Jurisdiction(s):
United Kingdom

Related legal acts

Key definition

Demerger definition

What does Demerger mean? In practice, a demerger is the separation of one or more businesses from a corporate group so they operate independently, usually with substantially the same ultimate shareholders and separate management. It is a descriptive corporate reorganisation term rather than a single companies-law procedure. In the UK and Ireland, tax legislation includes regimes commonly referred to as statutory demerger rules, which can allow tax‑neutral treatment or exempt distributions where strict conditions are met. Typical implementation routes include: - Capital reduction demerger. - Scheme of arrangement. - Hive‑down of a business to a new subsidiary followed by a distribution in specie of its shares (often...

Glossary of demerger structures and corporate restructuring terms under UK company and insolvency law

Published by a LexisNexis Corporate expert

Practice notes

STOP PRESS:

A major overhaul of the UK listing framework took effect on 29 July 2024, removing both the premium and standard segments while at the same time introducing a single listing category for equity shares in commercial companies. This commercial companies category is heavily disclosure-based and sits alongside other listing categories, such as the shell companies, the secondary listing and the closed ended investment fund categories. A new UK Listing Rules sourcebook took effect to deliver these reforms, and the previous Listing Rules sourcebook was also revoked. For further information, see Practice Note: Reform of the UK listing regime—fundamentals. This Practice Note describes the regime exactly as it stood prior to 29 July 2024.

B buy out

This is the acquisition of a business or a controlling stake in a corporation’s shares. It commonly arises where the current management team wishes to assume full control of the undertaking.

C Capital redemption reserve

A non-distributable reserve into which sums are transferred following a redemption or share buyback in accordance with CA 2006, s 733. The company may deploy the capital redemption reserve to pay up new shares to be allotted to members as fully paid bonus shares.

Capital reduction demerger...

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Web page updated on 21/05/2026

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