Section 783 | Certain associated companies leaving group at the same time

(1)Where two companies cease to be members of a group at the same time, section 780 does not apply in relation to a transfer by one of the companies to the other if condition A or B is met.

(1A)Condition A is that the companies—

(a)are both 75% subsidiaries and effective 51% subsidiaries of another company on the date of the transfer, and

(b)remain both 75% subsidiaries and effective 51% subsidiaries of that other company until immediately after they cease to be members of the group.

(1B)Condition B is that one of the companies—

(a)is both a 75% subsidiary and an effective 51% subsidiary of the other on the date of the transfer, and

(b)remains both a 75% subsidiary and an effective 51% subsidiary of the other until immediately after the companies cease to be members of the group.

(2)This subsection applies if—

(a)a company (“the transferee”) that is a member of a group of companies (“the first group”) acquires an asset from another company (“the transferor”) which is a member of that group at the time of the transfer,

(b)the transferee ceases to be a member of the first group,

(c)subsection (1) applies in relation to the transferee ceasing to be a member of the first group (so that section 780 does not apply),

(d)the transferee subsequently ceases to be a member of another group of companies (“the second group”), and

(e)there is a relevant connection between the two groups (see section 784).

(3)If subsection (2) applies, section 780 applies in relation to the transferee ceasing to be a member of the second group as if both companies had been members of the second group at the time of the transfer.

(4)This section is subject to section 789 (merger carried out for genuine commercial reasons).