Income Tax Act 2007 section 809FZL

Significant equity stake funds

Section 809FZL establishes special rules for how investment holding periods are calculated for significant equity stake funds that hold qualifying investments in trading companies or holding companies of trading groups.

• A significant equity stake fund is an investment scheme (other than a venture capital fund) where, at the outset, it is reasonable to expect that over 50% of total invested value will be in significant equity stake investments, and over 50% will be held for at least 40 months
• A significant equity stake investment is an investment in an unlisted trading company (or holding company of a trading group) that is likely to remain unlisted, where the fund holds at least a 20% interest and the scheme director condition is met
• Any additional investments made by the fund in the same company after the initial significant equity stake is acquired are treated as having been made at the time of that original acquisition, and any partial disposals are not recognised until either the fund's interest drops below 15% or the scheme director condition ceases to be met
• When testing the 20% and 15% interest thresholds, share capital held by associated investment schemes is aggregated with that of the significant equity stake fund