Partition demerger meaning

Capital reduction demergers Why a company may undertake a demerger, and the alternative ways such a split can be structured, are explained in Practice Notes: Demergers—an introduction to the tax issues and Demergers—an introduction for corporate lawyers. More detailed Practice Notes examine the tax implications associated with the main demerger routes, namely: statutory (or dividend) demergers, whether direct or indirect—see Practice Note: Statutory demergers liquidation demergers—see Practice Note: Liquidation demergers capital reduction demergers—the focus of this Practice Note In a capital reduction demerger, the top company of the target group reduces its capital; in consideration, the demerged business is moved to a new holding company, which then issues shares to the shareholders. Unlike a statutory demerger, a capital reduction demerger does not benefit from the specific tax reliefs available for exempt distributions. Even so, it can be implemented so that it does not give rise to tax charges—on income or on capital—for the shareholders or for any of...

A demerger is a form of corporate reorganisation enabling a company to separate its operations. This separation occurs when the company transfers one or more elements of its business to one or more other companies, which may sit within its group or be outside it. The recipient (transferee) company can be overseen by the same directors as the transferor, or by different directors. Shares in the transferee are usually held by at least some of the transferor’s shareholders, though the way those shares are apportioned between them may vary. Key features of a demerger preservation of business (the demerged business continues after the demerger, and is carried on separately) preservation of shareholders (the demerged business will usually be owned by some mix of the shareholders who owned it before the demerger, ie taken as a whole, the shareholder base is the same before and after the demerger, it is not a vehicle to bring new investors into a company or group) no consideration is...

This Practice Note is about the tax implications of liquidation demergers, also known as section 110 demergers, after section 110 of the Insolvency Act 1986 This Practice Note examines the tax consequences of liquidation demergers, sometimes referred to as section 110 demergers, taking its label from section 110 of the Insolvency Act 1986. For context on the reasons a company may undertake a demerger, and an overview of alternative structures, see Practice Notes: Demergers—an introduction to the tax issues and Demergers—an introduction for corporate lawyers. Detailed Practice Notes cover the tax aspects of the principal demerger routes: statutory (or dividend) demergers, which can be direct or indirect—see Practice Note: Statutory demergers capital reduction demergers—see Practice Note: Capital reduction demergers liquidation demergers—the focus of this Practice Note Typically, a liquidation demerger involves placing a new holding company at the top of the group, then putting that new holding company into liquidation. The liquidator then transfers the businesses being separated to two new...