This section provides for an exception to section 135; that section is not to apply where a company leaves a group as part of a bona fide merger. There are two safeguards to prevent abuse. Firstly, the merger must be shown to have been for a bona fide commercial reason and without tax avoidance as a main object, and secondly, “ merger ” is fairly closely defined. To qualify as a merger the arrangements must provide that a company leaves a group, that an interest in that company’s business is acquired by an outside company or companies and that an interest of equivalent value in the business or businesses of the acquiring company or companies is acquired by a member or members of the original group. At least 25 per cent of the value of these interests must consist of ordinary shares and the remainder of shares or debentures.
SECTION 136.
Question proposed: " That section 136 stand part of the Bill."
We mentioned earlier that there were co-operative societies within this Bill. Is that right?
There would be.
If there are, would these requirements with regard to certain types of shareholding or interests be applicable? There have been a number of mergers in co-ops in recent times. As this point might take a considerable time to clear, perhaps the Minister would have a look at it later?
Yes. Concerning the point you raised, I refer you back to section 129, subsection (2) (c).
Section 136 is to exempt the legitimate merger from the provisions of section 135. Is that right?
Yes.
Will the Minister have a look at that to see that these requirements in regard to shares will not create any trouble?
Yes.
Question put and agreed to.