Readers' forum: Benefit of synergy

My clients are a holding company Holdco with two wholly-owned trading subsidiaries. The equal shareholders in Holdco are four individuals A Mrs A C and D. In addition A holds 42% of the shares in a standalone trading company called Tradeco. The other 58% of shares are held by two individuals E and F.

To obtain the benefit of synergy and protect the long-term prospects of Tradeco currently worth about £150 000  it is proposed that A gifts his 42% shareholding in Tradeco for nominal consideration to Holdco and that E gives half his proportionate shareholding in Tradeco to Holdco for nominal consideration so that Holdco ends up owning 60% of Tradeco with the remaining 40% owned by E and F equally although this will necessitate the issue of a further 5% approximate shareholding in Tradeco to F.

The eventual structure becomes ...