57Meaning of control and related party

57 Meaning of control and related party

(1) For these rules, an entity controls a second entity if the first entity holds a majority of the voting shares of the second entity or the first entity has the capacity to determine the outcome of decisions about the second entity’s financial and operating policies. (2) In determining whether the first entity has this capacity: (a) the practical influence the first entity can exert (rather than the rights it can enforce) is the issue to be considered; and (b) any practice or pattern of behaviour affecting the second entity’s financial or operating policies is to be taken into account (even if it involves a breach of an agreement or a breach of trust). (3) The first entity does not control the second entity merely because the first entity and a third entity jointly have the capacity to determine the outcome of decisions about the second entity’s financial and operating policies, unless the first entity controls the third entity or vice versa or there is an entity that controls both the first entity and the third entity. (4) If the first entity is under a legal obligation to exercise a shareholding or use a capacity for the benefit of someone other than the first entity’s members, it shall be disregarded in determining if there is control. (5) For these rules, each of the following is a related party of an entity (the first entity): (a) a director of the first entity; (b) an entity which has a director in common with the first entity; (c) an entity (the controlling entity) that controls the first entity, whether directly or by intermediate entities that it controls; (d) a director of the controlling entity; (e) the persons that comprise the controlling entity, if the controlling entity is not a corporation; (f) other entities controlled by any of the above; (g) a relative of any of the persons listed in paragraph (a), (d) or (e); (h) an entity or person that is reasonably likely to become covered by one or more of paragraphs (a) to (g); (i) an entity or person that was a related party in the past 6 months under one or more of paragraphs (a) to (h).