Companies Act 2014 section 72

Restriction of section 71(5) in the case of mergers

Section 72 provides relief from the share premium requirements under section 71(5) when a company issues shares at a premium as part of a merger arrangement where it acquires at least 90 per cent of another company's equity share capital.

• Where a company acquires at least 90 per cent of another company's equity shares through a merger arrangement, any premium on shares issued as consideration need not be transferred to the share premium account (undenominated capital)
• The relief extends to shares issued in exchange for non-equity shares in the target company, provided the 90 per cent equity threshold is met
• The 90 per cent threshold must be met separately for each class of equity share capital where the target company has multiple classes of shares
• Shares held by the issuing company's holding company, subsidiaries, fellow subsidiaries, or their nominees all count towards meeting the 90 per cent threshold

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