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7 - Varying Share Interests

Published online by Cambridge University Press:  29 February 2024

Peter Harris
Affiliation:
University of Cambridge
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Summary

This chapter considers the change of an existing share interest in some form. There is a realisation event, either by issuing, transferring or terminating share interests. The change can be by substitution, such as on the exercise of options or convertible notes. It might be by way of splitting and here the focus is on the tax treatment of bonus shares or stock distributions. It can also be by way of consolidation. All of these corporate reconstructions raise the issue of whether the investor’s interest in the corporation has changed sufficiently to justify the imposition of tax consequences. Similar issues arise where more than one corporation is involved in the change. So, in a corporate merger, a shareholder in the target may exchange their shares in return for shares in the bidder. Consideration is given to mergers by fusion and mergers by share exchange. Such mergers raise change of ownership issues (Chapter 5) similar to those raised in the context of a cash takeover. Demergers involve the splitting of a business or subsidiary from the holding corporation, and this can result in the investor holding two sets of shares post demerger. Issues raised are similar to for bonus shares.

Type
Chapter
Information
Corporate Tax Law
Structure, Policy and Practice
, pp. 564 - 612
Publisher: Cambridge University Press
Print publication year: 2024

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  • Varying Share Interests
  • Peter Harris, University of Cambridge
  • Book: Corporate Tax Law
  • Online publication: 29 February 2024
  • Chapter DOI: https://doi.org/10.1017/9781009429207.009
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  • Varying Share Interests
  • Peter Harris, University of Cambridge
  • Book: Corporate Tax Law
  • Online publication: 29 February 2024
  • Chapter DOI: https://doi.org/10.1017/9781009429207.009
Available formats
×

Save book to Google Drive

To save content items to your account, please confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your account. Find out more about saving content to Google Drive.

  • Varying Share Interests
  • Peter Harris, University of Cambridge
  • Book: Corporate Tax Law
  • Online publication: 29 February 2024
  • Chapter DOI: https://doi.org/10.1017/9781009429207.009
Available formats
×