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Parent company guarantee to target vendors

Parent co. guarantee payment for put option exercise of individual shareholder in Buyco.

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If individual vendor sold shares in Target for shares in Buyco subject to Put/Call option after x years with ultimate Parent company guarantee if the shareholder in Buyco at the time of exercise of options were unable to purchase the shares, would such receipt by the original vendor be a CGT receipt if paid by group Parent under guarantee obligation as opposed to being paid by the shareholder of Buyco under Put/Call agreement?

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By Tax Dragon
13th Sep 2019 13:13

What's your alternative?

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By Scion
13th Sep 2019 13:47

If CGT receipt is it regarded as receipt of consideration for the disposal of shares otherwise would not get ER.

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By Tax Dragon
13th Sep 2019 13:58

What's the circumstance? A company has somehow been unable to afford a share-for-share purchase so parent company buys the shares?

Can you break it down a bit from your single-breath OP?

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Replying to Tax Dragon:
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By Scion
13th Sep 2019 14:27

Ultimate Group Parent is the main shareholder currently in Buyco but is intending to transfer Buyco to be held by another intermediate holding company in the group. Target vendor with the put options in Buyco is wondering if this potentially may have any tax implications for him. There is a guarantee in original target SPA that Parent will guarantee its obligations re Put option if it is no longer the major shareholder in Buyco ie if Buyco transferred elsewhere in group.

Any thoughts on potential tax issues for target vendor if ownership of Buyco changes from Parent to another company in the purchasers group?

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By Tax Dragon
13th Sep 2019 14:41

Suppose A sells to B and C pays. At the end of the day, there's been a sale for which proceeds were received.

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