IFM14430 - Approval requirement: the close company requirement

The eligibility conditions in CTA10/S1158 essentially define the type of company that may apply for approval as an investment trust (and they must continue to be complied with once a company has been approved). There is a further requirement at regulation 18 of SI 2011/2999 that prohibits an approved company from being close at any time in an accounting period. The meaning of ‘close company’ is given at CTA2010/S439.

If an approved company does become close during an accounting period it will be treated as being in serious breach of the regulations. It will be treated as not having been approved from the start of that accounting period and for all subsequent periods. The company may apply for re-approval from the start of a subsequent accounting period if it meets the eligibility conditions and is non-close from the start of that subsequent period (regulations 26 and 29 of SI 2011/2999).