Corporation Tax Act 2010 section 1083

Conditions for distributions within section 1077(1)

Section 1083 sets out additional conditions (G to K) that must be met where an exempt distribution involves the transfer of a trade or shares in a subsidiary, followed by the issue of shares in the receiving company to the members of the transferring company.

• When a trade is transferred, the distributing company must retain no interest, or only a minor interest, in that trade; when shares in a subsidiary are transferred, they must represent substantially all of the distributing company's ordinary share capital and voting rights in that subsidiary.
• After the distribution, the main activity of each receiving company must be either carrying on the transferred trade or holding the transferred shares.
• Shares issued by each receiving company must not be redeemable, must constitute substantially the whole of its issued ordinary share capital, and must confer substantially the whole of the voting rights in that company.
• After the distribution, the distributing company must remain either a trading company or the holding company of a trading group.