Companies Act 2014 section 73

Restriction of section 71(5) in the case of group reconstructions

Section 73 restricts the amount that must be credited to undenominated capital (the share premium equivalent) when shares are issued at a premium as part of an internal group reconstruction involving wholly-owned subsidiaries.

• Applies where the issuing company is a wholly-owned subsidiary that allots shares to its holding company or a fellow wholly-owned subsidiary in exchange for non-cash assets transferred from within the same wholly-owned group
• Where shares are issued at a premium, the issuing company need only credit to undenominated capital the "minimum premium value" rather than the full premium, providing relief from the general rule in section 71(5)
• The minimum premium value is calculated by comparing the base value of the net assets transferred (assets less assumed liabilities) against the aggregate nominal value of the shares allotted — base value being the lower of cost or carrying amount in the transferor's books immediately before the transfer
• Section 72 (which provides similar relief for mergers) does not apply where this section applies — the two reliefs are mutually exclusive

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