Finance Act, 2002

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Amendment of provisions relating to approved profit sharing schemes and employee share ownership trusts.

13.—(1) The Principal Act is amended—

(a) in section 509—

(i) in subsection (1), by substituting the following for the interpretation given to “shares”:

“‘shares’ includes stock and specified securities;

‘specified securities’ means securities (within the meaning of Schedule 12), other than ordinary shares, which—

(a) were transferred to the trustees of an approved scheme by the trustees of an employee share ownership trust to which section 519 applies, and

(b) were—

(i) securities issued to the trustees of the employee share ownership trust referred to in paragraph (a) in an exchange to which section 586 applies,

(ii) securities (in this subparagraph referred to as ‘similar securities’) similar to the securities referred to in subparagraph (i) and which were acquired by those trustees using dividends received in respect of the securities so referred to or in respect of similar securities so acquired,

(iii) securities issued to those trustees as a result of a reorganisation or reduction of share capital (in accordance with section 584) which occurred subsequent to the exchange referred to in subparagraph (i) and which securities represent the securities issued in that exchange and the similar securities (if any) referred to in subparagraph (ii), or

(iv) securities (in this subparagraph referred to as ‘similar securities’) similar to the securities first-mentioned in subparagraph (iii) and which were acquired by those trustees using dividends received in respect of the securities so mentioned in subparagraph (iii) or in respect of similar securities so acquired,

but subject to the condition that, where the company which issued the securities in the exchange referred to in paragraph (b) is a company limited by shares (within the meaning of section 5 of the Companies Act, 1963 ), the trustees of the employee share ownership trust have, as a result of the exchange, acquired such percentage of the ordinary share capital of the company which issued the securities that is not less than the percentage of the ordinary share capital of the company which the trustees held immediately prior to the exchange;”,

and

(ii) by inserting the following subsection after subsection (3):

“(4) The Revenue Commissioners may nominate any of their officers to perform any acts and discharge any functions authorised by this Chapter or by Schedule 11 to be performed or discharged by them.”,

(b) by substituting the following section for section 511A:

(c) in section 519—

(i) by substituting the following for subsection (7A):

“(7A) Where the trustees of a trust to which this section applies—

(a) sell securities on the open market, or

(b) receive a sum on the redemption of securities,

any gain accruing to such trustees shall not be a chargeable gain if, and to the extent that the proceeds of such sale or redemption, as the case may be, are used—

(i) to repay moneys borrowed by those trustees,

(ii) to pay interest on such borrowings, or

(iii) to pay a sum to the personal representatives of a deceased beneficiary.”,

(ii) by substituting the following for subsection (9)(d):

“(d) the gain accruing to the trustees of that trust from—

(i) the sale on the open market, or

(ii) the redemption,

of securities.”,

and

(iii) by substituting, in subsection (10), “securities” for “shares” in both places it occurs in paragraph (a) of the definition of “deceased beneficiary”,

(d) in Schedule 11—

(i) by deleting paragraph 7,

(ii) by substituting, in paragraph 8, “Subject to paragraph 8A, the shares shall form part of the ordinary share capital of—” for “The shares shall form part of the ordinary share capital of—”,

(iii) by substituting “concerned,” for “concerned, or” in paragraph 8(b),

(iv) by substituting “so owned, or” for “so owned.” in paragraph 8(c)(ii),

(v) by inserting the following in paragraph 8 after subparagraph (c):

“(d) a company which issued the shares to the trustees of an employee share ownership trust to which section 519 applies, in an exchange to which section 586 applies, which shares were transferred to the trustees of an approved scheme by the trustees of the employee share ownership trust.”,

(vi) by inserting the following after paragraph 8:

“8A. Any reference in subparagraph (d) of paragraph 8 to shares shall be construed as including a reference to shares which were issued to the trustees of the employee share ownership trust referred to in that subparagraph as a result of a reorganisation or reduction of share capital (in accordance with section 584) which occurred subsequent to the exchange referred to in that subparagraph and which shares represent—

(a) the shares issued in the exchange referred to in that subparagraph, or

(b) the specified securities issued in the exchange referred to in paragraph (b) of the definition of ‘specified securities’ in section 509(1).”,

(vii) by substituting “clause (a)” for “paragraph (a)” in paragraph 10(3)(b), and

(viii) by inserting the following in Part 3 after paragraph 11:

“11A. (1) Notwithstanding any other provision of this Schedule, in the case of specified securities, this Schedule shall, with any necessary modification, apply as if this paragraph were substituted for paragraphs 8 to 11.

(2) The specified securities shall be issued by—

(a) a company not under the control of another company, or

(b) a company under the control of a company (other than a company which is, or if resident in the State would be, a close company within the meaning of section 430) whose ordinary shares are quoted on a recognised stock exchange.

(3) The specified securities shall not be subject to any restrictions other than restrictions which attach to all specified securities of the same class, or a restriction authorised by subparagraph (4).

(4) Subject to subparagraphs (5) and (6), the specified securities may be subject to a restriction imposed by the company's articles of association—

(a) requiring all specified securities held by directors or employees of the company or of any other company of which it has control to be disposed of on ceasing to be so held, and

(b) requiring all specified securities acquired, in pursuance of rights or interests obtained by such directors or employees, by persons who are not, or have ceased to be, such directors or employees to be disposed of when they are acquired.

(5) A restriction is not authorised by subparagraph (4) unless—

(a) any disposal required by the restriction is to be by means of a sale for a consideration in money on terms specified in the articles of association, and

(b) the articles also contain general provisions by virtue of which any person disposing of specified securities of the same class (whether or not held or acquired as mentioned in subparagraph (4)) may be required to sell them on terms which are the same as those mentioned in clause (a).”,

and

(e) in Schedule 12—

(i) in the definition of “relevant company” in paragraph 1(1)—

(I) by deleting “or” in clause (a),

(II) by substituting “plc,” for “plc;” in clause (b), and

(III) by inserting the following after clause (b):

“(c) ACC Bank plc, or

(d) a company which acquired control of the Irish National Petroleum Corporation Limited;”,

(ii) in paragraph 13(3)(a), by inserting “or of securities to which subparagraph (ii) or (iv) of paragraph (b) of the definition of ‘specified securities’ in section 509(1) applies” after “the founding company”, and

(iii) in paragraph 15(a) by deleting—

(I) “, and the original shares the securities represent are shares in the founding company”, and

(II) “and ‘original shares’”.

(2) Subsection (1) shall apply and have effect as on and from 16 April 2001.