21Meanings of subsidiary and holding entity

21 Meanings of subsidiary and holding entity

Meaning of subsidiary (1) An entity (the lower entity) is a subsidiary of another entity (the higher entity) if: (a) the higher entity: (i) is in a position to control more than half the voting power in the lower entity; or (ii) holds more than half the issued securities in the lower entity (disregarding any securities that carry no right to participate beyond a specified amount in a distribution of either profits or capital); or (b) the lower entity is a subsidiary of an entity that is the higher entity’s subsidiary (including because of one or more applications of this subsection).

Note: The lower entity need not be the immediate subsidiary of the higher entity under paragraph (1)(a) (see section 23 which provides that a person may control the voting power in an entity directly or indirectly, and section 19 which provides that a person is taken to hold interests in securities that are traced through a chain of corporations, trusts or unincorporated limited partnerships).

(2) In determining whether a lower entity is a subsidiary of a higher entity, disregard any securities held or power exercisable by: (a) the higher entity in a fiduciary capacity; or (b) any person as a result of a debenture of the lower entity; or (c) any person as a result of a trust deed for securing the issue of a debenture of the lower entity. (3) In determining whether a lower entity is a subsidiary of a higher entity, any securities held or power exercisable: (a) by any person as a nominee for the higher entity; or (b) by, or by a nominee for, a subsidiary of the higher entity; are taken to be held or exercisable by the higher entity. Meaning of holding entity (4) An entity (the higher entity) is a holding entity of another entity (the lower entity) if the lower entity is a subsidiary of the higher entity.