(1) The conditions for accounting for an acquisition as a merger are -
(a) that at least 90 per cent of the nominal value of the relevant shares in the undertaking acquired is held by or on behalf of the undertakings dealt with in the group accounts,
(b) that the proportion referred to in paragraph (a) was attained pursuant to the arrangement providing for the issue of equity shares by the undertakings dealt with in the group accounts,
(c) that the fair value of any consideration other than the issue of equity shares given pursuant to the arrangement by the undertakings dealt with in the group accounts did not exceed 10 per cent of the nominal value of the equity shares issued.
(2) The reference in paragraph (1) (a) to the "relevant shares" in an undertaking acquired is to those carrying unrestricted rights to participate both in distributions and in the assets of the undertaking upon liquidation.