Section 257LB — Income Tax Act 2007: The no pre-arranged exits requirements

The no pre-arranged exits requirements 257LB 1 There must not at any time in the shorter applicable period be any arrangements in existence for the investment to be redeemed, repaid, repurchased, exchanged or otherwise disposed of in that period.

2 The issuing arrangements for the investment must not include—

a arrangements for or with a view to the cessation of any trade which is being or is to be or may be carried on by the social enterprise or a person connected with the social enterprise, or b arrangements for the disposal of, or of a substantial amount (in terms of value) of, the assets of the social enterprise or of a person connected with the social enterprise.

3 The arrangements referred to in subsection (2)(a) and (b) do not include any arrangements applicable only on the winding-up of a company except in a case where—

a the issuing arrangements include arrangements for the company to be wound up, or b the arrangements are applicable on the winding-up of the company otherwise than for genuine commercial reasons.

4 In this section “ the issuing arrangements ” means—

a the arrangements under which the investor makes the investment, and b any arrangements made before, and in relation to or in connection with, the making of the investment by the investor.

5 Subsections (2) to (4) do not apply if the social enterprise is an accredited social impact contractor.