(1)In Part XXVI of the Companies Act 1985 (general interpretation provisions), for section 736 substitute—
(1)A company is a “subsidiary” of another company, its “holding company”, if that other company—
(a)holds a majority of the voting rights in it, or
(b)is a member of it and has the right to appoint or remove a majority of its board of directors, or
(c)is a member of it and controls alone, pursuant to an agreement with other shareholders or members, a majority of the voting rights in it,
or if it is a subsidiary of a company which is itself a subsidiary of that other company.
(2)A company is a “wholly-owned subsidiary” of another company if it has no members except that other and that other’s wholly-owned subsidiaries or persons acting on behalf of that other or its wholly-owned subsidiaries.
(3)In this section “company” includes any body corporate.
(1)The provisions of this section explain expressions used in section 736 and otherwise supplement that section.
(2)In section 736(1)(a) and (c) the references to the voting rights in a company are to the rights conferred on shareholders in respect of their shares or, in the case of a company not having a share capital, on members, to vote at general meetings of the company on all, or substantially all, matters.
(3)In section 736(1)(b) the reference to the right to appoint or remove a majority of the board of directors is to the right to appoint or remove directors holding a majority of the voting rights at meetings of the board on all, or substantially all, matters; and for the purposes of that provision—
(a)a company shall be treated as having the right to appoint to a directorship if—
(i)a person’s appointment to it follows necessarily from his appointment as director of the company, or
(ii)the directorship is held by the company itself; and
(b)a right to appoint or remove which is exercisable only with the consent or concurrence of another person shall be left out of account unless no other person has a right to appoint or, as the case may be, remove in relation to that directorship.
(4)Rights which are exercisable only in certain circumstances shall be taken into account only—
(a)when the circumstances have arisen, and for so long as they continue to obtain, or
(b)when the circumstances are within the control of the person having the rights;
and rights which are normally exercisable but are temporarily incapable of exercise shall continue to be taken into account.
(5)Rights held by a person in a fiduciary capacity shall be treated as not held by him.
(6)Rights held by a person as nominee for another shall be treated as held by the other; and rights shall be regarded as held as nominee for another if they are exercisable only on his instructions or with his consent or concurrence.
(7)Rights attached to shares held by way of security shall be treated as held by the person providing the security—
(a)where apart from the right to exercise them for the purpose of preserving the value of the security, or of realising it, the rights are exercisable only in accordance with his instructions;
(b)where the shares are held in connection with the granting of loans as part of normal business activities and apart from the right to exercise them for the purpose of preserving the value of the security, or of realising it, the rights are exercisable only in his interests.
(8)Rights shall be treated as held by a company if they are held by any of its subsidiaries; and nothing in subsection (6) or (7) shall be construed as requiring rights held by a company to be treated as held by any of its subsidiaries.
(9)For the purposes of subsection (7) rights shall be treated as being exercisable in accordance with the instructions or in the interests of a company if they are exercisable in accordance with the instructions of or, as the case may be, in the interests of—
(a)any subsidiary or holding company of that company, or
(b)any subsidiary of a holding company of that company.
(10)The voting rights in a company shall be reduced by any rights held by the company itself.
(11)References in any provision of subsections (5) to (10) to rights held by a person include rights falling to be treated as held by him by virtue of any other provision of those subsections but not rights which by virtue of any such provision are to be treated as not held by him.
(12)In this section “company” includes any body corporate.”.
(2)Any reference in any enactment (including any enactment contained in subordinate legislation within the meaning of the Interpretation Act M11978) to a “subsididary” or “holding company” within the meaning of section 736 of the Companies Act M21985 shall, subject to any express amendment or saving made by or under this Act, be read as referring to a subsidiary or holding company as defined in section 736 as substituted by subsection (1) above.
This applies whether the reference is specific or general, or express or implied.
(3)In Part XXVI of the Companies Act 1985 (general interpretation provisions), after section 736A insert—
(1)The Secretary of State may by regulations amend sections 736 and 736A so as to alter the meaning of the expressions “holding company”, “subsidiary” or “wholly-owned subsidiary”.
(2)The regulations may make different provision for different cases or classes of case and may contain such incidental and supplementary provisions as the Secretary of State thinks fit.
(3)Regulations under this section shall be made by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament.
(4)Any amendment made by regulations under this section does not apply for the purposes of enactments outside the Companies Acts unless the regulations so provide.
(5)So much of section 23(3) of the Interpretation Act 1978 as applies section 17(2)(a) of that Act (effect of repeal and re-enactment) to deeds, instruments and documents other than enactments shall not apply in relation to any repeal and re-enactment effected by regulations made under this section.”.
(4)Schedule 18 contains amendments and savings consequential on the amendments made by this section; and the Secretary of State may by regulations make such further amendments or savings as appear to him to be necessary or expedient.
(5)Regulations under this section shall be made by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament.
(6)So much of section 23(3) of the Interpretation Act 1978 as applies section 17(2)(a) of that Act (presumption as to meaning of references to enactments repealed and re-enacted) to deeds or other instruments or documents does not apply in relation to the repeal and re-enactment by this section of section 736 of the Companies Act 1985.