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Readers’ forum: Should client claim substantial shareholdings exemption?

16 January 2024
Issue: 4920 / Categories: Forum & Feedback , Business , Companies , Compliance , Policy
Isolating risk

Some years ago my client trading company set up a subsidiary company to carry on a separate project so as to isolate any risks associated with it.

The directors of another company have recently expressed a wish that they should become involved as they also have experience in this area of business.

The shareholders of my client company believe that this could be beneficial for all parties and have suggested that shares in the subsidiary company could be transferred to them or their company.

They are thinking that the share transfers could take place over a period of years linked to agreed increases in the subsidiary’s profits.

I am wondering whether such transfers would be eligible for the substantial shareholdings' exemption. Are there limitations to this relief if the shares are transferred in tranches?

Can readers also advise on how this relief should be claimed? I have looked everywhere...

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