Income Tax Assessment Act 1936
The distributing trust method of demutualisation is as follows:
(a) all membership rights in the mutual entity are extinguished;
(b) the entity becomes a company with a share capital;
(c) shares ( special shares ) carrying only voting rights in respect of the demutualised entity are issued within the limitation period to a trustee to hold for the benefit of the members;
(d) the issue takes place before the issue of the ordinary shares mentioned in paragraphs (f) and (g);
(e) after the issue of all the ordinary shares, the rights attaching to the special shares become the same as those attaching to the ordinary shares and the special shares are dealt with in accordance with paragraph (h) as if they were ordinary shares;
(f) shares ( ordinary shares ) of only one class in the entity are, within the limitation period, issued to the trustee to hold on behalf of existing members in exchange for the membership rights referred to in paragraph (a) and, in accordance with the choice of each existing member, to transfer to the member the shares held on behalf of the member or to dispose of those shares on behalf of the member;
(g) shares (also ordinary shares ) of the same class in the entity may, within the limitation period, be issued to the trustee on behalf of new members and, in accordance with the choice of each new member, to transfer to the member the shares held on behalf of the member or to dispose of those shares on behalf of the member;
(h) within the limitation period the trustee:
(i) sells the ordinary shares issued to the trustee and distributes the proceeds to the member; or
(ii) transfers the ordinary shares to the member;
(i) if a listing resolution was passed by the entity - the ordinary shares are listed within the limitation period.
Note:
Other things may happen in connection with the implementation of the demutualisation.
326-55(2)
The trustee must be the trustee of a trust established solely for the purposes of performing functions under subsection (1).
326-55(3)
The following diagram shows the main events that occur where this demutualisation method is used.
![Distributing trust method of demutualisation](/law/view/sgif/cch-leg2/distributing_trust_method_of_demutualisation_24490851.gif)
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