VCM56070 - VCT: VCT winding-up: assets transferred from VCT-in-liquidation to a VCT
SI2004/2199 Regulation 8: ICTA88/SCH28B
Background
Where a liquidator of a company is unable to realise all of a company바카라 사이트™s assets those assets may be transferred in kind (바카라 사이트˜in specie바카라 사이트™) to members of the company. This might happen if the liquidator of a VCT was having difficulty selling shares or securities in which it had invested. However, distributing such investments in kind to the individuals who had invested in the VCT may be unwelcome both to them and to the directors and shareholders of the investee company.
Regulation 8 of SI2004/2199 permits liquidators to transfer such investments to other VCTs by way of an arm바카라 사이트™s length bargain. Investments that were qualifying holdings in the hands of the VCT-in-liquidation can maintain that status on transfer to a VCT.
The extent to which a VCT-in-liquidation can take advantage of this disposal route is restricted. The restriction is intended to discourage liquidators from transferring marketable assets to other VCTs in preference to disposing of them in other ways.
When the rules apply
Regulation 8 applies where:
- a VCT-in-liquidation (VCM56010) has made all reasonable endeavours (see below) to sell shares or securities comprised in its qualifying holdings at their market value (or as close to that value as possible),
- those shares or securities are transferred during the prescribed winding-up period (VCM56030) of the VCT-in-liquidation to a VCT by way of an arm바카라 사이트™s length bargain or for a consideration not less than their market value, and
- the value of those transferred shares or securities (together with the value of any other such transfers - VCM56080) does not exceed 7.5% of the overall value of the VCT-in-liquidation바카라 사이트™s assets at the start of its winding-up.
Effect of the rules
The effect of Regulation 8 is to treat:
- any shares or securities that satisfied (or were deemed to have satisfied) the requirements of any of the following provisions,
- to any extent, or for any period, when they were held by a VCT-in-liquidation,
- as if those same conditions were satisfied to the same extent and for the same period when those investments are transferred to a VCT.
The provisions that this treatment applies are:
| Reference | Guidance link | Description |
|---|---|---|
| - ITA07/S286(2) | VCM55010 | (method of acquisition) |
| - ITA07/S293 | VCM55150 | (employment of money raised) |
| - ITA07/S287 | VCM55060 | (maximum qualifying investment) |
| - ITA07/S297 | VCM55240 | (gross assets rule) |
This means that investments that were qualifying holdings in relation to the VCT-in-liquidation can continue to be treated as qualifying holdings in relation to the VCT to which they are transferred.
Reasonable endeavours
The phrase 바카라 사이트˜reasonable endeavours바카라 사이트™ is not defined in the legislation. But Regulation 8 is aimed specifically at those investments for which, realistically, there are no potential buyers (other than VCTs who would benefit from Regulation 8(1)(c)) willing to offer anywhere near market value. For example, where a potential sale is blocked or where any offers are unreasonably below a level based on the net asset value of the relevant company.
In this context it should be noted that a liquidator바카라 사이트™s responsibility to maximise receipts from the company바카라 사이트™s assets might not necessarily require that each individual asset (or class of asset) be sold at its market value. A greater overall return may sometimes be achieved by disposing of aggregated parcels of assets, or the assets as a whole.
Market value and arm바카라 사이트™s length bargains
For the purposes of SI2004/2199 바카라 사이트˜market value바카라 사이트™ derives its meaning from TCGA92/S272 & 273 (CG59540). In this context, 바카라 사이트˜market value바카라 사이트™ means the value to non-VCTs or to VCTs if they did not benefit from the special treatment of the regulations. 바카라 사이트˜Arm바카라 사이트™s length bargain바카라 사이트™ includes a bargain with a VCT which does benefit from the regulations (that is, a VCT for which the shares or securities transferred would be qualifying holdings).