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Three-Cornered Demerger /
Indirect Dividend in Specie Demerger

A dividend in specie is a dividend of assets (e.g. property, intellectual property) instead of cash. An indirect dividend demerger is where a company declares a dividend in specie of certain assets and those assets are transferred to a company owned by the shareholders.

A three-cornered demerger can be used to split a corporate group by a parent company declaring a dividend in specie of the shares in a subsidiary. The subsidiary is then transferred to a new company owned by the shareholders. The parent company must have sufficient distributable reserves to the book value of the shares in the subsidiary.

Our recent experience:

Demerger and restructure of IT and services infrastructure business: Advising £45 million turnover client on restructuring of its business by way of three-cornered demerger to provide for two distinct businesses.

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We recently worked with Yavan and Matt on a corporate reorganisation of our company. The work involved a complex process of a pre-demerger separation of the trade into two subsidiary companies, a demerger transaction itself and then a subsequent buy-back of shares by the newly demerged entity.

I was particularly impressed with the way Yavan ran the project and dealt with such a complex structure. I also enjoyed working with Matt Lea who carried out much of the drafting and the day to day management of the file, providing consistency in the detailed advice whilst allowing Yavan to provide strategic and technical input when required. This meant the project was completed on schedule and to budget. The quality of service received was excellent and we will certainly be working with them again in the future…

- Darren Bateman

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