Section 397C — Finance Act 2008: Meaning of “minority shareholder”

Meaning of “minority shareholder” 397C 1 In section 397A “ minority shareholder ”, in relation to a non-UK resident company, means a person whose shareholding in the company is less than 10% of the company's issued share capital.

2 Subsections (3) to (6) make provision about the circumstances in which shares form part of a person's shareholding in a company for the purposes of this section.

3 Shares form part of a person's shareholding in a company to the extent that the person is beneficially entitled to the shares or to a distribution arising in respect of the shares (or both).

4 Shares form part of a person's shareholding in the company where—

a a person is a settlor in relation to a settlement, and b income arising from shares comprised in the settlement is treated for income tax purposes as the income of that person and of that person alone.

5 Shares form part of the shareholding in a company of a person (“P”) if—

a they form part of the shareholding in the company of a person connected with P, b P transferred the shares to the connected person or arranged for the connected person to acquire the shares, and c the purpose of the transfer or arrangement was wholly or mainly to enable P to avoid tax.

6 Shares form part of a person's shareholding in a company if that person has transferred the shares to another person under a repo or stock lending arrangement.

7 In this section— “ repo ” has the same meaning as in Part 11 of ITA 2007 (see section 569 of that Act), “ settlement ” and “ settlor ” have the same meaning as in Chapter 5 of Part 5 of this Act, and “ stock lending arrangement ” has the same meaning as in Part 11 of ITA 2007 (see section 568 of that Act).