SCHEDULE 7Parent and subsidiary undertakings: supplementary provisions
Introduction
1
The provisions of this Schedule explain expressions used in section 1162 (parent and subsidiary undertakings) and otherwise supplement that section.
Voting rights in an undertaking
2
(1)
In section 1162(2)(a) and (d) the references to the voting rights in an undertaking are to the rights conferred on shareholders in respect of their shares or, in the case of an undertaking not having a share capital, on members, to vote at general meetings of the undertaking on all, or substantially all, matters.
(2)
In relation to an undertaking which does not have general meetings at which matters are decided by the exercise of voting rights the references to holding a majority of the voting rights in the undertaking shall be construed as references to having the right under the constitution of the undertaking to direct the overall policy of the undertaking or to alter the terms of its constitution.
Right to appoint or remove a majority of the directors
3
(1)
In section 1162(2)(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.
(2)
An undertaking shall be treated as having the right to appoint to a directorship if—
(a)
a person's appointment to it follows necessarily from his appointment as director of the undertaking, or
(b)
the directorship is held by the undertaking itself.
(3)
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.
Right to exercise dominant influence
4
(1)
For the purposes of section 1162(2)(c) an undertaking shall not be regarded as having the right to exercise a dominant influence over another undertaking unless it has a right to give directions with respect to the operating and financial policies of that other undertaking which its directors are obliged to comply with whether or not they are for the benefit of that other undertaking.
(2)
A “control contract” means a contract in writing conferring such a right which—
(a)
is of a kind authorised by the articles of the undertaking in relation to which the right is exercisable, and
(b)
is permitted by the law under which that undertaking is established.
(3)
This paragraph shall not be read as affecting the construction of section 1162(4)(a).
Rights exercisable only in certain circumstances or temporarily incapable of exercise
5
(1)
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.
(2)
Rights which are normally exercisable but are temporarily incapable of exercise shall continue to be taken into account.
Rights held by one person on behalf of another
6
Rights held by a person in a fiduciary capacity shall be treated as not held by him.
7
(1)
Rights held by a person as nominee for another shall be treated as held by the other.
(2)
Rights shall be regarded as held as nominee for another if they are exercisable only on his instructions or with his consent or concurrence.
Rights attributed to parent undertaking
9
(1)
Rights shall be treated as held by a parent undertaking if they are held by any of its subsidiary undertakings.
(2)
Nothing in paragraph 7 or 8 shall be construed as requiring rights held by a parent undertaking to be treated as held by any of its subsidiary undertakings.
(3)
For the purposes of paragraph 8 rights shall be treated as being exercisable in accordance with the instructions or in the interests of an undertaking if they are exercisable in accordance with the instructions of or, as the case may be, in the interests of any group undertaking.
Disregard of certain rights
10
The voting rights in an undertaking shall be reduced by any rights held by the undertaking itself.
Supplementary
11
References in any provision of paragraphs 6 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 paragraphs but not rights which by virtue of any such provision are to be treated as not held by him.