Section 18H — Corporation Tax Act 2010: Associated companies: fixed-rate preference shares

Associated companies: fixed-rate preference shares 18H 1 In determining for the purposes of section 18E(4) whether a company is under the control of another, fixed-rate preference shares held by a company are ignored if the company holding them—

a is not a close company, b takes no part in the management or conduct of the company which issued the shares, or in the management or conduct of its business, and c subscribed for the shares in the ordinary course of a business which includes the provision of finance.

2 In this section “ fixed-rate preference shares ” means shares which—

a were issued wholly for new consideration, b do not carry any right either to conversion into shares or securities of any other description or to the acquisition of any additional shares or securities, and c do not carry any right to dividends other than dividends which—

i are of a fixed amount or at a fixed rate per cent of the nominal value of the shares, and ii together with any sum paid on redemption, represent no more than a reasonable commercial return on the consideration for which the shares were issued.

3 In subsection (2)(a) “ new consideration ” has the meaning given by section 1115.