Commonly controlled businesses
If a person, or set of persons, has a controlling interest in each of 2 businesses, the persons who carry on those businesses constitute a group.
A person, or set of persons, has a controlling interest in a business if:
a) in the case of 1 person the person is the sole owner (whether or not as trustee) of the business, or
b) in the case of a set of persons the persons are together as trustees the sole owners of the business, or
c) in the case of a business carried on by a corporation:
the person, or each of the set of persons, is a director of the corporation and the person, or set of persons, is entitled to exercise more than 50% of the voting power at meetings of the directors of the corporation, or
a director, or set of directors, of the corporation that is entitled to exercise more than 50% of the voting power at meetings of the corporation is under an obligation, whether formal or informal, to act in accordance with the direction, instructions or wishes of that person, or set of persons, or
d) in the case of a business carried on by a body corporate or unincorporated that person or set of persons constitute more than 50% of the board of management (by whatever name called) of the body or control the composition of that board, or
e) in the case of a business carried on by a corporation that has a share capital that person or set of persons can, directly or indirectly, exercise, control the exercise of, or substantially influence the exercise of, more than 50% of the voting power attached to the voting shares, or any class of voting shares, issued by the corporation, or
f) in the case of a business carried on by a partnership that person or set of persons:
i) own (whether beneficially or not) more than 50% of the capital of the partnership, or
ii) is entitled (whether beneficially or not) to more than 50% of the profits of the partnership, or
g) in the case of a business carried on under a trust the person or set of persons (whether or not as a trustee of, or beneficiary under, another trust) is the beneficiary in respect of more than 50% of the value of the interests in the first-mentioned trust.
If:
a) 2 corporations are related bodies corporate within the meaning of the Corporations Act 2001 of the Commonwealth, and
b) 1 of the corporations has a controlling interest in a business, the other corporation has a controlling interest in the business.
If:
a) a person or set of persons has a controlling interest in a business, and
b) a person or set of persons who carry on the business has a controlling interest in another business, the person or set of persons referred to in paragraph (a) has a controlling interest in that other business.
If:
a) a person or set of persons is the beneficiary of a trust in respect of more than 50% of the value of the interests in the trust, and
b) the trustee of the trust (whether alone or together with another trustee or trustees) has a controlling interest in the business of another trust, the person or set of persons has a controlling interest in the business.
If:
A person who may benefit from a discretionary trust as a result of the trustee or another person, or the trustee and another person, exercising or failing to exercise a power or discretion, is taken, for the purposes of this Part, to be a beneficiary in respect of more than 50% of the value of the interests in the trust.
If:
a) a person or set of persons has a controlling interest in the business of a trust, and
b) the trustee of the trust (whether alone or together with another trustee or trustees) has a controlling interest in the business of a corporation, the person or set of persons is taken to have a controlling interest in the business of the corporation.
If:
a) a person or set of persons has a controlling interest in the business of a trust, and
b) the trustee of the trust (whether alone or together with another trustee or trustees) has a controlling interest in the business of a partnership, the person or set of persons is taken to have a controlling interest in the business of the partnership.
Groups arising from Common Control
Common control creates groups when 2 or more businesses are controlled by the same person or persons. Control need not be direct and can be traced through business structures where control exists. Any persons who have any interest in the businesses are totalled.
Example
| Company 1 has shareholders | Company 2 has shareholders |
|---|---|
A 75% | A 40% |
B 5% | B 20% |
C 20% | D 40% |
A and B together have 80% control of company 1 and 60% of company 2. Both companies are commonly controlled and are a group.
The table below summarises the control provisions.
| Business carried on by: | Person or persons with control | Controlling interest |
|---|---|---|
Sole trader | 1 person | Sole owner (whether or not a trustee). |
Joint ownership | All of the persons | Exclusive owners together (whether or not as trustees). |
Corporation | Director(s) | 1 or more directors who are entitled to exercise more than 50% of the voting power at meetings of the directors. |
Corporation with share capital | Shareholders | 1 or more shareholders who can directly, indirectly, exercise, control the exercise, or substantially influence the exercise of, more than 50% of the voting power attached to voting shares. |
Partnership | Partner (s) | 1 or more partners who own (beneficially or not) more than 50% of the capital of the partnership. |
Partnership | Partner (s) | 1 or more partners who are entitled (beneficially or not) to more than 50% of the profits of the partnership. |
Trust | Beneficiary or beneficiaries | Entitled to more than 50% of the value of the interests in the trust. Any beneficiary of a discretionary trust is deemed to have a greater than 50% interest of the value of the interests in the trust. |
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