Sole shareholder of company wishes to dispose of shares where the assets are 2 public houses. The problem is there are 2 purchasers who each want 1 pub and neither is connected to each other or the seller.
How can this be constructed as a share sale to the benefit of the seller as there are significant potential gains on each pub ?
Spencer Watson
Replies (2)
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Liquidation demerger
A liquidation demerger is the answer.
In brief
1. Vendor sets up two Newcos owned by him
2. Oldco is put into liquidation
3. Oldco distributes pubs one each to the two Newcos
4. Newcos issue shares to vendor in consideration for the pubs
5. Vendor sells shares of Newcos to the two purchasers
If done properly it should exactly fit your need.
Benefit of the trade
I believe one of the requirements in order for tax clearance to be granted for a liquidation demerger is that it must be for the benefit of the trade.
As both pubs are being sold separately, I am not sure if this would qualify.