VCM54190 - VCT: VCT approval: exchange of shares or securities in same company: valuation of the new holding
ITA07/S278(5) & (6), ITA07/S289
SI2661/2002 Regulation 7(2) & (4)
A VCT can exchange a holding of ‘old’ shares or securities in a company for ‘new’ shares or securities in the same company (see VCM55320).
The ‘new’ shares or securities are valued for the 15% holding limit condition, the 70% qualifying holding condition and the 30% or 70% eligible shares condition as follows.
The aggregate value of the new shares and new securities is calculated immediately after the old shares and securities are cancelled or otherwise extinguished using the formula below. This value will then be used until the shares or securities fall to be revalued in accordance with ITA/S278(3)) (see VCM54160).
The formula is:
Nv = Ov x Nmv
Nmv + C
where
| Formula | Definition |
|---|---|
| Nv = | the aggregate value of the new shares and securities that you are calculating; |
| Ov = | the aggregate value of the old shares and securities when they were last valued; |
| Nmv = | the aggregate market value of the new shares and securities immediately after the old shares and securities are cancelled or otherwise extinguished; |
| C = | the aggregate market value immediately after the old shares and securities are cancelled or otherwise extinguished of, (i) any monetary amount,(ii) any monetary amount (without any discount for postponement of the right to receive payment or any part of it), and (iii) any other consideration of receipt (except the new shares and securities, received by the VCT as consideration for, or in respect of, the old shares or securities. |
This same method of valuation is to be used to check that each qualifying holding comprises at least 10% eligible shares, ITA07/S289 (see VCM55080).
If some ‘old’ shares or securities are not included in the exchange, see VCM54200.
Where the value of the new shares or new securities issued to the VCT needs to be apportioned, see VCM54210.