INCOME TAX ASSESSMENT ACT 1997 - SECT 165.115Z What constitutes a controlling stake in a company

INCOME TAX ASSESSMENT ACT 1997 - SECT 165.115Z

  (1)   An entity has a controlling stake in a company at a particular time if the entity, or the entity and the entity's * associates between them:

  (a)   are able at that time to exercise, or control the exercise of, more than 50% of the voting power in the company (either directly, or indirectly through one or more interposed entities); or

  (b)   have at that time the right to receive (either directly, or indirectly through one or more interposed entities) more than 50% of any dividends that the company may pay; or

  (c)   have at that time the right to receive (either directly, or indirectly through one or more interposed entities) more than 50% of any distribution of capital of the company.

Note 1:   The effect of subsection   (1) is that, if an entity has a controlling stake in a company, each associate of the entity also has a controlling stake in the company.

Note 2:   Division   167 has special rules for working out rights to voting power, dividends and capital distributions in a company whose shares do not all carry the same rights to those matters.

  (2)   If:

  (a)   apart from this subsection, an interest that gives an entity and its * associates (if any):

  (i)   the ability to exercise, or control the exercise of, any of the voting power in a company; or

  (ii)   the right to receive dividends that a company may pay; or

  (iii)   the right to receive a distribution of capital of a company;

    would, in the application of paragraph   (1)(a), (b) or (c), be counted more than once; and

  (b)   the interest is both direct and indirect;

only the direct interest is to be counted.