Hello
Co no.1 owned 60% by A and 40 % by B. (not related individuals)
Co no. 2 owned 25% by A, 25% by B, 25 % by C and 25% by D (not related individuals) (I think either A or B has a casting vote)
Are these two associated? (no commerical transactions between them of any kind, run purely separately)
(NB if it makes any difference (there are other adult family members making up these percentages so >5 individuals in each co)
Thank you for your thoughts
Replies (6)
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You may have shot yourself in the foot a little
By not disclosing the other adult family members interests, a definitive conclusion can't be made.
There's no need to attribute the rights of a persons associates in order to determine control (for the purposes of determining whether companies are associated for the purposes of the small profits rate), unless there's substantial commercial interdependence between the companies (which you don't indicate).
Based on the information provided (that may include inappropriate attributions), the companies aren't associated. A controls company 1 by himself, but both A and B (and whichever of them has the casting vote) are needed to control company 2.
Like I say though, you may have made unnecessary attributions that might alter the analysis, and, additionally, the question isn't solely dependent on shareholdings.
They're not associated
In order to be associated they must be controlled by a common irreducible group. Such an irreducible group could not involve Bd, Be, C, D or E.
In company 2, the only irreducible group that doesn't involve those people and that has control is all of the remainder. In company 1 if you take any of that group away, then you either still have control (meaning that it's not an irreducible group) or you don't (meaning that it's not a controlling group common to both companies).
Steve
Whilst I agree that Co 1 and Co 2 (and Co Ab, for that matter) are not associated, isn't it simpler to say that as C & D (who have no involvement in Co 1) own 50% of Co 2, not even the 50% remainder of As and Bs together (who do have control of Co 1) have control of Co 2 and so the companies cannot be under common control?