Income Tax Assessment Act 1936
The direct method of demutualisation is as follows:
(a) all membership rights in the entity are extinguished;
(b) the entity becomes a company with a share capital;
(c) shares ( ordinary shares ) of only one class in the entity are issued within the limitation period to existing members in exchange for the membership rights referred to in paragraph (a);
(d) shares (also ordinary shares ) of the same class in the entity may be issued within the limitation period to new members;
(e) if a listing resolution was passed by the members of the entity - the ordinary shares are listed within the limitation period.
Other things may happen in connection with the implementation of the demutualisation.326-45(2)
The following diagram shows, where this demutualisation method is used, the issue of shares to members of the entity.
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