There is a
qualifying change in ownership whenever there is a
relevant change in the relationship between
company A (the lessor company) and its principal company. In
essence, there is a relevant change when the 75% subsidiary
relationship is broken. A change from (say) 100% ownership to 75%
ownership does not trigger Schedule 10.
The simple example of the direct sale of a lessor company is
illustrated in Example 1.
Example 1
Here, the principal company of A Ltd is B Ltd. B Ltd sells all
shares in A Ltd to C Ltd. The sale of shares means that A Ltd stops
being a 75% subsidiary of B Ltd. There is a relevant change in the
relationship between company A and its principal company.
Where the principal company does not hold shares directly in
A Ltd there is a relevant change in the relationship between
company A and its principal company whenever any of the links of
the chain that establish the relationship between A and its
principal company are broken because any company in the chain
ceases to be a 75% subsidiary of another company. This is
illustrated by example 2.
Example 2
The principal company of A Ltd is C Ltd. C Ltd sells all of the
shares in B Ltd to D Ltd. No shares in A Ltd are sold.
The chain of 75% relationships runs from A Ltd to B Ltd and B
Ltd to C Ltd. There is a change in the relationship between B Ltd
and C Ltd so that B Ltd stops being a qualifying 75% subsidiary of
C Ltd. This change is a relevant change in the relationship between
A Ltd and C Ltd as a principal company.
