Rob Lant and Joel Phillips consider the options available for groups looking to undertake a demerger
Over the years three methods of demerging have developed in the UK: statutory demergers capital reduction demergers and demergers effected under the Insolvency Act 1986 s 110 (appropriately called liquidation demergers).
We examine the key aspects of these methods below.
In a typical statutory demerger a company distributes shares in a trading subsidiary either directly to its shareholders (a direct demerger) or to a newly incorporated company (‘Newco’) that issues shares to the shareholders (an indirect demerger).The statutory demerger regime was introduced in the early 1980s partly because of the difficulties listed...
