Taxes Consolidation Act 1997 section 585

Conversion of securities

Section 585 provides that the rules in section 584 relating to the reorganisation or reduction of a company's share capital also apply to the conversion of securities, so that such a conversion is not treated as a disposal for capital gains tax purposes.

• A "conversion of securities" includes the conversion of loan stock or debentures into shares, optional conversions in lieu of cash redemption (subject to a 4 December 2002 cut-off), and compulsory exchanges of securities under statute.
• "Security" covers any loan stock or similar security of a government, public authority, or company, whether secured or unsecured, but excludes securities exempt from CGT under section 607.
• A conversion of securities into units in an investment undertaking that is a company is excluded from the relief.
• Where the conversion qualifies, the new shares or securities are treated as acquired at the same time and at the same cost as the original securities, preserving the holder's base cost and acquisition date.