D6.210 Conversion of share rights

Corporate tax
Corporate tax | Commentary

D6.210 Conversion of share rights

Corporate tax | Commentary

Conversion of capital

D6.210 Conversion of share rights

Tax treatment of a conversion of shares

Any alteration in the rights of a share, class of share or debenture typically falls within the share reorganisation rules (D6.101–D6.103) and therefore should be neutral for chargeable gains purposes.

However, this is subject to the rules on value shifting (see C1.335–C1.336).

Rights may be altered for a number of commercial reasons either independently or in conjunction with a more substantial transaction.

Common examples include:


    (a)     converting preference shares into ordinary shares, loan stock (see below)


    (b)     making changes to share rights prior to a listing (such as removing restrictions on transfer); and


    (c)     splitting shares into different classes in order to effect a demerger (see

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