What is a share for share exchange?
A share for share exchange takes place when one company issues shares to a person in exchange for shares in a different company.
If the specific conditions in the relevant legislation (TCGA 1992) are met, then the share for share rules will apply. However, this will need careful analysis.
What is the effect of the share for share rules?
The effect of the share for share rules is that the person’s old shares are effectively swapped for the new shares issued to them.
There is no disposal by the person for Capital Gains Tax (“CGT”) purposes and therefore no CGT payable.
The new shares effectively ‘stand in the shoes’ of the old shares – this means that they have the same base ...
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