Part 14Change in company ownership
Chapter 7Meaning of “change in the ownership of a company”
Disregard of change in ownership
F1724ADisregard of change in parent company
(1)
Where a new company (“N”) acquires all the issued share capital of another company (“C”), the resulting ownership change is disregarded for the purposes of Chapters 2 to 6 if, immediately after that acquisition (“the acquisition”), N—
(a)
possesses all of the voting power in C,
(b)
is beneficially entitled to 100% of any profits available for distribution to equity holders of C,
(c)
would be beneficially entitled to 100% of any assets of C available for distribution to its equity holders in the event of a winding up of C or in any other circumstances, and
(d)
meets the continuity requirements.
(2)
“The resulting ownership change” means the change in the ownership of C by reason of Condition A in section 719 being met in relation to the acquisition.
(3)
A company is “new” if, before the acquisition, it has neither—
(a)
issued any shares other than subscriber shares, nor
(b)
begun to carry on any trade or business.
(4)
N meets the continuity requirements if, and only if—
(a)
the consideration for the acquisition consists only of the issue of shares in N to the shareholders of C,
(b)
immediately after the acquisition, each person who immediately before the acquisition was a shareholder of C is a shareholder of N,
(c)
immediately after the acquisition, the shares in N are of the same classes as were the shares in C immediately before the acquisition,
(d)
immediately after the acquisition, the number of shares of any particular class in N bears to all the shares in N the same proportion, or as nearly as may be the same proportion, as the number of shares of that class in C bore to all the shares in C immediately before the acquisition, and
(e)
immediately after the acquisition, the proportion of shares of any particular class in N held by any particular shareholder is the same, or as nearly as may be the same, as the proportion of shares of that class in C held by that shareholder immediately before the acquisition.
(5)
For the purposes of this section, N is treated as acquiring all the issued share capital of C for consideration consisting only of the issue of shares in N to the shareholders of C if, as a result of a scheme of reconstruction involving the cancellation of all shares in C and the issue of shares in N—
(a)
N holds all the issued share capital of C by reason of that share capital being issued to N by C, and
(b)
only shares in N are issued to the persons who were shareholders of C immediately before the shares in C were cancelled.
(6)
In a case within subsection (5), subsection (4) applies as if any reference to immediately before the acquisition were a reference to immediately before the shares in C were cancelled.
(7)
“Scheme of reconstruction” means a scheme carried out in pursuance of a compromise or arrangement—
(a)
to which Part 26 of the Companies Act 2006 (arrangements and reconstructions) applies, or
(b)
under any corresponding provision of the law of a country or territory outside the United Kingdom.
(8)
Chapter 6 of Part 5 (equity holders and profits or assets available for distribution) applies for the purposes of subsection (1)(b) and (c) as it applies for the purposes of section 151(4).