Section 257LDA — Income Tax Act 2007: The existing investments requirement

The existing investments requirement 257LDA 1 If at the time immediately before the investment is made the investor holds any shares in or debentures of—

a the social enterprise, or b a company which at that time is a qualifying subsidiary of the social enterprise, those shares or debentures must be risk finance investments or (in the case of shares) permitted subscriber shares.

2 A share or debenture is a “ risk finance investment ” for the purposes of this section if—

a it is a share that was issued to the investor, or a debenture of which the investor is the holder in return for advancing an amount, and b at any time, a compliance statement under section 205, 257ED or 257PB is provided in respect of it or of shares or investments including it.

3 Subscriber shares are “ permitted subscriber shares ” for the purposes of this section if—

a they were issued to the investor and have been continuously held by the investor since they were issued, or b they were acquired by the investor at a time when the company which issued them—

i had issued no shares other than subscriber shares, and ii had not begun to carry on or make preparations for carrying on any trade or business.

4 In this section “ debenture ” is to be read in accordance with section 257L(6).