IFM40245 - Eligibility criteria: category A investors: further provisions

FA22/SCH2/PARAS 10 and 11

PARA 10 defines ‘relevant qualifying investor’ for the purposes of the category A investor definition in PARA 8. In summary, these are:

• life insurers,
• sovereign immune entities,
• UK REITs (IFM21000),
• overseas REIT equivalents (see IFM22016),
• non-resident companies meeting the property income condition within the NRCG rules (CG73996N),
• pension schemes (both UK and overseas), and
• charities.

For the purposes of PARA10, ‘pension schemes’ includes both where a QAHC is held directly by the scheme itself and where the QAHC is held by a trustee or manager of a pension scheme.

Pension schemes and charities are subject to carve outs to address the risk that the charities or pension schemes are too closely associated with particular individuals.

A company which is an ‘intermediate company’ may be a category A investor within the meaning of PARA 8 if the conditions within PARA 11 are met:

• it must be a company as defined within CTA10/S1121 (CTM00510),
• the company must be wholly or almost wholly owned by category A investors which are not QAHCs, and
• must meet the activity condition in FA22/SCH2/PARA13 (IFM40255).

Although the ‘wholly or almost wholly owned’ test applied looks to direct ownership only, this does not preclude a stack of intermediate companies from all qualifying.

If, for example, a transparent qualifying fund incorporates a wholly owned subsidiary, Company X, that Company X will be an intermediate company within the definition, and hence a category A investor. So, in turn, if Company X has a wholly owned subsidiary of its own, Company Y, that Company Y will be wholly owned by Company X, which is a category A investor, and so will also qualify as an intermediate company – and so on.