Share for Share

One of the main reasons for implementing a share-for-share exchange is to create a group for company law and tax purposes. Using this mechanism, the acquiring company issues new shares to a person or company, and that person then transfers his or her shares in the target company to the acquiring company thereby the acquiring company becomes the parent company of the target company.

Section 586 TCA 1997 treats the exchange of shares as if both companies are the same company and the exchange of shares is a reorganisation of its share capital. The exchange is deemed to be a disposal for capital gains tax purposes if the conditions of the section are met.

Stamp duty is applicable on the transfer of shares, but relief can be obtained if the conditions set out in s80 of the Stamp Duties Consolidation Act 1999 if certain conditions are met.

Satisfying the Revenue conditions of a bona fide scheme of reconstruction is a vital step in the process and the target company must have control of the target company after the exchange are just 2 of the conditions.

Tax Advice

Appropriate tax advice should be obtained prior to any transaction being commenced.

How Can CLS Help

We will work with the tax adviser to prepare a step plan and implement the proposed share for share drafting all the necessary board minutes, resolutions of members, CRO forms and declarations and arrange for the necessary share transfer forms to be processed in ROS.

If you are considering a share for share exchange please contact any one of the team on 059 9186776 or send us an email.

Please Note:

Our CLS Insights aims to bring you practical information and news on Company Law and Company Secretarial. We cover the topics that matter to your business and give practical tips and also the benefit our experiences. Please remember this article is a guide and legal advice should always be obtained. If you have any queries please contact one of the team and we would be happy to help.