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Where Taxpayers and Advisers Meet

Reverse share swap

tdh10
Posts: 1
Joined: Tue Jun 25, 2019 11:04 am

Reverse share swap

Postby tdh10 » Tue Jun 25, 2019 11:09 am

Mr A owns 25% of the shares in Company A, with the remainder of the 75% shares being held by a Family Trust.

Company A is a dormant holding company, which owns 100% of company B, a trading company.

Mr A would like to somehow transfer 20% of his overall holding in the group to being 20% of the trading subsidiary only, making Company B owned 20% by Mr A and 80% by Company A. This is for succession planning purposes for the trading business.

Mr A is a director of both companies, as such we cannot simply issue new shares in Company B or gift shares from Company A to Mr A.

Is there a reverse share swap, or similar, mechanism through which this transaction can be effected without adverse tax consequences?

Many thanks

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