CHAPTER 6

Corporate restructuring and holding structures

111AL. Application of consolidated revenue threshold to group mergers and demergers

(1) In this Chapter—

“merger” means any arrangement where—

(a) the controlling interest in the entities of all or substantially all of 2 or more separate groups are brought under the ownership of a single entity or group to form a single group, or

(b) the controlling interest in an entity that is not a member of any group is brought under the ownership of another entity or group to form a single group;

“demerger” means any arrangement where the entities of a group are separated into 2 or more groups that are no longer consolidated by the same ultimate parent entity in its consolidated financial statements.

(2) Where 2 or more groups merge to form a single group (in this subsection referred to as a ‘merged group’) in any of the 4 consecutive fiscal years immediately preceding a fiscal year, for the purposes of the consolidated revenue test the revenue of the merged group shall be deemed to be greater than the consolidated revenue threshold for any fiscal year prior to the merger if the sum of the revenue included in each of their consolidated financial statements for that fiscal year is equal to or greater than the consolidated revenue threshold.

(3) Where an entity that is not a member of a group (in this subsection referred to as the ‘new member entity’) merges with an entity or a group (referred to in this subsection to as the ‘acquiring entity’) in a fiscal year, and either the new member entity or the acquiring entity did not have consolidated financial statements in any of the last 4 consecutive fiscal years immediately preceding that fiscal year, the consolidated revenue threshold shall be deemed to be satisfied for that fiscal year if the sum of the revenue included in each of their financial statements or consolidated financial statements for that fiscal year is equal to or greater than the consolidated revenue threshold.

(4) Where an MNE group or large-scale domestic group to which this Part applies demerges into 2 or more groups (each referred to in this subsection as a ‘demerged group’), the consolidated revenue test shall be deemed to be satisfied by a demerged group—

(a) with respect to the first tested fiscal year ending after the demerger, where the demerged group has revenue recorded in the group’s consolidated financial statements equal to or greater than the consolidated revenue threshold in that fiscal year, and

(b) with respect to the second to fourth tested fiscal years ending after the demerger, where the demerged group has revenue recorded in the group’s consolidated financial statements equal to or greater than the consolidated revenue threshold in at least 2 of the fiscal years following the year of the demerger.