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Legal traps in corporate reorganisations

There is always a critical piece in the planning for a group reorganisation which needs to be addressed in parallel with the tax considerations and that is company law.

Spending time and effort designing a tax-efficient restructuring plan will prove fruitless if it simply cannot be implemented because of company law restrictions.

What are the most common legal pitfalls encountered in corporate reorganisations?

Corporate benefit

On transactions between companies in the same group the effect of the transaction on each company must be reviewed separately.

Company law does not recognise any concept of group benefit and the directors of each individual company must satisfy themselves that the transaction is in the best interests of that...

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