Transfer of shares to ultimate controlling party

Transfer of shares to ultimate controlling party

Didn't find your answer?

Client is the sole shareholder of Company A.

Company A is the sole shareholder of Company B.

Company A has accumulated losses. Company B has accumulated profits, but less than A's losses.

Is there a method by which the shares in B can be transferred to the shareholder of A, so that the ultimate controlling party receive dividends from B?

Replies (7)

Please login or register to join the discussion.

avatar
By Lou Scannon
03rd Mar 2015 14:31

Yes

Liquidate company A.

Thanks (0)
avatar
By JamesAnd
03rd Mar 2015 14:37

Or?

Do a share for share so that he exchanges some of his shares in A for some of A's shares in B

Thanks (0)
Replying to The Dullard:
avatar
By Lou Scannon
03rd Mar 2015 14:43

Eh?

JamesAnd wrote:

Or?

Do a share for share so that he exchanges some of his shares in A for some of A's shares in B

A subsidiary cannot hold shares in its parent.

Thanks (0)
Replying to noodles:
By johngroganjga
03rd Mar 2015 14:49

Parent company

Lou Scannon wrote:

JamesAnd wrote:

Or?

Do a share for share so that he exchanges some of his shares in A for some of A's shares in B

A subsidiary cannot hold shares in its parent.

You have misread.  The other party to the transaction described by JamesAnd would be Company A, and the consideration passing to Company A would be shares in itself.  So the proposal is that Company A buys back some of its own shares. 

Thanks (0)
By johngroganjga
03rd Mar 2015 14:39

But you will need to look at who company A's creditors are before you can fully understand the implications of doing that, and also work through the tax implications (in  the hands of the shareholder) of the liquidation itself to be sure that it is worth his while.

Thanks (0)
avatar
By JamesAnd
03rd Mar 2015 14:52

Not going to.

Instead of owning 100% of A who owns 100% of B he can exchange so that he now owns some of B instead

Thanks (0)
avatar
By JamesAnd
03rd Mar 2015 14:54

Mine crossed with yours John!

Thanks for confirming I wasn't going made (just yet)

Thanks (0)