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  • Demerger group

    A demerger group consists of a head entity and one or more entities known as demerger subsidiaries. These entities can be companies and/or fixed trusts. A discretionary trust cannot be a member of a demerger group, but it may be one of the owners of the head entity.

    The 'head entity' of a demerger group is a company or fixed trust at the top of the group structure. No other entity in the group can have ownership interests in the head entity. However, where the head entity owns more than 20% and less than 80% of a listed company or widely held trust, the listed company or widely held trust can choose for the head entity not to be a member of the demerger group. In this case, the listed company or widely held trust would usually become the head entity.

    A 'demerger subsidiary' is a company or fixed trust in which members of the demerger group, either alone or with other members in the demerger group, own or have the right to acquire ownership interests of more than 20% of that entity (generally measured by rights to income or capital and voting rights).


    Figure 2: demerger group

    Figure 2: demerger group

    In the example above the demerger group consists of:

    • Head Company
    • Company A
    • Fixed Trust, and
    • Company B.


    • 'Head Company' is the head entity
    • 'Company A', 'Fixed Trust' and 'Company B' are demerger subsidiaries.

    'Company C' is not a member of the demerger group because the group members have less than 20% interest in it.


    Although 'Fixed Trust' from the example above is a member of the demerger group, it cannot be demerged – see Same entity type test below. 'Head Company' can demerge either 'Company A' or 'Company B'.

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      Last modified: 03 Feb 2016QC 17023