»Ê¹ÚÌåÓýapp

Section 77 provides relief from transfer on sale duty for documents transferring shares in one company (the target company) to another company (the acquiring company). »Ê¹ÚÌåÓýapp conditions for the relief are as follows.

• »Ê¹ÚÌåÓýapp transfer must form part of an arrangement by which the acquiring company acquires the whole of the issued share capital of the target company.
• »Ê¹ÚÌåÓýapp consideration for the acquisition must consist only of the issue of shares in the acquiring company.
• »Ê¹ÚÌåÓýapp shares must only be issued to the shareholders of the target company.
• »Ê¹ÚÌåÓýapp acquisition must be effected for bona fide commercial reasons, and it must not be part of a scheme or arrangement a main purpose of which is the avoidance of certain taxes.
• »Ê¹ÚÌåÓýapp shareholders of the acquiring company after the acquisition must be the same as those of the target company immediately before the acquisition.
• »Ê¹ÚÌåÓýappir proportions of shareholdings in the two companies must be the same (or as nearly as may be the same).
• »Ê¹ÚÌåÓýapp classes of shares in the two companies must be the same.
• »Ê¹ÚÌåÓýapp proportions of shares of any class in the acquiring company must be identical to those of the same class in the target company.
• At the time the instrument mentioned in s77(1) is executed there are no disqualifying arrangements. Further information can be found at STSM042460.

Section 77 gives a very limited narrow relief; its conditions are stringent and are strictly enforced. For the purposes of section 77, references to “sharesâ€� or “share capitalâ€� include references to “stockâ€� as defined at section 122 of the Stamp Act 1891, even if the “stockâ€� is itself exempt from stamp duty. »Ê¹ÚÌåÓýappre is more information at STSM042415.

Single Bid

»Ê¹ÚÌåÓýapp context of the phrase ‘whole of the issued share capitalâ€� means that the relief is given only where there is a single bid for the entire share capital of the target company. Relief is not given therefore if the acquiring company already held shares in the target company.

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Issue of Shares to Target Company Shareholders

»Ê¹ÚÌåÓýapp consideration shares must be issued (mere allotment is not sufficient) to all the shareholders of the target company. Shares registered in the name of a nominee of a shareholder of the target company are not accepted as having been issued to the shareholder. See STSM042400.

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Class of Shares

»Ê¹ÚÌåÓýapp term class of share concerns the rights attaching to the shares and not simply the descriptions of the shares. »Ê¹ÚÌåÓýapp question of whether one share is within a class different from that of another share depends upon whether the rights attached to the two classes of share are different. Details of a company’s share and their rights are to be found in the company’s Memorandum and Articles of Association.