Section 443 — Finance Act 2003: Case outside charge under section 438

Case outside charge under section 438 443 1 Section 438 (charge on occurrence of chargeable event) does not apply if—

a the employment-related securities are shares (or an interest in shares) in a company of a class, b all the company’s shares of the class are convertible securities, c all the company’s shares of the class (other than the employment-related securities) are affected by an event similar to that which is a chargeable event in relation to the employment-related securities, and d subsection (3) or (4) is satisfied.

2 For the purposes of subsection (1)(c) shares are affected by an event similar to that which is a chargeable event in relation to the employment-related securities—

a in the case of a chargeable event within section 439(3)(a) (conversion), if they are converted into securities of a different description, b in the case of a chargeable event within section 439(3)(b) (disposal), if they are disposed of, c in the case of a chargeable event within section 439(3)(c) (release of entitlement to convert), if the entitlement to convert them into securities of a different description is released, or d in the case of a chargeable event within section 439(3)(d) (receipt of benefit), if a similar benefit is received in respect of the entitlement to convert them.

3 This subsection is satisfied if, immediately before the event that would be a chargeable event, the company is employee-controlled by virtue of holdings of shares of the class.

4 This subsection is satisfied if, immediately before that event, the majority of the company’s shares of the class are not held by or for the benefit of any of the following—

a employees of the company, b persons who are related to an employee of the company, c associated companies of the company, d employees of any associated company of the company, or e persons who are related to an employee of any such associated company.

5 For the purposes of subsection (4) a person is related to an employee if—

a the person acquired the shares pursuant to a right or opportunity available by reason of the employee’s employment, or b the person is connected with a person who so acquired the shares or with the employee and acquired the shares otherwise than by or under a disposal made by way of a bargain at arm’s length from the employee or another person who is related to the employee.