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Two shareholders own eight properties through an investment company. They wish to go their own way and would like to achieve this by forming two separate companies, each owning four properties
A property investment company owns eight properties. The two directors who are 50:50 shareholders each want to transfer four properties into their own 100%-owned companies.
This is purely for commercial reasons; they want to go in different directions. The market value of each set of four properties is broadly similar (about £3m) and my question is how do we best effect this “demerger”?
Presumably a statutory demerger under CTA 2010 Part 23 Ch 5 (TA 1988 s 213 as was) is out of the question because the property business is not a trade. Also a liquidation demerger would seem to be ruled out because there are outstanding mortgages on these properties and the bank would not want the transferor company to be liquidated.
This leaves us with a capital reduction demerger. If we follow that path am I correct in assuming that the...
