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Three-way split

25 March 2014
Issue: 4445 / Categories: Forum & Feedback , Business , Capital Gains

The shares of a trading company are owned by three individuals. One of them wishes to leave. The suggestion is that a new company is formed that will purchase the trade of the existing one and then equalise the remaining shareholdings

A trading company is owned by three individuals in the proportions of: 40% 40% and 20%. One of the 40% shareholders wishes to exit the company.

Because the conditions for a company buyback of own shares are not met (he has owned them for less than five years) the plan is for the remaining two shareholders to set up a new company which will buy out the exiting shareholder for cash.

The new company will offer the continuing shareholders a further issue of its own shares such that the trading company will become a wholly-owned subsidiary of the otherwise dormant new holding company.

Clearance is to be sought under TCGA 1992 s 138 in relation to the two remaining shareholders that the provisions of TCGA 1992 s 135 will apply to the exchange of their shares in the trading company for the new issue of...

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