The court had to construe the words ‘reconstruction or amalgamation’ in the memorandum of association of a company: ‘The only question I have to decide is whether, in the case of each of these two companies, there has or has not been a winding-up ‘for the purpose of reconstruction or amalgamation.’ Neither of words, ‘reconstruction’ and ‘amalgamation’, has any definite legal meaning. Each is a commercial and not a legal term, and even as a commercial term, there is no exact definite meaning. In each case one has to decide whether the transaction is such that, in the meaning of commercial men, it is one which is comprehended in the term ‘reconstruction’ or ‘amalgamation”. And ‘Then it remains to consider whether what was done was for the purpose of ‘reconstruction or amalgamation.’ What does ‘reconstruction’ mean? To my mind it means this. An undertaking of some definite kind is being carried on, and the conclusion is arrived at that it is not desirable to kill that undertaking, but that it is desirable to preserve it in some form, and to do so, not by selling it to an outsider who shall carry it on – that would be a mere sale – but in some altered form to continue the undertaking in such a manner as that the persons now carrying it on will substantially continue to carry it on. It involves, I think, that substantially the same business shall be carried on and substantially the same persons shall carry it on. But it does not involve that all the assets shall pass to the new company or resuscitated company, or that all the shareholders of the old company shall be shareholders in the new company or resuscitated company. Substantially the business and the persons interested must be the same. Does it make any difference that the new company or resuscitated company does or does not take over the liabilities? I think not. I think it is none the less a reconstruction because from the assets taken over some part is excepted provided that substantially the business is taken, and it is immaterial whether the liabilities are taken over by the new or resuscitated company or are provided for by excepting from the scheme of reconstruction a sufficient amount to answer them. It is not, therefore, vital that either the whole assets should be taken over or that the liabilities would be taken over. You have to see whether substantially the same persons carry on the same business; and if they do, that, I conceive, is a reconstruction.’
Judges:
Buckley J
Citations:
[1904] 2 Ch 268
Jurisdiction:
England and Wales
Cited by:
Cited – Brooklands Selangor Holdings Limited v Inland Revenue Commissioners ChD 1970
The court had to consider whether the arrangments before it amounted to a reconstruction for stamp duty purposes: ‘I will deal first with the question whether those transactions amounted to a reconstruction. In ordinary speech the word . .
Applied – Baytrust Holdings Ltd v Inland Revenue Commissioners 1971
Whether a scheme of arrangement constituted a reconstruction for stamp duty purposes. . .
Cited – Mytravel Group Plc, Re Companies Act 1985 ChD 24-Nov-2004
The company sought approval of a proposed reconstruction under the section.
Held: Approval could not be given. To count as a reconstruction two principal qualities were required. The business carried on should be the same or similar, and those . .
Cited – In re Courage Group’s Pension Schemes Ryan v Imperial Brewing and Leisure Ltd ChD 1987
It was possible to amend the provisions of a pension scheme provided the amendments did not conflict with the purposes of the scheme. How was a court to identify such purposes: ‘It is trite law that a power can be exercised only for the purpose for . .
Cited – Fallon v Fellows (Inspector of Taxes) ChD 2001
The court considered whether a scheme was for the purposes of reconstruction or amalgamation in a capital gains tax context. Citing South African Supply: ‘In the context I think it is clear that when the learned judge referred to the persons . .
Lists of cited by and citing cases may be incomplete.
Company
Updated: 30 April 2022; Ref: scu.220247