CTM15130 - Distributions: general: explanation of terms

Below are explanations of some terms used in the distributions legislation.

Share (CTA10/S1117(1))

Share includes stock and any other interest of a member in a company. It includes the rights of a member in a company limited by guarantee.

Out of assets (CTA10/S1117(3),(4))

A distribution is treated as made, or consideration as provided, out of the assets of a company if the cost falls on the company.

New consideration

See CTM15140.

Repayment of capital (CTA10/S1026)

See CTM15400

Principal secured

See CTM15501

Security (CTA10/S1117(1))

This includes a security not creating or providing evidence of a charge on assets.

Interest or other consideration may be paid by a company on money advanced without the issue of a security. In such cases, the interest or other consideration is treated as if paid in respect of a security issued for the advance by the company. As a result, interest on any loan is potentially within the scope of CTA10/S1000(1) E, and F

In respect of shares (CTA10/S1113)

In places the distributions legislation refers to something done ‘in respect of’ a share. This means something done to a person as the holder or former holder of a share. It also includes something done as a result of a right granted or offer made in respect of the share.

In appropriate cases CTA10/S1113 can apply to something done at the request or wishes of the shareholder (see CTM15350).

When a company is a member of a 90 per cent group, ‘in respect of shares in the company’ means in respect of shares in that company or in any other company in the group.

A transaction may lead to two companies becoming, for the first time, members of the same 90 per cent group.

In these circumstances the companies are not treated as members of the same 90 per cent group for the purposes of deciding if a distribution arose as a result of the transaction.