Income Tax Act 2007 section 323

Meaning of "merger" and "successor company"

Section 323 defines what counts as a "merger" and identifies the "successor company" for the purposes of the EIS share reorganisation rules in this Chapter.

• A merger occurs when one merging company (Company A) issues its shares to members of the other merging company or companies, either in exchange for their existing shares or as consideration for transferring all or part of their business to Company A.
• Alternatively, a merger occurs when a new or separate company (Company B), which is not itself one of the merging companies, issues its shares to members of all the merging companies on the same basis — share exchange or business transfer.
• The "successor company" is Company A in the first type of merger (where one merging company absorbs the others) or Company B in the second type (where a separate company receives shares or businesses from all merging companies).
• These definitions determine which company inherits the EIS-related status and obligations following a corporate reorganisation involving two or more companies.