Statutory Demerger - Company law

A private close company A is used by Mr X and Mr Y as a trading company in which they each hold 50% of the shares. Another company (B) is owned 100% by company A but is currently dormant.

Mr Y would now like to go their separate ways and trade in separate companies

This separation of trade is to be achieved via a statutory demerger separating company B from company A

Mr Y would then use company B as his sole company through which he would trade and Mr X would continue to operate through company A

Advanced clearance that the demerger will be treated as an exempt distribution so that it will not give rise to a tax liability for either the companies or the shareholders has been granted by HMRC

Having received HMRC clearance we now need to deal with the mechanics of the transaction

Would anyone be able to advise on the company law procedure and the forms to be filed with companies house

We believe that we will need to subdivide the existing shares in A into two separate class of share so that a "dividend in specie" can be paid to Mr Y in the form of shares in company B. Having paid the dividend, Mr Y's shares in company A will need to be cancelled

I would appreciate any advice concerning the above and specifically the procedure to be followed relating to the cancellation of Mr Y’s shares in company A

Thanks