There are three individuals who have 6 separate trading companies in which they hold shares. The companies have been trading for 3 years.
They wish to transfer their shares in these companies to a Holding Company owned by them.
My understanding is that the transfer would be at Valuation, ie the shares would be valued and the HC would acquire them at the current value.
I should be grateful if someone could confirm my understanding.
Would the individuals be liable to CGT on the gain?
If yes, would ER be available. Neither of the three is Director/Employee of any of the 6 companies, so probably not?
Thanks for any guidance.
Replies (7)
Please login or register to join the discussion.
You don't mention what the consideration for the transfers will be. Are we to assume that it will be new shares in the acquiring company?
What proportions of the issued share capital of the six existing companies do the shares to be transferred represent?
Thank you but I think you have misread my second question. I wasn't asking whether the six individuals were transferring all their shares - that much was implicit in your question. I was asking whether their shareholdings were 100% holdings or some lesser interest.
Well the simple answer to your question is that you should check out the position about CGT holdover relief on the share for share exchanges.
Claiming ER on the gains is only relevant of the gains can't be held over. As you say, no-one can claim ER in relation to a company that they are not director or employee of. But are you really saying that we have three individuals with controlling interests in six companies, and not one of them of them is a director of any of them. That is most unusual. Why has not one of them chosen to appoint themselves as a director?
You seem to be looking at holdover relief on gifts of business assets. That is not relevant here.
What I said was look at "holdover relief on the share for share exchanges". When there is a share for share exchange the transferee is always a company.