| Commentary

266.1 Basic charge to tax

| Commentary

266 Other types of reconstruction

266.1 Basic charge to tax

Where the reconstruction is not a direct demerger, the distribution will count as a capital distribution within Section 122 of the Taxation of Chargeable Gains Act 1992 and therefore, prima facie, the recipient shareholders will be deemed to have disposed of the whole or part of their shares. If the shares which are issued by the transferee company effectively replace all of the shareholders’ shares in Company A, as will be the case with a reconstruction and with most mergers, each shareholder will be treated as disposing of their whole Company

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