S.L. 364.6 Art. 12Transfer of value.

(1)(i) Where as a result of a change in the issued share capital of a company or a change in voting rights attached to such shares, (herein after referred to as the

"change"), a transfer of value as provided for in article

42B of the Act is deemed to have taken place, the value transferred to the transferee, shall be determined in accordance with the following formula:

Y = ( (A – B) + C – D ) x - 1 Where -

(a) "Y" represents the amount to be determined;

(b) "A" is the real value of the shares held by the transferee in the company immediately before the change;

(c) "B" is the real value of the shares held by the transferee in the company immediately after the change;

(d) "C" is the consideration paid by the transferee for the acquisition of shares or additional shares issued by the company, where the change consists of an issue of share capital for consideration;

(e) "D" is the amount paid by the company in respect of a cancellation of shares held by the transferee, where the change consists of a reduction of share capital: Provided that where the result of the formula is a negative amount the value of "Y" shall be taken to be zero: Provided further that where the transferee does not hold any shares in the company immediately before or after the change, the value of "A" or "B" in the said formula, as the case may be, shall be taken as zero: Provided also that, where the change in the issued share capital consists of a conversion of securities, for the purpose of paragraphs (b) and (c) the real value of shares, which do not participate in any way in the profits of a company other than by way of a fixed rate of return, shall be taken as zero.

(ii) The amount determined in accordance with the said formula shall be deemed for the purpose of article 42B of the Act, to be the value transferred by the transferor to the transferee and such value shall be deemed to have passed into shares in or rights over the company held by the transferee on which duty is chargeable in accordance with the provisions of article 42 of the Act.

(2) For the purpose of sub-rule (1):

(i) the real value of shares held in a company is a percentage of the real value of the said company corresponding to the percentage of the issued share capital represented by the nominal value of those shares;

(ii) where the issued share capital of the company is made up of different classes of shares (whether before or after the change in the issued share capital) or where the change consists of an alteration of voting rights, the real value of shares held in the company shall, notwithstanding paragraph (i), be the percentage of the real value of the said company corresponding to the percentage of the total voting rights in the company represented by the total voting rights attached to those shares;

(iii) notwithstanding paragraph (ii), where the value of "Y" as determined by the application of sub-paragraph (i) is higher than the value of "Y" as determined by the application of sub-paragraph (ii), the value of "Y" is to be determined by the application of sub-paragraph (i).

(3) The real value of a company shall, for the purpose of sub-rule (2), be determined in accordance with rules 5(6) and (7) of the Capital Gains Rules, and references in the said sub-rules to "market value" shall be construed as references to "real value": Provided that in determining the real value of the company, the total net asset value referred to in rule 5(6) of the said rules shall be that resulting from an accounting statement prepared by a certified public accountant holding a practicing certificate in auditing, to be drawn up as at the date of the deemed transfer of value. The accounting statement shall consist of two balance sheets showing the position of the company immediately before and after the change and shall be drawn up using the same methods and the same layout as used for its financial statements for the financial year preceding that in which the change takes place.

(4) On a subsequent transfer of the shares held by the transferee immediately after the change, made before the end of the financial year in which the change took place, the real value taken into account in determining the amount chargeable to duty shall, notwithstanding the provisions of rule 11(1), not be lower than the value of "B" referred to in subrule (1)(i)(c) of this rule, being the value taken into account in determining the value transferred.

(5) The transferee in any transfer of value referred to in this rule shall submit to the Commissioner a computation of the real value of the shares, made on the forms or means as supplied by the Commissioner for this purpose, accompanied by the accounting statement referred to in sub-rule (3) and by a Perit’s valuation of the real value of the immovable property taken into account in determining the value of the company, together with a site plan issued by the Land Registry, signed and stamped by a Perit.

(6) The form referred to in sub-rule (5) shall be delivered in triplicate to the Commissioner and the transferee shall, together with the delivery, pay to the Commissioner the amount of duty due on the transfer in accordance with article 49(2) of the Act.

(7) The Commissioner shall stamp one of the copies of the form submitted in accordance with sub-rule (5) in acknowledgement of the receipt of same and return it to the person who submitted it.

(8) Where a transfer of value is exempt from duty by virtue of the proviso to article 42B of the Act, other than sub-paragraph (iv) of the said proviso, the transferee shall submit to the Commissioner a statement made on the forms or means as supplied by the Commissioner for this purpose.

(9) For the purposes of this rule, the term "shares" or "share capital" shall exclude shares, which do not participate in any way in the profits of a company other than by way of a fixed rate of return.