A demerger is a type of corporate reorganisation that allows a company to divide its business. The division is effected by the company transferring one or more parts of its business to one or more other companies, which may sit within its group structure or be outside it. A transferee company may be run by the same directors as the transferor company or run by different directors. The shares in a transferee company will typically be held by at least some of the shareholders of the transferor company, although the shares may be allocated between them in a different way.
The features of a demerger that generally distinguish it from other types of corporate reorganisation are:
preservation of business (the demerged business does not stop after the demerger, it is carried on separately)
preservation of shareholders (the demerged business will typically be owned by some combination of the shareholders who owned it before the demerger, ie looked at as a whole, the shareholders are the same before and after the demerger, it is not a vehicle to bring new investors into a company or group),
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