The raising of capital and the ratio of shares issued in the...

The raising of capital and the ratio of shares issued in the demerger do not have any bearing on the technical issues considered by the ATO in providing a class ruling under section Division 125 -( that is it is a demerger under the ITA).

Generally the class ruling will also consider application of section 6(1), 44(4),45A,45B and 45C - is the distribution a dividend or not etc - need to see specific application but this is the general matters considered.

Under Div 125, Firefinch must retain less than 20% of LLL on demerger, in conjunction with demerger LLL must not seek to do a capital raising other than with inspecie beneficiaries (there are some minor outs here for shortfalls and other matters) otherwise it is not considered a demerger under ITA and that I imagine will cause immense grief for most FFX shareholders.

But for me what is important is that the In specie distribution is not consider a dividend (ouch - see BHP May 2022 inspecie distribution of Woodside shares).

The split of my original FFX shares cost base that gave rise to my in specie LLL. Eg if my original FFX shares cost 50cents, then a portion of this cost base will be applied to the LLL shares reducing my FFX cost base. Ensuring the tax character (revenue vs capital; account and dates of acquisition etc) pertaining to my purchase of FFX shares is retained.

These matters go directly to the value proposition of the demerger for shareholders.

From the outside it all looks pretty vanilla to me and it does not seem that either FFX or LLL have breached any of the DIV125 requirements so all should be good - fingers crossed.