Demergers—glossary of terms
Demergers—glossary of terms

The following Corporate guidance note provides comprehensive and up to date legal information covering:

  • Demergers—glossary of terms
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Buy out This is the purchase of a company or a controlling interest in a corporation’s shares. This often happens when a company’s existing managers wish to take control of the company.


Capital redemption reserve A non-distributable reserve into which amounts are paid following a redemption or share buyback in accordance with CA 2006, s 733. The company may use the capital redemption reserve to pay up new shares to be allotted to members as fully paid bonus shares.
Capital reduction demerger This method involves a capital reduction of the parent company of the target group, in consideration for which the demerged business is transferred to a new company, which in turn issues shares to the shareholders. See Practice Notes: Demergers—an introduction for corporate lawyers and Reduction of capital—a quick guide. For specific tax information see: Capital reduction demergers.
Chapter 11 Refers to debtor-in-possession restructurings under chapter 11 of the US bankruptcy code.
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