Companies Act 2014 section 75

Restriction of section 71(5) in the case of shares allotted in return for acquisition of issued shares of body corporate

Section 75 provides relief from the normal share premium rules when a company issues its own shares to acquire all the issued shares of another company, making that company its wholly-owned subsidiary.

• The section applies where a company (the "issuer") allots shares to acquire 100% of another company, the consolidated assets and liabilities remain essentially unchanged, shareholders' proportionate interests are preserved, and the investment is not recorded at fair value
• Where shares are issued at a premium, the issuer need only credit the "minimum premium value" to undenominated capital, rather than the full premium — and may disregard any excess when determining the carrying amount in its entity or group financial statements
• No share in the issuer may be issued at a discount to its nominal value, regardless of this relief
• Key definitions include "base value of the consideration" (the carrying value of the acquired company's net assets), "minimum premium value" (the excess of that base value over the aggregate nominal value of shares issued), and "permitted cash payments" (small cash adjustments for fractional entitlements or court-ordered payments)