Associated Company or Not??

Susan Norman

Scenario:

Ltd Co- Shop

Mr A and Mrs A own 50% ordinary shares each and are both directors.



Ltd Co- Property Development

Mr A, Mrs A, Son of Mr A and his wife all own 25 shares each in a different class. The Son is the only Director and his class of share hold the only voting rights.


No loans or transactions exist between companies.


Are these companies associated?

MarkT

I'd have said yes, they are

http://www.legislation.gov.uk/ukpga/2010/4/section/449

Susan Norman

Thanks for the link.

I have been reading some articles about the change from 1 April 2011 and was unsure if these companies were associated????

MarkT

Susan Norman wrote: »

Thanks for the link.

I have been reading some articles about the change from 1 April 2011 and was unsure if these companies were associated????

Its a grey area - I'd have thought that section 449 as it is a point of legislation would say that they were. Articles in print unless they're backed up by an acknowledgement of the actual act of law (especially when it comes to taxation) are imho, just articles and little more

reader

The link refers to the word "control".

Is it normal to define "control" as owning 51% (or more) of the shares that confer voting rights?

If this is the case, would it be possible to argue they are not associated?

jamesm96

reader wrote: »

The link refers to the word "control".

Is it normal to define "control" as owning 51% (or more) of the shares that confer voting rights?

If this is the case, would it be possible to argue they are not associated?

Well I'd have thought so... less than 51% but more than 20% is 'significant influence' but not control.

Dean

Provided the individual company's are financially, economically or organisationally interdependent of each other then in your case they wouldn't be associated.

NR-M has written a good article on the new rules compared with the old here.

Regards

Dean