(2) Subject to subsection (3), where a company disposes of shares in another company in terms of a transaction that is not a deferral transaction and that company held a qualifying interest in that other company at any time during the period of 18 months prior to that disposal, the amount of any exempt dividend received by or that accrued to that company in respect of the shares disposed of must-
[Words preceding paragraph (a) substituted by section 38 of Act 23 of 2018 effective on 1 January 2019 and applies in respect of disposals on or after that date]
(a) to the extent that the exempt dividend constitutes an extraordinary dividend; and
(b) if that company immediately before that disposal held the shares disposed of as trading stock,
be included in the income of that company in the year of assessment in which those shares are disposed of or, where that dividend is received or accrues after that year of assessment, the year of assessment in which that dividend is received or accrues: Provided that where a company disposes of shares that are treated as having been disposed of previously by that company in terms of subsection (4), the amount of any extraordinary dividend in respect of those shares must be included in the income of that company only to the extent to which it has not previously been included in the income of that company in terms of this subsection.
[Subsection (2) amended by section 38(1)(d) of Act 23 of 2018, by section 25(1)(c) of Act 34 of 2019 and by section 25(1)(d) of Act 34 of 2019 deemed effective on 20 February, 2019 and applicable in respect of shares held by a company in a target company if the effective interest held by that company in the shares of that target company is reduced on or after that date]
(3) Where a company holds shares in another company and disposes of any of those shares in terms of a transaction that is not a deferral transaction within a period of 18 months after having acquired those shares in terms of a deferral transaction, other than an unbundling transaction and-
(a) within a period of 18 months prior to the disposal of those shares by that company an exempt dividend in respect of those shares accrued to or was received by a person that-
(i) disposed of those shares in terms of a deferral transaction; and
(ii) was a connected person in relation to that company at any time within that period,
that dividend must for purposes of this section be treated as a dividend that accrued to or was received by that company in respect of those shares within the period during which that company held those shares; and
(b) if that company acquired those shares (hereinafter referred to as ‘new shares’) in terms of that deferral transaction in return for or by virtue of the holding, by that company, of other shares (hereinafter referred to as ‘old shares’) that were disposed of in terms of that deferral transaction and an exempt dividend in respect of the old shares, other than a dividend consisting of new shares, accrued to or was received by that company within a period of 18 months prior to the disposal by that company of the new shares, that dividend must for purposes of this section be treated as an amount that accrued to or was received by that company as an exempt dividend in respect of the new shares.
[Subsection (3) added by section 38(1)(e) of Act 23 of 2018 and amended by section 25(1)(e) of Act 34 of 2019]
(4) Where a company holds equity shares in another company (hereinafter referred to as the “target company”) and-
(a) the target company issues shares (hereinafter referred to as the “new shares”) to a person other than that company; and
(b) the effective interest of that company in the equity shares of the target company is reduced by reason of the new shares issued by the target company,
that company must for purposes of this section be treated as having disposed, immediately after the new shares were issued, of a percentage of those equity shares that is equal to the percentage by which the effective interest of that company in the equity shares of the target company has been reduced by reason of the new shares issued by the target company: Provided that any new shares that are convertible to equity shares must for purposes of this subsection be treated as equity shares.
[Subsection (4) added by section 25(1)(f) of Act 34 of 2019 deemed effective on 20 February, 2019 and applicable in respect of shares held by a company in a target company if the effective interest held by that company in the shares of that target company is reduced on or after that date]
[Section 22B inserted by section 34 of Act 17 of 2009, amended by section 40 of Act 7 of 2010, substituted by section 46 of Act 24 of 2011, amended by section 4 of Act 22 of 2012, section 41 of Act 22 of 2012 and substituted by section 34 of Act 17 of 2017 effective on 19 July 2017, applies in respect of any disposal on or after that date other than a disposal in terms of an agreement all the terms of which were finally agreed to before that date by all the parties to that agreement]