Capital reduction demerger

1st May 2024

Our client is the holding company of a property investment and trading group that also held shares in subsidiaries’ holding investment portfolios (the ‘investment companies’) where different family members were entitled to the assets and distributions from these companies through separate classes of shares.

haysmacintyre provided tax advice and assistance in respect of a capital reduction demerger to demerge the investment companies from the group.

Our client, a family-owned property investment and trading company, had a complex share ownership structure split amongst various family members, who were descendants of the original founder, and family trusts.

This structure made it difficult for the directors, whose main focus was on the property business, to run the group as it placed an additional administrative burden on dealing with numerous family shareholders and preparing consolidated accounts. The shareholders holding rights over the investment companies were also unable to run them as they wanted due to additional administrative costs of having an audit and being consolidated into a wider group. The objective was therefore to demerge the investment companies.

As a firm, we have acted for this client for over 30 years, meaning we were fully aware of the difficulties that the structure caused for the directors in running the property business and for the shareholders of the investment companies having to get involved in shareholder matters. We were therefore well-placed to help them achieve their objective of demerging the investment companies.

As a result of the demerger and some more recent buyback of shares, the group now has one class of ordinary shares that is held by one family member, his wife and kids, and a family trust for his wider family. The investment companies are each held separately by other family members with each having their own holding company.

 

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