(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.
(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
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