This section applies in the following cases where units in a collective investment scheme ("collective investment scheme B") are issued to a person in exchange for units in another collective investment scheme ("collective investment scheme A").
The cases are—
Case 1 Where units in collective investment scheme B are issued in exchange for units as the result of a general offer—
(a)made to participants in collective investment scheme A or any class of them, and
(b)made in the first instance on a condition such that if it were satisfied the property subject to collective investment scheme B would include units in collective investment scheme A giving rights to more than 50% of the capital, and more than 50% of the income, of collective investment scheme A.
Case 2 Where—
(a)under an arrangement, participants in collective investment scheme A exchange units in that scheme for units of substantially the same value in collective investment scheme B, and
(b)in consequence of the exchanges under the arrangement, 85% or more of the property subject to collective investment scheme B is constituted by units in collective investment scheme A.
Where this section applies, sections 127 to 131 (share reorganisations etc) apply with the necessary adaptations as if collective investment scheme A and collective investment scheme B were the same company and the exchange were a reorganisation of its share capital.
This section has effect subject to section 103K(1) (exchange must be for bona fide commercial reasons and not part of tax avoidance scheme).