Commentary

264.3.1 Conditions applying to direct and indirect demergers

COMPANIES vol 11 acquisitions, mergers, demergers
| Commentary

264.3.1 Conditions applying to direct and indirect demergers

| Commentary

264.3.1 Conditions applying to direct and indirect demergers

The exemption conditions seek to ensure that the demerger provisions are used to facilitate genuine transactions by which the trading activities of a single company or group are divided so as to be carried on by two or more companies not belonging to the same group or by two or more independent groups1. In particular, the conditions aim to prevent the legislation being used to avoid tax through the implementation of artificial demerger schemes. The conditions which apply to both direct and indirect demergers are2:

  1. (a)

        Condition A: Each relevant company must

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