Are the following companies associated?
Same 3 family members have shares in each company but different percentages in each.
Company A
Shares split 98%, 1% and 1%
Company B
Shares split one-third each.
The companies operate from seperate premises and different trades. However, there is a small inter-company loan balance for payment made by one company on behalf of the other.
Thanks
Replies (4)
Please login or register to join the discussion.
Not associated provided...
... there is no substantial commercial interdependence.
You already knew that though. I think your question is really whether the two companies have substantial commercial interdependence.
Probably not, but you really need to consider the full regulations yourself. The companies are certainly financially interdependent as defined, but you imply that this interdependence isn't substantial. There are other factors to consider though in addition to those to which you have specifically refer to.
I am not 100% certain, but I think they are related
The same two shareholders from each company could outvote the third, so I think this mean that both companies can be controlled by the same two people, which would mean that the companies are related.
EDIT: I think I misread the question.
@Shirley
You need to compare the irreducible controlling combinations in the two companies. An irreducible controlling combination is one that has control, but wouldn't do so if one person were removed from the mix.
Ignoring attribution, in company A, you only need the 98% shareholder to control the company, whereas in company B you need a combination of any two of the shareholders, so you don't have the same irreducible controlling group.
That changes if attribution of the other family members' right applies, but attribution only takes place if the companies have substantial commercial interdependence.