Part 3Companies with small profits
Supplementary
33Interpretation of section 32(2) and (3)
1
For the purposes of section 32(2)(a), a company (“A”) is a 51% subsidiary of another company (“B”) only at times when—
a
B would be beneficially entitled to more than 50% of any profits available for distribution to equity holders of A, and
b
B would be beneficially entitled to more than 50% of any assets of A available for distribution to its equity holders on a winding up.
2
The requirement in subsection (1) is in addition to the requirements of section 1154(2) (meaning of “51% subsidiary”).
3
In determining for the purposes of section 32(2)(a) whether or not a company is a 51% subsidiary of another company (“C”), C is treated as not being the owner of share capital if—
a
it owns the share capital indirectly,
b
the share capital is owned directly by a company (“D”), and
c
a profit on the sale of the shares would be a trading receipt for D.
4
In section 32(2)(b) and this section—
a
“trading company” means a company whose business consists wholly or mainly of carrying on a trade or trades, and
b
“relevant holding company” means a company whose business consists wholly or mainly of holding shares in or securities of trading companies that are its 90% subsidiaries.
5
For the purposes of section 32(3), a company is owned by a consortium if at least 75% of the company's ordinary share capital is beneficially owned by two or more companies each of which—
a
beneficially owns at least 5% of that capital,
b
would be beneficially entitled to at least 5% of any profits available for distribution to equity holders of the company, and
c
would be beneficially entitled to at least 5% of any assets of the company available for distribution to its equity holders on a winding up.
6
The companies meeting those conditions are called the members of the consortium.
7
Chapter 6 of Part 5 (equity holders and profits or assets available for distribution) applies for the purposes of subsections (1) and (5) as it applies for the purposes of section 151(4)(a) and (b).