You should bear in mind that more than one person (or group of
persons) may have control of a company at the same time. For
example, one person may have the greater part of the voting power,
while another holds the greater part of the issued share capital
and yet a third is entitled to the greater part of the assets in a
winding-up (for the meaning of 'control' - see
CTM60210 to CTM60230.
Whether or not two companies are under the control of the
same person will be obvious as soon as you have applied the control
tests in Section 416 (2) to (6) to both companies. However, to
determine whether two companies are under the control of the same
persons you have to establish which group or
groups of persons control each company.
You should only regard the two companies as under the control
of the same persons if:
and
A 'minimum controlling combination' means a group of persons
which has control of the company but which would not have control
of it if any one of the persons were excluded from the group.
For example, if three unconnected persons, A, B and C, each
hold one third of the shares in a company, there are three minimum
controlling combinations; A and B together, or B and C together, or
A and C together. Since you can clearly establish that control is
held by any two together, the addition of another person to the
controlling combination is superfluous and you should not also
contend that A, B and C together control the company.
| Company CB | |||
| Shares | |||
| Mr A 50 | Mr B 50 | Mr C 50 | total issued shares 150 |
| Company AA | ||||
| Shares | ||||
| Mr A 50 | Mr B 50 | Mr C 50 | Mr D 50 | total issued shares 200 |
A, B, C and D are
not associates.
Company CB is controlled by A and B together,
or A and C together,
or B and C together, that is by
any two of them together.
Company AA is controlled by A, B and C together,
or A, B and D together,
or A, C and D together,
or B, C and D together, that is by any
three of them together.
As there is no group of persons controlling Company CB which
is identical with a group of persons controlling Company AA, you
should not regard the two companies as associated.
However if A and B' shares together entitled them to the
greater part of the
voting power in Company AA, then we would have an
identical group controlling both companies (albeit by a separate
test in ICTA88/S416 (2)(a)) and so we would regard the two
companies as associated.
