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Distributions Of Investment Companies

Volume 980: debated on Monday 3 March 1980

The text on this page has been created from Hansard archive content, it may contain typographical errors.

7 pm

Amendments made:

No. 327, in page 49, leave out lines 1 to 18 and insert—

'(1) Subject to the following provisions of this section, an investment company may also make a distribution at any time out of its accumulated, realised revenue profits, so far as not previously utilised by distribution or capitalisation, less its accumulated revenue losses (whether realised or unrealised), so far as not previously written off in a reduction or reorganisation of capital duly made—'.

No. 328, in page 49, line 25, leave out '(5)' and insert '(1)'.

No. 329, in page 49, line 33, leave out from 'company' to 'consists' in line 36 and insert

'which has given notice in the prescribed form (which has not been revoked) to the registrar of its intention to carry on business as an investment company (the "requisite notice") and has since the date of that notice complied with the requirements set out in subsection (7A) below.
(7A) The requirements referred to in subsection (7) above are—
(a) that the business of the company'.

No. 330, in page 49, line 37, leave out 'land or other assets'.

No. 331, in page 49, leave out lines 40 to 44 and insert—

'(b) that none of the company's holdings in companies other than companies which are for the time being investment companies represents more than 15 per cent. by value of the investing company's investment;
(c) that distribution of the company's capital profits is prohibited by its memorandum or articles of association;
(d) that the company has not retained, otherwise than in compliance with this Part of this Act, in respect of any accounting reference period more than 15 per cent. of the income it derives from securities.
(7B) An investment company may not make a distribution by virtue of subsection (1) above unless its shares are listed on a recognised stock exchange and, during the period beginning with the first day of the accounting reference period immediately preceding the accounting reference period in which the proposed distribution is to be made or, where the distribution is proposed to be made during the company's first accounting reference period, the first day of that period and ending with the date of the distribution (whether or not any part of those periods falls before the appointed day), it has not—
  • (a) distributed any of its capital profits; or
  • (b) applied any unrealised profits or any capital profits (realised or unrealised) in paying up debentures or any amounts unpaid on any of its issued shares.
  • (7C) An investment company may not make a distribution by virtue of subsection (1) above unless the company gave the requisite notice—
  • (a) before the beginning of the period referred to in subsection (7B) above; or
  • (b) where that period began before the appointed day, as soon as may be reasonably practicable after the appointed day: or
  • (c) where the company was incorporated on or after the appointed day, as soon as may be reasonably practicable after the date of its incorporation.
  • (7D) A notice by a company to the registrar under subsection (7) above may be revoked at any time by the company on giving notice in the prescribed form to the registrar that it no longer wishes to be an investment company within the meaning of this section, and, on giving such notice, the company shall cease to be such an investment company.
    (7E) Section 359(2) and (3) of the Income and Corporation Taxes Act 1970 and section 93(6)(b) of the Finance Act 1972 shall have effect for the purposes of subsection (7A)(b) above as those provisions have effect for the purposes of subsection (1)(b) of the said section 359.
    (7F) The Secretary of State may by regulations made by statutory instrument extend the provisions of this section, with or without modifications, to companies whose principal business consists of investing their funds in securities, land or other assets with the aim of spreading investment risk and giving their members the benefit of the results of the management of the assets.
    (7G) Regulations made under subsection (7F) above—
  • (a) may make different provision for different classes of companies and may contain such transitional and supplemental provisions as the Secretary of State considers necessary; and
  • (b) shall not be made unless a draft of the regulations has been laid before Parliament and approved by a resolution of each House of Parliament.'
  • No. 332, in page 50, line 1, leave out subsections (8) to (12).—[ Mr. Eyre.]