Commonwealth Numbered Acts

COMPANIES ACT 1981 No. 89 of 1981 - SECT 7

7. (1) For the purposes of this Act, a corporation shall, subject to
sub-section (3), be deemed to be a subsidiary of another corporation if-

   (a)  that other corporation-

        (i)    controls the composition of the board of directors of the
               first-mentioned corporation;

        (ii)   is in a position to cast, or control the casting of, more than
               one-half of the maximum number of votes that might be cast at a
               general meeting of the first-mentioned corporation; or

        (iii)  holds more than one-half of the issued share capital of the
               first-mentioned corporation (excluding any part of that issued
               share capital that carries no right to participate beyond a
               specified amount in a distribution of either profits or
               capital); or

   (b)  the first-mentioned corporation is a subsidiary of any corporation
        that is that other corporation's subsidiary (including a corporation
        that is that other corporation's subsidiary by another application or
        other applications of this paragraph).

(2) Without limiting by implication the circumstances in which the composition
of a corporation's board of directors is to be taken to be controlled by
another corporation, the composition of a corporation's board of directors
shall be taken to be controlled by another corporation if that other
corporation, by the exercise of some power exercisable whether with or without
the consent or concurrence of any other person by that other corporation, can
appoint or remove all or a majority of the directors, and for the purposes of
this provision that other corporation shall be deemed to have power to make
such an appointment if-

   (a)  a person cannot be appointed as a director without the exercise in his
        favour by that other corporation of such a power; or

   (b)  a person's appointment as a director follows necessarily from his
        being a director or other officer of that other corporation.

(3) In determining whether one corporation is a subsidiary of another
corporation-

   (a)  any shares held or power exercisable by that other corporation in a
        fiduciary capacity shall be treated as not held or exercisable by it;

   (b)  subject to paragraphs (c) and (d), any shares held or power
        exercisable-

        (i)    by any person as a nominee for that other corporation (except
               where that other corporation is concerned only in a fiduciary
               capacity); or

        (ii)   by, or by a nominee for, a subsidiary of that other
               corporation, not being a subsidiary that is concerned only in a
               fiduciary capacity,

shall be treated as held or exercisable by that other corporation;

   (c)  any shares held or power exercisable by any person by virtue of the
        provisions of any debentures of the first-mentioned corporation, or of
        a trust deed for securing any issue of such debentures, shall be
        disregarded; and

   (d)  any shares held or power exercisable by, or by a nominee for, that
        other corporation or its subsidiary (not being held or exercisable as
        mentioned in paragraph (c)) shall be treated as not held or
        exercisable by that other corporation if the ordinary business of that
        other corporation or its subsidiary, as the case may be, includes the
        lending of money and the shares are held or the power is exercisable
        only by way of security given for the purposes of a transaction
        entered into in the ordinary course of business in connection with the
        lending of money, not being a transaction entered into with a person
        associated with the other corporation or its subsidiary.

(4) A reference in this Act to the holding company of a company or other
corporation shall be read as a reference to a corporation of which that
last-mentioned company or that other corporation is a subsidiary.

(5) Where a corporation-

   (a)  is the holding company of another corporation;

   (b)  is a subsidiary of another corporation; or

   (c)  is a subsidiary of the holding company of another corporation, that
        first-mentioned corporation and that other corporation shall, for the
        purposes of this Act, be deemed to be related to each other.

(6) For the purposes of this Act, a corporation is the ultimate holding
company of another corporation if-

   (a)  the other corporation is a subsidiary of the first-mentioned
        corporation; and

   (b)  the first-mentioned corporation is not itself a subsidiary of any
        corporation.

(7) For the purposes of this Act, a corporation is a wholly-owned subsidiary
of another corporation if none of the members of the first-mentioned
corporation is a person other than-

   (a)  that other corporation;

   (b)  a nominee of that other corporation;

   (c)  a subsidiary of that other corporation, being a subsidiary none of the
        members of which is a person other than that other corporation or a
        nominee of that other corporation; or

   (d)  a nominee of such a subsidiary.