LLM6180 - Conversion: Schedule 20A FA93: Nameco conversions
FA93/SCH20A/PARA1 sets out five conditions which must be satisfied for the reliefs in Part 1 to apply.
Condition 1
Condition 1 requires the Name to give notice of resignation as an underwriting member and cease writing new business. This requirement for the Name to resign refers to resignation under the Lloyd’s Membership Byelaw. A member who gives notice on or before 20 October ceases to be an underwriting member and becomes a non-underwriting member at the end of that year. The member may not then underwrite new business. If notice is given after 20 October, the member ceases to be an underwriting member at the end of the following year. The year in which the member becomes a non-underwriting member is the member’s last underwriting year. See LLM6230 where the member withdraws notice of resignation.
Condition 2
Condition 2 requires the Name to transfer all syndicate capacity to the successor company. This refers to all capacity which the Name does not sell or otherwise dispose of. There is no need for the Name to trade in the Nameco with exactly the same capacity as possessed as a private Name.
Condition 3
Condition 3 - the Name must hold a majority of the ordinary share capital in the company, and must control the company. “Ordinary share capital” and “control” here have their normal meanings (ICTA88/S832 and ICTA88/S416).
Condition 3 can be met where the Nameco has shareholders other than the Name. But relief for the carry forward of trading losses and deferral of capital gains tax is available only to a Name who owns and controls the company.
Condition 4
Condition 4 - the transfer of syndicate capacity must be solely in return for an issue of new shares (and so not a mixture of shares and cash or other consideration) in the successor company.
Condition 5
Condition 5 - the successor company must start underwriting in the year immediately following the Name’s last underwriting year, in accordance with Condition 2.