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Holding company

Holding company

Client has two companies and company B is to become holding company of company A shares.  I know that share for share exchange can normally be done but is it affected by company B already being in existance and having shares issued?

Also, somebody asked recently if anyone has a pro-forma letter for clearance from HMRC and I cannot find a reply.

Any assistance would be appreciated. 


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23rd Nov 2012 09:56


... company B issues new shares in itself to the shareholders of company A in exchange for their shares in company A. 

After the exchange company B  is the holding company of company A.

The transaction can be done without triggering a CGT charge for the company A shareholders on the disposal of their company A shares if it is not done to avoid tax..

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23rd Nov 2012 12:43

Stamp Duty

The possible problem in this scenario is stamp duty.  If the shareholdings in Company B after the exchange don't mirror the shareholdings in Company A before the exchange, then there's stamp duty at ½% on the transaction.

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23rd Nov 2012 16:12

Much appreciated replies

Thanks for your replies.

So if two directors had 50 shares each in A and B, it would work if company B bought company A shares off them and they then had 100 company B shares each?  It is the bank driving the changes so there ii is not being done to avoid any tax.

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23rd Nov 2012 16:37


Get a S.138 clearance and then get the purchase contract adjudicated as exempt by the Stamp Office.

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