8 New section CD 29B inserted (Issues to shareholders of rights to subscribe for or sell back shares)

(1)

After section CD 29, insert:

CD 29B Issues to shareholders of rights to subscribe for or sell back shares
Issue of rights to subscribe for shares

(1)

The issue by a company to a shareholder of a right to subscribe for a share, or to sell a share in the company to the company, is not a dividend.

Issue of shares under rights to subscribe for shares

(2)

The issue by a company of a share to a person for consideration less than the market value, immediately before the issue, of a share in the same class of shares, is not a dividend if—

(a)

the person subscribes for the share under a right (a subscription right) issued by the company to a shareholder holding shares before the issue of the right; and

(b)

the company does not, as part of the issue of the subscription right, give the person a right to dispose of the share to the company.

Premiums from issue of rights to subscribe for shares

(3)

A distribution by a company to a shareholder is not a dividend if—

(a)

the company issues to the shareholder a right (the shareholder right) to subscribe for, or dispose of to the company, a share in the company at a given price (the shareholder price); and

(b)

the shareholder fails or is ineligible to exercise the shareholder right; and

(c)

another person pays to the company an amount—

(i)

for the shareholder right:

(ii)

greater than the shareholder price, for the issue of a share under the shareholder right; and

(d)

the distribution is from the amount of the payment that does not increase the company’s available subscribed capital.

Defined in this Act: available subscribed capital, bonus issue in lieu, company, consideration, dividend, pay, share, shareholder

(2)

Subsection (1) applies for the 2008–09 and later tax years.