Demerger Agreement Solicitors
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Demerging assets and activities from your business can dramatically increase value for shareholders. By restructuring and spinning off entities, you can focus your attention on specific units of the company and increase its efficiency. However, to achieve these results, you must understand your restructuring options and avoid unnecessary taxes. That’s where we come in.
Our demerger agreement solicitors remove the stress and confusion of restructuring. We provide clear, jargon-free advice and manage your legal obligations for a smooth transition.
How can a Demerger Benefit your Business?
Demergers allow businesses to reorganise and, therefore, have several benefits. You may see:
Increased Shareholder Value
Shareholders of a parent company typically receive shares in the demerged enterprise. With two sets of shares, they are often worth more than their stake in the original company.
Increased Efficiency
By splitting up complex business processes into separate entities, you can create streamlined, independent operations and increase the efficiency of your activities.
Focus on Business Specialisms
When you demerge specialist processes, management can focus on them to promote progress.
What Types of Demergers are Available?
Before deciding to demerge assets from your business, recognising the ideal type of demerger is vital. As part of this process, you should understand the term ‘dividend in specie’. This dividend is a distribution of assets rather than a distribution of cash and is often central in demerger agreements.
Statutory Demerger
A statutory demerger allows you to create a new enterprise as part of an existing parent company and then transfer assets or shares to the original shareholders. They are highly tax efficient, with no stamp duty payable, so seeking HMRC clearance before the demerger is crucial.
You can perform either a direct or an indirect statutory demerger:
- Direct mergers occur when a parent company forms two or more subsidiaries and then pays a dividend in specie for the shares of one of those subsidiaries to their original shareholders.
- An indirect merger occurs when a parent company forms a new enterprise owned by the original shareholders. Then, they transfer shares of a subsidiary to this new enterprise and pay the dividend to the shareholders.
Reduction of Capital Demerger
We use a capital reduction demerger when the requirements for a statutory demerger are not met. If the demerged company wants to continue operating and has the share capital to facilitate the reduction, this demerger is preferred over liquidation.
A parent company forms a Newco and transfers a demerged subsidiary to it. The Newco then issues shares to shareholders for the subsidiary acquisition. Subsequently, the parent company’s share capital is reduced by the value of the demerged subsidiary.
Liquidation Demerger
You can liquidate a company under Section 110 of the 1986 Insolvency Act and demerge it into subsidiaries. The assets are divided between two or more subsidiary newcos. Then, the liquidator accepts shares in one of these Newcos as a transfer of assets and distributes them between the parent company’s shareholders.
Scheme of Arrangement
Carried out with shareholders’ and creditors’ consent, this process is approved by a court under Part 26 of the 2006 Companies Act. It organises a solvent company restructuring and is often used alongside other demerger processes.
Our Demerger Services
When you approach us, we support you in every facet of your demerger. We can help you:
Understand the Best Demerger for your Business
Knowing the type of demerger that suits your business is crucial; there are many legal pitfalls and tax issues to avoid. Our team audits your company and then recommends the ideal demerger and company structure to prevent these problems from arising.
Get HMRC Clearance for the Demerger
The tax implications of demergers often require HMRC clearance prior to implementing the changes. We contact them on your behalf and complete the necessary applications.
Register New Businesses
As part of the demerger, you may spin off new businesses that must be registered with Companies House. We manage this registration so that your new enterprises are recognised.
Review your Company’s Legal Documents
We draft all the documents involved in the demerger to implement effective protective measures for your business. Then, after the completed transfer, our experts review and amend your company’s existing legal documents to suit its new structure.
Liaise Between Investors and Shareholders
We will communicate the details of the demerger with shareholders and investors so that they understand the process, benefits and ramifications.
Clients We Can Help
We support a broad range of companies in the UK and abroad, including businesses, groups, investors, shareholders, directors and holding companies. No matter the size of your operation, we can help you separate and demerge assets to return higher profits to shareholders or concentrate on specific services. Contact our team today for more details.
Why Choose Witan?
If you are looking for experienced legal professionals to support you through your demerger, we can provide the necessary corporate law expertise. We regularly help companies restructure and demerge assets, providing thorough, clear advice and acting as a first point of contact when concerns arise. You receive:
- Close to 40 years of legal experience
- Representation from a Legal 500 firm
- Reliable legal advice without confusing jargon
- A free no-obligation consultation with an expert
- Corporate-focussed legal professionals
- Demerger agreement solicitors in London, Birmingham and Northampton
Meet Our Experts
Having built an impressive team of legal experts and litigation specialists, we can help you structure and manage your demerger. In our extensive combined experience, we have seen and resolved almost every imaginable situation, and we bring this problem-solving capability to every case. Discover our profiles to learn about our achievements:
Qarrar Somji
Solicitor-Advocate
Salim Bharwani
Corporate Consultant
Ada Chu
Trainee Solicitor
Namitha Gopan
Litigation Executive
Aliya Abid
Litigation Executive
Nazifa Sarwar
Litigation Executive
Get Our Support
To benefit from our demerger agreement solicitors, contact our specialists today. We will arrange a free no-obligation consultation to learn about your situation and then explain how we can help.
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