CTM36810 - Particular topics: transactions in securities: definitions
Securities
ITA07/S713 defines securities as including shares and stock and any interest held as a member of a company including a company not limited by shares, such as a company limited by guarantee or an unlimited company. This list is not exhaustive.
Transactions in securities
»Ê¹ÚÌåÓýappse are transactions, of whatever description, relating to securities (ITA07/S684) including, but not limited to:
- purchase, sale or exchange of securities,
- issue, or securing the issue, of new securities,
- applying or subscribing for new securities, and
- altering or securing the alteration of rights attached to securities.
From 6 April 2016, two further transactions are specified in ITA07/S684 (2):
- repayment of share capital or share premium, and
- distribution in respect of securities in a winding up.
»Ê¹ÚÌåÓýapp first is for the sake of clarity. »Ê¹ÚÌåÓýapp second extends the scope of the provisions with effect from 6 April 2016, although earlier transactions involving a winding up could in some circumstances fall within the earlier provisions.
»Ê¹ÚÌåÓýapp legislation is widely drawn and applies to “transactions, of whatever description, relating to securitiesâ€� and goes on to give particular, but not comprehensive, examples.
An officer who becomes aware of a transaction in securities “of whatever description� will need to consider whether the legislation applies. BAI Clearance and Counteraction Team will advise. See CTM36860.
»Ê¹ÚÌåÓýapp meaning of transactions in securities has been clarified by case law as including the following:
| Redemption of a security | IRC v Parker (1966) 43TC396 |
|---|---|
| Alteration of rights attaching to a security (in this case through a liquidation agreement) | IRC v Joiner (1975) 50TC499 |
| Loans made by a company to individuals who subsequently acquired the company | Williams v IRC (1979) 54TC257 |
»Ê¹ÚÌåÓýapp payment of a dividend is not a transaction in securities. In IRC v Laird [2003] UKHL 54 Lord Millett explained that “the distribution of the undistributed profits of a company to the shareholders entitled thereto merely gives effect to the rights attaching to the sharesâ€�.