Acquistions

BUSINESS OR COMPANY ACQUISTION?

> BUSINESS ACQUISTN; BUSINESSS OR ASSETS?

> BUSINESS;

> A business acq is one where the buyer/s acquire the assets that makes up the business.

> The contract is betwn owner of bus and the buyer (may be an individual, p/s or co.)

> The business is purchased as a going concern with all assets, inclu. goodwill.

> No change in ownership of business.

> Vat not chargeable

> transfer more likely caught by TUPE Reg 1981 of which d effect will be deemed transfer

of contracts of employees employed immediately b4 transfer to buyer.

> co. receives proceeds of sale

> TRANSFER OF BUSINESS IN RETURN 4 SHARES

> 2 potentially available reliefs; CGT and Income Tax.

> Cgt; rolling gains into shares;

S. 162 of taxatn of chargeable gains act 1992 enables chargeable gains on disposals of business

to be rolled into price at which shares are taken to av been acquired,

postponing any liablity to cgt until shares are disposed of.

>for relief to operate, all assets of business must b transferd to co.

> Income tax; carryn forward unutilised trading losses;

S. 386 of income and corporation taxes act 1988 allows former owners of business to carry forward

any unutilised tradn losses against income received from co. where

business is transferred to co. mainly or wholly in return 4 shares(at least 80% of consideration must be in shares) BUT

if not wholly of mainly in return 4 shares, or is assets only, bcause of business stopn, no tradin losses can b carried forwrd

> ASSETS;

> buyer limits transaction to purchase of certain assets of business.

> transaction unlikely to be classed as sale of going concern

> mere sale/acqusitn of assets (especially if buyer doesn't

acquire goodwill)

> no CGT and Income Tax reliefs available here.

> Vat chargeable on assets passing.

> transfer less likely 2 b caught by Transfer Of Undertakings(Protectn of Employment)Regulatns 1981.

> Common Law positn will apply; unless seller redeploys employees, their contracts of emplymnt will b

terminated and employer will b open 2 all potential claims arisn from terminatn of the contracts.......

(wrongfull dismissal, unfair dismissal and redundancy)

SHARE ACQUISTION;

> A share acq is where buyer acquires shares in the co. that own d business.

> Contract is btw owner of shares and buyer/s

> Shares in the co are transferred.

> change in co. ownership but no change in ownership of business

> all assets, liabilities, rights or obligatns of co. continue to be with it.

> sh/ders receive proceeds of sale.

DIFF BTWN SHARE SALE AND BUSNESS SALE;

share sale;

*seller loses connectn with co.(subject to any guarantees, warranties, indemnities, given

to buyer by seller.

*co. continues to exist.

*liabilities of co. continue 2 b enforceable against it.

*a stock transfer form is all needed to transfer title to shares although pre-contract investigatns

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