Section 538 — Income Tax (Earnings and Pensions) Act 2003: Share conversions excluded for purposes of section 536

Share conversions excluded for purposes of section 536 538 1 This section has effect for the purposes of section 536(1)(d) (other disqualifying events: share conversions).

2 A conversion of shares is not a disqualifying event if—

a it is a conversion of shares of one class only (“the original class”) into shares of one other class only (“the new class”);

b all the shares of the original class are converted into shares of the new class;

and c one of the conditions in subsection (3) is met.

3 The conditions are—

a that immediately before the conversion the majority of the relevant company’s shares of the original class are held otherwise than by or for the benefit of—

i directors or employees of the relevant company, ii an associated company of the relevant company, or iii directors or employees of such an associated company;

b that immediately before the conversion the relevant company is employee-controlled as a result of holdings of shares of the original class. 4 “ associated company ” has the meaning given by section 449 of CTA 2010 , “ director ” has the same meaning as in the benefits code (see section 67) but also includes a person who is to be or has been a director, “ employee ” includes a person who is to be or has been an employee, and “ employee-controlled ” has the same meaning as in Chapters 1 to 4 of this Part (see section 421H(1)).