New South Wales Consolidated Acts New South Wales Consolidated ActsThis Schedule applies for the purposes of section 175P.
(1) An entity has a
"direct interest" in a corporation if--(a) in the case of an entity that is a person--the person can, directly or indirectly, exercise, control the exercise of, or substantially influence the exercise of, the voting power attached to any voting shares issued by the corporation, or(b) in the case of an entity that is a group of associated persons--each of the associated persons can, directly or indirectly, exercise, control the exercise of, or substantially influence the exercise of, the voting power attached to any voting shares issued by the corporation.
(2) The value of the direct interest of the entity in the corporation is the proportion (expressed as a percentage) of the voting power of all voting shares issued by the corporation that--(a) in the case of an entity that is a person--the person can directly or indirectly exercise, control the exercise of, or substantially influence the exercise of, as referred to in subclause (1), or(b) in the case of an entity that is a group of associated persons--the associated persons can, if acting together, directly or indirectly exercise, control the exercise of, or substantially influence the exercise of, as referred to in subclause (1).
(1) An entity has an
"indirect interest" in a corporation if the corporation is linked to another corporation (the
"directly controlled corporation" ) in which the entity has a direct interest.
(2) A corporation is linked to a directly controlled corporation if the corporation is part of a chain of corporations--(a) that starts with the directly controlled corporation, and(b) in which a link in the chain is formed if a corporation has a direct interest in the next corporation in the chain.
(3) The following are examples of how subclauses (1) and (2) work (the examples are cumulative)--(a) Corporation A (a directly controlled corporation) has a direct interest in corporation B. Corporations A and B form part of a chain of corporations, and corporation B is linked to corporation A. Accordingly, an entity that has a direct interest in corporation A also has an indirect interest in corporation B.(b) Corporation B also has a direct interest in corporation C. In this case, corporations A, B and C form part of a chain of corporations. Both corporations B and C are linked to corporation A. The entity that has a direct interest in corporation A has an indirect interest in both corporations B and C.(c) Corporation B also has a direct interest in corporation D. There are now 2 chains of corporations, one consisting of A, B and C, and one consisting of A, B and D. Corporations B, C and D are all linked to corporation A and an entity that has a direct interest in corporation A would have an indirect interest in corporations B, C and D. An entity that has a direct interest in corporation B would have an indirect interest in corporations C and D. However, an entity that has a direct interest in corporation C only would not have an indirect interest in corporation D, as corporation D is not linked to corporation C.
(4) The value of the indirect interest of an entity in a corporation (an
"indirectly controlled corporation" ) that is linked to a directly controlled corporation is calculated by multiplying together the following--(a) the value of the direct interest of the entity in the directly controlled corporation,(b) the value of each direct interest that forms a link in the chain of corporations by which the indirectly controlled corporation is linked to the directly controlled corporation.
(5) The following are examples of how subclause (4) works (the examples are cumulative)--(a) An entity has a direct interest (with a value of 80%) in corporation A. Corporation A has a direct interest (with a value of 70%) in corporation B. The value of the indirect interest of the entity in corporation B is 80% × 70% (that is, 56%). Accordingly, in this example the entity has a controlling interest (within the meaning of section 175P) in corporation B.(b) Corporation B also has a direct interest (with a value of 40%) in corporation C. The value of the indirect interest of the entity in corporation C is 80% × 70% × 40% (that is, 22.4%). Accordingly, in this example the entity does not have a controlling interest in corporation C.
(6) It is possible for an entity to have more than one indirect interest in a corporation. This may occur if the corporation is linked to more than one corporation in which the entity has a direct interest, or if the corporation is linked to only one corporation in which the entity has a direct interest but is linked through more than one chain of corporations. In that case, the entity has an aggregate interest in the corporation (see clause 4).
(1) An entity has an
"aggregate interest" in a corporation if--(a) the entity has a direct interest and one or more indirect interests in the corporation, or(b) the entity has more than one indirect interest in the corporation.
(2) The value of the aggregate interest of an entity in a corporation is the sum of the following--(a) the value of the direct interest (if any) of the entity in the corporation,(b) the value of each indirect interest of the entity in the corporation.
(3) For example--An entity has a direct interest (with a value of 40%) in corporation B.
The entity also has a direct interest (with a value of 25%) in corporation A, which in turn has a direct interest (with a value of 60%) in corporation B. Accordingly, the entity also has an indirect interest in corporation B with a value of 15% (that is, 25% × 60%).
The value of the entity's aggregate interest in corporation B is the sum of the direct interest (40%) and the indirect interest (15%), which is 55%.
Accordingly, in this example, the entity has a controlling interest in corporation B (within the meaning of section 175P).