What are intra-group reorganisation?
15 April 2019 by Andreea Brindas
If you are part of a Group Company looking for ways to increase business efficiency through and/or take advantage of available tax reliefs, intra-group reorganisations may be for you. This blog will briefly set out what intra-group reorganisations are and their benefits from an English law perspective.
What are they?
An intra-group reorganisation normally involves a transfer of subsidiaries or key assets for functioning of a business within the Group Company. It may also involve other connected transactions such as intra-group loans, dividends and issue of shares.
What are the benefits?
Some of the benefits available include, but are not limited to:
- Tax advantages. It may be possible to rearrange cash flows to minimise tax costs and make the corporate structure more tax efficient in the long term. NB: You should seek independent financial advice from a registered accountant in relation to any tax advantages and/or reliefs available.
- Increase business efficiency. Such re-organisation converting to a company operating in a divisional structure where each division conducts a separate business may reduce administrative costs; such as cross-charging and the preparation of subsidiary accounts. It may also improve the businesses financial performance by combining the financial performance of businesses previously conducted through separate subsidiaries.
It is open to you to carry out an intra-group reorganisation at any point. However, the most common circumstances are:
- Pre-sale of a company or business reorganisation. This may benefit a company wishing to sell part but not all of its business-i.e. sale of a business division only.
- Pre-acquisition of a company or business reorganisation. Ensures that the ‘new’ business will become a subsidiary to the ‘right’ holding company. Alternatively, you may be able to carry out a post-acquisition reorganisation. A PAR may involve the ‘new’ business being hived down into existing operating subsidiaries together with various assets transfers; i.e. land, intellectual property etc. A post-acquisition reorganisation may benefit from various tax reliefs applicable to intra-group transfers.
An intra-group reorganisation may be simple or complex depending on the existing structure of the Group Company, the desired structured to be achieved post-reorganisation, as well as the number of assets involved in the transaction. Other considerations prior to proceeding to the reorganisation may involve third party consents, company law issues, shared assets considerations etc.
The Corporate Commercial Department here at Fisher Jones Greenwood LLP can guide you through intra-group reorganisation; as well as assist you with the preparation of any documentation required.
Should you require any further information or assistance please do not hesitate to get in touch – call 01206 700113 or email [email protected].
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