SCHEDULE 2 continued PART I continued
24 (1) This paragraph applies where under an approved scheme any shares are allotted, or issued without prior allotment—
(a) to any person by virtue of his being, or having been, a registered producer and without any consideration being provided by him,
(b) to trustees on terms which provide for the transfer of the shares to persons by virtue of their being, or having been, registered producers, or
(c) to the relevant board,
by a body to which sub-paragraph (2) below applies.
(2) This sub-paragraph applies to a body which—
(a) is a relevant successor of the relevant board, or of a subsidiary of that board, and
(b) is not a body in relation to which the scheme makes provision for the transfer to it of anything other than shares in a subsidiary of the relevant board.
(3) The shares shall be treated for the purposes of the enactments relating to the taxation of company distributions as if they had been issued wholly in consideration of a subscription paid to the relevant successor of an amount equal to the market value of the shares at the time of allotment or, if issued without prior allotment, at the time of issue.
(4) In sub-paragraph (3) above, the reference to the market value of the shares is to the price which they might reasonably be expected to fetch on a sale in the open market.
(5) Section 272(2) to (4) of the [1992 c. 12.] Taxation of Chargeable Gains Act 1992 (general principles for determining market value of shares) shall apply for the purposes of this paragraph.
(6) Where, as at the time at which the market value of any shares falls to be determined for the purposes of this paragraph, the shares are not quoted on a recognised stock exchange, subsection (3) of section 273 of that Act (assumption with respect to information available to prospective purchaser) shall apply for the purposes of the determination as it applies for the purposes of a determination falling within subsection (1) of that section.
(7) In sub-paragraph (6) above, “recognised stock exchange” has the meaning given by section 841 of the Income and Corporation Taxes Act 1988.
(8) Sub-paragraphs (5) and (6) of paragraph 20 above shall apply for the purposes of this paragraph as they apply for the purposes of that.
25 (1) This paragraph applies where under an approved scheme any debenture—
(a) is issued by a body which is a relevant successor of the relevant board, or of a subsidiary of that board, and
(b) is either—
(i) issued to any person by virtue of his being, or having been, a registered producer and without any consideration being provided by him, or
(ii) included in an issue of debentures to trustees on terms which provide for the debentures to be transferred to persons by virtue of their being, or having been, registered producers.
(2) The debenture shall be treated for the purposes of the enactments relating to the taxation of company distributions, or to the taxation of the income of companies, as if it had been issued—
(a) wholly in consideration of a loan made to the relevant successor of an amount equal to the principal sum payable under the debenture, and
(b) wholly and exclusively for the purposes of the trade carried on by the relevant successor.
(3) For the purposes of section 117(1) of the [1992 c. 12.] Taxation of Chargeable Gains Act 1992 (meaning of “qualifying corporate bond”), the indebtedness acknowledged by the debenture shall be treated as representing a normal commercial loan at any time after the debenture has been acquired by a person as a result of a disposal which is not excluded for the purposes of section 117(7) of that Act.
(4) Except as provided by sub-paragraph (3) above, the indebtedness acknowledged by the debenture shall not be treated for those purposes as representing a normal commercial loan.
(5) Sub-paragraphs (5) and (6) of paragraph 20 above shall apply for the purposes of this paragraph as they apply for the purposes of that.
26 (1) This paragraph applies where under an approved scheme there is conferred on any person by virtue of his being, or having been, a registered producer—
(a) any right to acquire shares in a body which is a relevant successor of the relevant board, or of a subsidiary of that board, in priority to other persons,
(b) any right to acquire shares in that body for consideration of an amount or value lower than the market value of the shares, or
(c) any right to free shares in that body.
(2) The right shall be regarded for the purposes of tax on chargeable gains as an option (within the meaning of section 144 of the Taxation of Chargeable Gains Act 1992) granted to, and acquired by, him for no consideration and having no value at the time of that grant and acquisition.
(3) For the purposes of sub-paragraph (1)(c) above, shares are free if they are issued or transferred without any consideration being provided by the person acquiring them, there being disregarded for this purpose any depreciatory effect of transfers under the scheme on the value of a right to participate in a winding up of the relevant board.
(4) Sub-paragraph (6) of paragraph 20 above shall apply for the purposes of this paragraph as it applies for the purposes of that.
27 Any sum required to be paid under section 17 above by a person carrying on a trade as a milk producer shall be allowed as a deduction in computing the profits of the trade for the purposes of tax.
28 (1) No transfer effected under section 11 above shall give rise to any liability to stamp duty.
(2) Stamp duty shall not be chargeable—
(a) on an approved scheme, or
(b) on an instrument which is certified to the Commissioners of Inland Revenue by the relevant authority—
(i) to be an instrument made in pursuance of such a scheme, and
(ii) to be an instrument in respect of which no disqualifying consideration has been given.
(3) For the purposes of sub-paragraph (2)(b)(ii) above, consideration given in respect of an instrument made in pursuance of an approved scheme shall be treated as disqualifying consideration unless—
(a) it is given by the milk marketing board to which the scheme relates (“the relevant board”),
(b) it is given by a person to whom property, rights or liabilities of the relevant board, or of a subsidiary of that board, are transferred under the scheme, other than a person who is, or has been, a registered producer, or
(c) it is given by a person who is, or has been, a registered producer and takes the form of a surrender in whole or part of a right to participate in the winding up of the relevant board.
(4) For the purposes of sub-paragraph (3)(b) above, a person to whom property is leased shall be treated as a person to whom property is transferred if the scheme could, without breaching the requirement in paragraph 7(2) of Schedule 1 to this Act, have provided for the property concerned to be transferred to him.
(5) No instrument which is certified as mentioned in paragraph (b) of sub-paragraph (2) above shall be taken to be duly stamped unless—
(a) it is stamped with the duty to which it would, but for that sub-paragraph, be liable, or
(b) it has, in accordance with section 12 of the [1891 c. 39.] Stamp Act 1891, been stamped with a particular stamp denoting that it is not chargeable with any duty or that it is duly stamped.
(6) In sub-paragraph (2)(b) above, “relevant authority” means—
(a) in the case of a certificate with respect to a scheme relating to the England and Wales Milk Marketing Board, the Minister of Agriculture, Fisheries and Food and the Secretary of State acting jointly,
(b) in the case of a certificate with respect to a scheme relating to the board established under the Milk Marketing Scheme (Northern Ireland) 1989, the Department of Agriculture for Northern Ireland, and
(c) in the case of a certificate with respect to any other scheme, the Secretary of State.
29 No agreement made in pursuance of an approved scheme shall give rise to a charge to stamp duty reserve tax.
30 (1) In this Part of this Schedule, references to relevant successor, in relation to a milk marketing board, are to a body—
(a) to which property, rights or liabilities of the board are transferred under section 11 above, and
(b) which is a qualifying body in relation to the transfer.
(2) In this Part of this Schedule, references to relevant successor, in relation to a subsidiary of a milk marketing board, are to a body—
(a) to which property, rights or liabilities of the subsidiary are transferred under section 11 above, and
(b) which, by virtue of paragraph 31(1)(a), (c), (d) or (e) below, is a qualifying body in relation to the transfer.
31 (1) For the purposes of this Part of this Schedule, a body is a qualifying body, in relation to a transfer under an approved scheme, if it is—
(a) a development council established under the [1947 c. 40.] Industrial Organisation and Development Act 1947,
(b) a company registered under the [1985 c. 6.] Companies Act 1985 which was, immediately before the day on which this Act is passed, a 100 per cent. subsidiary of the board to which the scheme relates,
(c) a company registered under the Companies Act 1985 in relation to which either or both of the first and second conditions are met and in relation to which the third condition is met,
(d) a society registered under the [1965 c. 12.] Industrial and Provident Societies Act 1965 in relation to which either or both of the fourth and fifth conditions are met, or
(e) a company registered under the Companies Act 1985 in relation to which the sixth condition is met.
(2) The first condition is that—
(a) the scheme makes provision for the issue or transfer of shares in the company to members of the relevant class without any consideration, or with only a nominal consideration, being provided by the members acquiring them, and
(b) the members of that class who fall within the provision represent at least 90 per cent. of the total number of members of that class.
(3) The second condition is that—
(a) the company is one of a number of companies registered under the Companies Act 1985 in relation to each of which the scheme provides as mentioned in sub-paragraph (2)(a) above, and
(b) the members of the relevant class who fall within the provision relating to the company, when taken together with the members of that class who fall within the provision, or provisions, relating to the other company, or companies, represent at least 90 per cent. of the total number of members of that class.
(4) The third condition is that, immediately after the transfer, at least 90 per cent. of the ordinary share capital of the company consists of shares which—
(a) are owned directly or indirectly by the board to which the scheme relates,
(b) have been issued or transferred under the scheme to members of the relevant class without any consideration, or with only a nominal consideration, being provided by the members acquiring them,
(c) have been issued or transferred under the scheme to persons who are, or have been, registered producers in settlement of claims against the board to which the scheme relates, being claims arising out of the supply or production of milk,
(d) have been issued or transferred under the scheme to trustees on terms which provide for their transfer to members of the relevant class, or
(e) are held by persons to whom they have been issued or transferred under the scheme in connection with securing the quotation of the company on the Stock Exchange.
(5) The fourth condition is that—
(a) the scheme provides for membership of the society to be open to members of the relevant class, and
(b) the members of that class who fall within the provision represent at least 90 per cent. of the total number of members of that class who are engaged in milk production on the day of the transfer.
(6) The fifth condition is that—
(a) the society is one of a number of societies registered under the [1965 c. 12.] Industrial and Provident Societies Act 1965 in relation to each of which the scheme provides as mentioned in sub-paragraph (5)(a) above, and
(b) the members of the relevant class who fall within the provision relating to the society, when taken together with the members of that class who fall within the provision, or provisions, relating to the other society, or societies, represent at least 90 per cent. of the total number of members of that class who are engaged in milk production on the day of the transfer.
(7) The sixth condition is that the company is a 100 per cent. subsidiary of a company falling within paragraph (c) of sub-paragraph (1) above or of a society falling within paragraph (d) of that sub-paragraph.
(8) For the purposes of this paragraph, a body corporate shall be deemed to be a 100 per cent. subsidiary of another body corporate if and so long as the whole of its ordinary share capital is owned directly or indirectly by that other body corporate.
(9) In determining for the purposes of this paragraph whether under an approved scheme shares are issued or transferred without any consideration, or with only a nominal consideration, being provided by the persons acquiring them, there shall be disregarded any depreciatory effect of transfers under the scheme on the value of a right to participate in the winding up of the board to which the scheme relates.
(10) For the purposes of this paragraph, the relevant class, in relation to an approved scheme, consists of those to whom property or rights are to be distributed under the scheme by virtue of their being, or having been, registered producers.
(11) Subsections (4) to (10) of section 838 of the [1988 c. 1.] Income and Corporation Taxes Act 1988 (rules for determining amount of share capital owned) shall apply for the purposes of this paragraph as they apply for the purposes of that section.
(12) In this paragraph—
(a) “ordinary share capital” has the same meaning as in the Income and Corporation Taxes Act 1988,
(b) “owned directly or indirectly”, in relation to a body corporate, means owned directly or through another body corporate or other bodies corporate or partly directly and partly through another body corporate or other bodies corporate, and
(c) references to ownership shall be construed as references to beneficial ownership.
32 (1) In this Part of this Schedule—
(a) “approved scheme” includes a scheme of reorganisation approved under any provision in Northern Ireland legislation corresponding to section 3 above (with any variation approved under any provision in such legislation corresponding to section 5 above) and in relation to which approval has not been withdrawn under any provision in such legislation corresponding to section 6 above, and
(b) “milk marketing board” includes the board established under the Milk Marketing Scheme (Northern Ireland) 1989.
(2) In the application of this Part of this Schedule by virtue of sub-paragraph (1) above—
(a) any reference to section 11 above shall be construed as a reference to any corresponding provision in Northern Ireland legislation;
(b) any reference to the [1965 c. 12.] Industrial and Provident Societies Act 1965 shall be construed as a reference to the [1969 c. 24 (N.I.).] Industrial and Provident Societies Act (Northern Ireland) 1969;
(c) any reference to the [1985 c. 6.] Companies Act 1985 shall be construed as a reference to the [S.I. 1986/1032 (N.I. 6).] Companies (Northern Ireland) Order 1986;
(d) “registered producers”, in relation to the board established under the Milk Marketing Scheme (Northern Ireland) 1989, means persons registered as producers under the marketing scheme administered by the board; and
(e) “subsidiary” has the same meaning as in the Companies (Northern Ireland) Order 1986.
(3) In paragraph 27 above, the reference to section 17 above shall be construed as including a reference to any corresponding provision in Northern Ireland legislation.
33 Nothing in section 47(2) of the [1958 c. 47.] Agricultural Marketing Act 1958 (restriction on disclosure of information obtained under the Act) shall restrict the disclosure of information by a milk marketing board in accordance with the provisions of an approved scheme or in connection with the establishment of a development council under the [1947 c. 40.] Industrial Organisation and Development Act 1947.
34 Where, under an approved scheme, shares are issued or transferred to a trustee, the shares issued or transferred to him shall, so far as concerns his powers, not be treated as excluded by virtue of paragraph 3(b) of Part IV of Schedule 1 to the [1961 c. 62.] Trustee Investments Act 1961 (exclusion of shares of a company which has not paid a dividend for each of the last five years) from paragraph 1 of Part III of that Schedule (wider-range investments).
35 The [S.I. 1981/1794.] Transfer of Undertakings (Protection of Employment) Regulations 1981 shall apply to any transfer under an approved scheme of the whole or any part of the undertaking of a milk marketing board, or of a subsidiary of such a board, whether or not that undertaking would, apart from this provision, be treated as an undertaking in the nature of a commercial venture for the purposes of those Regulations.
36 (1) Sub-paragraph (2) below applies to any occupational pension scheme operated by a milk marketing board or a subsidiary of such a board.
(2) Any power under the scheme to change the identity of the principal employer shall not be treated as improperly exercised by virtue only of the fact that it is used to substitute for the existing principal employer a body—
(a) which already participates in the scheme, or
(b) to which property, rights or liabilities of the existing principal employer are transferred under section 11 above.
(3) Sub-paragraph (2) above shall not apply if the substitution is made otherwise than in connection with the carrying out of an approved scheme.
37 (1) The following provisions of this paragraph have effect for the purpose of any statutory accounts of a successor body, that is to say, a body to which property, rights or liabilities of a milk marketing board are transferred under section 11 above.
(2) The transfer to the successor body under section 11 above shall be taken to have been effected immediately after the end of the last complete accounting period of the transferor to end before the date of the transfer under that section and—
(a) in a case where all the property, rights and liabilities of the transferor are transferred to the successor body under that section, to have been a transfer of all the property, rights and liabilities to which the transferor was entitled or subject immediately before the end of that period;
(b) in any other case, to have been a transfer of such of the property, rights and liabilities to which the transferor was so entitled or subject as are determined by or under the relevant scheme of reorganisation.
(3) The value of any asset and the amount of any liability which is taken by virtue of sub-paragraph (2) above to have been transferred to the successor body shall be taken to have been—
(a) in a case where all the property, rights and liabilities of the transferor are transferred to the successor body under section 11 above, the value or amount assigned to the asset or liability for the purposes of the statement of accounts prepared by the transferor in respect of the last complete accounting period of the transferor to end before the date of the transfer under that section;
(b) in any other case, the value or amount so assigned or, if the asset or liability is part only of an asset or liability to which a value or amount is so assigned, so much of that value or amount as may be determined by or under the relevant scheme of reorganisation.
(4) The amount to be included in respect of any item shall be determined—
(a) where all the property, rights and liabilities of the transferor are transferred to the successor body under section 11 above, as if anything done by the transferor (whether by way of acquiring, revaluing or disposing of any asset or incurring, revaluing or discharging any liability, or by carrying any amount to any provision or reserve, or otherwise) had been done by the successor body;
(b) in any other case, as if so much of anything done by the transferor (as mentioned in paragraph (a) above) as may be determined by or under the relevant scheme of reorganisation had been done by the successor body.
(5) Without prejudice to the generality of the preceding provisions, the amount to be included from time to time in any reserves of the successor body as representing its accumulated realised profits shall be determined—
(a) where all the property, rights and liabilities of the transferor are transferred to the successor body under section 11 above, as if any profits realised and retained by the transferor had been realised and retained by the successor body;
(b) in any other case, as if such proportion of any such profits as is determined by or under the relevant scheme of reorganisation had been realised and retained by the successor body.
(6) In this paragraph—
“accounting period”, in relation to the transferor, means the period by reference to which it prepares accounts under the marketing scheme which it administers;
“relevant scheme of reorganisation” means the scheme of reorganisation under which the transfer to the successor body takes place; and
“statutory accounts”, in relation to a successor body, means any accounts prepared for the purpose of any provision of the legislation under which the body is registered.
38 (1) No right of pre-emption or other like right affecting any property or rights of a milk marketing board, or of a subsidiary of such a board, shall be exercisable by virtue of the making of any application under section 2 or 5 above.
(2) Sub-paragraph (1) above shall not apply where the making of such an application is specifically identified by the right of pre-emption or other like right as a circumstance in which the right is exercisable.
39 (1) Any provision which imposes a prohibition (whether absolute or qualified) on the transfer of any property or rights of a milk marketing board, or of a subsidiary of such a board, shall be treated as not applying in the case of a transfer under section 11 above.
(2) Sub-paragraph (1) above shall not apply in the case of a provision which is formulated specifically with reference to the possibility of the undertaking of a milk marketing board being transferred otherwise than to a board constituted by a scheme under Part I of [1958 c. 47.] the Agricultural Marketing Act 1958.
(3) For the purposes of this paragraph, any provision which has the effect of penalising a transfer shall be treated as prohibiting it.
40 (1) Any provision which imposes a prohibition (whether absolute or qualified) on the transfer of any property or rights of a milk marketing board, or of a subsidiary of such a board, shall, unless the prohibition is imposed for public purposes, be treated as not applying in the case of a transfer under an approved scheme otherwise than under section 11 above.
(2) Sub-paragraph (1) above shall not apply in the case of a provision which is formulated specifically with reference to the possibility of the undertaking of a milk marketing board being transferred otherwise than to a board constituted by a scheme under Part I of the Agricultural [1958 c. 47.] Marketing Act 1958.
(3) For the purposes of this paragraph, any provision which has the effect of penalising a transfer shall be treated as prohibiting it.
41 (1) This paragraph applies to any provision which imposes a qualified prohibition on the effecting of any description of transaction, other than a transfer, with respect to any property or rights of a milk marketing board, or of a subsidiary of such a board.
(2) Where the prohibition imposed by a provision to which this paragraph applies is imposed for purposes other than public purposes, it shall, subject to sub-paragraph (3) below, be treated as not applying in the case of a transaction effected under an approved scheme.
(3) Sub-paragraph (2) above shall not apply in the case of a provision which is formulated specifically with reference to the possibility of the undertaking of a milk marketing board being transferred otherwise than to a board constituted by a scheme under Part I of the Agricultural Marketing Act 1958.
(4) For the purposes of this paragraph, any provision which has the effect of penalising the effecting of any description of transaction shall be treated as prohibiting it.
42 (1) If any person suffers a diminution in the value of any property or interest in consequence of the operation of paragraph 40 or 41 above or, where sub-paragraph (2) below applies, paragraph 39 above, such compensation as may be just shall be paid to that person by one or more of the parties to the transfer or other transaction.
(2) This sub-paragraph applies where the effect of the transfer is to sever the ownership of the property or rights to which the provision concerned relates.
(3) Any dispute as to whether, and, if so, how much, compensation is payable under this paragraph, or as to the person by whom it shall be paid, shall be referred to and determined by an arbitrator appointed—
(a) in the case of a dispute concerning anything which takes place under a scheme relating to the England and Wales Milk Marketing Board, in accordance with regulations made by the Minister of Agriculture, Fisheries and Food and the Secretary of State acting jointly, and
(b) in any other case, in accordance with regulations made by the Secretary of State.
43 (1) For the purposes of this paragraph, a provision is a qualifying provision if—
(a) it imposes an absolute prohibition on the effecting of any description of transaction, other than a transfer, with respect to any property or rights of a milk marketing board, or of a subsidiary of such a board, and
(b) the prohibition which it imposes is imposed for purposes other than public purposes.
(2) Where an approved scheme—
(a) identifies a qualifying provision as one to which this paragraph applies, and
(b) specifies one of the relevant bodies as the body against which any claim under paragraph 44 below, in relation to the identified provision, is to be made,
that provision shall, subject to any provision of regulations under sub-paragraph (3)(c) below, be treated as not applying in the case of a transaction effected under the scheme.
(3) The appropriate authority may make regulations—
(a) with respect to the giving of notice of a provision of an approved scheme which identifies a qualifying provision as one to which this paragraph applies,
(b) with respect to the giving by the authority of a certificate of compliance in relation to the giving of notice under paragraph (a) above, and
(c) excluding sub-paragraph (2) above where no certificate of compliance under paragraph (b) above has been given at the time that a transaction is effected.
(4) Sub-paragraph (2) above shall not apply in the case of a provision which is formulated specifically with reference to the possibility of the undertaking of a milk marketing board being transferred otherwise than to a board constituted by a scheme under Part I of [1958 c. 47.] the Agricultural Marketing Act 1958.
(5) In sub-paragraph (2)(b) above, the reference to the relevant bodies is to—
(a) the milk marketing board to which the scheme relates, and
(b) the body or bodies to which property, rights or liabilities of that board are, under the scheme, to be transferred under section 11 above.
(6) In sub-paragraph (3) above, “appropriate authority” means—
(a) in the case of an approved scheme relating to the England and Wales Milk Marketing Board, the Minister of Agriculture, Fisheries and Food and the Secretary of State acting jointly, and
(b) in any other case, the Secretary of State.
(7) For the purposes of this paragraph, any provision which has the effect of penalising the effecting of a description of transaction shall be treated as prohibiting it.
44 (1) If any person suffers a diminution in the value of any property or interest in consequence of the operation of paragraph 43 above in relation to any provision, such compensation as may be just shall be paid to him by the nominated body.
(2) Any dispute as to whether, and, if so, how much, compensation is payable under this paragraph shall be referred to and determined by an arbitrator appointed—
(a) in the case of a dispute concerning anything which takes place under a scheme relating to the England and Wales Milk Marketing Board, in accordance with regulations made by the Minister of Agriculture, Fisheries and Food and the Secretary of State acting jointly, and
(b) in any other case, in accordance with regulations made by the Secretary of State.
(3) In sub-paragraph (1) above, the reference to the nominated body is to the body specified by the approved scheme concerned as the body against which any claim for compensation under this paragraph, in relation to the provision concerned, is to be made.
45 (1) For the purposes of this paragraph, a provision is a qualifying provision if—
(a) it is contained in a qualifying agreement,
(b) it imposes an absolute or qualified prohibition on the movement outside a specified area of property to which the agreement relates, and
(c) the prohibition which it imposes is imposed for purposes other than public purposes.
(2) For the purposes of sub-paragraph (1) above, an agreement is a qualifying agreement if—
(a) it is an agreement under which moveable property is leased to a milk marketing board or to a subsidiary of such a board, and
(b) an approved scheme makes provision for the transfer of rights and liabilities of the lessee under the agreement.
(3) Where an approved scheme—
(a) identifies a qualifying provision as one to which this paragraph applies,
(b) specifies a relevant modification in relation to that provision,
(c) specifies a commencement date in relation to the modification, and
(d) specifies one of the relevant bodies as the body against which any claim under paragraph 46 below, in relation to that provision, is to be made,
then, subject to any provision of regulations under sub-paragraph (4)(c) below, that provision shall have effect subject to the specified modification on and after the commencement date specified in relation to it.
(4) The appropriate authority may make regulations—
(a) with respect to the giving of notice of a provision of an approved scheme which does any of the things mentioned in paragraphs (a) to (c) of sub-paragraph (3) above,
(b) with respect to the giving by the authority of a certificate of compliance in relation to the giving of notice under paragraph (a) above, and
(c) excluding sub-paragraph (3) above where no certificate of compliance under paragraph (b) above has been given before such date as may be specified in the regulations.
(5) Where by virtue of sub-paragraph (3) above a qualifying provision is modified in its application to any property, the fact that, at any time in the week beginning with the date on which the modification first has effect, that property is outside the permitted area shall not be treated as constituting a breach of the provision if the property—
(a) is in the area which was the permitted area before the modification had effect, or
(b) is in transit from that area to the permitted area.