½Û×ÓÊÓƵ

General rules on an exchange of securities

Broadly, an exchange of securities (sometimes referred to as a share for share or paper for paper exchange) is where one company ('company B') acquires shares in, or debentures of, another company ('company A') and in exchange issues its own shares or debentures.

A share exchange may be a scheme of reconstruction or amalgamation. However, a share exchange only has to satisfy the conditions in TCGA 1992, s 135 and does not necessarily have to be a scheme of reconstruction.

An exchange of securities¹ should be neutral for chargeable gains purposes assuming that it falls within the share reorganisation rules² (¶Ù6.101–D6.103).

The rule applies irrespective of whether the exchange is intra-group or with a third party (ie an intra group exchange of securities will not be treated as falling within the no gain/no loss provisions³). For details see D6.306.

Where the qualifying circumstances apply (D6.206), company A and company B are treated as the same company and the exchange is treated