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Reorganisations & Reconstructions
Making the complex simple
Business owners might want to restructure their business for a variety of commercial reasons, such as planning for a sale, succession planning or restructuring a group to maximise tax efficiency.
There are various routes which a company can take to reorganise its business, such as introducing a new holding company, splitting interests by way of a demerger, or disposing of shares to members of the management team or to the company itself.
All of these methods will have different tax consequences and it is important to seek tax help early on in the process, as there may be a number of different ways to achieve your commercial objectives.
Setting up a Group
Setting up a group structure or introducing a holding company, (often by way of share for share exchange), can be used for pre-sale planning, for asset protection purposes, or as a result of expanding your business or commercial activities. There must be clear commercial reasons for a reorganisation to ensure that the reorganisation can be undertaken tax neutrally, and HMRC clearance is often needed. We have significant experience in this area.
Reorganising a Group
A share reorganisation can include a wide range of transactions such as alteration of share rights, a purchase of existing shares (whether by third party, existing management or the company itself) or a capital reduction.
Alterations of share rights may be undertaken for various commercial reasons, for example, the issue of different share classes may be necessary to vary the existing voting rights of the shareholders.
All of the above will have substantial tax consequences, and professional tax help should be sought.
Splitting up a Group or Business’ (Demergers)
There are many reasons why a corporate demerger may be attractive. Splitting the businesses could be seen as a way to unlock shareholder value. A demerger could also be undertaken to ring-fence liabilities attached to a particular business, or as a first step before selling a business.
There are various methods of implementing a demerger, including statutory as well as non-statutory routes. Demergers can be very complex, especially where property or other tangible assets are involved, and it is crucial that appropriate tax advice is sought.
Family Investment Companies (FICS)
Whilst family investment companies are often, (although not always) used for IHT or estate planning, they often, (although not always!), involve setting up a new group or some form of reorganisation, hence including them here. FICs can be structured in a variety of ways to suit the requirements and circumstances of the family.
Case Study
Reorganisation and Reconstruction
