Section 279H — Finance Act 2014: Interpretation of section 279G(3) and (4)

Interpretation of section 279G(3) and (4) 279H 1 For the purposes of section 279G(3)(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 279G(3)(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 279G(3)(b) and this section— “ trading company ” means a company whose business consists wholly or mainly of carrying on a trade or trades, and “ 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 279G(4), 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 asset 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).