UK takeovers—the demise of the scheme of arrangement?

UK takeovers—the demise of the scheme of arrangement?

 In an unexpected move, Chancellor George Osborne announced in his Autumn Statement the introduction of measures to prevent avoidance of stamp duty on takeovers—aimed at the use of cancellation schemes of arrangement, under which no stamp duty is currently payable.

What is the significance of this announcement?

The Chancellor has announced, as part of its theme of ‘Ensuring a fair contribution from business’, that:

'The government will, by early 2015, bring forward amendments to section 641 of the Companies Act to prohibit reductions in share capital by target companies in takeovers conducted using schemes of arrangement in order to protect the stamp tax base.'

Traditionally, UK company takeovers have been structured as offers by a bidder to the shareholders of the target company to transfer their shares in

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