Part V

Share Capital, its Increase, Maintenance and Reduction
Chapter III

Share Premiums

Merger relief.
131
1
With the exception made by section 132(8) (group reconstruction) this section applies where the issuing company has secured at least a 90 per cent. equity holding in another company in pursuance of an arrangement providing for the allotment of equity shares in the issuing company on terms that the consideration for the shares allotted is to be provided—
a
by the issue or transfer to the issuing company of equity shares in the other company, or
b
by the cancellation of any such shares not held by the issuing company.
2
If the equity shares in the issuing company allotted in pursuance of the arrangement in consideration for the acquisition or cancellation of equity shares in the other company are issued at a premium, section 130 does not apply to the premiums on those shares.
3
Where the arrangement also provides for the allotment of any shares in the issuing company on terms that the consideration for those shares is to be provided by the issue or transfer to the issuing company of non-equity shares in the other company or by the cancellation of any such shares in that company not held by the issuing company, relief under subsection (2) extends to any shares in the issuing company allotted on those terms in pursuance of the arrangement.
4
Subject to the next subsection, the issuing company is to be regarded for purposes of this section as having secured at least a 90 per cent. equity holding in another company in pursuance of such an arrangement as is mentioned in subsection (1) if in consequence of an acquisition or cancellation of equity shares in that company (in pursuance of that arrangement) it holds equity shares in that company (whether all or any of those shares were acquired in pursuance of that arrangement, or not) of an aggregate nominal value equal to 90 per cent. or more of the nominal value of that company’s equity share capital (excluding any shares in that company held as treasury shares).
5
Where the equity share capital of the other company is divided into different classes of shares, this section does not apply unless the requirements of subsection (1) are satisfied in relation to each of those classes of shares taken separately.
6
Shares held by a company which is the issuing company’s holding company or subsidiary, or a subsidiary of the issuing company’s holding company, or by its or their nominees, are to be regarded for purposes of this section as held by the issuing company.
7
In relation to a company and its shares and capital, the following definitions apply for purposes of this section—
a
“equity shares” means shares comprised in the company’s equity share capital; and
b
“non-equity shares” means shares (of any class) not so comprised;
and “arrangement” means any agreement, scheme or arrangement (including an arrangement sanctioned under section 899 of the Companies Act 2006 (court sanction for compromise or arrangement with creditors or members) or section 110 of the Insolvency Act (liquidator accepting shares etc. as consideration for sale of company property)).
8
The relief allowed by this section does not apply if the issue of shares took place before 4th February 1981.
S. 131(1): "section 132(8)" substituted (retrospectively) for "section 132(4)" by Companies Act 1989 (c. 40, SIF 27), ss. 145, 213(2), Sch. 19 para. 1
Words substituted by Insolvency Act 1986 (c. 45, SIF 66), s. 439(1), Sch. 13 Pt. I
Words in s. 131(4) inserted (1.12.2003) by The Companies (Acquisition of Own Shares)(Treasury Shares) Regulations 2003 (S.I. 2003/1116), reg. 4, {Sch. para. 10}
Words in s. 131(7) substituted (6.4.2008) by The Companies Act 2006 (Consequential Amendments etc) Order 2008 (S.I. 2008/948), arts. 2(2), 3(1), Sch. 1 para. 66 (with arts. 6, 11, 12)
Ss. 126-182 repealed (1.10.2009) by Companies Act 2006 (c. 46), ss. 1295, 1300, Sch. 16; S.I. 2008/2860, art. 4, Sch. 1 (with arts. 5, 7, 8, Sch. 2 (as amended by S.I. 2009/1802, art. 18, Sch.))