Amendments made: No. 215, in page 447, line 32, leave out to end of line 19 on page 448 and insert—
'Meaning of ''venture capital investment partnership''
2 (1) A ''venture capital investment partnership'' means a partnership in relation to which the following conditions are met.
(2) The first condition is that the sole or main purpose of the partnership is to invest in unquoted shares or securities.
This condition shall not be regarded as met unless it appears from—
(a) the agreement constituting the partnership, or
(b) any prospectus issued to prospective partners,
that that is the sole or main purpose of the partnership.
(3) The second condition is that the partnership does not carry on a trade.
(4) The third condition is that not less than 90% of the book value of the partnership's investments is attributable to investments that are either—
(a) shares or securities that were unquoted at the time of their acquisition by the partnership, or
(b) shares that were quoted at the time of their acquisition by the partnership but which it was reasonable to believe would cease to be quoted within the next twelve months.
(5) For the purposes of the third condition—
(a) the following shall be disregarded—
(i) any holding of cash, including cash deposited in a bank account or similar account but not cash acquired wholly or partly for the purpose of realising a gain on its disposal;
(ii) any holding of quoted shares or securities acquired by the partnership in exchange for unquoted shares or securities;
(b) whether the 90% test is met shall be determined by reference to the values shown in the partnership's accounts at the end of a period of account of the partnership.
(6) Where a partnership ceases to meet the above conditions, the company shall be treated as if the partnership had continued to be a venture capital investment partnership until the end of the period of account of the partnership during which it ceased to meet the conditions.
(7) A partnership that ceases to meet those conditions cannot qualify again as a venture capital investment partnership.
For this purpose a partnership is treated as the same partnership notwithstanding a change in membership if any person who was a member before the change remains a member.'.
No. 216, in page 449, line 3, leave out sub-paragraph (3).
No. 217, in page 449, line 44, at end insert—
'(3A) The operation of sub-paragraph (3) is not affected by the partnership having ceased to be a venture capital investment partnership before the time at which the distribution is treated as received by the company.'.
No. 218, in page 450, line 37, at end insert—
'Investment in other venture capital investment partnerships
8A (1) For the purposes of paragraph 2 (meaning of ''venture capital investment partnership'') an investment by way of capital contribution to another venture capital investment partnership shall be treated as an investment in unquoted shares or securities
(2) The Treasury may by regulations make provision, in place of but corresponding to that made by paragraphs 3 to 8, in relation to gains accruing on a disposal of relevant assets by such a partnership.
(3) The regulations may make provision for any period of account to which, in accordance with paragraphs 10 to 12, this Schedule applies.'.
No. 219, in page 451, line 11, at end insert
'and also includes any debentures'.
No. 220, in page 451, line 22, at end insert—
'(3) References in this Schedule to capital contributed to a limited partnership include amounts purporting to be provided by way of loan if—
(a) the loan carries no interest,
(b) all the limited partners are required to make such loans, and
(c) the loans are accounted for as partners' capital, or partners' equity, in the accounts of the partnership.'.
No. 221, in page 451, line 22, at end insert—
(4) For the purposes of this Schedule the assets of—
(a) a Scottish partnership, or
(b) a partnership under the law of any other country or territory under which assets of a partnership are regarded as held by or on behalf of the partnership as such,
shall be treated as held by the members of the partnership in the proportions in which they are entitled to share in the profits of the partnership.
References in this Schedule to the company's interest in, or share of, the partnership's assets shall be construed accordingly.'.—[Ruth Kelly.]
Schedule 31, as amended, agreed to.
Clause 85 ordered to stand part of the Bill.