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| Scope of exceptions for certain bearer instruments. |
106. - (1) In section 95(2) of the Finance Act 1986 (bearer instruments excepted from charge on entry into depositary receipt system), for paragraph (b) substitute-
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"(b) an instrument within the stamp duty exemption for non-sterling instruments which does not raise new capital.". |
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(2) After that subsection insert-
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"(2A) For the purpose of subsection (2)(b) an instrument is regarded as raising new capital only if the following conditions are met.
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(2B) The first condition is that the instrument-
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(a) is issued in conjunction with- |
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(i) the issue of marketable securities for which only cash is subscribed, or
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(ii) the granting of rights to subscribe for marketable securities which are granted for a cash consideration only and exercisable only by means of a cash subscription; or
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(b) is issued to give effect to the exercise of such rights as are mentioned in paragraph (a)(ii). |
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(2C) The second condition is that the marketable securities mentioned in subsection (2B)(a) are either-
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(a) shares the holders of which have a right to a dividend at a fixed rate but have no other right to share in the profits of the company, or |
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(b) securities which are loan capital within the meaning of section 78 above, |
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and do not carry any rights (of conversion or otherwise) by the exercise of which securities which are not listed on a recognised stock exchange may be obtained.
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(2D) In subsections (2B) and (2C) "marketable securities" means chargeable securities which are listed, or depositary receipts for which are listed, on a recognised stock exchange.".
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(3) In section 97(3) of that Act (bearer instruments excepted from charge on entry into clearance system), for paragraph (b) substitute-
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"(b) an instrument within the stamp duty exemption for non-sterling instruments which does not raise new capital.". |
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(4) After that subsection insert-
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"(3A) For the purpose of subsection (3)(b) an instrument is regarded as raising new capital only if the following conditions are met.
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(3B) The first condition is that the instrument-
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(a) is issued in conjunction with- |
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(i) the issue of marketable securities for which only cash is subscribed, or
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(ii) the granting of rights to subscribe for marketable securities which are granted for a cash consideration only and exercisable only by means of a cash subscription; or
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(b) is issued to give effect to the exercise of such rights as are mentioned in paragraph (a)(ii). |
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(3C) The second condition is that the marketable securities mentioned in subsection (3B)(a) are either-
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(a) shares the holders of which have a right to a dividend at a fixed rate but have no other right to share in the profits of the company, or |
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(b) securities which are loan capital within the meaning of section 78 above, |
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and do not carry any rights (of conversion or otherwise) by the exercise of which securities which are not listed on a recognised stock exchange may be obtained.
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(3D) In subsections (3B) and (3C) "marketable securities" means chargeable securities which are listed, or depositary receipts for which are listed, on a recognised stock exchange.".
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(5) In section 99 of that Act (interpretation), after subsection (8) insert-
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"(8A) "Recognised stock exchange" has the same meaning as it has in the Tax Acts by virtue of section 841 of the Income and Corporation Taxes Act 1988.".
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(6) Subsections (1) to (4) above apply in relation to any instrument issued on or after 9th March 1999, except one giving effect to an agreement for a company merger or takeover entered into in writing by the companies involved before 30th January 1999.
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| Relief in case of certain replacement securities. |
107. - (1) After section 95 of the Finance Act 1986 (depositary receipts: exceptions) insert-
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| "Depositary receipts: exception for replacement securities. |
95A. - (1) There shall be no charge to tax under section 93 above in respect of the transfer, issue or appropriation of chargeable securities ("the new securities") issued by a company in place of existing securities of the same company ("the old securities") if-
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(a) the old securities are held under a depositary receipt scheme; |
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(b) there was a charge to tax under section 93 above in respect of the transfer, issue or appropriation- |
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(i) of the old securities, or
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(ii) of earlier securities in relation to which on a previous application of this section those securities were the new securities,
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or there would have been such a charge if that section had been in force; and |
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(c) there is an arrangement under which- |
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(i) the new securities are transferred, issued or appropriated as mentioned in section 93(1)(b), and
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(ii) the old securities are cancelled.
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(2) For the purposes of subsection (1) above the cases in which securities are held under a depositary receipt scheme are those specified (in relation to shares) in section 95(5) above.
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(3) The exception provided by this section applies only to the extent that the value of the new securities immediately after their issue does not exceed the value of the old securities immediately before the issue of the new securities.".
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(2) In section 99(10) of that Act (meaning of "chargeable securities"), after "95," insert "95A,".
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(3) After section 97 of that Act (clearance services: exceptions) insert-
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| "Clearance services: further exception. |
97AA. - (1) There shall be no charge to tax under section 96 above in respect of the transfer or issue of chargeable securities ("the new securities") issued by a company in place of existing securities of the same company ("the old securities") if
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(a) the old securities are held under a clearance services scheme; |
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(b) there was a charge to tax under section 96 above in respect of the transfer or issue- |
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(i) of the old securities, or
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(ii) of earlier securities in relation to which on a previous application of this section those securities were the new securities,
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or there would have been such a charge if that section had been in force; and |
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(c) there is an arrangement under which- |
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(i) the new securities are transferred or issued as mentioned in section 96(1)(b), and
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(ii) the old securities are cancelled.
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(2) For the purposes of subsection (1) above the cases in which securities are held under a clearance services scheme are those specified (in relation to shares) in section 97(6) above.
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(3) The exception provided by this section applies only to the extent that the value of the new securities immediately after their issue does not exceed the value of the old securities immediately before the issue of the new securities.".
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(4) In section 99(10) of that Act (meaning of "chargeable securities"), after "97" insert ", 97AA".
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(5) This section applies in relation to securities issued on or after 1st May 1998.
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| Charge to tax on surrender of units in unit trusts. |
108. - (1) Schedule 19 to this Act (stamp duty reserve tax on surrender of units in unit trust scheme) has effect.
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(2) In section 90(1) of the Finance Act 1986 (exceptions from general charge to stamp duty reserve tax) for "to the managers" substitute "to or from the managers".
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This amendment applies where the relevant day for the purposes of section 87 of that Act falls on or after the day on which this section comes into force.
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(3) Nothing in this section affects any charge to stamp duty reserve tax under section 87(1) of the Finance Act 1986 in respect of an agreement not excepted by section 90(1), as amended by subsection (2) above.
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(4) This section comes into force on 1st October 1999.
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| Application of unit trust provisions to OEICs. |
109. - (1) Section 152 of the Finance Act 1995 (power to apply tax legislation to open-ended investment companies) is amended as follows.
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(2) In subsection (2)(b) for "Part IV of the Finance Act 1986 (stamp duty reserve tax)" substitute "stamp duty reserve tax".
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(3) In subsection (3)(c)-
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(a) for "Part IV of the Finance Act 1986" substitute "the enactments relating to stamp duty or stamp duty reserve tax", and |
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(b) for "the enactments relating to stamp duty" substitute "those enactments". |
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(4) In subsection (6) at the appropriate place insert-
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""the enactments relating to stamp duty reserve tax" means Part IV of the Finance Act 1986 and any enactment which amends or is required to be construed as one with that Part;". |
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| Power to exempt UK depositary interests in foreign securities. |
110. - (1) The Treasury may by regulations make provision excluding from the definition of "chargeable securities" in Part IV of the Finance Act 1986 such rights in or in relation to securities as, in accordance with the regulations, are to be treated as exempt UK depositary interests in foreign securities.
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(2) Subject to subsection (3), the regulations may-
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(a) define "depositary interest", "UK depositary interest" and "foreign securities" for this purpose; and |
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(b) exempt such descriptions of UK depositary interests in foreign securities (as so defined) as may from time to time be specified in the regulations. |
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(3) The regulations shall not make provision for the exemption of a depositary interest unless the terms of issue of the interest are such that it can only be transferred in accordance with regulations under section 207 of the Companies Act 1989 (transfer of securities without written instrument).
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(4) The regulations may contain such incidental, supplementary, consequential and transitional provision as appears to the Treasury to be appropriate.
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This may include provision modifying the enactments relating to stamp duty reserve tax for the purpose of giving effect to the exemption conferred by regulations under this section (or, where earlier regulations are varied or revoked, withdrawing an exemption formerly conferred).
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(5) Regulations under this section may make different provision for different cases.
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(6) Regulations under this section shall be made by statutory instrument which shall be subject to annulment in pursuance of a resolution of the House of Commons.
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