A partition demerger aims to segregate a business stream from the corporate group. It can be facilitated by a capital reduction demerger, which (unlike a statutory demerger) does not restrict the ability to sell a demerged business stream to a third party and (unlike a liquidation demerger) does not impose a requirement to appoint a liquidator. A capital reduction demerger reduces share capital in one company, in order to issue shares in a new company equal to the reduced share capital, effectively transferring a business through the cancellation and issue of shares. A five stage approach is suggested for a capital reduction partition demerger, which, although complex, should mitigate the tax liabilities.
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A partition demerger aims to segregate a business stream from the corporate group. It can be facilitated by a capital reduction demerger, which (unlike a statutory demerger) does not restrict the ability to sell a demerged business stream to a third party and (unlike a liquidation demerger) does not impose a requirement to appoint a liquidator. A capital reduction demerger reduces share capital in one company, in order to issue shares in a new company equal to the reduced share capital, effectively transferring a business through the cancellation and issue of shares. A five stage approach is suggested for a capital reduction partition demerger, which, although complex, should mitigate the tax liabilities.
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