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Sums received on a capital reduction were transactions in securities

By Mark McLaughlin, July 2025

The transactions in securities provisions applied to amounts paid to shareholders in respect of shares cancelled on a capital reduction and represented relevant consideration in connection with the transaction. 

On 22 April 2015, a capital reduction took place in a close company (GHL), whereby GHL cancelled 1,000,000 shares and in exchange £10 per share was credited to the appellants’ loan accounts with GHL. The number of cancelled shares for each appellant was in proportion to their percentage share ownership, so each appellant’s percentage share ownership remained the same after the capital reduction. GHL paid the consideration to the appellants by way of a credit to each of their loan accounts with GHL and the appellants entered into agreements with GHL, which provided for GHL to repay the appellants the amount held to their credit in their loan accounts by periodic instalments. The consideration was nevertheless paid to and received by

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