½Û×ÓÊÓƵ

¶Ù±ð³¾±ð°ù²µ±ð°ù²õ—o±¹±ð°ù±¹¾±±ð·É

A demerger is a series of transactions which have the effect and purpose of dividing the trading activities carried on by a single company or group of companies between two or more companies or groups of companies¹.

A demerger takes place when company (A) transfers part of its business to its 75% subsidiary (B) and declares a dividend to its shareholders.

The demerger may be either:

1. Ìý

   •ÌýÌýÌýÌý a direct demerger², where A transfers some of the shares in B to its shareholders to satisfy the dividend, or

2. Ìý

   •ÌýÌýÌýÌý an indirect demerger³, where A transfers either the trade or the shares in B to a separate company (C) in exchange for C shares being issued A's shareholders to satisfy the dividend

Where certain conditions are satisfied the recipient of the shares:

1. Ìý

   •ÌýÌýÌýÌý is not treated as receiving an income distribution (ie it is an exempt distribution) so it is not subject to income tax⁴, and

2. Ìý

   •