| Commentary

220 Direct demergers

| Commentary

220 Direct demergers

A direct demerger presupposes that the company which wishes to divide its business has already separated the discrete parts of its business into distinct subsidiary companies. The demerger then proceeds by the dividing company making a distribution in specie of its shares in one or more of those subsidiaries directly to all, or some of its own shareholders. For example, assume that a company, Multico, has two equal shareholders, Carol and Tim. Multico owns two trading subsidiaries, Bookco which owns a chain of bookshops and Trainco which runs training courses. Carol and Tim make a commercial decision

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