Share Acquisition – NBC Institute

AT – July 2023 – L3 – Q3a – Mergers, amalgamation, and reorganization

Discussing the tax implications of a 51% share acquisition and strategies to mitigate tax exposure.

Question

Exclusif Homes Ghana Ltd is a wholly owned Ghanaian real estate company. The basis period of the company ends on 31 December each year. The company has obtained a government contract to build low-cost houses across the country. In order to raise additional capital to undertake this project, the company is looking for an investor who would acquire at least 51% of the shares of the company. The managers of the company are engaged in negotiations with several potential investors, and there is the likelihood of having an investor and agreements signed on 31 January 2022.

The financial statements of Exclusif Homes Ghana Ltd revealed that the company made a loss of GH¢2,500,000 for the period ended 31 December 2021. Included in the expenses of the company are financial costs and bad debt amounting to GH¢100,000 and GH¢150,000 respectively.

The company also has a parcel of land located at Abokobi which the company purchased three years ago at the cost of GH¢100,000. The current value of the land is GH¢500,000.

Required:
Advise Exclusif Homes Ghana Ltd on the following:

The income tax implications for the company if an investor acquires 51% of the company’s shares and the tax planning opportunities available which could reduce the income tax exposure of the company if an investor acquires 51% of the company’s shares.
Measures the acquirer can adopt to mitigate the tax effects (if any) of the proposed transaction.

Answer

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Tags: Change in Ownership, Financial cost, Share Acquisition, Tax Loss, Tax Planning
Level: Level 3

Topic: Mergers, amalgamation, and reorganization
Series: JULY 2023

AT – May 2017 – L3 – Q3a – Mergers, amalgamation, and reorganization

Discuss the tax implications of acquiring either 15% or 25% of shares in another resident company and recommend the best option for tax benefits.

Question

a) CJA Ltd is a resident company engaged in Real Estate Business. As part of efforts to diversify its operations, it plans to acquire interest in Don-bill Ltd, another resident company. At the last AGM held on 4th March 2017, some Shareholders were of the view that CJA should acquire 15% of the shares of Don-bill Ltd.

The Managing Director of CJA was of the view that the Company should rather invest and acquire 25% shares to give it enormous influence in Don-bill Ltd.

Your firm has been identified to give a professional advice on the two proposals to help in decision making.

Required:
What is the tax implication on the two proposals and which proposal will you advise CJA Ltd to adopt to leverage on the tax benefits.
(10 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Corporate Taxation, Dividend tax, Investment decisions, Resident companies, Share Acquisition, Tax Benefits
Level: Level 3

Series: MAY 2017

BCL – Dec2022 – Q3b – Types of capital and the financing of companies

Explain the circumstances under which a company can acquire its own shares.

Question

Required: Identify and explain TWO (2) circumstances in which a company can acquire its own shares. (6 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Company Law, Company Shares, Corporate finance, Share Acquisition
Level: Level 1

Topic: Types of capital and the financing of companies
Series: DEC 2022

AT – July 2023 – L3 – Q3a – Mergers, amalgamation, and reorganization

Discussing the tax implications of a 51% share acquisition and strategies to mitigate tax exposure.

Question

The company also has a parcel of land located at Abokobi which the company purchased three years ago at the cost of GH¢100,000. The current value of the land is GH¢500,000.

Required:
Advise Exclusif Homes Ghana Ltd on the following:

The income tax implications for the company if an investor acquires 51% of the company’s shares and the tax planning opportunities available which could reduce the income tax exposure of the company if an investor acquires 51% of the company’s shares.
Measures the acquirer can adopt to mitigate the tax effects (if any) of the proposed transaction.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Change in Ownership, Financial cost, Share Acquisition, Tax Loss, Tax Planning
Level: Level 3

Topic: Mergers, amalgamation, and reorganization
Series: JULY 2023

AT – May 2017 – L3 – Q3a – Mergers, amalgamation, and reorganization

Discuss the tax implications of acquiring either 15% or 25% of shares in another resident company and recommend the best option for tax benefits.

Question

The Managing Director of CJA was of the view that the Company should rather invest and acquire 25% shares to give it enormous influence in Don-bill Ltd.

Your firm has been identified to give a professional advice on the two proposals to help in decision making.

Required:
What is the tax implication on the two proposals and which proposal will you advise CJA Ltd to adopt to leverage on the tax benefits.
(10 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Corporate Taxation, Dividend tax, Investment decisions, Resident companies, Share Acquisition, Tax Benefits
Level: Level 3

Series: MAY 2017

BCL – Dec2022 – Q3b – Types of capital and the financing of companies

Explain the circumstances under which a company can acquire its own shares.

Question

Required: Identify and explain TWO (2) circumstances in which a company can acquire its own shares. (6 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Company Law, Company Shares, Corporate finance, Share Acquisition
Level: Level 1

Topic: Types of capital and the financing of companies
Series: DEC 2022

Question Tag: Share Acquisition

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AT – July 2023 – L3 – Q3a – Mergers, amalgamation, and reorganization

Discussing the tax implications of a 51% share acquisition and strategies to mitigate tax exposure.

AT – May 2017 – L3 – Q3a – Mergers, amalgamation, and reorganization

Discuss the tax implications of acquiring either 15% or 25% of shares in another resident company and recommend the best option for tax benefits.

BCL – Dec2022 – Q3b – Types of capital and the financing of companies

Explain the circumstances under which a company can acquire its own shares.

AT – July 2023 – L3 – Q3a – Mergers, amalgamation, and reorganization

Discussing the tax implications of a 51% share acquisition and strategies to mitigate tax exposure.

AT – May 2017 – L3 – Q3a – Mergers, amalgamation, and reorganization

Discuss the tax implications of acquiring either 15% or 25% of shares in another resident company and recommend the best option for tax benefits.

BCL – Dec2022 – Q3b – Types of capital and the financing of companies

Explain the circumstances under which a company can acquire its own shares.

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Question Tag: Share Acquisition

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AT – July 2023 – L3 – Q3a – Mergers, amalgamation, and reorganization

Discussing the tax implications of a 51% share acquisition and strategies to mitigate tax exposure.

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AT – May 2017 – L3 – Q3a – Mergers, amalgamation, and reorganization

Discuss the tax implications of acquiring either 15% or 25% of shares in another resident company and recommend the best option for tax benefits.

You're reporting an error for "AT – May 2017 – L3 – Q3a – Mergers, amalgamation, and reorganization"

BCL – Dec2022 – Q3b – Types of capital and the financing of companies

Explain the circumstances under which a company can acquire its own shares.

You're reporting an error for "BCL – Dec2022 – Q3b – Types of capital and the financing of companies"

AT – July 2023 – L3 – Q3a – Mergers, amalgamation, and reorganization

Discussing the tax implications of a 51% share acquisition and strategies to mitigate tax exposure.

You're reporting an error for "AT – July 2023 – L3 – Q3a – Mergers, amalgamation, and reorganization"

AT – May 2017 – L3 – Q3a – Mergers, amalgamation, and reorganization

Discuss the tax implications of acquiring either 15% or 25% of shares in another resident company and recommend the best option for tax benefits.

You're reporting an error for "AT – May 2017 – L3 – Q3a – Mergers, amalgamation, and reorganization"

BCL – Dec2022 – Q3b – Types of capital and the financing of companies

Explain the circumstances under which a company can acquire its own shares.

You're reporting an error for "BCL – Dec2022 – Q3b – Types of capital and the financing of companies"

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