|
||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| On-line
tool: Meaning of control To avoid confusion, it should be made clear that the actual legislation does not refer to whether parties are "related". The legislation refers to whether a party is “directly or indirectly participating in the management, control or capital of the other [party]”. We think "related" is a little more user-friendly. Control of partnerships A person (ie, any legal entity) controls a partnership if that person has the right to a share of more than one-half of the assets, or of more than one-half of the income, of the partnership. Control of companies Section 840 of the Taxes Act 1988 says "control", in relation to a body corporate, means the power of a person to secure- (a) by means of the holding of shares or the possession of voting power in or in relation to that or any other body corporate; or (b) by virtue of any powers conferred by the articles of association or other document regulating that or any other body corporate, that the affairs of the first-mentioned body corporate are conducted in accordance with the wishes of that person. In practice, this means that control of a company arises from voting power of more than 50%. There are special rules aimed at joint ventures that mean in some circumstances as little as 40% control can be sufficient. Indirect control The control need not be direct. For instance, if Company A owns Company B, which in turn owns Company C, then A and C are related (as, of course, are A&B and B&C). Connected persons In determining whether a person (ie, any legal entity) controls a company or a partnership, that person is attributed with certain rights and powers, including those of any persons that are “connected” with that person. For this purpose, individuals are connected with their spouse, brother, sister, ancestor and lineal descendant. Trusts are connected with the settlor of the trust and any persons connected with the settlor. For instance, assume Frank owns 30% of Company A, and his father and sister own 9% each. Frank's wife used to own 9%, but she transferred them into a trust of which the beneficiaries are their children. Frank is deemed to have 57% voting power, so he and Company A are related. The 'small print' Neither TPS nor its affiliates and employees make any representation regarding the completeness or accuracy thereof and they accept no responsibility for any loss or damage incurred as a result of any user acting or refraining from acting upon anything contained on these pages or upon its omission therefrom. |
On-line tool: navigation Introduction Step 1 Step 2 Step 3 Step 4 Step 5
|
|---|