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The rules in TCGA 1992, ss 135, 136 (see D6.202, D6.205) (share exchanges and company reconstructions) do not apply¹ to an existing holding of shares in a company (company A) which is held by an investing company in the same capacity when:

1. Ìý

   •ÌýÌýÌýÌý there is a reconstruction or amalgamation, whereby another company (company B) issues shares in or debentures of that company in exchange for (or in respect of) the shares or debentures in company A, which affects the existing holding

2. Ìý

   •ÌýÌýÌýÌý immediately before that reconstruction or amalgamation, investment relief was attributable to the existing holding, and

3. Ìý

   •ÌýÌýÌýÌý the shares in the existing holding have been held continuously from the time they were issued until the reconstruction or amalgamation (as to whether shares have been 'held continuously', see D8.393)

This means that the investing company is treated as disposing of the shares in the existing holding at the time of a reconstruction or amalgamation, and