A reconstruction involves the transfer of all or part of one company’s undertaking or assets to another without any substantial change in the people ultimately interested in them.

This may be a simple transfer to another company owned by the same shareholders in the same proportions but it is more common to structure the transaction to maximise the use of certain tax and stamp duty reliefs.

A partition is a reconstruction that involves splitting a company’s undertaking or assets between different groups of members.

A demerger is a reconstruction or partition to which section 213 of the Income and Corporation Taxes Act 1988 applies. That and related sections exempt demergers from certain tax charges, including corporation tax.

A reconstruction or partition can be carried out by means of a dividend in specie, where the demerging company agrees to transfer assets to a new company in return for the issue of shares in the new company to all or some of the shareholders of the demerging company.

Alternatively, a reconstruction or partition may be carried out under section 110 of the Insolvency Act 1986.

This empowers a liquidator of a company in voluntary liquidation to transfer the company’s undertaking or assets to another company in return for the issue of shares.

Our services include:

• preparation of all necessary minutes, resolutions and other company documents, including a draft distribution agreement or liquidation agreement (as appropriate)
  
• a procedural guide
  
• filing of all necessary documents and forms at Companies House

Our fees start from £775 + VAT (£910.62).

Please note: Jordans is not able to provide advice on the taxation of the transaction or applications for tax reliefs or exemptions, advice or documents relating to the conveyance or assignment and transfer of real property or other assets (other than shares) involved in the reconstruction or partition. Accordingly, the parties involved should take independent professional advice on these matters.

Next steps

For more information on our company reconstruction services you can download an additional information sheet or request more information from the link below.

Alternatively you can contact our Corporate Legal Services team by ‘phone using the contact numbers on the right of this page.