Key CGT implications for shareholders in a rights issue
Key CGT implications for shareholders in a rights issue

The following Tax practice note provides comprehensive and up to date legal information covering:

  • Key CGT implications for shareholders in a rights issue
  • Rights issue should be a reorganisation
  • Allotment versus issue
  • Reorganisation treatment and overseas shareholders
  • Restrictive overseas securities laws
  • Interpretations of TCGA 1992, s 126
  • Treatment of overseas shareholders in a rights issue
  • Reorganisation treatment and fractional entitlements
  • How do rights issues deal with fractional entitlements?
  • Treatment of fractional entitlements permitted by reorganisation conditions
  • More...

Key CGT implications for shareholders in a rights issue

This practice note:

  1. explains the key CGT (shorthand for capital gains tax and corporation tax on chargeable gains) implications of a rights issue for shareholders who:

    1. are resident for tax purposes in the UK, and

    2. hold their existing shares in the issuer as an investment and are therefore subject to taxation on chargeable gains in respect of any disposal of their shares (whether existing or new shares) in the issuer, but

  2. does not cover the tax implications of a rights issue for shareholders who either:

    1. are resident for tax purposes outside the UK, or

    2. are subject to special tax rules because, for instance, they do not hold their existing shares as an investment (such as share dealers) or they have acquired (or are deemed to have acquired) their shares in connection with an employment or office

This practice note also does not deal with the tax implications of a rights issue where securities other than shares are offered.

For information on what a rights issue is, see: What is a rights issue? and for tax considerations for an issuer, see: Key tax considerations for the issuer in a rights issue.

Rights issue should be a reorganisation

From the perspective of existing shareholders of the issuer that:

  1. are resident for tax purposes in the UK, and

  2. hold their shares in the

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