Commentary

D7.803 Qualifying shares

Corporate tax
Corporate tax | Commentary

D7.803 Qualifying shares

Corporate tax | Commentary

Division D7.8     Building societies

For updates affecting this Division please see Part D0 Updates

Building societies—Background

D7.803 Qualifying shares

As building societies are mutual organisations, their constitution prevents them from issuing ordinary share capital in the same way as other companies. They are, however, able to issue certain types of 'deferred' shares which qualify as core ('Tier 1') capital for regulatory purposes.

Post January 2014

From 1 January 2014, building societies are governed by the Capital Requirements Directive IV (CRD IV) rules. Building societies will need to issue newly developed regulatory capital instruments which will be treated as Common Equity Tier 1 capital under CRD IV. Capital instruments (deferred shares, or existing securities converted into deferred shares, ('core capital deferred shares' (CCDS)) issued by the Building Society under the CRD IV rules will form part of its core tier one capital and they will be taxed as shares. CCDSs will not qualify as permanent interest bearing shares largely because the capital instruments will have many features in common with ordinary share capital so

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