Section 701 exemption or Restructuring relief

Upthekingdom2

Hi All.

I am a shareholder in Kerry Co Operative the former parent of Kerry Group PLC.
Kerry Co Op now own less than 14% of its former subsidiary .

Should Kerry co operative restructure and exchange shareholders co op shares for Kerry group shares proportionally to its current holding would there be any taxation implications of this restructuring until the shareholders individually sold their resultant Kerry Group shares?


Thanks

dogsears

Upthekingdom2 wrote: »

Hi All.

I am a shareholder in Kerry Co Operative the former parent of Kerry Group PLC.
Kerry Co Op now own less than 14% of its former subsidiary .

Should Kerry co operative restructure and exchange shareholders co op shares for Kerry group shares proportionally to its current holding would there be any taxation implications of this restructuring until the shareholders individually sold their resultant Kerry Group shares?


Thanks

There are specific, complicated, provisions to deal with exactly this, and you are right these are in Section 701. If the Co-op restructures in the way you ask about, Section 701 may result in a tax treatment that effectively defers any tax until you sell the plc shares you receive in exchange. Its not guaranteed but I would expect the Co-op would be making every effort to do it in such a way that Section 701 applies. Also, I think if this happens the Co-op will be providing comprehensive information to all the members including in relation to this, so you will know in advance of the exchange happening.

Upthekingdom2

Thank you for your response.
Lest say the 701 was revoked and not cabable of being reissued would there be alternative Sections that allow the efficient reorganisation of shareholding in the said example would you or anyone know?

dogsears

Well, it won't be revoked.

But no, if it wasn't there, there wouldn't be anything else. There are other provisions relating to corporate restructurings etc but I don't think they could be applied here.

fepper

How could Kerry coop be able to restructure itself if all the 14% shareholding in the plc were exchanged /converted,they'd be no shareholders in Kerry coop then so what's there to restructure?

Upthekingdom2

The term restructure refers to the exchange of Kerry co operative shares in exchange for Kerry Plc shares in the most efficient manner possible for the benefits of the shareholders.
So yes, in this situation the co op shares would be transferred to Group under a Section 811 or other exemption should the 701 not be granted and all Coop shares would be redeemed.