Jurisdiction(s):
United Kingdom

Key definition

Share definition

What does Share mean? A share is a unit of ownership in a company used to allocate control and economic benefit among shareholders in corporate governance and transactions. Company law in the UK (Companies Act 2006) and Ireland (Companies Act 2014) sets the framework for shares and shareholder rights, though the precise rights arise from statute and the company’s constitution. Key features include: a bundle of rights (typically voting, dividends, information and a share of surplus on winding up); limited liability (exposure capped at any unpaid amount on partly paid shares); transferability subject to statutory and constitutional restrictions; and legal title evidenced...

UK tax treatment and reorganisation relief for share-for-share exchanges and loan notes (QCBs and non-QCBs): conditions, anti-avoidance, BADR, SSE and degrouping

Published by a LexisNexis Tax expert

Practice notes

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In certain corporate takeovers, the purchaser may arrange the deal so that the price is satisfied by issuing new shares and/or loan notes in the acquiring Company. Rather than, or in addition to, receiving cash, the vendor shareholders swap their existing shares (or loan notes) for fresh shares and/or loan notes created by the corporate buyer. This Practice Note explains the tax consequences for the selling shareholders and the acquirer in such arrangements. It covers both parties’ positions under the relevant tax rules. This method of acquisition plainly offers a cash flow benefit to the buyer and, provided specific conditions are met, the securities exchange is also treated as a reorganisation for tax purposes. Consequently, no capital gains tax (or corporation tax on chargeable gains) is due from the selling shareholders at the point they dispose of their shares. Where the consideration comprises a mixture of cash and shares and/or loan notes issued by the buyer, no tax is payable to the extent that the consideration consists of those shares or loan notes, ie capital gains tax (or corporation tax on chargeable gains) is only chargeable in respect of the element of consideration received in cash...

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Web page updated on 21/05/2026

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