demergers & spinoffs

A demerger may take a variety of forms. In its most obvious incarnation, the shareholders in the demerged legal entities are identical to the shareholders in the original company and may well hold their shares in identical proportions to those before the demerger. In other cases, known as “a partition” a division or trade of a company will be transferred to another company whose shares are issued to shareholders of a particular class.  The remaining business or other trade is then transferred to another company whose shares are issued to the remaining shareholders.

These schemes often involve a group re-organisation, a formal Companies Act scheme of arrangement, a reduction of share capital, the payment of a dividend in specie and an offering of new shares.

At White & Black we can advise on a variety of different structures for a demerger or spin-off including:

• a three cornered demerger;
• a section 110 liquidation scheme;
• a Part 26 Companies Act 2006 scheme; and 
• direct dividend structure.