Preference share meaning

Tax consequences of different buyback structures The table below offers a concise overview of the tax outcomes arising from the various forms of share buyback that a UK company may undertake. Throughout, it is assumed that the relevant shareholder is UK resident and that the repurchased shares are held as an investment. For fuller guidance on the tax treatment of share buybacks, see the following Practice Notes: Tax consequences of share buybacks—main rules Tax consequences of share buybacks—calculating the income capital split Tax consequences of share buybacks—unquoted trading companies For a comparative table setting out other ways a company can return value to shareholders, together with the principal UK tax issues for each route, see: Key UK tax considerations for returning value to shareholders—comparative table. Note that tailored provisions apply where the company repurchasing its shares is a qualifying asset holding company. For more on this, refer to Practice Note: Qualifying asset holding companies (QAHCs)—tax treatment...

Nosnehpetsj Ltd (in liquidation) v Watersheds Capital Partners Ltd and another [2020] EWHC 1938 (Ch), [2020] All ER (D) 144 (Jul) What are the practical implications of this case? The key takeaway is that directors will generally be held to the content of confirmation statements, accounts and, for the period before 2016, annual returns. Many private companies operate with a degree of informality, and directors sometimes shift assets within a small group merely by reflecting the transfers in those filings. A director who acts in that way is unlikely to be allowed to step back from those actions by asserting that corporate formalities were not observed, particularly where third parties have relied on the records or one group company has gone into insolvency. The old saying that equity will not assist a volunteer carries limited weight in corporate contexts. The modern stance is that equity will not go out of its way to thwart a gift. Contemporaneous records will be preferred over after-the-event assertions by directors. The decision also...

In this issue: Tax Treatment Corporate Governance Updated content Useful information Dates for your diary Weekly highlights from other practice areas Tax Treatment Tax update spring 2025: simplification, administration and reform HMRC has unveiled a suite of measures focused on tax and customs administration and simplification. The package spans new consultations, published outcomes, calls for evidence, announcements and related materials. Of these, the points below are expected to be of particular relevance to share incentives specialists: Employment Related Securities changes — from 1 May 2025 a streamlined route will apply for making a joint election to shift an employer’s NICs liability triggered by certain chargeable events linked to employment-related securities or options, removing the need for the employer to send the election form to HMRC for pre-approval when using the GOV.UK template form Modernisation of the stamp taxes on shares framework — the government has released a summary of responses to the 2023...

The High Court has held that Standard Chartered’s suggested substitute for Libor, derived from the secured overnight financing rate (SOFR), amounts to a “reasonable alternative rate”, in one of the earliest matters to reach the English courts concerning the move away from the Libor benchmark. Judges Julian Flaux and David Foxton concluded that the bank’s proposed metric rests on “a well-established rate used across the financial markets in a variety of financial instruments” and has the backing of financial regulators in both the UK and the US. Having failed to reach agreement with its investors—including hedge funds managed by DE Shaw and Bracebridge—on the rate to be applied to US$750m of preference shares issued in 2006, Standard Chartered asked the court to determine the dividend rate it should pay...

In most leveraged buy-outs, funding combines equity and debt. Deployment of proceeds varies by deal, but finance is typically directed to: buying the target business—usually by making a direct payment to the seller meeting transaction costs and expenses, including advisers’ fees, and refinancing outstanding debt A transaction may instead aim to refinance existing liabilities or return capital to the sponsor without a full exit—known as a ‘leveraged recapitalisation’—rather than acquire a target (see Practice Note: What is acquisition finance?). This Practice Note considers: how investors inject equity into the group and the forms that equity may take the range of debt options, including senior facilities, mezzanine facilities, second lien facilities, PIK or payment in kind facilities, unitranche facilities, senior secured notes and subordinated notes, and the factors that influence the choice of funding structure For an introductory overview, see Practice Note: Introductory guide to acquisition finance. For a glossary of key terms and...

It is fundamental to ensuring the arrangement meets the company’s specific needs and objectives. This Practice Note aims to assist in pinpointing a company’s stated objectives so as to determine the most fitting share scheme arrangement for it. Types of schemes For the purposes of this note, the following categories of share scheme arrangements will be examined and evaluated against each objective: unapproved share option schemes enterprise management incentives (EMI) schemes company share option plans (CSOPs) share incentive plans (SIPs) save as you earn/sharesave (SAYE) schemes long term incentive plans (LTIPs) growth or value share arrangements joint share ownership plans (JSOPs) phantom share plans Company objectives Set out below are questions to help a company identify the most appropriate share incentive arrangement to meet its aims: Should the scheme be extended to all eligible employees, or offered only on a discretionary basis? Is the arrangement intended for employees alone,...

As set out in Scope of distributions for tax purposes, distributions fall into four categories: dividends — covering paragraph A, with fuller guidance in Tax—types of distribution—dividends transfers of assets or liabilities — covering paragraphs B and G, with further detail in Tax—types of distribution—transfers of assets and liabilities interest recharacterised as a distribution — spanning paragraphs E and F, with more detail in Types of distribution—interest recharacterised as a distribution: non-commercial securities and Types of distribution—interest recharacterised as a distribution: special securities bonus issues of shares or securities — covering paragraphs C, D and H and discussed further in this note Paragraphs C and D—Redeemable share capital and securities The third and fourth categories comprise the company issuing any redeemable share capital or any securities: in respect of shares in, or securities of, the company; and otherwise than for new consideration Distributions within paragraph C or D are often termed ‘CD distributions’,...

1 By this power of attorney dated [ insert date ] I, [ insert name of director ] of [ insert address of director ], being a director of [ insert company name ] (incorporated in [England and Wales] under registered number [ insert company number ]) (the Company), appoint every other director of the Company, severally, as my true and lawful attorney (each an Attorney). Each Attorney may, on my behalf and in my name or in the Attorney's name, carry out all acts, deeds and matters, and may negotiate, approve, agree to, sign, execute and deliver any deeds, contracts, agreements, documents, undertakings and assurances which, in my personal capacity or in my capacity as a director of the Company [ or any of its subsidiaries (as appropriate) ], are necessary or required, or which the board of directors of the Company or any committee thereof (the Board) considers desirable, for or in connection with: 1.1 the proposed offer to be made by the Company for...

Insert the following as new definitions (if not already included) in the articles of association of the relevant company: A Ordinary Shares — refers to the A ordinary shares of [ insert amount ] each comprised within the share capital of the Company; Available Profits — signifies profits that are distributable as construed under the Companies Act; B Ordinary Shares — denotes the B ordinary shares of [ insert amount ] apiece forming part of the Company’s capital; Issue Price — indicates the price at which the relevant Share is allotted, being the combined total of amounts paid or treated as paid in respect of its nominal value together with any share premium applicable; Preference Dividend — means the dividend payable in accordance with Article [ insert number of article dealing with company dividend payments ]; Preference ...

To: [ name of offeror ] (the Company) and its other directors [ name of financial adviser ] (the Bank ) Proposed takeover offer for [ insert name of offeree ] (the Offeree ) I, the undersigned, being a director of the Company, acknowledge that, in relation to the offer [ to be ] made by the Company for [ all ] the issued [ and to be issued ] [ ordinary ] [ and preference ] share capital of the Offeree [ (such offer to be implemented by means of a scheme of arrangement ( Scheme ) of the Company) ] (the [ Offer OR Acquisition ]): [ the Company may issue or publish, or procure the issue or publication of (amongst other things): [ a document sent to shareholders of the Offeree, setting out information regarding the Offer, including complete details of its terms and conditions...