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Holding off

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22 September 2009
Issue: 4224 / Categories: Forum & Feedback , Companies
A company has been through three successive management buyouts resulting in a chain of four effectively dormant holding companies. How can the structure be rationalised?

Our client A Ltd is a UK-resident trading company. Over the past 15 years or so it has been through three successive management buyouts. Each successive buyout team has made the acquisition through a separate corporate vehicle.

This has led to the current beneficial owners of A Ltd owning it through a chain of four effectively dormant companies the ultimate holding company being H Ltd. The directors would like to rationalise the structure by effectively dissolving three of the companies in the chain so as to leave just one holding company owning the shares in A Ltd.

My understanding is that this will involve a distribution by the immediate holding company of A Ltd H3 Ltd to the shareholders of H Ltd.

However relief under TA 1988 s 213(2) will not be due because H3 Ltd will...

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