Asset-for-share transactions followed by an unbundling transaction and a sale of shares to a third part


This binding private ruling is valid for a period of five years from 25 February 2020.

This binding private ruling is published with the consent of the applicant(s) to which it has been issued. It is binding between SARS and the applicant and any coapplicant(s) only and published for general information. It does not constitute a practice generally prevailing.

1. Summary

This ruling determines the tax relief for the parties involved in an internal restructuring involving corporate rules (section 42) followed by an unbundling (section 46) and a sale of shares to a third party. 

2. Relevant tax laws

In this ruling references to sections are to sections of the Act and the STT Act applicable as at 25 February 2020. Unless the context indicates otherwise any word or expression in this ruling bears the meaning ascribed to it in the relevant Act. 

This is a ruling on the interpretation and application of –

  • The Act —
    • section 24BA;
    • section 42; and
    • section 46.
  • The STT Act –
    • section 1; and
    • section 8(1)(a)(i) and (iv).

3. Parties to the proposed transaction

The applicant: A resident listed company

Listco: A resident company and a wholly-owned subsidiary of the applicant before the proposed transaction, which is to be listed

Company A: A resident company which is a wholly-owned subsidiary of the applicant

Company B: A resident company which is a subsidiary of the applicant

Company C A non-resident company owned by members of the senior management of company B

4. Description of the proposed transaction

The applicant comprises of three principal business units. The purpose of the proposed transaction is to demerge and separately list one of these.

Listco will have a primary listing on the JSE.

The listing of the applicant will be retained.

Please click here to read more.

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Further webinar commentary on asset-for-share transactions can also be accessed here.

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