Duty on Documents and Transfers Act (Cap. 364), article 42B

42B. (1) Where the real value of shares held by a person (hereinafter referred to as the "transferor") in a company, has been reduced as a result of a change in the issued share capital of such company, or a change in voting rights attached to such shares, and such value so reduced passes into other shares in or rights ove r the company, held by any other person (hereinafter referred to as t he "transferee"), the transferor shall be deemed to have made a transfer of such value so reduced to the transferee, calculated by taking into account the difference between the real value of th e shares held immediately before and after the said change and du ty shall be chargeable in accordance with article 42: Provided that this articl e shall not apply where: (i) the change in the issued share capital or change in voting rights does not produce any change in the individual, direct or indir ect, beneficial owners of the said company and in the proportion in the real value of the said company represented by the shares owned beneficially, directly or indirectly, by each such individual; or (ii) the change in the issued share capital consists of an allotment of shares in a company, as a result of an exchange of shares from one company to another exempt from duty under the provisions of article 42(1); or Cap. 123. (iii) the transfer of value is the result of a change in voting rights and such transfer is made by the transferor to a person referred to in paragraph (i) of article 5(2)(e) of the Income Tax Act ; or (iv) the said company is a company whose securities are listed on a stock exchange recognised by the 40 CAP. 364.] DUTY ON DOCUMENTS AND TRANSFERS Commissioner for the purpose of this provision; or Cap. 123. (v) the said company is not a "property company" and it can be shown to the satisfaction of the Commissioner that the said change is effected for bona fide commercial reasons and does not form part of a scheme or arrangements of which the main purpose, or one of the main purposes is avoidance of liability to duty. For the purpose of this paragraph "property company" shall have the sam e meaning assigned to it in article 2(1) of the Income Tax Act but the provisos to the said definition shall not apply. (2) The provisions of this article shall apply mutatis mutandis to any reduction in the real value of an interest in a partnership, an d for the purposes of this article: Cap. 123. (a) any reference to a "property company" shall include a "property partnership" as defined in article 2(1) of the Income Tax Act , excluding the provisos of such definition; and (b) any reference to "shares", "share capital" and "voting rights" shall include a partnership’s interests, capital and voting rights. Duty on transfer of an interest in a partnership. Added by: IV . 2011.37. Amended by: VIII.2020.47; VII.2022.48.