Private ruling: Core deposit intangible asset ("CDI")
Published: June 2013
Ruling period: Years ended 30 June 20XX to year ended 30 June 20YY
Date scheme commenced: Background and facts

Ruling: Q1: Is a customer deposit liability of Bank X that becomes that of the Bank a Division 230 financial arrangement? | A1: Yes. | Q2: Does section 715-375 of the ITAA 1997 apply to the customer deposit liability of Bank X that becomes that of the Bank? | A2: Yes. | Q3: Is the core deposit intangible asset an asset for the purposes of Division 705 of the ITAA 1997? | A3: No. | Q4: Is the core deposit intangible asset a thing that is or is part of a Division 230 financial arrangement for the purposes of paragraph 701-63(3)(b)(v) ITAA 1997? | A4: No. | Q5: Is the core deposit intangible asset a reset cost base asset for the purposes of section 705-35 of the ITAA 1997? | A5: No. | Q6: Does subsection 701-55(5A) of the ITAA 1997 apply to the core deposit intangible asset? | A6: No. | Q7: Does the accruals or realisation method in Subdivision 230-B of the ITAA 1997 apply to recognise the financial benefits provided to acquire the core deposit intangible asset or does the balancing adjustment in Subdivision 230-G of the ITAA 1997 arise on cessation of the financial arrangement? | A7: No. | Q8: Is the Bank's method of working out the transitional balancing adjustment in respect of the core deposit intangible asset under subitem 104(13) of Schedule 1, Part 3 of the TOFA Act correct? | A8: Answer not necessary.

Relevant facts and circumstances: Background and facts During 20XX the boards of Bank X Limited (Bank X) and Bank Y Limited (the Bank) announced an intention to merge their businesses by way of the Bank acquiring all the shares in Bank X in a merger transaction. The scheme was implemented during 20XX, and on that day (the merger date), Bank X became a member of the Bank's tax consolidated group. Bank X, prior to the merger, was an Australian resident bank. As part of the merger, the Bank assumed control of the core customer deposit account liabilities of Bank X. In accordance with AASB 3 Business Combinations , AASB 127 Consolidated and Separate Financial Statements and AASB 138 Intangible Assets the Bank recognised a number of intangible assets in its financial statements as a result of the merger (acquisition) of Bank X. One of these intangible assets was a core deposit intangible (CDI). TOFA elections The Bank has advised that it had made the following TOFA elections: 1. The Bank has applied Division 230 of the ITAA 1997 from 1 July 20ZZ. The 20ZZ/20XX income year being it's "first applicable income year". 2. The Bank has made a transitional election to ungrandfather transitional financial arrangements in accordance with subitem 104(2) of Schedule 1, Part 3 of the TOFA Act. 3. The Bank has made an election under section 230-150 of the ITAA 1997 for the portfolio treatment of fees, premiums and discounts. 4. The Bank has made a general foreign exchange retranslation election under section 230-225 of the ITAA 1997 for treatment foreign exchange gains and losses on certain financial arrangements on a retranslation basis. 5. The Bank has not made any other elections under Division 230 or the TOFA Act.

Relevant legislative provisions: Income Tax Assessment Act 1997 (ITAA 1997) ITAA 1997, Division 230 | ITAA 1997, subdivision 230-B | ITAA 1997, subdivision 230-G | ITAA 1997, subsection 230-45(1) | ITAA 1997, subsection 230-45(2) | ITAA 1997, Part 3-90 | ITAA 1997, section 701-1 | ITAA 1997, subsection 701-10(4) | ITAA 1997, 701-63(3) | ITAA 1997, Division 705 | ITAA 1997, paragraph 701-63(3)(b)(v) | ITAA 1997, subsection 701-55(5A) | ITAA 1997, section 705-35 | ITAA 1997, section 715-375 | ITAA 1997, section 995-1 | Explanatory memorandum to the Tax Laws Amendment Bill (Taxation of Financial Arrangements) 2008 (TLAB (TOFA) 2008) | Tax Laws Amendment (Taxation of Financial Arrangements) Act 2009 (TLAA (TOFA) 2009) TLAA (TOFA) 2009 Item 104B(2) of schedule 1 of Part 3 | TLAA (TOFA) 2009 Item 104B(13) of schedule 1 of Part 3 | Tax Laws Amendment (2012 Measure No. 2) Act 2012 (TLAA 2012 No. 2) TLAA 2012 No. 2 Subitem 50(2) of Part 4 in Schedule 3 | Taxation ruling 1999/16 (TR 1999/16) | Taxation ruling 2004/11 (TR 2004/11) | Taxation ruling 2004/13 (TR 2004/13) | Taxation ruling 2005/17 (TR 2005/17) | Other references (non ATO view, such as court cases) | Financial Section (Business Transfer and Group Restructure ) Act 1999 Stewart v. Bank of Australasia (1883) 9 VLR (L) 240 | Foley v. Hill (1848) 9 ER 1002 | Illich v. R (1987) 162 CLR 110 | Murray v. FCT 98 ATC 4585 (Murray) | Rosehill v. Commissioner of Stamp Duties (1905) 3 CLR 393 (Rosehill) | Australian Accounting Standard 3 (AASB 3) Business Combinations | Australian Accounting Standard 138 (AASB 138) Intangible Assets

Reasons for decision: Summary: Yes. The customer deposit liabilities of Bank X that became that of the Bank on the merger date for income tax purposes and are still held by the Bank as at the 1 July 20ZZ are *Division 230 financial arrangements. | Detailed Reasoning - Division 230 ITAA 1997 financial arrangement: Section 995-1 of the ITAA 1997 defines a *Division 230 financial arrangement as: A *financial arrangement is a Division 230 financial arrangement if Division 230 of the ITAA 1997 applies in relation to your gains and losses from the arrangement. Subsection 230-45(1) of the ITAA 1997 sets out the definition of a *financial arrangement for the purposes of Division 230: You have a financial arrangement if you have, under an *arrangement; (a) a *cash settlable legal or equitable right to receive a *financial benefit; (b) a cash settlable legal or equitable obligation to provide a financial benefit; or (c) a combination of one or more such rights and/or one or more such obligations; unless (d) .... Subsection 230-45(2) of the ITAA 1997 sets out when a right to receive or an obligation to provide a financial benefit is cash settlable. Paragraph 230-45(2)(a) provides that a right to receive or an obligation to provide a financial benefit is cash settlable, if and only if, the benefit is money or a money equivalent. Subsection 974-160 of the ITAA 1997 sets out what, for the purposes of the ITAA 1997 is a financial benefit. 974-160(1) In this Act: | Detailed Reasoning - Financial benefit: (a) means anything of economic value; and (b) includes property and services; and (c) ...... even if the transaction that confers the benefit on an entity also imposes an obligation on the entity. | Detailed Reasoning - Rights and obligations under a customer bank account: The legal relationship between a bank and its customer is that of debtor and creditor, with the bank being the debtor and the customer being the creditor ( Stewart v. Bank of Australasia (1883) 9 VLR (L) 240. In Foley v. Hill (1848) 9 ER 1002, Lord Cottenham said: Money when paid into a bank, ceases altogether to be the money of the customer... it is then the bank's money;.... But he is, of course, answerable for the amount, because he has a contract, having received the money, to repay to the customer, when demanded, a sum equivalent to that paid into his hands... The banker is not an agent or factor but he is a debtor. | Detailed Reasoning - Are Bank X's customer deposit liabilities financial arrangements?: As at the merger date, Bank X had core customer deposit liabilities in relation to its various deposit accounts under the Bank X's standard terms and conditions for these accounts. Based on those standard terms and conditions, Bank X has the following key rights and obligations under the accounts: · The right to charge interest on overdrawn accounts; · The right to collect fees and charges; and · The obligation to repay, in accordance with the terms of the account, the amount standing to the credit of the account. The obligation to repay the amount standing to the credit of the account is a financial benefit, being something of economic value and property. It is also a cash settlable obligation to provide a financial benefit because the benefit is money (paragraph 230-45(2)(b)). Each right to charge interest or collect fees and charges are cash settlable rights to receive financial benefits within the meaning of paragraph 230-45(1)(a) of the ITAA 1997 because the benefit is money or a money equivalent. Because the customer deposit liabilities are arrangements under which Bank X has a cash settlable obligation to provide a financial benefit or combines both a cash settlable obligation to provide financial benefits and cash settlable rights to receive financial benefits, each bank account is a financial arrangement within the meaning of section 230-45 of the ITAA 1997. The relevant arrangement for the purposes of section 230-45 is each bank account. That is, section 230-55 applies to treat as a single arrangement the rights and obligations under each bank account. A consideration of all of the matters in subsection 230-55(4) indicate that the separate rights to receive financial benefits and the separate obligations to provide financial benefits under each bank account should be treated as a single arrangement for the purposes of Division 230. Each customer bank account that is a liability is hereafter, for the purposes of this ruling, referred to as a 'customer deposit liability'. | Detailed Reasoning - Is a customer deposit liability of Bank X that became that of the Bank a Division 230 financial arrangement?: On the merger date the Bank acquired 100% membership interests of Bank X and the latter became a member of the Bank's tax consolidated group. When an entity becomes a subsidiary member of a consolidated group, the membership interests held by the group in the joining entity are ignored and the entity's assets and liabilities are treated for tax purposes as the assets and liabilities of the head company (subsection 701-1(1) (the single entity rule) and TR 2004/11). Therefore the Bank is taken, under the single entity rule to have assumed Bank X's customer deposit liabilities and under the entry history rule in section 701-5 to have started to have had the customer deposit liabilities at the time Bank X started to have them. That is, on or before the merger date. This is prior to the Bank's first applicable income year. The Bank has applied Division 230 of the ITAA 1997 from 1 July 20ZZ. The Bank has also made a election under subitem 104(2) of Schedule 1, Part 3 of TLAA (TOFA) 2009 to have Division 230 apply to financial arrangements it started to have prior to 1 July 20ZZ. The customer deposit liabilities of Bank X that became those of the Bank on the merger date and continued to be held by the Bank on the 1 July 20ZZ are therefore *Division 230 financial arrangements. | Summary: Yes | Detailed Reasoning - Detailed reasoning: Yes, section 715-375 will apply, via paragraph 104B(2)(b) of TLAA (TOFA) 2009, for the purpose specified in subitem 104B(2), to the customer deposit liabilities brought into the group by Bank X on the merger date and continued to be held by the Bank on the 1 July 20ZZ. | Detailed Reasoning - Section 715-375 - Liabilities: Section 715-375 of the ITAA 1997, as recently amended by TLAA 2012 No. 2 provides that: (1) Subsection (2) applies if: (a) an entity (the joining entity) becomes a *subsidiary member of a *consolidated group at a time (the joining time); and (b) a thing (the accounting liability) is, in accordance with *accounting standards, or statements of accounting concepts made by the Australian Accounting Standards Board, a liability of the joining entity at the joining time (disregarding subsection 701-1(1) (the single entity rule)) that can or must be recognised in the entity's statement of financial position; and (c) the accounting liability is or is part of a *Division 230 financial arrangement of the head company at the joining time (because of subsection 701-1(1) (the single entity rule)). (2) for the purposes of Division 230 and Schedule 1 to the Tax Laws Amendment (Taxation of Financial Arrangements) Act 2009 , treat the *head company of the group as starting to have the accounting liability at the joining time for receiving a payment equal to: (a) if the liability is or is part of a *Division 230 financial arrangement of the head company at the joining time (because of subsection 701-1(1) (the single entity rule)): (i) to which Subdivision 230-B (accruals method or realisation method) applies; or (ii) to which Subdivision 230-E (hedging financial arrangements method) applies; the amount of the liability, as determined in accordance with: (iii) the joining entity's *accounting principles for tax cost setting; or (iv) if the amount of the liability cannot be determined in accordance with the joining entity's accounting principles for tax cost setting - comparable standards fro accounting made under a *foreign law; or (b) otherwise - the liability's *Division 230 starting value at the joining time. The Bank has applied Division 230 of the ITAA 1997 from 1 July 20ZZ and has made a transitional election in accordance with subitem 104(2) of Schedule 1, Part 3 of TLAA (TOFA) 2009. The Bank's first applicable income year (i.e. the year ended 30 June 20XX) started after the joining time, being the merger date. | Detailed Reasoning - Does section 715-375 of the ITAA 1997 apply retrospectively?: The TOFA transitional provisions in Schedule 1 of Part 3 of TLAA (TOFA) 2009 were amended by TLAA 2012 No. 2 to ensure the TOFA consolidation interaction provisions (subsection 701-55(5A) and section 715-375) apply in relation to assets and liabilities that are part of a pre-TOFA joining where the head company has made an election under subitem 104(2). Subitem 104B(1) specifies the conditions that must be met for the application of the item 104B amended transitional provisions. The customer deposit liabilities of Bank X that became those of the Bank on the merger date and continued to be held by the Bank as at 1 July 20XX will satisfy the conditions in subitem 104B(1) on the basis of the following: 1. The joining entity (Bank X) became a subsidiary member of the Bank's consolidated group at the joining time (i.e. the merger date); 2. The customer deposits were liabilities of the joining entity (Bank X) and these became liabilities of the head company (i.e. the Bank) when the joining entity (Bank X) because a subsidiary member of the group as a result of subsection 701-1(1) (the single entity rule). 3. The customer deposits were liabilities that were *financial arrangements at the start of the head company's (the Bank's) first applicable income year (i.e. at 1 July 20ZZ when the TOFA rules first commenced). 4. The head company's (the Bank's) first applicable income year (i.e. the year ended 30 June 20XX) started after the joining time (i.e. the merger date ). 5. The head company (i.e. the Bank) did have the customer deposits throughout the period: (i) starting at the joining time (i.e. the merger date) and (ii) ending at the start of the Bank's first applicable year (i.e. 1 July 20ZZ). The Bank has advised that it will need to perform analysis to confirm the amount of these customer deposits. 6. The Bank has elected to have subitem 104(2) (i.e. the TOFA transactional election) apply to itself. 7. The Bank has advised that the joining entity (Bank X) is not a chosen transitional entity within the meaning of Division 701 of the Income Tax (Transitional Provisions) Act 1997. Paragraph 104B(2)(b) of the transitional provisions in TLAA (TOFA) 2009 (as amended by TLAA 2012 No. 2) therefore applies to the customer deposit liabilities held by the Bank on the 1 July 20ZZ. The result being that, for the purposes of subitem 104(13) and Division 230, those customer deposit liabilities are deemed to be a Division 230 financial arrangement or a part of a Division 230 financial arrangement at the merger date joining time and therefore section 715-375 applies to those liabilities. | Summary: No. | Detailed Reasoning - Detailed reasoning: In accordance with AASB 3 Business Combinations , AASB 127 Consolidated and Separate Financial Statements and AASB 138 Intangible Assets , the Bank, as the acquirer of Bank X on the merger date recognised a number of intangible assets as assets separate from goodwill for accounting purposes. One of the intangible assets identified, in accordance with AASB 3 and AASB 138 criteria, was a core deposit intangible (CDI) with a fair market value of $MM as at the merger date. There is no definition of a CDI in AASB 3 or AASB 138. CDIs are unique to the commercial banking industry (or banks authorised to take deposits from customers). As stated in Punjab Co-operative Bank Ltd, Amritser v IT Commrs, Lahore Numerous depositors place their money with the bank, often receiving a small rate of interest on it. A number of borrowers receive loans of a large part of the deposited funds, at somewhat higher rates of interest. The recognition of a CDI as an intangible asset separate from goodwill on a banking acquisition or merger began in the USA. In the early 1980's the Financial Accounting Standards Board (FASB) and the Office of Comptroller of the Currency (in response to the financial institution failures (savings and loans crisis) of that period) made it a requirement for acquiring banks to separately recognise for US accounting and regulatory purposes. Former section 167 of the Internal Revenue Code also provided its own driver for separate recognition by providing a depreciation deduction for an asset, used in the trade or business of the taxpayer, if it could be shown to have an ascertainable value separate and distinct from goodwill and a limited and determinable useful life (noting most of the valuation material on CDIs comes from former IRC section 167 CDI cases). The recognition of CDIs and a range of other intangibles as assets separate from goodwill on a business combination for Australian accounting purposes did not commence until 2005 after the adoption by the AASB of International Financial Reporting Standards. According to the FASB Valuation Resource Group a CDI has two components; a lower cost source of funds or future cost saving component and an intangible component or the benefit of being able to cross-sell products or services to the acquired depositor base. The CDI recognised in respect of the acquisition of Bank X is confined to the lower cost source of funds or future cost saving component. The valuation report provided by the Bank notes the following with regard to the CDI: - • Conceptually the acquired core deposit base provides value to the extent that it serves as a source of below market rate funds. • The core deposit intangible asset was valued using an income approach. The realisation of cost savings between the cost of deposits and the cost of alternative funding is the fundamental rationale in assuming deposit liabilities. • The cost savings arise from the difference between the cost of funds on deposit (interest cost, net maintenance costs and other costs) and the cost of an equal amount of funds from an alternative source having a similar term as the core deposit funds (the margin spread). These future cost savings are then discounted to their present value (using a discount rate of NN%). • Core deposit types were separately identified by management and valued separately as they exhibit different margin spreads, attrition profiles and maintenance costs. • The fair market value of the CDI as at the merger date was $MM. | Detailed Reasoning - Is the CDI an asset for the purposes of Division 705: Although there is no definition of the term asset for the purposes of Division 705 (in particular, for the purposes of subsection 705-35(1) of Division 705), the pre rule amendments in Part 1 of Schedule 3 of TLAA 2012 No. 2 operate to treat certain intangible assets as forming part of goodwill for these purposes. As Bank X joined the Bank's consolidated group on the merger date it is subject to the pre rules (as the pre rules apply to an entity that joined the consolidated group before 12 May 2010). Section 701-63 of the pre rules operates to treat certain intangible assets of the joining entity as forming part of goodwill for the purposes of Division 705. These assets are defined in paragraphs 701-63(3)(a), (b) and (c). Paragraph 701-63(3)(b) applies to a customer relationship asset, know how asset or other accounting intangible asset that is not a (i) CGT asset; (ii) revenue asset; (iii) depreciating asset; (iv) trading stock; (v) a thing that is or is part of a *Division 230 financial arrangement; (vi) goodwill; (vii) an excluded asset. For Division 705 purposes goodwill is legal goodwill as described by the High Court in Commissioner of Taxation v Murray 1 (Murray). Taxation Rulings TR 2004/13 and TR 2005/17 provide that it is the CGT asset definition of goodwill that is relevant for the purposes of Part 3-90 and this definition per Taxation Ruling TR 1999/16 (paragraph 9) is legal goodwill in accordance with Murray. The High Court in Murray stated that it was more accurate to refer to goodwill as having sources than it is to refer to it as being composed of elements (para 24). An asset will be separate from goodwill for income tax purposes (Division 705 purposes) where the law provides remedies for its protection as a severable asset from the business to which it relates; where the right to such remedies arise from the legal properties of the asset itself and not from the existence of goodwill (para 30 of Murray). It is the view of the Commissioner that the CDI asset forms part of legal goodwill for the purposes of Division 705 (subsection 705-35(1)) absent section 701-63 of the pre rules. The reasons for this are as follows: - • Although a CDI is said to meet the AASB 138 paragraph 12(a) separability identification criteria, that being that it is capable of being separated from the entity and sold either individually or together with a related contract, asset or liability, there is no evidence of any such (asset deal) transactions involving CDIs having occurred in Australia (nor for that matter any other jurisdiction). 2 The decisions on CDIs in respect of former section 167 of the IRC which effectively allowed a deduction for that part of goodwill with a separately ascertainable value and limited useful life, are not applicable in Australia given there is no provision equivalent to former section 167 of the IRC. • A CDI cannot be dealt with independently of the banking business to which it relates. A CDI is an accounting construct which is only recognised by the acquirer for accounting purposes on the acquisition of a banking business as part of a business combination. • The CDI is a product or function of assets of the bank, the funds on deposit and the expectation that those funds will remain with the bank for a period of time, in other words the expectation of continued patronage by the deposit customers and the banks use of those assets in its wider banking business to generate profit. The customers of the bank as a whole, including the depositors are therefore the source of the CDI (which at its core simply represents part of the present value of the profits the bank expects to generate from deploying the borrowed funds in its unique wider banking business), thus bearing a key characteristic of legal goodwill (Rosehill). • The CDI itself is not a source of value, but the expression of value from use of an asset in its wider business. The source of that value are the deposit customers; the expectation of continued patronage (attraction of custom), which is central to the legal concept of goodwill as confirmed in Murray (para 20)). For these reasons, the CDI is legal goodwill and therefore forms part of the goodwill asset for the purposes of Division 705. Therefore subsection 701-63(3) of the pre rules does not apply to treat the CDI as goodwill because subparagraph 701-63(3)(b)(vi) applies. The CDI is already goodwill under ordinary concepts. | Detailed Reasoning - The effect of paragraph 701-63(3)(b) of the Pre Rules: However, if contrary to the view of the Commissioner above the CDI asset does not form part of legal goodwill and is a separate asset for Division 705 purposes, paragraph 701-63(3)(b) would apply to treat the CDI as forming part of goodwill for section 705-35 purposes. The CDI is a form of customer relationship asset or other accounting intangible asset. If the CDI were found not to be part of legal goodwill, then paragraph 701-63(3)(b) of the pre rules would apply on the basis the CDI is not any of the following: - (i) a CGT asset The CDI is neither property nor a legal or equitable right that is not property under section 108-5. For a right to be a CGT asset it must be recognised and protected by law or be a right which a court of law or equity will assist in enforcing. It must also be capable of having a cost base (or deemed market value cost base) and of generating a CGT event (change of beneficial ownership etc) in respect of which there may be capital proceeds (or deemed market value capital proceeds). A CDI accounting intangible asset is therefore not a section 108-5 CGT asset. (The relevant asset for Division 705 purposes is goodwill, which is a section 108-5 CGT asset). (ii) a *revenue asset A revenue asset is defined in section 977-50 as a *CGT asset that is neither *trading stock nor a *depreciating asset, the profit or loss on your disposing of the asset, ceasing to own it or otherwise realising it would be taken into account in calculating your assessable income or *tax loss otherwise than as a *capital gain or *capital loss. As the CDI is not a *CGT asset it is not a revenue asset. (iii) a depreciating asset, as defined in subsection 40-30(2) (intangible depreciating assets) (iv) trading stock as defined in section 70-10 (v) a thing that is or is part of a *Division 230 financial arrangement - refer to Question 4 below (vii) an excluded asset as defined in subsection 705-35(2) | Summary: No. | Detailed Reasoning - Detailed reasoning: This question is only relevant if, contrary to the Commissioner's view above, the CDI does not form part of legal goodwill and is a separate asset for Division 705 purposes. If the CDI forms part of goodwill under ordinary concepts it cannot constitute a thing that is or is part of a *Division 230 financial arrangement. The applicant's position is that although the CDI is not a separate financial arrangement in its own right for the purposes of subsection 230-45(1) (because it is not a cash settlable legal or equitable right to receive or provide a financial benefit) it is part of the customer deposit liability which (in accordance with Questions 1 and 2 above) is a *Division 230 financial arrangement. The CDI is not a financial arrangement as defined in section 230-45 in its own right as it: 1. is part of goodwill; 2. is not an arrangement; and 3. even if it was an arrangement, it involves no cash settlable legal or equitable right to receive or provide a financial benefit. Additionally, the CDI is not a part of the Division 230 financial arrangement, which is each customer bank account as: · it does not form part of the arrangement between the bank and the depositing customers. · as for the reasons expressed above in question 3, it simply represents part of the expected value that can be generated from using those deposits in the banks broader banking business; and · it is not a right or obligation, within the meaning of 230-55 of the ITAA 1997 (which prescribes the matters relevant when determining whether rights and obligations can be aggregated to form a single arrangement). There are no other financial arrangements that the CDI could be suggested to be part of. The CDI is therefore not a thing that either is or is part of a *Division 230 financial arrangement (for the purposes of paragraph 701-63(3)(b)(v)) at either the merger date joining time nor the 1 July 2010 Division 230 commencement time. | Summary: No. | Detailed Reasoning - Detailed reasoning: No, because for the reasons set out above, the CDI forms part of the goodwill of the joining entity (Bank X) for section 705-35 reset cost base asset purposes. See the answer to question 3 above. | Summary: No. | Detailed Reasoning - Detailed reasoning: No, because for the reasons set out above the CDI forms part of the goodwill asset of the joining entity (Bank X). See the answer to question 3 above. | Summary: No. | Detailed Reasoning - Detailed reasoning: No, because the CDI is not a financial arrangement. See the answer to question 4 above. | Summary: Answer not necessary. | Detailed Reasoning - Detailed reasoning: This question does not arise, because the CDI is not a financial arrangement. See the answer to question 4 above. 1 193 CLR 605 2 All of the former section 167 of the IRC cases on CDIs (in which a section 167 deduction was allowed) involved either share acquisitions or business acquisitions (business combinations).