CG67875 - Reliefs: employee-ownership trusts: defining significant and controlling interests

TCGA92/S236T(1)

The matters below are relevant to the 바카라 사이트˜controlling interest requirement바카라 사이트™, see CG67850, and the 바카라 사이트˜significant interest바카라 사이트™ condition, the latter of which has to be fulfilled where the 바카라 사이트˜all-employee benefit requirement바카라 사이트™ is not met but is to be treated as met, see CG67846.

In some cases the strict terms of these requirements may not be met for genuine commercial reasons, even though the purpose of the EOT is not thereby compromised. There are special rules in TCGA92/S236T which ensure that in these closely-defined cases the requirements are treated as met.

TCGA92/S236T(2)

The definition of 바카라 사이트˜equity holder바카라 사이트™ is provided by CTA10/S158.

In determining the proportion of profits or assets available for distribution to a company, CTA10/Ss165-182 apply.

The guidance at CTM81000+ deals with the two points above in more detail.

TCGA92/S236T(3)

In deciding whether the trustees are entitled to a specified proportion or more of the profits available for distribution to equity holders, the trustees are to be treated as entitled to dividends even if they are permitted or required, by the trusts of the settlement, to waive their entitlement to those dividends.

TCGA92/S236T(4)

The 바카라 사이트˜controlling interest requirement바카라 사이트™ and the 바카라 사이트˜significant interest바카라 사이트™ condition both depend on there being no agreements under which the three principal conditions could cease to be satisfied, see CG67846 and CG67850. Certain types of provision may be ignored when deciding whether such agreements or instruments prevent the relevant condition being satisfied. These provisions, described below, are to be ignored only where they confer on the third party any entitlement in the event of a default by the trustees in performing their obligations in relation to the debt or loan.

  • The provisions of a mortgage or charge granted by the trustees to a third party to secure any debt. In Scotland this applies to the provisions of a charge or security.
  • The provisions of an agreement in respect of a loan made to the trustees by a third party.

These rules ensure that the trustees can use their shares in the company as security for a loan in the course of their normal activities. In their absence the mere possibility of the trustees losing control of the shares in the event of default would prevent them from meeting the 바카라 사이트˜controlling interest requirement바카라 사이트™, see CG67850, or being treated as meeting the 바카라 사이트˜all-employee benefit requirement바카라 사이트™, see CG67846.

If the trustees actually lose control of the shares, for instance through one of these provisions being invoked by a creditor, the relevant requirements will cease to be met and relief will not be due.

See CG67876 for an explanation of certain terms used in this paragraph.