Section 95 of Stamp Duty Act CAP 480: Reconstruction or amalgamation of companies

(1) If in connexion with a scheme for the reconstruction of a company or companies or the amalgamation of any companies it is shown to the satisfaction of a collector that there exist the following conditions—
(a) that a company with limited liability is to be registered, or that since 29th September, 1951, a company has been incorporated by Letters Patent or Act of the United Kingdom Parliament, or under an Act of Kenya, or the nominal share capital of a company has been increased;
(b) that the company (in this section referred to as the transferee company) is to be registered or has been incorporated or has increased its capital with a view to the acquisition either of the undertaking of, or of not less than ninety per centum of the issued share capital of, any particular existing company;
(c) that the consideration for the acquisition (except such part thereof as consists in the transfer to or discharge by the transferee company of liabilities of the existing company) consists as to not less than ninety per centum thereof—
(i) where an undertaking is to be acquired, in the issue of shares in the transferee company to the existing company or to holders of shares in the existing company; or
(ii) where shares are to be acquired, in the issue of shares in the transferee company to the holders of shares in the existing company in exchange for the shares held by them in the existing company; then to the provisions of subsection (2) shall apply.
(2) If the collector is satisfied as to the conditions set out in subsection (1) then, subject to the further provisions of this section—
(a) the nominal share capital of the transferee company, or the amount by which the capital of the transferee company has been increased, as the case may be, shall, for the purpose of computing the stamp duty chargeable in respect of that capital, be treated as being reduced by either—
(i) an amount equal to the amount of the share capital of the existing company, or, in the case of the acquisition of a part of an undertaking, equal to such proportion of the share capital as the value of that part of the undertaking bears to the whole value of the undertaking; or
(ii) the amount to be credited as paid up on the shares to be issued as consideration and on the shares, if any, to be issued to creditors of the existing company in consideration of the release of debts (whether secured or unsecured) due or accruing due to them from the existing company or of the assignment of those debts to the transferee company, whichever amount is the less; and
(b) stamp duty under the heading Conveyance or Transfer on sale in the Schedule shall not be chargeable on any instrument made for the purposes of, or in connexion with, the transfer of the undertaking or shares or on any instrument made for the purposes of, or in connexion with, the assignment to the transferee company of any debts, secured or unsecured, of the existing company, nor shall any such duty be chargeable on any instrument vesting, or relating to the vesting of, the undertaking or shares in the transferee company.
(3) No instrument referred to in paragraph (b) of subsection (2) shall be deemed to be duly stamped unless—
(a) it is stamped with the duty to which it would, but for this section, be liable; or
(b) it has, in accordance with the provisions of section 17, been stamped with a particular stamp denoting that—
(i) it is not chargeable with any duty; or
(ii) it is duly stamped, but where, by reason of this subsection, a fee has been paid under section 17 in respect of the stamping of such an instrument, no fee shall be payable under that section in respect of the stamping of any further instrument of transfer or assignment between the existing company and the transferee company where the conditions under which that further transfer or assignment takes place are those under which the transfer or assignment in respect of which the fee was paid took place.
(4) In the case of an instrument made for the purposes of, or in connexion with, a transfer to a company within the meaning of the Companies Act (Cap. 486), the provisions of paragraph (b) of subsection (2) shall not apply unless the instrument is either—
(a) executed within a period of twelve months from the date of the registration of the transferee company or the date of the resolution for the increase of the nominal share capital of the transferee company, as the case may be; or
(b) made for the purpose of effecting a conveyance or transfer in pursuance of an agreement which has been filed, or particulars of which have been filed, with the Registrar of Companies within that period of twelve months.
(5) The provisions of this section with respect to the release and assignment of debts of the existing company shall not, except in the case of debts due to banks or to trade creditors, apply to debts which were incurred less than two years before the proper time for making a claim for exemption under this section.
(6) For the purposes of a claim for exemption under paragraph (b) of subsection (2), a company which has, in connexion with a scheme of reconstruction or amalgamation, issued any unissued share capital shall be treated as if it had increased its nominal share capital.
(7) A company shall not be deemed to be a particular existing company within the meaning of this section unless it is provided by the memorandum of association of, or the Letters Patent, Act of the United Kingdom Parliament or Act of Kenya incorporating, the transferee company that one of the objects for which the company is established is the acquisition of the undertaking of, or shares in, the existing company, or unless it appears from the resolution, Act of the United Kingdom Parliament, Act of Kenya or other authority for the increase of the capital of the transferee company that the increase is authorized for the purpose of acquiring the undertaking of, or shares in, the existing company.
(8) In a case where the undertakings of or shares in two or more companies are to be acquired, the amount of the reduction to be allowed under this section in respect of the stamp duty chargeable in respect of the nominal share capital or the increase of the capital of a company shall be computed
separately in relation to each of those companies.
(9) Where a claim is made for exemption under this section, the collector may require the delivery to him of a statutory declaration in such form as he may direct, made by an advocate, and of such further evidence, if any, as the collector may reasonably require.
(10) If—
(a) where any claim for exemption from duty under this section has been allowed, it is subsequently found that any declaration or other evidence furnished in support of the claim was untrue in any material particular, or that the conditions specified in subsection (1) are not fulfilled in the reconstruction or amalgamation as actually carried out; or
(b) where shares in the transferee company have been issued to the existing company in consideration of the acquisition, the existing company within a period of two years from the date, as the case may be, of the registration or incorporation, or of the authority for the increase of the capital, of the transferee company ceases, otherwise than in consequence of reconstruction, amalgamation or liquidation, to be the beneficial owner of the shares so
issued to it; or
(c) where any such exemption has been allowed in connexion with the acquisition by the transferee company of shares in another company, the transferee company within a period of two years from the date of its registration or incorporation or of the authority for the increase of its capital, as the case may be, ceases, otherwise than in consequence of reconstruction, amalgamation or liquidation, to be the beneficial owner of the shares so acquired, the exemption shall be deemed not to have been allowed and an amount equal to the duty remitted shall become payable forthwith, and shall be recoverable from the transferee company as a debt due to the Government, together with interest thereon at the rate of five per centum per annum in the case of duty remitted under paragraph (a) of subsection (2) from the date of the registration of incorporation of the transferee company or the increase of its capital, as the case may be, and, in the case of duty remitted under paragraph (b) of subsection (2), from the date on which it would have become chargeable if the Stamp (Amendment) Ordinance, 1951 (No. 58 of 1951) (now repealed) had not been enacted.
(11) If in the case of any scheme of reconstruction or amalgamation the collector is satisfied that at the proper time for making a claim for exemption from duty under subsection (1) there were in existence all the necessary conditions for the exemption other than the condition that not less than ninety per centum of the issued share capital of the existing company would be acquired by the transferee company, the collector may, if it is proved to his satisfaction that not less than ninety per centum of the issued capital of the existing company has under the scheme been acquired within a period of six months from the earlier of the two following dates, that is to say—
(a) the last day of the period of thirty days after the first allotment of shares made for the purposes of the acquisition; or
(b) the date on which an invitation was issued to the shareholders of the existing company to accept shares in the transferee company, and on production of the instrument on which duty paid has been impressed, direct repayment to be made of such an amount of duty as would have been remitted if that condition had been originally fulfilled.
(12) In this section, except where the context otherwise requires—
(a) references to the undertaking of an existing company include references to a part of the undertaking of an existing company;
(b) "shares" includes stock.