Income Tax Assessment Act 1936
The direct method of demutualisation is as follows:
(a) all membership rights in the entity are extinguished;
(b) the entity becomes a company with a share capital;
(c) shares ( ordinary shares ) of only one class in the entity are issued within the limitation period to existing members in exchange for the membership rights referred to in paragraph (a);
(d) shares (also ordinary shares ) of the same class in the entity may be issued within the limitation period to new members;
(e) if a listing resolution was passed by the members of the entity - the ordinary shares are listed within the limitation period.
Note:
Other things may happen in connection with the implementation of the demutualisation.
326-45(2)
The following diagram shows, where this demutualisation method is used, the issue of shares to members of the entity.
![Direct method of demutualisation](/law/view/sgif/cch-leg2/direct_method_of_demutualisation_24490845.gif)
This information is provided by CCH Australia Limited Link opens in new window. View the disclaimer and notice of copyright.