Transfer of business

Transfer of business

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Hello there

We have a client who has a holding company (A), and two wholly owned subsidiaries (B & C).

The activities carried out by B & C were largely similar, and the client decided to transfer B's business and assets into C, leaving B with just some share capital, balanced by cash. 

The question is, how are B's reserves relfected in the accounts of C?  Can they simply be transferred into C as an increase to reserves?  Or should the reserves be distributed to A as a dividend, resulting in a loan owing from C to A for the value of that dividend.

Many thanks for any comments.

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