An Index to Share Transactions incl. Reorganisations, Demergers & Share Exchanges

What tax relief applies in a share transaction? When do you need a company reorganisation or reconstruction? What tax reliefs apply to a company reorganisation, a share for share exchange, reconstruction or other transaction involving shares?

You can reorganise or separate company activities and different subsidiaries using a variety of different methods.

The super-practical tax guides in this index provide an outline of the tax treatment together with step-by-step guides, case studies and tax clearance templates.

Instructions

1. Using the Transactions Planner, decide what you want to do and what Option works best.

2. Follow the links to the Tools to find the tools for the job.

3. Check out our Case studies to find your topic.

Transactions Planner

Reorganisation Planner

What do you want to do?

Aim	Options	Tools

Creating a group Inserting a new holding company Creating new subsidiaries Why? To separate new or different activities To create a holding company for a share scheme or investment relief Asset protection To create a spare company for later SSE relief	Add a new subsidiary: Incorporation of a new subsidiary by an existing company Form a group Insert a new holding company via a share-for-share exchange	Guides How to start a new company Share for share exchanges Case study & tax clearance template Creating a group Paperwork Forming a group: documents

Reorganise share capital: To create different share classes To change share rights Why? For new investment For employee reward & incentive	With shareholder approval: amend by Companies Act 2006 resolution: Bonus & rights issues Sub-division Alteration of rights	Guides Reorganisations & Reconstructions Issuing different share classes: Family companies Employee Shares: setting up share classes with different rights for directors & employees CGT Value shifting

Repay share capital: Return share capital to shareholders, or Create a credit to the profit and loss reserve Why? Shed excess cash Create distributable reserves	Capital reduction	Guides Capital Reduction index Capital Reduction: distribute capital Capital Reduction: tax treatment

Prepare for immediate sale: Move saleable activity to a new clean company Separate the activities of a company into two companies Why? The potential sale of one trade or activity Separation/fallout of business partners.	Share sale following: Liquidation demerger Capital reduction demerger Asset sale/company sale Move (hive) up, across or down! Transfer of business or assets around a group Plan for SSE	Guides Reorganisations and reconstructions Demergers: what are your options? Substantial Shareholding Exemption (SSE) Case studies & tax clearance templates Case Study 2: Tradeco: Demerger of its investment business Case Study 3: Tradeco demerger of investment subsidiary Case Study 4: Investco: Demerger of trading subsidiary

Tidy up the business or assets or plan for a potential future sale Split activities to separate out two trades Tidy up or plan for a potential future sale: Demerge a trading subsidiary Demerge an investment subsidiary Streamline a group Why? Potential sale of trade or investment business or investment asset To preserve Capital Gains Tax (CGT) Business Asset Disposal Relief (BADR) or Inheritance Tax (IHT) Business Property Relief (BPR).	Just trades: Statutory demerger Capital reduction demerger Liquidation demerger Trades or business: Liquidation demerger Capital reduction demerger Hive down to a clean new company	Guides: Demergers: what are your options? Reorganisation & reconstructions Case studies: just trades Case Study 1: Tradeco: demerger of two trades Case studies: a mixed business Case Study 2: Tradeco, demerger of its investment business Case Study 3: Tradeco demerger of investment subsidiary Case Study 4: Investco: Demerger of trading subsidiary

Tidy up the business or assets or plan for a potential future sale Alternatives to a demerger	Distribution: de-envelope assets by transfer to shareholders Asset sale to a new company or shareholder	Guides De-enveloping a property

Buyout By Employee-Owned Trust By management By a third party how? Borrow against assets of new subsidiary Share for share exchange for existing shareholders	Sale to Employee Ownership Trust Share buyout via a new holding company Share buyout via a LLP Share buyout: by individuals Purchase of own shares Trade sale: disposal of goodwill & trade followed by liquidation	Guides Succession planning: Buyouts Management Buyout: what are your options? Employee Ownership Trusts Case study Case Study 5: Management buyout: via new holdco Paperwork Forming a group: documents

Exit planning for key shareholders, leaving remaining shareholders in control For? Buyout retiring or dissenting shareholder	Use company funds to buy shares Company purchase of own shares Borrow against company assets to buy shares Buyout via a holding company	Guides Succession planning: Buyouts Purchase of own shares Purchase of own shares: out of capital Case studies Case Study 6: POS: Buyout retiring shareholder Case Study 5: Management buyout: via new holdco

Expand the businesses Merge two or more businesses		Guides Groups: at a glance

Stamp Duty: Share-for-share exchange	Relief for a share for share exchange What are disqualifying events? Examples of cases where relief does and does not apply.	Guides Stamp Duty: Share for Share exchanges

Close down the company: that is the end!	Liquidation Striking off	Guides Ceasing trading: What are your options? TAAR: Distributions on winding up (anti-phoenixing rules) Checklists Striking off: step-by-step

Case Studies

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Topic/case study

1. Trading company with two trading activities:

Separate its two trades into different companies.
With same owners or split between existing owners.

Why?

Potential sale of one trade.
Separation/fallout of business partners.

See Case Study 1: Tradeco: demerger of two trades

2. Trading company with an investment property or investment business:

Separate activities into separate companies

Why?

Potential sale of trade or investment business or investment asset
To preserve Capital Gains Tax (CGT) Business Asset Disposal Relief (BADR) or Inheritance Tax (IHT) Business Property Relief (BPR).

See Case Study 2: Tradeco: Demerger of its investment business

3. Trading company with investment subsidiary