Income Tax Assessment Act 1936

PART III - LIABILITY TO TAXATION  

Division 9AA - Demutualisation of insurance companies and affiliates  

Subdivision B - Key concepts and related definitions  

SECTION 121AI   DEMUTUALISATION METHOD 4  

121AI(1)   [Transactions involved in demutualisation]  

Under demutualisation method 4 , in connection with the implementation of the demutualisation:

(a) all membership rights in the mutual insurance company are extinguished; and

(b) shares in the mutual insurance company are issued to another company (the holding company ); and

(c) not more than 10 shares (the special shares ) in:

(i) the holding company; or

(ii) another company (the ultimate holding company ) of which the holding company is a wholly-owned subsidiary, either directly or through one or more other wholly-owned subsidiaries (each of which is an interposed holding company );

are issued to a trustee to hold for the benefit of the policyholder/member group; and

(d) the issue of the special shares takes place before the issue of the ordinary shares mentioned in paragraph (e), and on the issue of all the ordinary shares, the rights attaching to the special shares become the same as those attaching to the ordinary shares; and

(e) a greater number of shares (the ordinary shares ) of only one class in the holding company or ultimate holding company are either:

(i) issued, at the election of each person in the policyholder/member group, to the person or to a trustee to sell on behalf of the person; or

(ii) issued to a trustee, at the election of each person in the policyholder/member group, to distribute to the person or to sell on behalf of the person; and

(f) the trustee sells the ordinary shares and distributes the proceeds of sale to the person, or distributes the ordinary shares to the person; and

(g) the ordinary shares are listed within the listing period.

Note:

Other things may also happen in connection with the implementation of the demutualisation.

121AI(2)   [Diagram of transactions]  

The following diagram shows the main events, where this demutualisation method is used involving 2 trustees and an election covered by subparagraph (1)(e)(ii).