There are many reasons why a company and/or its shareholders may want to undergo a corporate restructuring. Some are designed to help separate companies that operate two distinct trades, whereas others can be used as a way of returning capital to its shareholders.
Ashtons Legal has experience in dealing with many types of corporate restructurings and can guide you through the steps and procedures which need to be followed in order to make your corporate restructuring successful.
Our Corporate and Commercial team is highly ranked by leading client guide, the Legal 500, for our independently recognised expertise. You can be assured that your business is in safe hands when working with our team.
Contact Our Corporate Restructuring Solicitors in East Anglia
For practical advice on any type of corporate restructuring, as well as any other business legal advice you need to reach your goals, get in touch with our specialist Corporate and Commercial lawyers in Cambridge, Bury St Edmunds, Ipswich, and Norwich.
To set up an initial consultation:
- Give us a call on 0330 404 0767; or
- Fill in our simple online enquiry form and we will be in touch shortly.
Our corporate restructuring expertise
Corporate restructurings can take many forms. Our corporate lawyers have experience with all of the common structures, including:
Statutory demergers
A statutory demerger is used where a company either:
- is operating two or more distinct trades
- has two or more trading subsidiaries
and there is a desire to completely separate out the two (or more) trades.
Statutory demergers can either be “direct” or “indirect”.
Indirect statutory demerger case study
Capital reduction demergers
These can be quite complex, but ultimately involve a company reducing its capital, in return for which the business which is intended to be “demerged” is transferred to another company.
Capital reduction demerger case study
Capital reductions
Whether done via the courts or via what is known as the “solvency statement route”, capital reductions are generally done in order to increase or create distributable reserves within a company, which can then be paid to the shareholders.
Share for share exchanges
A new holding company is set up to acquire 100% of the shares in an existing company, where effectively the shareholders “swap” their shares in the company for shares in the new holding company.
Share restructuring buy out
This is similar to a share-for-share exchange, but instead, only some of the shareholders swap their shares in the company for shares in the new holdings company and the others receive cash and exit the company entirely.
This is a common structure that is put in place where a company wishes to perform an own share purchase in order to buy shareholders out but does not have sufficient distributable reserves (please see below).
Share restructuring buy out case study
Company own share purchases
An own share purchase is where a company, with the prior approval of its shareholders, buys back the shares held by its shareholders. There are a number of legal requirements which need to be met for the purchase to be deemed valid, including how the purchase is to be funded.
More information can be found in our Own Share Purchase guide.
Tax implications of corporate restructuring
Whilst all corporate restructurings will have a solid commercial justification for them, it is important that the potential tax implications of each possible option are understood before pressing ahead.
Some of the potential options may qualify for tax reliefs that are specifically available for exempt distributions. Others will not but it may still be possible for them to be carried out in a way which does not trigger a tax charge.
Corporate Restructuring Case Studies
Indirect statutory demerger
Indirect statutory demerger of a local company which was carrying on two trades and wanted to split them into separate companies.
The indirect demerger was affected by the company declaring a dividend in specie of the business and assets it wished to be demerged to a newco which had been set up for this purpose in return for the newco issuing consideration shares directly to the shareholders of the original company in proportion to their existing shareholdings.
Capital reduction demerger
Our corporate restructuring solicitors have advised on numerous company own share purchases, including:
Case study 1: Capital reduction demerger of a set of group companies which were between them carrying on two trades and were ultimately owned by two shareholders.
The relevant assets were hived-up or down the group to ensure that all assets in relation to trade one were in the topco and all assets in relation to trade two were in a subsidiary.
Share classes were created in the topco whereby the A shares were only entitled to the proceeds which related to trade one and the B Shares were only entitled to the proceeds which related to trade two.
There was then a capital reduction whereby the topco cancelled its B shares and transferred the shares in the subsidiary to a newco which had been set up for this purpose in return for the newco issuing consideration shares directly to the B shareholder of the topco in proportion to their cancelled B shares.
Case study 2: Ashtons Legal has advised a group of real estate companies owned and operated by Witnesham Ventures Limited on a successful capital reduction demerger.
The group originally consisted of three companies, each of which operated its own separate real estate business. Through the process of a capital reduction demerger, the three companies were separated into three stand-alone and distinct groups of their own.
Reduction of capital
Reduction of capital of a local company using the solvency statement procedure, freeing up nearly half a million pounds that could be distributed to its shareholders.
Share restructuring buy out
Advising a local professional firm on a share restructuring buy out whereby the entire issued share capital of the company was sold to a newco that had been set up for that purpose, whereby the exiting shareholders received cash on completion and the remaining shareholders received consideration shares in the newco in proportion to their existing shareholdings.
Own share purchases
Our corporate restructuring solicitors have advised on numerous company own share purchases, including:
- advising an exiting shareholder on an own share purchase of his £25m shareholding in a local haulage company.
- advising a marine supply company on an own share purchase of an exiting shareholder which was done in tranches over a period of 10 years.
- advising a property development company on an own share purchase of shares held by a retiring director.
- advising a local estate agents on an own share purchase as part of a process to remove a director following a disciplinary process.
- advising an engineering consultancy company on the own share purchase of shares held by one of its founders as part of his long-term exit planning strategy.
Contact Our Corporate Restructuring Solicitors in East Anglia
For practical advice on any type of corporate restructuring, as well as any other business legal advice you need to reach your goals, get in touch with our specialist Corporate and Commercial lawyers in Cambridge, Bury St Edmunds, Ipswich, and Norwich.
To set up an initial consultation:
- Give us a call on 0330 404 0767; or
- Fill in our simple online enquiry form and we will be in touch shortly.