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Recovery of capital

  • 15-12-2018 6:13pm
    #1
    Heisenburg81
    Closed Accounts Posts: 322 ✭✭


    For the purposes of s. 249 - In the case of a holding company who borrowed to acquire a subsidiary - would the payment of dividends by the subsidiary ever be deemed a recovery of capital?


Comments

  • #2
    dogsears
    Registered Users, Registered Users 2 Posts: 535 ✭✭✭dogsears


    No. But beware - s247 loans generally and especially recovery of capital is an absolute quagmire for any but the most straightforward of situations.


  • #3
    Heisenburg81
    Closed Accounts Posts: 322 ✭✭Heisenburg81


    dogsears wrote: »
    No. But beware - s247 loans generally and especially recovery of capital is an absolute quagmire for any but the most straightforward of situations.

    Thanks dogsears.

    Say Hold Co borrows €100M and uses to purchase two sub co's - A €70M and B €30M.
    B sold three years later for €50M.
    Does S. 249 (1) (iii) have the effect of deeming the entire proceeds to be a recovery of capital and not just the pro - rata share based on the loan proceeds of €30M.
    The wording of the section is "any" amount of capital and includes from a "connected company".


  • #4
    dogsears
    Registered Users, Registered Users 2 Posts: 535 ✭✭✭dogsears


    That's correct and would be the same even if B had been built up from scratch and not bought with borrowed money.


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