(1) The Principal Act is amended -

(a) in Chapter 1 of Part 20 by inserting the following after section 626A:

"Exemption from tax in the case of gains on certain disposals of shares.

626B.

(1)

(a) In this section, section 626C and Schedule 25A -

'investor company' and 'investee company' have the meanings assigned by subsection (2);

'relevant territory' means -

(i) a Member State of the European Communities, or

(ii) not being such a Member State, a territory with the government of which arrangements having the force of law by virtue of section 826(1) (a) have been made;

'relevant time', in relation to a disposal by an investor company of shares in an investee company, means -

(i) for the purposes of subsection (2) (a) (i) (II), the time immediately before -

(I) that disposal, or

(II) any previous disposal -

(A) at a time within the period, or if there was more than one such period the most recent period, during which the investor company was a parent company of the investee company, or