Schedule 6 | Meaning of “subsidiary” etc: supplementary provisions

Introduction

(1)The provisions of this Part of this Schedule explain expressions used in section 1159 (meaning of “subsidiary” etc) and otherwise supplement that section.

Voting rights in a company

(2)In section 1159(1)(a) and (c) the references to the voting rights in a company are to the rights conferred on shareholders in respect of their shares or, in the case of a company not having a share capital, on members, to vote at general meetings of the company on all, or substantially all, matters.

Right to appoint or remove a majority of the directors

(1)In section 1159(1)(b) the reference to the right to appoint or remove a majority of the board of directors is to the right to appoint or remove directors holding a majority of the voting rights at meetings of the board on all, or substantially all, matters.

(2)A company shall be treated as having the right to appoint to a directorship if—

(a)a person's appointment to it follows necessarily from his appointment as director of the company, or

(b)the directorship is held by the company itself.

(3)A right to appoint or remove which is exercisable only with the consent or concurrence of another person shall be left out of account unless no other person has a right to appoint or, as the case may be, remove in relation to that directorship.

Rights exercisable only in certain circumstances or temporarily incapable of exercise

(1)Rights which are exercisable only in certain circumstances shall be taken into account only—

(a)when the circumstances have arisen, and for so long as they continue to obtain, or

(b)when the circumstances are within the control of the person having the rights.

(2)Rights which are normally exercisable but are temporarily incapable of exercise shall continue to be taken into account.

Rights held by one person on behalf of another

(5)Rights held by a person in a fiduciary capacity shall be treated as not held by him.

(1)Rights held by a person as nominee for another shall be treated as held by the other.

(2)Rights shall be regarded as held as nominee for another if they are exercisable only on his instructions or with his consent or concurrence.

Rights attached to shares held by way of security

(7)Rights attached to shares held by way of security shall be treated as held by the person providing the security—

(a)where apart from the right to exercise them for the purpose of preserving the value of the security, or of realising it, the rights are exercisable only in accordance with his instructions, and

(b)where the shares are held in connection with the granting of loans as part of normal business activities and apart from the right to exercise them for the purpose of preserving the value of the security, or of realising it, the rights are exercisable only in his interests.

Rights attributed to holding company

(1)Rights shall be treated as held by a holding company if they are held by any of its subsidiary companies.

(2)Nothing in paragraph 6 or 7 shall be construed as requiring rights held by a holding company to be treated as held by any of its subsidiaries.

(3)For the purposes of paragraph 7 rights shall be treated as being exercisable in accordance with the instructions or in the interests of a company if they are exercisable in accordance with the instructions of or, as the case may be, in the interests of—

(a)any subsidiary or holding company of that company, or

(b)any subsidiary of a holding company of that company.

Disregard of certain rights

(9)The voting rights in a company shall be reduced by any rights held by the company itself.

Supplementary

(10)References in any provision of paragraphs 5 to 9 to rights held by a person include rights falling to be treated as held by him by virtue of any other provision of those paragraphs but not rights which by virtue of any such provision are to be treated as not held by him.