Hi,
I've got a question related to Merger relief and Group reconstruction relief. The first stated that merger relief is when a company issue shares to acquire above 90% of the shares of another company. The Group reconstruction relief is for a wholly owned sub to acquire shares in another sub against issuing shares.
I don't know if there is any difference between both?
what the difference between S611 and S612
Re: what the difference between S611 and S612
You've already stated the difference Leo. Group reconstruction only arises within existing groups, merger when acquiring a company.
(UK company law matter, for other readers' info).
(UK company law matter, for other readers' info).
Re: what the difference between S611 and S612
Thanks JRSB for your reply. You see, often companies use merger relief or GRR for group reconstructions. Lets say, a company that insert a Newco in the structure and the Newco allots its own shares to acquire an investment in a sub from it's parent.
Sometimes, GRR applies and sometimes Merger Relief applies, but if you look at Companies Act 06, for Merger relief it says only it's when a company acquire more than 90% of another company against it's own shares. So, why we can't use Merger Relief in such situation but only GRR?
Sometimes, GRR applies and sometimes Merger Relief applies, but if you look at Companies Act 06, for Merger relief it says only it's when a company acquire more than 90% of another company against it's own shares. So, why we can't use Merger Relief in such situation but only GRR?
Re: what the difference between S611 and S612
they basically give you the same option which is to use the reconstruction or merger reserve rather than share premium, the latter being more restrictive
section 612 (merger relief) says it does not apply where group reconstruction relief is available (para 4)
section 612 (merger relief) says it does not apply where group reconstruction relief is available (para 4)
Re: what the difference between S611 and S612
Spot on !!! I see!
So, GRR applies when the Newco is wholly owned. And when the Newco is not, then GRR is not applicable, and consequently, Merger Relief applies. Thanks a lot!
So, GRR applies when the Newco is wholly owned. And when the Newco is not, then GRR is not applicable, and consequently, Merger Relief applies. Thanks a lot!