INCOME TAX Citation and commencement 1 These Regulations may be cited as the Personal Equity Plan (Amendment No. 2) Regulations 1997 and shall come into force on 8th August 1997. Interpretation 2 In these Regulations “the principal Regulations ” means the Personal Equity Plan Regulations 1989 and “regulation” means a regulation of the principal Regulations. Amendments to the principal Regulations 3 1 In sub-paragraph (a) of regulation 2(1) in the definition of “company” there shall be inserted before paragraph (a)— aa an open-ended investment company, . 2 For sub-paragraph (b) of regulation 2(1) there shall be substituted— b “authorised unit trust” means a unit trust scheme in the case of which an authorisation order made by the Securities and Investments Board under section 78 of the Financial Services Act 1986 is in force; “fund of funds” means— an authorised unit trust which according to the terms of the scheme is a fund of funds belonging to the category under that name established by the Securities and Investments Board, and a part of an umbrella scheme which the terms of the scheme identify as a part that would belong to that category if it were itself an authorised unit trust, where, in either case, the terms of the scheme do not permit any of the investments subject to the trusts of the scheme to consist of units in authorised unit trusts or parts of umbrella schemes which are not securities funds or of shares in open-ended investment companies or parts of umbrella companies which are not securities companies; “securities fund” means— an authorised unit trust which according to the terms of the scheme is a securities fund belonging to the category under that name established by the Securities and Investments Board, and a part of an umbrella scheme which the terms of the scheme identify as a part that would belong to that category if it were itself an authorised unit trust; “umbrella scheme” and references to a part of an umbrella scheme shall be construed in accordance with subsection (8) of section 468 of the Taxes Act and, in relation to a part of an umbrella scheme, references to investments subject to the trusts of an authorised unit trust and to a unit holder shall be construed in accordance with subsection (9) of that section; “unit holder”, except in relation to a part of an umbrella scheme, has the meaning given by subsection (6) of section 468 of the Taxes Act; “unit trust scheme” has the meaning given by subsection (6) of section 468 of the Taxes Act; “units”, in relation to an authorised unit trust, means the rights or interests (however described) of the unit holders in that authorised unit trust and, in relation to a part of an umbrella scheme, means the rights or interests for the time being of the unit holders in that part; . 3 After sub-paragraph (b) of regulation 2(1) there shall be added— c “open-ended investment company” has the meaning given by subsection (10) of section 468 of the Taxes Act as that subsection is added in relation to open-ended investment companies by regulation 10(4) of the 1997 Regulations ; “securities company” means— an open-ended investment company which according to its instrument of incorporation is a securities company belonging to the category under that name established by the Securities and Investments Board and in respect of which an authorisation order made by that Board is in force, and a part of an umbrella company which according to the instrument of incorporation of the company is a part which would belong to that category if it were itself an open-ended investment company in respect of which an authorisation order made by the Securities and Investments Board is in force; “shares”, in relation to an open-ended investment company, includes shares of any class and of any denomination of a given class and, in relation to a part of an umbrella company, means shares in the company which confer for the time being rights in that part; “umbrella company” and references to a part of an umbrella company shall be construed in accordance with subsection (18) of section 468 of the Taxes Act as that subsection is added in relation to open-ended investment companies by regulation 10(4) of the 1997 Regulations and, in relation to a part of an umbrella company, references to investments of the company shall be construed in accordance with subsection (12) of that section as so added; “the 1997 Regulations” means the Open-ended Investment Companies (Tax) Regulations 1997 . 4 1 In regulation 4(3A) in sub-paragraph (a) after paragraph (iii) there shall be inserted— iiia shares or rights to shares in an open-ended investment company or a part of an umbrella company, or iiib units or rights to units in an authorised unit trust or a part of an umbrella scheme, or . 2 In regulation 4(6) — a in sub-paragraph (c) for the words “the share certificate or other document evidencing title to a plan investment” there shall be substituted the words “, where a share certificate or other document evidencing title to a plan investment is issued, it”; b for sub-paragraphs (d) and (e) there shall be substituted— d that the plan manager shall, if the plan investor so elects, arrange for the plan investor to receive a copy of the annual report and accounts issued to investors by every company, unit trust, open-ended investment company or other entity in which he has plan investments; e that the plan manager shall be under an obligation (subject to any provisions made under any other enactment and if the plan investor so elects) to arrange for the plan investor to be able— i to attend any meetings of investors in companies, unit trusts, open-ended investment companies and other entities in which he has plan investments, ii to vote, and iii to receive, in addition to the documents referred to in sub-paragraph (d), any other information issued to investors in such companies, unit trusts, open-ended investment companies and other entities; . 5 In regulation 5(5) — a in sub-paragraph (a)— i for the words “an authorised unit trust” there shall be substituted the words “a securities fund”; ii after the words “shares in” there shall be inserted the words “a securities company or”; b for sub-paragraph (b) there shall be substituted— b in units in a securities fund or a fund of funds or in shares in a securities company or an investment trust which does not satisfy the relevant condition specified in regulation 6(3), but satisfies that condition as modified by regulation 6(5), provided that immediately after such an investment is made the total market value of plan investments in such securities funds, funds of funds, securities companies and investment trusts does not exceed one quarter of the market value of the portfolio. 6 1 In regulation 6(2) — a in sub-paragraph (a) the words “or dealt in on the Unlisted Securities Market” shall be omitted; b in sub-paragraph (ab)(ii) for the word “quoted” there shall be substituted the word “listed”; c in sub-paragraph (b) for the words “an authorised unit trust or a fund of funds” there shall be substituted the words “a securities fund or a fund of funds, or shares in a securities company,”. 2 In regulation 6(2B) in sub-paragraphs (a), (b) and (c) for the word “quoted” there shall be substituted the word “listed”. 3 In regulation 6(3) — a in sub-paragraph (a)— i for the words “a unit trust scheme which is an authorised unit trust” there shall be substituted the words “a securities fund”; ii in paragraph (ii) for the word “quoted” there shall be substituted the word “listed”; iii after paragraph (iii) there shall be inserted— iiia shares in a securities company where at least 50 per cent. in value of the investments of the company are shares referred to in paragraph (i) or (ii), securities which would be qualifying securities if paragraph (2C)(c) required the terms on which they were issued to be judged at the date when they first became investments of the company and securities which would be qualifying securities if they satisfied one of the conditions specified in paragraph (2B) and paragraph (2C)(c) so required, or iiib units in a securities fund where at least 50 per cent. in value of the investments subject to the trusts of the scheme are shares or securities referred to in paragraph (i), (ii) or (iii), or ; iv in paragraph (iv) for the words “satisfying the conditions specified in paragraph (2C)” there shall be substituted the words “which would satisfy the conditions specified in paragraph (2C) (if sub-paragraph (c) of that paragraph required the terms on which they were issued to be judged at the date when they first became subject to the trusts of the scheme)”; b for sub-paragraph (b) there shall be substituted— b in the case of a fund of funds, at least 50 per cent. in value of the investments subject to the trusts of the scheme are units in a securities fund or shares in a securities company where at least 50 per cent. in value of the investments subject to the trusts of the scheme or, as the case may be, of the investments of the company are— i shares referred to in paragraph (i) or (ii) of sub-paragraph (a), or ii securities which would be qualifying securities if paragraph (2C)(c) required the terms on which they were issued to be judged at the date when they first became subject to the trusts of the securities fund or, as the case may be, investments of the securities company and securities which would be qualifying securities if they satisfied one of the conditions specified in paragraph (2B) and paragraph (2C)(c) so required; c after sub-paragraph (b) there shall be inserted— ba in the case of a securities company, at least 50 per cent. in value of the investments of the company are— i shares or units referred to in paragraph (i), (ii), (iiia) or (iiib) of sub-paragraph (a), or ii securities which would be qualifying securities if paragraph (2C)(c) required the terms on which they were issued to be judged at the date when they first became investments of the company and securities which would be qualifying securities if they satisfied one of the conditions specified in paragraph (2B) and paragraph (2C)(c) so required, or iii shares in, and securities which would satisfy the conditions specified in paragraph (2C) (if sub-paragraph (c) of that paragraph required the terms on which they were issued to be judged at the date when they first became investments of the company) of, an investment trust where at least 50 per cent. in value of the investments held by that trust are shares referred to in paragraph (i) or (ii) of sub-paragraph (a), securities which would be qualifying securities if paragraph (2C)(c) required the terms on which they were issued to be judged at the date when they were first held by that trust and securities which would be qualifying securities if they satisfied one of the conditions specified in paragraph (2B) and paragraph (2C)(c) so required; d for paragraphs (i) and (ii) of sub-paragraph (c) there shall be substituted— i shares or units referred to in paragraph (i), (ii), (iiia) or (iiib) of sub-paragraph (a), or ii securities which would be qualifying securities if paragraph (2C)(c) required the terms on which they were issued to be judged at the date when they first became investments held by the trust and securities which would be qualifying securities if they satisfied one of the conditions specified in paragraph (2B) and paragraph (2C)(c) so required, or iii shares in, and securities which would satisfy the conditions specified in paragraph (2C) (if sub-paragraph (c) of that paragraph required the terms on which they were issued to be judged at the date when they first became investments of the trust) of, an investment trust where at least 50 per cent. in value of the investments held by that trust are shares referred to in paragraph (i) or (ii) of sub-paragraph (a), securities which would be qualifying securities if paragraph (2C)(c) required the terms on which they were issued to be judged at the date when they were first held by that trust and securities which would be qualifying securities if they satisfied one of the conditions specified in paragraph (2B) and paragraph (2C)(c) so required. 4 In regulation 6(4) in sub-paragraph (a) for the words “authorised unit trusts” there shall be substituted the words “securities companies, securities funds”. 5 In regulation 6(5) — a for sub-paragraph (b) there shall be substituted— b by substituting for paragraphs (ii) to (iv) of sub-paragraph (a)— ii shares in a securities company where at least 50 per cent. in value of the investments of the company are such ordinary shares or other quoted shares; iii units in a securities fund where at least 50 per cent. in value of the investments subject to the trusts of the scheme are such ordinary shares or other quoted shares; iv shares in an investment trust where at least 50 per cent. in value of the investments held by that trust are such ordinary shares or other quoted shares; b for sub-paragraph (c) there shall be substituted— c by substituting for paragraphs (i) and (ii) of sub-paragraph (b) the words “shares referred to in paragraph (i) of sub-paragraph (a) and other quoted shares”; c after sub-paragraph (c) there shall be inserted— ca by substituting for paragraphs (i) to (iii) of sub-paragraph (ba)— i shares referred to in paragraph (i) of sub-paragraph (a) or other quoted shares, or ii shares in a securities company where at least 50 per cent. in value of the investments of the company are such ordinary shares or other quoted shares, or iii units in a securities fund where at least 50 per cent. in value of the investments subject to the trusts of the scheme are such ordinary shares or other quoted shares, or iv shares in an investment trust where at least 50 per cent. in value of the investments held by that trust are such ordinary shares or other quoted shares; d for sub-paragraph (d) there shall be substituted— d by substituting for paragraphs (i) and (ii) of sub-paragraph (c)— i shares referred to in paragraph (i) of sub-paragraph (a) or other quoted shares, or ii shares in a securities company where at least 50 per cent. in value of the investments of the company are such ordinary shares or other quoted shares, or iii units in a securities fund where at least 50 per cent. in value of the investments subject to the trusts of the scheme are such ordinary shares or other quoted shares, or iv shares in an investment trust where at least 50 per cent. in value of the investments held by that trust are such ordinary shares or other quoted shares. 7 In regulation 6A — a in paragraph (1) for the words “authorised unit trusts” there shall be substituted the words “securities funds”; b in paragraph (2)(c) for the words “authorised unit trusts” there shall be substituted the words “securities companies, securities funds”. 8 In regulation 6B(2) in sub-paragraph (a) the words “, or dealt in on the Unlisted Securities Market,” shall be omitted. 9 In regulation 16(3)(b) in paragraph (iv) after the words “regulation 4(2A)(a),” the word “and” shall be omitted and after the words “regulation 4(2A)(b)” there shall be inserted the words “and on such an allotment or allocation as is referred to in regulation 4(2A)(c)”. 10 In regulation 17(1) for sub-paragraph (a) there shall be substituted— a no tax shall be chargeable on the plan manager or his nominee or on the plan investor— i in respect of interest, dividends, distributions or gains in respect of plan investments, or ii on any annual profits or gains treated by section 714(2) of the Taxes Act as having been received by any of them in respect of plan investments, or iii on an offshore income gain to which a disposal made by any of them of a plan investment gives rise which is treated by section 761(1) of the Taxes Act as constituting profits or gains, or iv on a profit realised by any of them from the discount on a relevant discounted security within the meaning of Schedule 13 to the Finance Act 1996 which is held as a plan investment; . 11 In regulation 19(5)(b) in paragraph (ii) after the words “regulation 4(2A)(a),” the word “and” shall be omitted and after the words “regulation 4(2A)(b)” there shall be inserted the words “and on such an allotment or allocation as is referred to in regulation 4(2A)(c)”. 12 1 In regulation 24A(2)(b) in paragraph (iv) after the words “regulation 4(2A)(a),” the word “and” shall be omitted and after the words “regulation 4(2A)(b)” there shall be inserted the words “and on such an allotment or allocation as is referred to in regulation 4(2A)(c)”. 2 In regulation 24A(3)(a) — a in paragraph (ii) for the words “authorised unit trusts” there shall be substituted the words “securities funds”; b after paragraph (ii) there shall be inserted— iia shares in securities companies, . 13 1 In regulation 27(2) — a in paragraph (b) of section 104(4) of the Taxation of Chargeable Gains Act 1992 (in this regulation referred to as “the 1992 Act”) as substituted by sub-paragraph (a) for the words “or (b)” there shall be substituted the words “, (b) or (c)”; b in sub-paragraph (i) of paragraph (b) of section 104(4) of the 1992 Act as so substituted for the words “or (b)” there shall be substituted the words “, (b) or (c)”. 2 In regulation 27(2A) — a in paragraph (a) of section 107(10) of the 1992 Act as substituted for the words “or (b)” there shall be substituted the words “, (b) or (c)”; b in section 107(11) of the 1992 Act as substituted for the words “regulation 4(2A)(a) or (b)” there shall be substituted the words “regulation 4(2A)(a), (b) or (c)” . 3 In regulation 27(3) after the words “other qualifying shares” there shall be inserted the words “, shares in securities companies, units in funds of funds, units in securities funds”. Bob Ainsworth Jim Dowd Two of the Lords Commissioners of Her Majesty’s Treasury 18th July 1997