INTM700730 - International movements of capital: Exclusions: transfers of shares and debentures

FA09/SCH 17/Para 9 and Regulation 5(1)(b) of S.I. 2009 / No. 2192

Regulation 5(1)(b) provides that transactions described in the Schedule to the Regulations and meeting any specified conditions are excluded from the reporting requirement. The provisions in the Schedule largely reflect the exclusions previously embodied in the General Consents given under the repealed legislation at ICTA88/S765 and will therefore already be familiar (see INTM700110). However there are a number of differences between the two sets of rules.

Paragraphs 7 to 10 of the Schedule to S.I. 2009 / No. 2192

Paragraph 7 of the Schedule excludes certain transfers by the reporting body or any company (whether or not it is resident in the United Kingdom) of shares or debentures of the foreign subsidiary. The exclusion applies where the transfer is to a person not connected with the reporting body. The transfer must be at market value and for consideration paid to the transferor and must not be to a nominee or trustee for a person who is connected with the reporting body. There must not be any arrangements by which the reporting body, or a nominee or trustee for the reporting body, or a person connected with the reporting body, or a nominee or trustee for a person connected with the reporting body is or may become entitled to the shares or debentures or any interest in them.

Paragraph 8 of the Schedule excludes transfers by the reporting body of shares or debentures of the foreign subsidiary to a company in the same group as the reporting body.

Paragraph 9 of the Schedule excludes transfers other than by the reporting body of shares or debentures of a foreign subsidiary in which the reporting body has an interest. The transfers must be permitted or caused by the reporting body and must be to the reporting body or to a company in the same group as the reporting body.

Paragraph 10 of the Schedule excludes transactions whereby the reporting body or a company in the same group as the reporting body gives security over the shares of a foreign subsidiary. The security must be given in connection with the borrowing of money and the lender must not be connected to the reporting body or to a company in the same group as the reporting body.