Section 1062 — Corporation Tax Act 2010: Connected persons

Connected persons 1062 1 This section contains the rules for determining whether a person is connected with a company for the purposes of this Chapter.

2 A person is connected with a company if the person directly or indirectly possesses, or is entitled to acquire, more than 30% of—

a the issued ordinary share capital of the company, b the loan capital and the issued share capital of the company, or c the voting power in the company.

3 If a person—

a acquired, or became entitled to acquire, loan capital of a company in the ordinary course of a business which includes the lending of money, and b takes no part in the management or conduct of the company, the person's interest in that loan capital is ignored for the purposes of subsection (2).

4 A person is connected with a company if the person (directly or indirectly)—

a possesses, or b is entitled to acquire, rights that would, in the event of a winding up or in any other circumstances, entitle the person to receive more than 30% of the assets of the company which would then be available for distribution to equity holders of the company.

5 For the purposes of subsection (4)—

a “ equity holder ” is to be read in accordance with sections 158 to 164, and b the percentage of the assets of a company to which a person would be entitled is to be determined in accordance with sections 166 and 167.

6 In section 166 as it applies for the purposes of subsection (4)—

a references to company A are to be read as including a person who is not a company, and b references to a winding up are to be read as including references to any other circumstances in which assets of a company are available for distribution to equity holders.

7 A person who has control of a company is connected with it.