Taxes Consolidation Act 1997 Schedule 11 paragraph 11

More than one class of issued share capital

Schedule 11, paragraph 11 requires that where a company whose shares are used in an approved profit sharing scheme has more than one class of ordinary share capital, the majority of issued shares of the relevant class must be held by independent outside shareholders.

• This rule applies only where the company has two or more classes of ordinary share capital at the time the trustees acquire the shares — if there is only one class, the rule does not apply.
• The majority of issued shares of the same class as those used in the scheme must not be held by directors or employees who acquired their shares through special rights or opportunities linked to their employment, rather than through a public offer.
• Trustees holding shares on behalf of such directors or employees, and companies that control the company in question or are its associates, are also treated as restricted shareholders for this purpose.
• The restriction on controlling or associated companies applies only where the shares qualify under paragraph 9(c) (a company controlled by a quoted non-close company) and do not qualify under paragraph 9(a) (the company that established the scheme).