We come to amendment No. 75. Amendment No. 76 is related. I suggest we take amendments Nos. 75 and 76 together.
SECTION 47.
I move amendment No. 75:
In page 56, between lines 39 and 40, to insert the following:
"(4) Subparagraph (5) shall apply in any case where—
(a) in connection with the arrangement, shares in the successor company are issued by that company to trustees on terms which provide for the transfer of those shares to members of the assurance company concerned for no new consideration, and
(b) the circumstances are such that in the hands of the trustees the shares constitute settled property.
(5) (a) Where this subparagraph applies, then, for the purposes of capital gains tax—
(i) the shares shall be regarded as acquired by the trustees for no consideration;
(ii) the interest of any member in the settled property constituted by the shares shall be regarded as acquired by the member for no consideration and as having no value at the time of its acquisition; and
(iii) where on the occasion of a member becoming absolutely entitled as against the trustees to any of the settled property, both the trustees and the member shall be treated as if, on the member becoming so entitled, the shares in question had been disposed of and immediately reacquired by the trustees, in their capacity as trustees within section 8(3) for a consideration of such an amount as would secure that on the disposal neither a gain nor a loss would accrue to the trustees and, accordingly, section 15 (3) shall not apply in relation to that occasion.
(b) Reference in this subparagraph to the case where a member becomes absolutely entitled to settled property as against the trustees shall be taken to include reference to the case where the member would become so entitled but for being a minor or otherwise under a legal disability.".
The purpose of these amendments is to supplement section 47 which provides for the capital gains tax position which arises when a life assurance company demutualises and a successor company is established in which members of the life assurance company are allocated free shares or shares at a discount.
The purpose of these amendments is to provide for the capital gains tax position which arises when a trustee of a trust which has held a policy in the life assurance company is allocated free shares or is given the right to purchase shares at a discount and avails of this right. These amendments put trustees and beneficiaries of such trusts in the same position as trustees and beneficiaries of trusts which are members of building societies which convert into limited companies.
Section 47 deals with the demutualisation of life assurance companies. The Norwich Union Building Society held a special meeting last week to do this. I must declare an interest in this matter as I have a policy with this society and will receive a small number of shares.
As will I.
Given the politically correct times in which we live, we could be brought before a tribunal for not declaring an interest in such matters. These trustees will be treated in the same way as the Minister and I for capital gains tax purposes. As I understand it, the shares we receive as a result of demutualisation will be regarded as having a nil value.
Amendment agreed to.
I move amendment No. 76:
In page 57, between lines 7 and 8, to insert the following subsection:
"(2) This section shall apply and have effect as on and from the 21st day of April, 1977.".
Amendment agreed to.
Section 47, as amended, agreed to.