[F1724ADisregard of change in parent companyU.K.
(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 [F2or 26A] 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).]
Textual Amendments
F1S. 724A inserted (with effect in accordance with s. 37(6) of the amending Act) by Finance Act 2014 (c. 26), s. 37(4)
F2Words in s. 724A(7)(a) inserted (26.6.2020) by Corporate Insolvency and Governance Act 2020 (c. 12), s. 49(1), Sch. 9 para. 44 (with ss. 2(2), 5(2))
Modifications etc. (not altering text)
C1Ss. 719-724A modified (with effect in relation to accounting periods commencing on or after 31.12.2023) by Finance (No. 2) Act 2023 (c. 30), ss. 212(5), 264