The limited participation requirement is met if Conditions A and B are met.
Condition A is that there was no time in the period of 12 months ending immediately after the disposal mentioned in section 236H(1) when—
P was a participator in C, and
the participator fraction exceeded 2/5.
Condition B is that the participator fraction does not exceed 2/5 at any time in the period beginning with that disposal and ending at the end of the tax year in which it occurs.
But a time which falls in a period during which the participator fraction exceeded 2/5 is to be disregarded for the purposes of subsection (2)(b) and (3) if—
that period lasts no more than 6 months, and
the fraction exceeded 2/5 during that period by reason of events outside the reasonable control of the trustees.
"The participator fraction" means—
The participators in C who are referred to in subsections (2) and (5) do not include any participator who—
is not beneficially entitled to, or to rights entitling the participator to acquire, 5% or more of, or of any class of the shares comprised in, C's share capital, and
on a winding-up of C would not be entitled to 5% or more of its assets.
In this section—
"participator" has the meaning given by section 454 of CTA 2010, and
references to a participator in a company are, in the case of a company which is not a close company (within the meaning of Chapter 2 of Part 10 of that Act), to be construed as references to a person who would be a participator in the company if it were a close company.