Stamp duty and stamp duty reserve tax implications of stabilisation transactions, including the over-allotment or greenshoe option
Stamp duty and stamp duty reserve tax implications of stabilisation transactions, including the over-allotment or greenshoe option

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

  • Stamp duty and stamp duty reserve tax implications of stabilisation transactions, including the over-allotment or greenshoe option
  • HMRC guidance—Stamp Taxes on Shares Manual
  • What is stabilisation?
  • The greenshoe option (or over-allotment option)
  • The purpose of the greenshoe option
  • Stamp duty and SDRT implications of transactions undertaken to settle the over-allocation
  • No stamp tax on grant of greenshoe or over-allotment option
  • No stamp tax on transfers under stock loans
  • No stamp taxes on exercise of greenshoe option or on any market purchases of shares provided intermediaries relief applies
  • Normal stamp tax charge on transfer to end investors
  • More...

Stamp duty and stamp duty reserve tax implications of stabilisation transactions, including the over-allotment or greenshoe option

In the context of an offering of shares to the public by way of an initial public offering (IPO) or a secondary offering of shares, this Practice Note explains:

  1. what stabilisation is

  2. how an over-allocation of the shares offered in the IPO or secondary offering, and therefore the transactions undertaken to settle the over-allocation, including the greenshoe or over-allotment option, fit into the stabilisation process, and

  3. the stamp duty and stamp duty reserve tax (SDRT) implications of those stabilisation transactions

For the purposes of this Practice Note, it is assumed that:

  1. the issuer is a UK incorporated company so the shares are UK shares, and

  2. all the issuer’s shares are held within CREST both before and after the offering (so that transfers of those shares are settled electronically on a paperless basis within the CREST settlement system)

It is worth noting that transfers of, or agreements to transfer, certain types of securities (eg unlisted shares that are admitted to trading on a recognised growth market, such as AIM) are exempt from stamp duty and SDRT. Consequently, the discussion in this Practice Note applies only to shares that do not benefit from an exemption from stamp duty or SDRT.

HMRC guidance—Stamp Taxes on Shares Manual

HMRC's guidance on stamp duty and SDRT is

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