Section 135 — Taxation of Chargeable Gains Act 1992: Exchange of securities for those in another company

Exchange of securities for those in another company 135 1 This section applies in the following circumstances where a company (“company B”) issues shares or debentures to a person in exchange for shares in or debentures of another company (“company A”).

2 The circumstances are: Case 1 Where company B holds, or in consequence of the exchange will hold, more than 25% of the ordinary share capital of company A. Case 2 Where company B issues the shares or debentures in exchange for shares as the result of a general offer— made to members of company A or any class of them (with or without exceptions for persons connected with company B), and made in the first instance on a condition such that if it were satisfied company B would have control of company A. Case 3 Where company B holds, or in consequence of the exchange will hold, the greater part of the voting power in company A.

3 Where this section applies, sections 127 to 131 (share reorganisations etc) apply with the necessary adaptations as if company A and company B were the same company and the exchange were a reorganisation of its share capital.

4 In this section “ordinary share capital” has the meaning given by section 1119 of CTA 2010 and also includes—

a in relation to a unit trust scheme, any rights that are treated by section 99(1)(b) of this Act (application of Act to unit trust schemes) as shares in a company, and b in relation to a company that has no share capital, any interests in the company possessed by members of the company.

5 This section applies in relation to a company that has no share capital as if references to shares in or debentures of the company included any interests in the company possessed by members of the company.

6 This section has effect subject to section 137 (anti-avoidance) .