Case Study

Business restructure before sale

What was the problem?

The shareholders had built up a good business with a well know brand behind it.  The shareholders were looking to sell up and targeted the UK and US markets.  However, the group’s centre of control was situated in a Malta with subsidiaries in the UK and US.

Malta used to be a popular jurisdiction for companies.  Regulatory changes have been introduced in recent years which have affected the trading environment for businesses in Malta.  This made it difficult to find and attract suitable local management to run the business in Malta.

On top of that, Malta is on the “grey list” for anti-money laundering checks and is being monitored by a task force which combats money laundering.

This meant that the group encountered an additional challenge of not being able to open and maintain bank accounts for the entities located in Malta.

What was the solution?

We assisted the shareholding management team in achieving a tax neutral re-organisation of the group whereby the UK became the centre for the holding company.  The group restructure involved creating a UK holding company structure whereby the Maltese companies and their assets and loans transferred to UK based entities in a tax efficient manner.

  • To comply with local laws the structure of the reorganisation was critical.
  • Our first job was to settle all of the inter group loans using funds available within the group. Loan were not written off as that would have created tax charges. Instead there was a complex system of inter group transfers which were tax neutral. The transactions were all documented for accounting and legal purposes.
  • The next step was to create the new holding company and its subsidiary.
  • With the new holding company in place we swapped the shares with Malta making the UK the new holding company.
  • We drafted the clearance applications made to HMRC to confirm that the steps were tax neutral.

How did we manage the pre-sale process cost efficiently?

The shareholders took professional advice in all the relevant jurisdictions and came to us. We advised on the UK tax and corporate aspects and worked closely with our client to gather all the relevant information to produce the required documentation.

At the outset we created a step list detailing every relevant step of the transaction clearly setting out the associated documents, timings and filings at Companies House. This helped us manage the process in a way the client found easy to follow.

Outcome?

A happy client who now has a UK corporate structure which is easy for the Americans to understand and documentation which is in order and ready for scrutiny in a due diligence exercise which hopefully now follows.

Pia Dalziel

An accomplished and experienced commercial solicitor with 12 years experience. Specialist in running corporate transactions and drafting,reviewing and advising on commercial agreements.

Let us take it from here

Call us on 020 7438 1060 or complete the form and one of our team will be in touch.