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Statutory definition

The statutory definition of a reorganisation for capital gains purposes is widely drawn as a 'reorganisation or reduction of a company's share capital'¹.

The share reorganisation provisions of TCGA 1992, ss 126–130 are largely concerned with the reorganisation of a single company's share capital. The same provisions are modified to apply to certain transactions involving more than one company. Therefore, exchanges of securities and schemes of reconstruction involving more than one company can also be treated as reorganisations for tax purposes, with the two companies being deemed to be a single company for that purpose. These are dealt with in Divisions D6.2–D6.5.

Reorganisation of share capital

A reorganisation of share capital includes the following²:

1. Ìý

   (a)ÌýÌýÌýÌý the allotment of shares or debentures in a company to existing shareholders in that company, whether for payment or not, in respect of and in proportion to their shareholdings, and

2. Ìý

   (b)ÌýÌýÌýÌý the alteration of the rights attached to any class of shares, where there is more than one