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Associates Companies - are these two companies associated?

Associates Companies - are these two companies...


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


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23rd Nov 2012 13:47

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.

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to Richard Hattersley
23rd Nov 2012 14:36

okay so...

Co 1 A 35%, Aa 6%, Ab 14% B 19%, Ba 10%, Bb 5% Bc 5% Bd 0.5% Be 0.5% E 5%

NB- Ab is a company owned by A 32% Ac 34% Ad 34%

Co 2, A 15%, Aa 5%, Ab 5%, B 10%, Ba 5%, Bb 5%, Bc 5%, C 25%, D 25%.

All A's are related, all B's are related.

There is no commercial interdependence  between the companies. No loans etc so no one has a greater share on winding up.

Any change to the conclusion?

Thank you

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23rd Nov 2012 16:14

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).

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to jcace
23rd Nov 2012 16:22

Thank you! 

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23rd Nov 2012 17:16


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?

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23rd Nov 2012 17:22

Yes but

Either A or B had a casting vote from the OP.

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