This section is self-explanatory. It gives the meaning of " associated company " and " control " for the purposes of Part X of the Act.
SECTION 102.
Question proposed: "That section 102 stand part of the Bill."
Is this basically a definition section?
It is, which one must have so that the workings of Part X can be understood. A company is another's "associated company" at any time if at that time or within one year previously, one has control of the other, or both are under common control, and the definition of "control" covers direct or indirect control of the company's affairs. A person is regarded as having control of a company if he on his own, with another person or persons, or through a nominee, either has or is entitled to acquire the majority of the share capital, voting powers or rights. The rights and powers of a person's associates and of any company controlled by him or by him and his associates or the nominees have to be regarded as belonging to that person. If, by the application of these provisions, a company could be treated as under the control of five or fewer participators, it is to be so treated——
In subsection (2) (a) the words in the Bill are "the greater part of the share capital". The Minister uses the word "majority". It is putting it a bit loose, "the greater part".
The majority can comprise the greater part of a number of different units.
The Minister, in describing this, used the word "majority".
You cannot say the majority. I accept that perhaps my presentation was less than elegant. You would talk about the majority of the share capital or the greater part.
Majority holdings.
The phrase "the greater part" as used in the Bill covers not merely share capital but also the voting power of the company. You would not talk about the majority of a singular thing like voting power.
It is here that it is just 51 per cent.
Fifty plus.
It is open to taking possession or "entitled to acquire".
Is that not loose? Of course, we are talking basically about a closed company. Anyone with a sufficient amount of money could hold himself up as somebody who is entitled to acquire.
In a closed company. In the event of it being a private company I would imagine it would be restricted by the articles.
What we are talking about here is legal entitlement which is an absolute entitlement that nobody else may resist. That is the power that confers the control and nobody can stop this.
Even a binding contract. It need not necessarily be in the article provided it is not stopped by the article.
Yes.
If I only have 10 per cent but I have the right on demand to have 50 per cent transferred.
You might have the position where you can transfer it at any rate. We might have an amendment on Report Stage before we go any further on this.
If two or more persons together satisfy any of the conditions in subsection (2) would that not get us into trouble? Say there are 100 persons, is not that just an ordinary company then?
One hundred would not be under five people.
A closed company would be.
We have the overall limitation of five there.
Yes.
The Minister is holding it down very much. It is more than two and less than five.
You could scrap two and say where five people together satisfy any of the conditions of sub-section (2) that they should be taken to have control of the company. It is a maximum of five anyway.
Yes. If two satisfy the conditions they will be taken to have control. It is not necessary that one person would have the control. It says " two or more " so you could take them to have control of the company.
Looking at subsection (1) and subsection (3) and putting the two of them together it is a peculiar sort of a hotch-potch because for the purposes of this part a company have to be treated as another associated company, if at that time or at any time within one year, for instance, one of the two has control of the other, that is an associate, or both are under the control of the same person or persons. This gets us down here to a person or persons, where two or more persons together satisfy any of the conditions mentioned in subsection (2) they should be taken to have control of the company.
We are dealing with two different things here. Subsection (1) deals with an associated company. In subsections (2) and (3) we are dealing with one controlled company.
No. They both relate to an associated company. An associated company is a company where both are under the control of the same person. Then you go on to subsection (2) and you find that for the purposes of this part a person can be deemed to have control in exercising and so on. That is a person. Then subsection (3) goes on to say that that control can be exercised by two or more persons, either two, three or four persons have control of both properties—they are associated properties.
Obviously you have to define " control " and one starts in subsection (2). Subsection (1) is dealing with what an associate company is and that involves having control. Then they go on to define " control ". The " five " we are discussing comes into section 94. It says "a ‘close company' is one which is under the control of five or fewer participants."
Two or more.
For the purposes of part X of the Act, which is what we are dealing with here, the close company is one which is under the control of five or fewer participators.
These are only close companies we are dealing with here in section 102.
Yes.
The five applies all the time.
Yes. We are saying that the mere fact that you have more than one person exercising control does not mean that it is no longer a controlled company.
It says "for the purposes of,". It is the only subsection that does not mention "for this Part".
Subsection (3) is related to subsection (2) which says: " For the purposes of this Part a person . . .".
On the question of " possesses or is entitled to acquire " the greater part of the share capital or issued capital or the company, what is the position of a mortgagee in this? Does that bring the mortgagee within this net?
The mere fact that he is a mortgagee would not necessarily mean that he would be able to acquire the greater part of the share capital.
We have mentioned the question of blank transfers before. This has been done in the past. If he is entitled to acquire, then he is in under this section. Would the Minister look at this? I can see difficulties arising.
I will certainly.
Very often the money is advanced, the blank transfer is executed and it is deposited. That is that. It is done.
I will consult about it.
Question put and agreed to.
SECTION 103.
Question proposed: "That section 103 stand part of the Bill."
This is another section which defines a number of words, including the one Deputy Haughey does not like "participator". At least now he will know what it means. No one is excepted.
(Dublin Central): Do these explanatory documents expire at section 102?
No; they go on.
(Dublin Central): Is there a particular one given out?
There is Part XI.
I suppose it is all definitive?
It is.
Is there any change from the previous definition of "relative"?
There is nothing significantly different.
Is there anything different about "relative"?
Did Deputy Belton mention the word "relative"?
Yes. We are still dealing with a close company?
Yes. Where is the word "relative"?
Subsection (3) (a).
No. It is not changing the existing definition which means a husband or wife, ancestor, or lineal descendant, brother, or sister, as in section 530 of the 1967 Income Tax Act.
Question put and agreed to.