Section 257BF — Income Tax Act 2007: Persons with a substantial interest in a company

Persons with a substantial interest in a company 257BF 1 An individual has a substantial interest in a company if the individual directly or indirectly possesses or is entitled to acquire more than 30% of—

a the ordinary share capital of the company or any subsidiary of the company, b the issued share capital of the company or any such subsidiary, or c the voting power in the company or any such subsidiary.

2 An individual has a substantial interest in a company if the individual directly or indirectly possesses or is entitled to acquire such rights as would—

a in the event of the winding up of the company or any subsidiary of the company, or b in any other circumstances, entitle the individual to receive more than 30% of the assets of the company or subsidiary (“the company in question”) which would then be available for distribution to equity holders of the company in question.

3 For the purposes of subsection (2)—

a the persons who are equity holders of the company in question, and b the percentage of the assets of the company in question to which the individual would be entitled, are determined in accordance with Chapter 6 of Part 5 of CTA 2010.

4 In making that determination—

a references in section 166 of that Act to company A are to be read as references to an equity holder, and b references in that section to a winding up are to be read as including a reference to any other circumstances in which assets of the company in question are available for distribution to its equity holders.

5 An individual does not have a substantial interest in a company merely because one or more shares in the company are held by the individual or by an associate of the individual, at a time when the company—

a has not issued any shares other than subscriber shares, and b has not begun to carry on, or make preparations for carrying on, any trade or business.

6 An individual has a substantial interest in a company if the individual has control of the company or any subsidiary of that company.

7 For the purposes of this section—

a an individual is treated as entitled to acquire anything which the individual is entitled to acquire at a future date or will at a future date be entitled to acquire, and b there is attributed to any individual any rights or powers of any other person who is an associate of the individual.

8 In this section “ subsidiary ”, in relation to a company, means a company which at any time in period A is a 51% subsidiary of the company, whether or not it is such a subsidiary while the individual concerned has, or is entitled to acquire, such capital, voting power, rights or control as are mentioned in this section.