Taxation of public to private transactions

Key points

• There are many reasons why a public quoted company may want to become a private company. P2P transactions are increasingly being used by private equity funds to take ownership of listed entities.
• There are two approaches to facilitate a P2P transaction: (a) the offer document approach; or (b) the scheme of arrangement approach. Although mechanically different, the tax implications of each approach are similar.
• The tax consequences for shareholders disposing of their holdings in the target will be determined by the nature of the consideration, which is most often a mixture of cash, shares and/or loan notes.
• The listed company’s core tax concern is ensuring that the disposal of its shares does not result in substantive tax charges.
• The offeror’s core tax concern on acquiring the shares in the target is whether stamp tax on shares is payable on the consideration given for the shares.

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