Statutory Instruments
1997 No. 511

INCOME TAX
The Personal Equity Plan (Amendment) Regulations 1997

Made
26th February 1997

Laid before the House of Commons
27th February 1997

Coming into force
20th March 1997

The Treasury, in exercise of the powers conferred on them by section 333 of the Income and Corporation Taxes Act 1988(1) and section 151 of the Taxation of Chargeable Gains Act 1992(2), hereby make the following Regulations:

Citation and commencement

1.  These Regulations may be cited as the Personal Equity Plan (Amendment) Regulations 1997 and shall come into force on 20th March 1997.

Interpretation

2.  In these Regulations “the principal Regulations” means the Personal Equity Plan Regulations 1989(3) and “regulation” means a regulation of the principal Regulations.

Amendments to the principal Regulations

3.—(1) In regulation 4(2)(4) after the words “specified in” there shall be inserted the words “sub-paragraph (a), (b) or (c) of”.

(2) In regulation 4(2A)(5) for sub-paragraph (b) there shall be substituted—

“(b)in connection with the transfer of the whole of the business of a building society (“the society”) to a company which has share capital (“the successor company”) in accordance with section 97 and the other applicable provisions of the Building Societies Act 1986(6) shares in the successor company which satisfy the conditions prescribed by paragraph (2B) are allotted or allocated to the qualifying individual by virtue of his being at a relevant time a member of the society or an employee, former employee or pensioner of the society or of a company which is a wholly-owned subsidiary of the society—

(i)in priority to other persons, or

(ii)for consideration of an amount or value lower than the market price of the shares, or

(iii)free; or

(c)in connection with the transfer of the whole or part of the business of a mutual insurance company (“the mutual”) to a company which has share capital (“the acquiring company”) under a scheme to which Schedule 2C to the Insurance Companies Act 1982(7) applies, or (on the assumption, where it is not in fact the case, that the mutual is carrying on business through a branch in the United Kingdom) would apply but for section 15(1A)(8) of that Act, shares in a company which is either the acquiring company or a company of which the acquiring company is a wholly-owned subsidiary, and which satisfy the conditions prescribed by paragraph (2B), are allotted or allocated to the qualifying individual by virtue of his being at a relevant time a member of the mutual or an employee, former employee or pensioner of the mutual or of a company which is a wholly-owned subsidiary of the mutual—

(i)in priority to other persons, or

(ii)for consideration of an amount or value lower than the market price of the shares, or

(iii)free.”

(3) After regulation 4(2A) there shall be inserted—

“(2B) The conditions prescribed by this paragraph are that the shares—

(a)are qualifying investments for general plans or, as the case may be, single company plans, and

(b)have not been allocated or appropriated to the qualifying individual in accordance with the provisions of an approved share option scheme or an approved profit sharing scheme.

(2C) In this paragraph and in paragraphs (2A) and (2B)—

“employee” includes any officer or director of the building society or the mutual insurance company or of a company which is a wholly-owned subsidiary of the building society or the mutual insurance company and any other person taking part in the management of the affairs of the building society or the mutual insurance company or of a company which is a wholly-owned subsidiary of the building society or the mutual insurance company;

“member”, in relation to a building society or a mutual insurance company, includes a person who is entitled to become a member;

“mutual insurance company” means an insurance company carrying on business without having any share capital;

“insurance company” has the meaning given in section 96 of the Insurance Companies Act 1982;

“pensioner” means a person entitled (whether presently or prospectively) to a pension, lump sum, gratuity or other like benefit, which is referable to the service of any person as an employee of the building society or the mutual insurance company or of a company which is a wholly-owned subsidiary of the building society or the mutual insurance company;

“a relevant time” means a time at which, under the arrangements described in sub-paragraph (b) or (c) of paragraph (2A), a person is required to be a member, employee, former employee or pensioner of the building society, mutual insurance company or company which is a wholly-owned subsidiary of the building society or mutual insurance company, in order to qualify for the allotment or allocation of shares on the terms set out in those sub-paragraphs;

a company shall be deemed to be a “wholly-owned subsidiary” of a building society, a mutual insurance company or another company if and so long as all its ordinary share capital is owned directly or indirectly by that building society, mutual insurance company or other company and section 838 of the Taxes Act shall apply for construing what is meant by directly or indirectly owning ordinary share capital of a company.”

(4) In regulation 4(3)(9)—

(a)in sub-paragraph (aa) after the word “that” there shall be inserted “, in relation to shares referred to in paragraph (2A)(a),”;

(b)in paragraph (i) of sub-paragraph (b) after the words “paragraph (2A)(b)” there shall be inserted the words “, any sum payable for such an allotment or allocation as is referred to in paragraph (2A)(c)”.

4.  In regulation 4A(3)(c)(10) after the words “regulation 4(2A)(b)” there shall be inserted the words “, any sum payable for such an allotment or allocation as is referred to in regulation 4(2A)(c)”.

5.  In regulation 24A(3)(a)(i)(11) after the words “ordinary shares” there shall be inserted the words “, not being shares in an investment trust,”.

Richard Ottaway
Patrick McLoughlin
Two of the Lords Commissioners of Her Majesty’s Treasury
26th February 1997

Explanatory Note

(This note is not part of the Regulations)
These Regulations further amend the Personal Equity Plan Regulations 1989 (S.I. 1989/469 as amended by S.I. 1990/678, 1991/733, 2774, 1992/623, 1993/756, 1995/1539, 3287, 1996/846 and 1355) (“the principal Regulations”) and come into force on 20th March 1997. The main effect of the amendments is that, from the date when these Regulations come into force, members and employees (including former employees and their dependents who are pensioners) of mutual insurance companies and their wholly-owned subsidiaries, who are entitled to acquire shares on advantageous terms in successor companies, will be able to subscribe to a plan by transferring to it shares which they are entitled to acquire in this way. These Regulations also amend the similar provisions relating to shares in the successor companies of building societies so that former employees of societies and their wholly-owned subsidiaries and their dependents who are pensioners may transfer such shares which they are entitled to acquire on advantageous terms to a plan.
Regulation 1 provides for citation and commencement.
Regulation 2 contains definitions.
Regulation 3 contains the amendments to the provision in the principal Regulations for the transfer to plans of shares in successor companies to building societies and inserts in the principal Regulations the new provision for the transfer to plans of shares in successor companies to mutual insurance companies.
Regulation 4 contains a consequential amendment.
Regulation 5 clarifies the effect of the provision in the principal Regulations for returns of information by plan managers.


(1)
1988 c. 1; section 333 was amended by section 70 of the Finance Act 1991 (c. 31).

(2)
1992 c. 12; section 151 was amended by section 85 of the Finance Act 1993 (c. 34) and by section 64(2) of the Finance Act 1995 (c. 4).

(3)
S.I. 1989/469, amended by S.I. 1990/678, 1991/733, 2774, 1992/623, 1993/756, 1995/1539, 3287, 1996/846 and 1355.

(4)
Substituted by S.I. 1990/678.

(5)
Inserted by S.I. 1990/678 and amended by S.I. 1992/623.

(6)
1986 c. 53.

(7)
1982 c. 50; Schedule 2C was inserted by regulation 28(2) of the Insurance Companies (Third Insurance Directives) Regulations 1994 (S.I. 1994/1696).

(8)
Substituted by regulation 4 of the Insurance Companies (Amendment) Regulations 1994 (S.I. 1994/3132).

(9)
Amended by S.I. 1990/678, 1991/733, 2774 and 1996/1355.

(10)
Inserted by S.I. 1991/2774.

(11)
Inserted by S.I. 1993/756.