Readers’ forum: Transferring shares from subsidiary to holding company

My client consists of a small group of companies with the following structure:

• Holdco with three natural persons as shareholders.
• One Subsidiary A 95% owned by Holdco with the other 5% owned by a full-time working director.
• Below Subsidiary A Subsidiary B is 100% owned by Subsidiary B.

The companies form a trading group and there are no investment activities or investment properties within the group.

It is the desire to move the group from this vertical group structure to one where the holding company runs directly both subsidiary A and subsidiary B.

I have considered doing this by the following mechanism: subsidiary A transfers the shares owned in subsidiary B to Holdco for nil consideration as part of an internal restructuring within the corporate group. This would basically be executed with a written contract and completion of a share transfer form J30.

This...