Commentary

D8.383 Company reconstructions and amalgamations

Corporate tax
Corporate tax | Commentary

D8.383 Company reconstructions and amalgamations

Corporate tax | Commentary

D8.383 Company reconstructions and amalgamations

The rules in TCGA 1992, ss 135, 136 (see D6.202, D6.205) (share exchanges and company reconstructions) do not apply1 to an existing holding of shares in a company (company A) which is held by an investing company in the same capacity when:

  1.  

    •     there is a reconstruction or amalgamation, whereby another company (company B) issues shares in or debentures of that company in exchange for (or in respect of) the shares or debentures in company A, which affects the existing holding

  2.  

    •     immediately before that reconstruction or amalgamation, investment relief was attributable to the existing holding, and

  3.  

    •     the shares in the existing holding have been held continuously2 from the time they were issued until the reconstruction or amalgamation

This means that the investing company is treated as disposing of the shares in the existing holding at the time of a reconstruction or amalgamation, and acquiring a new holding at that time.

However, TCGA 1992, ss 135, 136 are not disapplied on a reconstruction where, broadly, the issuing company becomes a

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